Welcome back to the 110th episode of Financial Advisor Success Podcast!
My guest on today’s podcast is Micah Shilanski. Micah is a partner with Shilanski & Associates, an independent RIA in Anchorage, Alaska, where Micah personally oversees nearly $130 million of assets under management for almost 160 client households.
What’s unique about Micah, though, is that over the past 8 years, he’s transitioned from working 70-plus hour work weeks to refining his practice down to the point where he can service all 160 clients while being in the office for only 4 months of the year, an endeavor that he first started simply to get more efficient and better work/life balance, and then had to extend further out of necessity over the past several years to unfortunately support a sick child.
In this episode, we talk about how Micah manages his client workload of meeting processes to be able to sustain 160 clients while being in the office only 4 months of the year. How he boxed together a whopping six or seven client meetings a day for five-week surges in the spring and the fall, the way he handles meeting preparation and client notes in the midst of maintaining such an intensive client meeting schedule, how he sets a communication policy with clients during the onboarding process to set their expectations around his somewhat unusual schedule, and the way Micah overcame his own severe dyslexia to keep rigorous notes into CRM by using a combination of audio dictation tools and video emails to clients.
We also talk about how Micah has managed to not only maintain his practice but grow at 20% a year, despite only being in the office for 4 months, by focusing into a niche of helping federal employees with their retirement benefits. How he created his own niche website, plan-your-federal-retirement.com, to reach prospective clients, the seminar marketing strategy he uses to get even more clients into his niche, why he charges and can get a $500 initial consultation fee even for prospects that find him on the internet, and how by focusing into a niche, he’s able to confidently charge above-average fees of $4,000 for an initial plan plus 1.75% of assets under management, because, as Micah emphasizes, there’s nothing wrong with charging a premium fee when you genuinely offer specialized and premium service to a niche clientele who simply can’t get the same expertise and experience anywhere else.
And be certain to listen to the end, where Micah shares the initial steps that any financial advisor can take to at least start to improve their own personal efficiency in the office, and how despite his time out of the office and the staff support he needs to make that happen, he’s ultimately still been able to maintain his target of a nearly 70% EBOC take-home compensation from his $130 million AUM practice.
What You’ll Learn In This Podcast Episode
- An overview of Micah’s firm. [5:44]
- What he does to set communication expectations for clients during the onboarding process. [09:03]
- How Micha structures his meetings. [14:25]
- How Micah created his own niche website. [39:10]
- The seminar marketing strategy he uses. [46:10]
- Their fee structure and how they are able to charge above-average fees. [58:04]
- Why Micah had to increase his efficiency. [1:17:34]
- Why he built his own CRM. [1:38:11]
- Steps any advisor can take to improve efficiency in the office. [1:47:22]
- What success means to Micah. [1:51:27]
Resources Featured In This Episode:
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Welcome, Micah Shilanski, to the “Financial Advisor Success” podcast.
Micah: Thank you very much for having me, Michael. I am delighted to be here with you today. And I just want to make sure I say this at the beginning, thank you for not only all the content that you put out continuously, but these podcasts have been great, and I just want to say thanks for taking the time and putting the energy and talking to all these advisors and giving everyone else these really great ideas. Thank you.
Michael: Oh, thank you. My pleasure. Like, I love talking about the business. I love talking about our industry.
Micah: Wow, talking shop’s great.
Michael: We all do things so differently. It’s always part of what’s fascinating to me. Like if you put 100 advisors in the room to talk about their businesses, you get like 100 different ways of doing business. And to me, increasingly, like, the rewarding value of going to conferences, sessions are great, and I go to some, it can be hypocritical not to since I speak in a lot of them as well, but, like, there comes a point in your career where conferences are less about the sessions in the room and more about the conversations in the hallways. And once your business gets to a certain size and level of success, you basically get to the point where like going to a conference for a day or a few and getting one key takeaway that you can take home and actually implement in your business with impact materially moves the needle and makes a giant ROI on the entire conference and decision to go.
And so, like, my goal and vision always with this podcast was just, you get those insights just by literally hearing what other people do with their businesses as you talk to them, so let’s just do that on a podcast then you can hear some of it and not even go to a conference. Not that they’re bad, and I appreciate if you come to my sessions, but, like, let’s…we can do this more broadly. Almost anybody can learn something by how other advisors run their business. You won’t do everything the same, but you can find one thing.
Micah: And that’s all you need. And you said it, and this is what I tell other people, you know, my goal when I go to a conference is just that one simple doable thing. That’s it. If I get that at a conference, it’s paid for the whole thing in spades. And I agree, you learn what’s next in our profession talking with other people, not just the platform speakers. I mean, you could get some good ideas there, don’t get me wrong. I’m not putting you down. You do a good presentation, but…
Michael: Thank you. I appreciate that.
Micah: …it’s that mingling, right? It’s that learning these other things. And you pick up, “Hey, this other guy is doing X different, wow, if I started doing that, what the difference would be in my practice.”
An Overview Of Micah’s Firm [5:44]
Michael: Yeah. And I’m also, I’m excited to talk to you because you have a really interesting practice as well. You know, you have a bit of a unique niche unto yourself of who you serve having gone really deep with financial planning for federal employees. I know you do a lot of virtual planning work because your firm is based in Alaska, which I know, correct my ignorance if I’m wrong, I’ve not traveled to Alaska, but I’m imagining, like, not a huge population of local federal employees to get clients with this niche in Alaska.
Micah: Yeah, we do. Alaska has, and I looked at this stat a few years ago, about 14,000 federal employees in Alaska, but half of our clients are outside the state. So yeah, we get a lot of clients from across the nation.
Michael: And is that…like, are they military-related? Like just what federal government is posted up to Alaska?
Micah: You know, we do have a lot of military, but keep in mind, with military, there’s also a lot of civilian employees which assists the military, right? So when you have a base, it’s just not uniformed service, they have civilian service as well. And so our target is civilian service, not military service, is really who we specialize in helping.
Michael: Okay. Okay. And so literally, like, going all the way back to the folks on FERS, the folks in the old CSRS program.
Micah: You got it.
Michael: Okay. Interesting. So you’ve got this niche-oriented business, a heavily virtual practice built up in Alaska and I know also have spent a lot of time of just focusing on work-life balance as well. You know, we had, still one of our more popular podcasts ever was Matthew Jarvis, who joined us fairly early and has a practice where he was… you know, had almost $100 million under management, a 50% profit margin, and was taking I think 50 or 60 days a year off in vacation. And, like, his goal was not optimizing his profit margin, his goal was optimizing to increase the number of vacation days that he was taking. And as I understand, like, you have a little bit of a similar balance of trying to have a lot of time and flexibility out of the office as part of how the business is being built with deliberate intent.
Micah: Yeah, real similar. And I would recommend. And thanks to you actually, because of you, I remember, you know, a couple years ago when the Jarvis podcast came out, you interviewed Matthew Jarvis, and it’s, like, kitces.com/7, right?
Michael: Yep, kitces.com/7 for episode seven. Almost exactly two years ago from this episode now airing. Like, we’re running your podcast here in February of 2019 and Matthew was on in February of 2017.
Micah: That’s awesome. Yeah, I remember listening to that podcast so intently because it was literally days before I was talking to…your podcast came in I was talking to my wife and being like, “Look, there has to be someone else out there my age that’s doing this,” right? We were, you know, highly profitable lifestyle practice. We’re taking a lot of time off now. 2017 and 2018 I was out of the office for about 8 months while still able to grow my practice at over 20% a year, even with taking that time out of the office.
Michael: You were out of the office eight months?
What He Does To Set Communication Expectations For Clients During The Onboarding Process [09:03]
Michael: Does that mean like because you were working remotely not physically in your office or, like, you were not working eight months?
Micah: That’s a great question. So it’s not a full not working. The way I describe it to my clients, because I tell all my clients about our travel schedule. We have this whole communication policy when we onboard clients to make sure, you know, we start off on the right foot. And so we talk a lot about our travels that we do. And the way I explain it to my clients is this, “Look, I’m in the office for certain periods of time, which are our appointment times. And that’s when we get our clients in because these are key times of year that I need to see my clients. And that’s my focus time, my tactical time. Now, outside of that, that’s when I have family time. That’s when I travel to conferences and I learn different things. Now, that’s my on-call time. If an emergency happens, if something comes up, my team is always available. And if you need me, I’m just a phone call away, but my phone may ring on my cell phone and not my desk.”
And so that’s the way that I describe it to clients, and that’s kind of the way that we live it as well is it allows our family, you know, a lot of free time. We help about 160 households me personally, firmwide we have more than that. But we found great ways to structure our time to kind of block our client appointments into small times of the year that we get all of our appointments in. We add a lot of value in those meetings. That gives us time to spend time with family and do other things outside of that.
Michael: So I’m fascinated by this sort of split, even down to how you communicate it. When you’re traveling but they can reach you, it’s on-call time, and then what do you call it when you’re in the office meeting with them?
Micah: That’s my tactical time. That’s when I’m in office meeting with clients.
Michael: Okay, that’s tactical time with clients. It’s an interesting thing because I feel like for a lot of advisors, there’s sort of this fear of like good client service means I have to do whatever they want, whenever they want. Like, if they want to meet at this time, we’re going to meet at this time. If they want to meet at that time, we’re going to meet at that time. And, you know, you, to me, are sort of describing the opposite logical extreme. Like, “Clients who want to see me, like, here are the few small blocks throughout the year where we do chunks of meetings with clients all at once, and, like, if you want to meet with me, here’s when you schedule. And if you want to do some other time, sure, we’ll be on call, but, like, you’re not seeing me because that’s not our meeting time.”
Micah: Well, I’d phrase it a little bit differently, if I may, and I would say that we picked certain times of the year to see clients because it’s the most beneficial to the clients, right?
Michael: Well, that’s a very kind way of putting it.
Micah: But it’s true from my perspective, right? Like, we want to see all of our clients before tax time. So that means March and April, first two weeks of April are extremely busy in our office. That’s our spring appointments set. And we bring all of our clients in, we look at tax returns before they’re filed. We do a lot of planning in that segment. And I find it really important because we have such a heavy tax focus. You know, we catch a lot of little mistakes that happen on tax return. And if I catch it before it’s filed, it’s a whole lot better than catching it after it’s filed. So what’s the difference, you know, before April 15th and after? Well, most the time, afterwards you’ve got to file an amended return because most people want to file before. So there’s a good reason as to why I want to see clients in that period and time.
Michael: Okay. And then are there other blocks that you have through the year then?
Micah: Mm-hmm. I kind of have three blocks. Spring and fall are the majority of our meeting sets, then also a summer block. That’s going to be there. About three weeks in the summertime. And sometimes we’ll spread that out, sometimes it’ll be all three consecutive weeks, it just kind of depends how everything falls, that we’ll bring in clients that we need to meet a little bit more frequently.
Michael: I can sort of see how the, like, four months in, eight months off starts to shape up. So you’ve got this, like, six or seven-week appointment block in the spring, another six or seven-week appointment block in the fall, three weeks in the summer. You add all those up you’re at about 15 or 16 weeks, about 4 months of the year, and, like, that captures most of the year for your office time?
Micah: You got it. So, you know, 15 weeks is kind of that target. What I target inside of there is doing, you know, roughly 30 appointments a week in when I’m doing a meeting set.
Michael: Thirty appointments a week? That’s like…
Micah: A week.
Michael: …six or seven a day every day.
Micah: It is. It is. It’s a little bit taxing. I’m not going to lie. If you’re not doing this, this is definitely something to work up to. Don’t jump at it. It took me kind of years to build. I call it appointment stamina, right? Because you’ve got to be on. When you’re in a client and you’re meeting with them, it’s, you know, presentation mode. You’ve got to be on. You’ve got to be excited. You’ve got to be…
Michael: Your client doesn’t care that you’re the sixth meeting of the day and that’s why you’re a little worn down. As far as they’re concerned, you’re just getting the short end of the stick because they got the sixth meeting. Like, it has to be on for every client.
Micah: Absolutely. I think, you know, Fred Astaire is the one that said it the best, is, you know, he was doing his dance routine and an interviewer said, you know, “How do you get out there all the time with such energy, you know, like it’s the first time? You’ve done this thousands of time.” And his response was just great. He says, “You know what? This might have been the thousandth time I’ve done this dance routine, but it’s the audience’s first and I owe it to them to give my best.” And that’s the same way that we view it with our clients.
How Micha Structures His Meetings [14:25]
Michael: Very cool. So 30…I mean, what does this look like? Like, are you literally just, like, two-hour intervals all day long every day of the week? What does this look like?
Micah: All right, so our schedule, the way that it works is generally, my first appointment is at 7 a.m. then 8:30, 9:45, 11:00, 12:30, 1:45, 3 p.m. So roughly hour 15 between appointments. But what I found working with clients, in-person clients take a little bit longer than virtual telephone appointments do, but one of the things that I found is once you pass that 45-minute hour mark on planning, you know, you’re starting to get the glassy-eyed, right? The clients aren’t really kind of focused in on that. And so before, we used to have longer meetings, but really, it was just our inefficiency in delivering the valued information in a short period of time. And I don’t think the clients really picked up on anything after that 45-minute interval. So it wasn’t really a service, in our opinion, it wasn’t a service to them to have them a two-hour block because they weren’t picking up half that meeting. So we started kind of refining this down into saying, “All right, how do we kind of deliver that value? Cover what we need to in 45 minutes to an hour, then you have about a 15-minute, give or take, break before you go on to your next appointment.”
Michael: All right, so I’m fascinated by this. So what changed in the meetings? Like, what did you do to get 90-minute meetings down to 45 to 60-minute meetings?
Micah: So we start off our meetings…let me just first cover, if I may, what we go over in our meetings, right?
Michael: Please, please.
Micah: Now, it’s going to be different. So there’s kind of two different types of client meetings that we can have. We can have one where it’s a new client. And a new client, we’re going to meet more frequently than two or three times a year because we’re going to develop their plan. And we do financial planning I think slightly differently. So we’re going to meet with them a lot more times the first year and kind of going through. So those set of meetings where we’re breaking down our financial planning process one step at a time. So whenever we’re engaged, we only cover one topic at a time with a client. So if we’re talking about estate planning, that’s the only thing that’s coming up that day, unless they have something else on their agenda. But on my agenda, all we’re talking about is estate planning, and we’re going to get that done. Then we’re going to have another meeting and go through the next segment of their financial plan. So there’s the new client meetings.
Then we have our renewal meetings, right, that are coming and just kind of the checkup. And on the checkup, of course, we always start with, you know, how they’re doing, whatever thing is interesting in their life. I always ask them about how their health is doing because that’s really important is quality of life when working with clients. I always talk to them about how their cash flow is doing, right? And, of course, the answer I always get is it’s flowing, right?
Michael: “How is your cash flow doing?” “It’s flowing.”
Micah: “It’s flowing.” So we kind of talk a little bit about that. And I ask them if they have any big purchases that are coming up, any big expenses that are coming up. And I let the client define what a big expense is. But those three questions are really important to kind of set the stage for the rest of our meeting. And once I get those done, I always say, “All right, I have my agenda, things I need to cover, but what else is on your agenda? What questions or concerns do you have?” And often clients will say, “Well you know, I’ll kind of save my questions for the end.” And what I found, Michael is that if they save their questions for the end, they’re not actually listening to anything that I’m saying because they have a question on their mind. So I always want to flush out, what is that question? I say, “Look, I can get back to my agenda at any time. Interrupt me with your questions. Interrupt me with your concerns. Let’s make sure we get everything addressed.”
So that’ll take about 15 minutes, give or take, and then we’ll move on to whatever we’re particularly covering for about another 15 or 20 minutes. That’s going to be there. So let’s take tax time as that’s going to be coming up, we’re going to be looking at our tax projection that we did for last year. What is it for this year? We’re going to probably be going over cash flow with them. Let’s make sure everything cash flow is fine. You know, I don’t know, random things like I do with federal employees. So the government shutdown and they’re not getting a paycheck, how is cash flow going, right? What are things that are set up and running with them? So we’ll go taxes, we’ll talk about cash flow, then we’ll talk about the next year of saying, “All right, how are we doing on track for your financial plan? What do we need to do differently?” And we’ll do quick little updates on that. So we take the same things you take in a long meeting, and we just make it into shorter bits.
Michael: Interesting. You mentioned around, you know, sort of agendas, what clients have on their agenda, what you have on the agenda, are you actually, like, creating structured agendas for each meeting kind of approach or is this simply talking through, like, mental note at start of every meeting, set expectation with client, “Hey, Mr. Client, here’s what we’ll want to talk about. I want to make sure we talk about what you want to talk about. So what do you want to talk about?” Like, it’s just a conversation at the beginning of the meeting.
Micah: Good question. So what we start off with is, on our appointment prep, right, because you’re doing all these appointments throughout the day, I don’t have time to do appointment prep in between meetings. So I’ve got to make sure before I do a meeting set everything is in order. So one of the ways that we do that is we have a pre-appointment checklist that our team puts together. Now, when I am done with my meeting, so let’s say I get done with my spring appointments of meetings and I do my dictation, one of the things that I’m doing is I’m dictating out what the next agenda is going to be. Because I just had the meeting with the client, I know where they’re at, I know what fall is coming up, okay, what are things I need to cover the next time we talk about? What was on the client’s homework? What do they need to do? What’s on our homework? And what’s our agenda?
Michael: So part of these 15-minute breaks between meetings is not actually because you’re prepping for the next meeting, it’s because you’re dictating for the prior meeting?
Micah: I wish I could say I got it done then. The answer is no. It’s at the end of the day. You know, if I’m lucky and I wrap my meeting up early, yes, I’ll do dictation right afterwards.
Michael: So this reminds me of, like, doctors’ rounds, right? Where like the doctor go see a whole bunch of patients and then they get to the end of their day and then they dictate or mark all their notes on their client charts at the end of the day. So, like, it’s that sort of structure?
Micah: Yeah. I take my client notes on an iPad. And we have a homework sheet that we have designed. And if someone wants our homework sheet or, you know, pre-appointment checklist, I’m happy to share that. So I take all the notes on my iPad. And I have a big iPad Pro. And clients really like that because, you know, it’s easy for them to see if I need to share something. So we’re paperless in our office, so I try to do most things virtually. So I take all my notes on a homework sheet and get it all done there, and then hopefully at the end of the meeting or really at the end of the day, that’s when I’ll jump through all my meetings. And I have to do that before I leave the day. That’s my rule. And I do all my dictation. I assign all the tasks, the client homework, everything goes out that day. So that way, you know, seven appointments later, if I forget to do this Monday’s dictation until Friday, that was a lot of people I’ve seen in the meantime, I might miss little details, right?
Michael: I would frankly be nervous about just remembering what to recap in 7 client meetings I had that day, never mind trying to remember how to recap 30 meetings at the end of the week. So, yeah, I’m impressed you can get through all of them at the end of the day. But I guess that’s part of that appointment stamina you’ve built up to after doing this over time.
Micah: It is. You know, take wherever you’re at. If you want to do this, I mean, take wherever you’re at and just add a little bit. These are little incremental changes that we’ve made over time. We didn’t take any huge leaps on this thing.
Michael: You had mentioned sharing your pre-appointment checklist. You know, if you’re willing, we’d love to share it out for people that may be just curious what that looks like.
Micah: Sure. Yeah.
Michael: So this is episode 110, so if you go to kitces.com/110, we’ll get a copy of Micah’s pre-appointment checklist and have it listed in the show notes and resources area so you can take a look and see what that looks like.
Micah: Yeah. Now, this is where your team is really key, though, because the team is, they’re going to fill that out, right? And so you as the advisor have done the dictation, you’ve done the outline that when it comes back to that next meeting with the client, your dictation should be at a stage or your notes where they can pick up that pre-appointment checklist and make sure everything was done. So that’s the appointment prep. You should be getting your appointment prep when you’re done with your meeting for the next one, right? When I’m done with my spring meetings, most of my appointment preps should be outlined to be done. So it’s not really that much work I need to do now when I’m remembering things from three months ago or six months ago, the last time I saw the client.
Michael: Oh, interesting. So truly, like, you’re trying to…you’re already setting next meeting’s prep material immediately following the current one, not frankly as most of us do, which is, like, 24 to 48 hours before the meeting is coming up, or less if we couldn’t get it done the day before.
Micah: Bob and Sue are coming in in 10 minutes, wait, what’s my mini-outline, right? Yeah. No, that doesn’t work. We’ve got to get ahead of this thing. And for me, when I got ahead of it, it was so much easier because I wasn’t remembering three months ago and reading my notes. You know, I had the meeting that day, now it’s real easy to know what needs to get done next time.
Michael: Interesting. And what do you use to do all of this dictation? Like, how do you dictate it? How does it get recorded?
Micah: I use my iPad to do…I think it’s iRecorder Pro or something like that that I use just to do all my dictation recording right on the iPad, and then it just syncs to Google Drive. And then one of the things that we’ve done is we’ve built our own CRM. We built our own technology platform along the way. And inside of that, when I get done with an appointment, it automatically queues up the relationship manager on our team to go and make sure dictation is done. So they make sure I’ve done my dictation, then they get it and they get it transcribed. And we just use rev.com for the transcription. They do a really good job. Then that comes in. And then normally we’ll send out either a letter. You know, so we have four advisors in my office, and what I like to do is I like to send out a video update when I’m done with my client meetings. So at the end of the day, you know, after I’ve done dictation, I’ll jump on, I use BombBomb, and I just do a quick little video update on everything that we talked about, also what the next meeting is going to look like, and we send that out to the client. And that’s been received pretty well.
Michael: Okay. Interesting using BombBomb for video emails. So for folks who haven’t seen it, we’ll put a link for this in the show notes as well. BombBomb just lets you…the name is strangely confusing to me. Like, it just makes it really easy to record these quick one-minute videos that, like, you can just do in front of your computer or webcam. And so, particularly for those of you who are maybe not the fastest at typing, so just sending follow-up emails to people it takes a while, like, just say it to the camera in 30 seconds and hit the send button and it drops a little video in and then people can see you saying it so you didn’t have to type it.
Micah: There you go. Now you’ve exposed my weakness. Thank you.
Michael: So you’re not the typist, I take it. I’m noticing a dictation and video trend here. Like, BombBomb for video email follow-ups, dictation for meeting notes, like, I’m getting the theme here.
Micah: Well, not only am I not the fastest typer, I’m highly dyslexic as well. So, you know, my emails and my written correspondence can lack a little bit. So I like it when someone else helps me out with those things.
Michael: Interesting. But I love that…I mean, just to that point, that, like, “Hey, I’m in a business with a whole lot of communication and happen to be highly dyslexic, let’s just work around this. We’re using dictation tools and video emails.” Like, I love that you just took it and rolled with it and, like, “That’s that. We just worked around it, now onwards.”
Michael: Very cool. So, I’m still wondering, though, a little bit about this…I don’t know, this prep structure. I guess, so if I think forward to maybe your fall sessions, so is most of the prep stuff for these fall sessions actually going to get done, like, in May because it’s just going to be the wrap up from your March, April sessions or is there still this, like, flurry of activity that ends out needing to happen as you’re heading into the fall season and just have to get ready for a zillion appointments? Like 5 or 6 weeks, 30 appointments a week, like, it’s 150 meetings of prep, it’s just…that’s a lot of prep stuff. Like, when does this actually…just when does this happen? When does this stuff happen?
Micah: So basically, the way that…so we think of everything in surges, right? Now, this is really important to make sure your team is on board if you’re doing this as well. And so one of the things that our team knows is when we have appointment surges, and like I said, in our firm, we have, you know, three advisors in our Anchorage office. My parents started our firm back in the ’80s, and my dad still works, and my sister and him are a team, they work together. And I’m the other advisor in our Anchorage office. And the three of us all have appointment surges at the same time because we get more synergy, right? More things are happening at the same time. And yes, it’s more work…
Michael: Oh, interesting. I would have assumed the other way. Like, okay you surge, then your dad surges, then someone else surges, because everybody’s head is going to surge off their shoulders if you try to do all of this at once. But you find the surges create synergy.
Micah: You know, it’s the assembly line concept, right? And so, if you’re doing the same task again and again and again and again, guess what? You get really, really good at it and really, really effective at that task. If I do this task then I go do this task then I go do this task then I go do that task then I go do this task, now I’m back to the first task, right? I’m not as effective at that first task. And so we try to use that concept in our office design, even with our team members, that that’s…their tasks that they have are in that same thing. I’d rather have them working, you know, all day on the same type of tasks versus mixing it up.
And so when we get to appointment prep, this is kind of how it works. We have our appointment surge. And let’s say it’s a six-week surge, just generally what we do, so we have six weeks of appointments in the spring. Now, as that’s getting done, about week 2, our ops team starts getting really busy because now I’ve met with, you know, 30 clients, Floyd and Jamie, they think they do about 20 or 25 meetings a week, so they do a bunch as well. And they’ll have those meetings now. We’ve created a lot of work for our team members. Now, our team members are in the backend doing the work that we’ve just generated while we’re meeting with new clients. So the work will flow for the next two to three weeks when we’re done with the appointment surge. So let’s just say for fun we wrap up on April 15th, I would imagine up until kind of that, you know, first, maybe second week of May, the office is still really busy getting everything done that we talked about for our appointment surges. And now we’re getting ready for that next push.
Michael: And so, I’m just wondering like, as you go through those cycles, does that mean like…I’m imagining there’s just a real sort of rhythm and cadence to what goes on in the firm. Like, the fact that you’ve got these surges means, like, a month before, everybody is already starting to gear up with like, “Okay, the surge is coming in a month, like, we’ve got a zillion things to do and repeat over and over again for the next month to get through the surge.” And then once we get through it, we get to the other side and it’s like, “Oh, okay,” everybody chills out for a few weeks and then you get ready for the next surge.
And then, like, there’s a…I don’t know, there’s an up-down rhythm, which I guess is the point of the surge metaphor, as opposed to I think most of us in advisor world we’re like, we’re just always in meeting mode. Like, we’re just always trying to schedule meetings. Yeah, there’s maybe some that we do at end of year because there’s end-of-year planning or or tax season because there’s tax planning, but, you know, every week there’s a couple more client meetings. It never ends. And yours do. Like, the surge is there and then the surge ends.
Micah: Yeah. And that’s a bit relieving quite frankly. You know, because one of the things is when you’re…if you’re in a perpetual, and I was like this, by the way, I mean, I remember a time before we started these changes, this is, you know, back in ’06, ’07 probably, that I was working 80 hours a week, right? I was doing constant appointments. I knew I had to grow my practice, and that meant butt in the seat. I had to be there. I had to work. You know, getting clients in whenever they get scheduled. You know, that was my mentality. And then we started to kind of change in that. And it’s amazing that the more we put parameters on how we set appointments, the more we put parameters on a time how much growth we had. Our clients were happier because we spell out for them what the best thing was for them. They enjoy this. They know when their meetings are going to be. We don’t get negative feedback on it from our clients, so we’re adding just good value, and the firm continues to grow. So I like it.
Michael: Fascinating. And you get people who take you up on 7 a.m.?
Micah: You know, this is the benefit of being in Alaska. So, about half of my clients are in lower 40 or outside of Alaska.
Michael: Oh. So you’re going at 7 a.m. but it’s 10:00, 11:00, 12:00, 1:00 for them going further east.
Micah: There you go. Now, that was…you know, this is interesting. So that’s the way we designed it. I was like, “All right, I’ll start off with a morning phone call because that will be fairly easy. It’s someone else’s three hours later, piece of cake.”
Michael: Right. And then, like, as you get later in the day, your clients come further west into your time zone.
Micah: You know, that was my vision, but that’s actually not how it happened. I get people in Anchorage that want to show up for the 7 a.m. appointment.
Michael: There’s early risers everywhere, right?
Micah: There are. You know, it’s a little bit of my younger crowd, a little bit of my…but no, they’re coming in at 7 a.m. And I’m shocked by it, but they’re like, “No, this appointment time actually works better for us.” It’s like, “Okay.”
Michael: And how do you…like, how do you schedule these? Just I’m imagining the grab bag process of trying to cram these many people in painfully short periods of time, like, how do you actually schedule this?
Micah: Now, when we think about painful periods of time, though, also, let’s step out of our industry for a quick second and say you called the doctor and you made a doctor’s appointment, does the doctor’s appointment just say, “Hey, when do you want to meet in the next month?”
Michael: Oh, no, it’s like, you know, playing battleship, “Can you do Tuesday at 2:15 p.m.?” Like, “Nope, try again? “Can you do Thursday?” Right? Like, we’re just trying to find the meeting slot that fits.
Micah: So this isn’t a foreign concept to anybody. This is a foreign concept to advisors because we feel that we need to be available whenever the client wants to see us. Now, you should be available whenever there’s a giant need, I’m not arguing that one, but we can set parameters on our own time. This is okay. Almost every other profession does this. So clients are already used to finding that. So what our relationship manager likes to do is she likes to schedule people when they’re actually leaving. So she tries to make sure she’s upfront, that when the client is leaving, she grabs them and schedules their next appointment. That’s the easiest way to go.
Michael: Well, yeah, that would make a lot of sense, wouldn’t it? Like, my dentist does the same thing. We just put the meeting on the calendar when we’re leaving from the last one. It’s usually pretty flexible because you’re scheduling four to six months out, and, like, that’s that and then they’ve got their appointment set.
Micah: So I’ll say that happens for about 60ish percent of our clients, we’re able to do that. So the balance, around 40%, that we have to call. And in our CRM that we built, one of the things that we really wanted to have is a client meeting trackability. And so, how many clients do I need to meet with in the spring and how many are booked? But more importantly, how many still need to be scheduled for appointments? So we can run pretty quick reports in our CRM to say, “All right, who is still pending in appointment?” And then it’s the relationship manager’s job to make sure she’s getting those people in.
Michael: Interesting. Okay. And I’ve just got to ask like, from the purely personal end, like, I get staff supports a lot of the meeting prep and you captured your notes at the tail end of the prior meeting and so forth, but just the amount of, like, task switching, people switching, brain switching to flip off to seven different people in a day, much less do that multiple days in a row and then multiple weeks in a row, like, what is that like mentally for you, just going from one client to another at that pace? Like, I don’t know, just I…
Micah: It’s invigorating. It’s awesome. People think that, you know, you get so run down. Well, and I don’t mean this as a disparaging comment, but maybe it gets run down because your meeting suck. Have a fun meeting, right?
Michael: Touche. Touche.
Micah: I like seeing my clients. We have a personality requirement for clients to come on, right? I have to like them.
Michael: I was going to say what’s your personality requirement? Just you have to actually like them?
Micah: Yeah. So I have three P’s when it comes to…and I say “I,” this is a firm thing, but we have three P’s when it comes to bringing on a client. They must be personal, productive, and profitable. So personable, I have to like them. Absolutely. Now, this is it, all these are two-way tests. They have to like me. I mean, when you’re going through the financial planning process, you’re going to talk about some heavy things. Money is emotional. And I know sometimes as advisors we like to, you know, live in our spreadsheets, but this is an emotional thing for clients to go through. We’re talking about one of the biggest transitions of their lives, and we’re planning for horrible events to happen in their lives, like death and disability, right? And not everyone is excited about that conversation. And if the client doesn’t like you, they’re not going to want to have a good conversation about that. So we absolutely spell it out before they sign our contract that says, “Nope, this has to be a likeability thing. You’ve got to like us.”
Michael: Okay, interesting. And just mentally keeping track of all these people?
Micah: Do you have trouble keeping track of your friends?
Michael: No. Not too bad. Maybe the ones I haven’t seen in a little while, but, you know, generally, not too bad.
Micah: Right. But you like them, right?
Micah: So if all of a sudden your calendar was filled with people that you wanted to see, do you think it makes it a little bit easier to remember their details?
Michael: Sure. Absolutely.
Micah: Now, I’m not trying to demean it in notes. I mean, notes are huge. Notes are required in our CRM for anything that you do. Period. If a client calls and we miss a call from a client, if you just leave a message, I mean, we get a card from a client, anything, notes have got to be in the CRM. And that’s one of the really important things when you’re doing like return phone calls or in our pre-appointment checklist, we pull the recent notes so the advisor can read all that stuff. What was the inter-office communication between the client and what was the advisor’s communication with the client? And all of this just helps jog your memory to make sure you’re really on top of it when you meet with those clients.
And I’ll scan those. You know, I’ll grab that pre-appointment checklist, I look at it in advance of the meetings, but I’ll grab it in kind of that 15-minute break and I’ll reread everything right there just to make sure, you know, I got that good frame of mind and I know where I need to be for those appointments. It sounds crazy, but it’s really not as hard as you think it is if you just do a little bit more, a little bit more, a little more.
Michael: Yeah. Right. Because, again, as you said, like, you didn’t wake up one morning and say, “I’m going to start doing seven meetings a day for five weeks,” you, I guess, acclimated to this over time and have crunched them together more over time.
Micah: You know, and I did this process painfully, by the way. I don’t want to shortchange that. Every time we do a change in my schedule, I kind of freak out because I’m like, “What do you mean I’m not going to have an hour and a half for an appointment?” Or, “We’re going to have an hour and 15. This gives me less break time. This gives me this,” right? I have all those mental anxieties about it. But what if it works? What if you can make a little change that makes such a dramatic impact in the lives of your clients and in your own personal life, is it worth a shot?
Michael: Well, I mean, you just get down to your…you have 160 clients, you’re seeing them 2 to 3 times a year, which is a fairly intensive meeting schedule by most people’s standards, and you’re cramming in 2 to 3 meetings a year for 160 clients in 4 out of the 12 months.
Micah: Yes, sir. Yeah. Sounds great when you say it that way.
How Micah Created His Own Niche Website [39:10]
Micah: So our firm, the way our firm was started back by my parents, my father and mother started our firm back in the ’80s, I would describe us as a multi-advisor lifestyle firm. We have four advisors, as I mentioned before. My dad, who started our firm, and my sister, they work together as a team. Then there’s myself in the Anchorage office. And we have another advisor down in Florida that’s part of our firm as well. And my niche is working with federal employees across the nation. And we use great online marketing, content-based marketing to attract clients on our website, plan-your-federal-retirement.com
Michael: Wait, let me just catch that, plan-your-federal-retirement.com. Like, this is your website, this is…like, this is the firm’s website or this is separate from the firm that’s just literally for planning for federal employees?
Micah: Well, this is the firm’s website, but it’s separate. So the firm’s website is shilanski.com because our firm is Shilanski & Associates. This website is focused just for federal employees to plan their retirement, right? Kind of hence the name. And all it’s designed to do is to educate, give great content information, great planning tips out there to federal employees.
Michael: Okay. So what kind of content are we talking about when you say, “I give great planning tips?”
Micah: Yep, good thing. So all of what we’re focused on is retirement benefits with a planning angle, right, because we’re financial planners. So what we want to do is take the complexity of federal benefits and make it easier for people to understand, and make it easier for them to plan their own retirement. And so what we’ll do is we’ll take things out there like survivor benefits, or maybe net versus gross. Here’s a simple one that advisors we overestimate all the time is the difference in net versus gross. But we have a lot of page traffic on this particular page just explaining of what the pension is actually going to be.
So federal employees, one of the classic mistakes a federal employee makes when they’re planning their retirement is they get their agency estimate and they look at that top line and says, “Wow, my pension is going to be $2,800 a month. Shoot, you know, that’s close to my paychecks. I’m doing pretty good, right? Or one of my paychecks.” Well, they’re looking at the gross number from their retirement estimate and they’re looking at the net number from their paycheck. Ooh, these are different, right? You have survivor benefits, you’ve got health insurance, you’ve got taxes, you might have, you know, long-term care inside of there, all these deductions. So we take the things that we talk about with planning with clients and we break them down for federal benefits, but each one of the pages, we write for keywords. So we do research into, “What are people searching? What are they googling? What are the keywords?” And we craft our content around those keywords so we can get better SEO traffic.
Michael: So when people are actually searching for net versus gross federal pensions, like, your material is coming up.
Micah: Yep, exactly. So, you know, we target our keywords. You know, we started doing this, I think we started our website back in 2009 time period, and it’s really grown a lot. And I think right now we have over 30,000 unique visitors a month on our website, which I’m happy with. I think that’s a good number.
Michael: Yeah, like, 30,000 unique visitors a month. Because I’m just imagining this in the average advisor’s context, like, imagine you have a firm and every day 1,000 people walk through your lobby. This is probably going to be good for business, right? Not everybody who walks through your lobby is going to, you know, sign up and give you their life savings, but if 1,000 people walk through your lobby every day, your odds are good this is going to go well for you.
Micah: So kind of putting that in perspective then, right? So this year, the first 2 weeks in January, we’ve had 11 requests for appointments from people. And we charge for our initial appointments, too. And they know this. And so we have had 11 people have requested for initial consultation with our firm in the first couple weeks of January. A lot of that is based on web traffic.
Michael: Interesting. So, like, there’s places on the website that, you know, promise them like, “And hey, if you want more help beyond this technical article, like, you can call Micah and he will help you.”
Micah: Yeah. And, I mean, check out the website, it’s not salesy. I mean, we give it away. We give away tons of information on the site there. You know, if I will, Michael, not to say we’re writing to your level, you have so much more content, but you don’t hide stuff. I mean, you write tons of great content for advisors, right?
Michael: Yeah. No, it’s the thing that I think people have always missed. I mean, frankly, not only do we write tons of content for advisors and it’s long and we give away everything and we don’t hold back, like, we get clients from the content I make for advisors, even though it’s nerdy and long and technical and for advisors. Because at the end of the day, like, you know, I think Google is a great searching engine. It doesn’t care who’s searching, it just tries to steer them towards content. And the reality, like, you can give away everything and basically one of three things is going to happen. You know, someone is going to come read it, figure out what to do, take that information and do it themselves. So more power to them. If they’re going to do it themselves based on what they read on the internet, they weren’t going to hire you anyways. So you may as well help them along.
They’re going to read it and say, “Oh, crap, I just don’t want to deal with this right now,” and procrastinate, which is, you know, probably 90% of the population, or they’re going to read it and say like, “Oh my God, there’s more to this than I realized. This is more complex. I have a lot of money at stake, I think I need some help. Who should I contact for help? Oh, probably the person I just read who clearly knows everything there is to know about this because they just wrote a ginormous article that puts everything out there and doesn’t hold back. If I’m going to get help, this is who I want help from.”
Micah: Yes. And I think so often us as advisors want to hold back because we have this, you know, secret sauce and we can’t tell people what’s going on. Absolutely not, tell them everything. Because, as you said, if they’re a do it yourselfer, they’re going to go do it themselves. And great, I wish them the best of luck, “Here’s some good information, knock yourself out.”
Michael: And the truth is, and we’ve certainly found this as well, even the people who are ultimately going to go do it themselves, they still may refer you to other people who won’t do it themselves, right? You know, if you think of like the average workplace with some water cooler talk, like, there’s some person who knows more than everybody else, who tends to be the go-to person, and then that person gets tired of answering everybody else’s questions and eventually starts sending them somewhere else for information. And if that person sends them to you, like, your best center of influence referrer can be a do-it-yourselfer that doesn’t want to do it for everybody else as well and sends people to you instead. And we’ve seen that come up in leads we’ve gotten through the website. Like, that was basically their pathway.
The Seminar Marketing Strategy Micah Uses [46:10]
Micah: Yeah. And I would say case in point, it’s the same with us. One of our best people that we do in-person seminars for federal benefits as well and one of the best people that helps us fill those seminars is an HR person for the government that is a do-it-yourselfer in a great way, but they love the content we put out, and they help us, you know, let people know about the seminars that are coming out. That’s great, right? They’ll never become a client, but they would love to help us because they’ve gotten such good content.
Michael: So talk to us about these in-person seminars that you do. Like, is this basically, the sales process is like you read me on the website, and then if you’re interested you go to one of my seminars, and if you want that you come work with me or are these, like, parallel channels, you can find me online through the website or hey, we also do some local marketing with seminars and, you know, get clients in all the different ways so we can get clients?
Micah: You got it. It’s the latter.
Micah: So there’s multiple ways that people can find us. One, of course, is online. It’s funny the way this breaks out. Almost every single year a third of our clients are online, a third are referrals and a third are seminars. And I go back over the years and it’s just consistent in that third, a third, a third. And so we’ll do two in-person seminars, two sets of in-person seminars, one in the spring, one of the fall. We do two days back-to-back. Each day is a new seminar. And we cap it at 50 people. We officially cap it at 40 people because every year we have people that come that weren’t signed up and says, “Hey, I noticed it was full but I came anyways.” So what a problem to have.
Michael: But they are prospects, it would be nice to not actually turn them away, so let’s just plan for this. Because you know they’re motivated because they showed up.
Micah: Yeah. Yeah, they showed up. And so it was like, “All right, well, you know.” And we do it during the day, and so they take the day off of work in order to come to our class. And it’s an eight-hour benefits class, and it is not sales. In the first couple minutes…
Michael: It’s an eight-hour seminar?
Micah: It’s an eight-hour all-day seminar. You bet.
Michael: And so what is…like, what is this on? What are you teaching? What are you showing them?
Micah: Well, it’s all about federal benefits, right? Federal retirement, again, is where we’re specializing in. And so we’re breaking down their benefits. So for the first part of the day, number one, you know, is, you know, we find out what their agenda is. Why did they come? What’s important in a seminar for them? You know, what information do they want to get out of it? Because, again, just like in an in-person client meeting, I want to make sure I get my client’s agenda, so I ask for that. Same in a seminar, I need to make sure I get the attendees’ agenda to make sure we answer these questions. So we get their agenda. Then we go over, you know, a little bit of kind of what’s the theory on retirement, reality on retirement, then we start diving into their benefits. We go into their FERS benefits, soup to nuts, how does it work, what are the caveats, what are the exceptions, what are the common mistakes that are made on benefits estimates, even from HR. Not knocking HR, just, you know, mistakes happen.
Michael: You know, I hear it’s a slightly large company, so probably gets a little complex. A few HR mistakes may wind their way in from time to time.
Micah: You know, and HR is not trained. They quit training retirement benefits to human resource people years ago. So we get HR people that call us frequently and ask us questions because they don’t know how to handle it. So we’ll go through the FERS, then we go through the survivor benefits, we go through Social Security, the TSP. Depending on the questions, TSPs before or after lunch. Then we’ll hit lunch and we wrap up with a lot of the insurances. So we’ll finish on TSP, life insurance, health insurance, long-term care. We talk about taxes. That’s always fun to talk about after lunch, and estate planning.
Michael: And so do you charge for this seminar?
Micah: You know, I get harassed from other people in my mastermind because I pretty much charge for everything else, but no, this we do not. The seminar is free. We have talked about putting a price tag on it for people to come, but we haven’t done that yet.
Michael: Okay. And how do you market for it? Like, how do you get 50 people in a room in Alaska coming for sessions like this?
Micah: So what we have now, again, as you said, it’s a nice benefit having a lobby with 1,000 people a day walking through it, right? So we have an active mailing list of about near 12,000, 13,000 people. You know, I say active because we kind of call that list every couple of years and try to weed out the people that aren’t active to get a higher response rate for our list. So it’s all email marketing.
And then we’ll notify different agencies that we’re having the seminar, and so they have an opportunity to let their employees know as well. So one of the things that OPM does is, on every agency, someone is responsible for training. So OPM goes out there and picks someone who’s responsible for federal benefits training. The interesting part is most of the time, the people that are selected have no idea they’re responsible for benefits training. So we call them and say, “Hey, we got your name from OPM, it says you’re responsible for benefits training.” They’re like, “No, I’m not.” And then we guide them to the website, and sure enough, it’s their name and their picture and, “You’re responsible for benefits training.” “Look, I have no idea.” It’s like, “Oh, well, you know.” And then we’re like, “We just want to let you know about that, and we happen to have this seminar in this area, here’s the information.”
And so even in an environment in which doing seminars for federal employees has become a lot more restrictive because we’ve had some bad actors in there create problems, we’re still able to fill our seminars and have people come in because it’s not salesy. And we get a lot of referrals to go there.
Michael: I just love the nature of that, like, the focus that you can get by targeting this area. Going right down to like, “How do you get leads?” “Well, we look up at OPM who’s responsible for the benefits training and then we call the people who’s responsible for benefits training. We’ve learned that they usually don’t know that they’re responsible. So we show them they’re responsible and then we show them we have a solution for the responsibility they’re not fulfilling, and lo and behold, they pick us.” Like, it seems both intuitively obvious and a channel that I would venture to say no financial advisor in history has ever pursued because you wouldn’t have any idea to look and pursue that until you went pretty deep into focusing around this niche.
Micah: Yeah, there’s a lot of details about federal benefits that are like that. And again, it’s a big employer, so that means there’s a lot of confusions at different levels that you can help sort out for people.
Michael: Interesting. And there’s also a fairly deep market opportunity because it’s a big employer, as you said.
Micah: You know, and it’s funny you think about that. And I can remember when we were thinking about going to a niche and I was freaking out because, you know, there wasn’t enough federal employees and it wasn’t a big enough niche to work in. So I look back at it and say how ridiculous I was when I was picking a niche. There’s over 2 million civilian federal employees, but I thought it was too small.
Michael: Right. Interesting. So you’ve got clients that come in through the seminars, clients that come in because you’re doing the online activity and the clients that are coming in for referrals, so I guess the only other question I have, like, on this seminar end, like, who signs up for…like, who engages you for planning after you already just spent eight hours giving it to them for free?
Micah: The people that are serious about getting their planning done. So a couple of motivators that we give at the end, we pass out an evaluation. We ask everyone to fill out an evaluation, even if you don’t want an appointment, leave your name off, but let us know what we did right or wrong. How can we improve the presentation? If you’re interested in working with us, if you think we know what we’re talking about and you want help then put your name down and we’ll give you a call. Now, what we normally do, if you just jump on online on our website and submit a request for an appointment on there, we charge $500 for our initial consultation, to sit down for an hour and meet with us. Because you attended the seminar, if you set an appointment within the next, I think it’s three weeks, three weeks or a month, if you set an appointment within the next three weeks then we’re going to waive that consultation fee. If you wait after that time, we’re going to charge you the $500 to come in for the appointment.
Michael: Whereas online-based leads just from moment one, you’re going to pay $500 for the consultation.
Micah: Yep, absolutely. And it’s very clear online that there’s a charge for it. And federal employees don’t have a problem with this. I think people don’t have a problem with this if they know they’re getting good value. And it’s a 100% promise that if you don’t think it was worth 500 bucks, you don’t owe a dime. If you do and we added some value then okay, this is the cost.
Michael: Yeah. I mean, there’s two things that strike me about this. You know, on the one hand, and this is a phenomenon I’ve seen as well, like, particularly when you’re dealing with online leads, you know, in a world where, if we go with this analogy, like 1,000 people strolling through your lobby every day, you know, first of all, all a bunch of them are going to stay. And that’s fine. Lots of people, you know, window shop and browse. You just need one or two every day would be fantastic. But at the same time, you know, if too many people stroll through your lobby, you’re going to get some people who start kicking the tires that just aren’t qualified or aren’t a good fit. If you try to talk to all 1,000 people, you could literally stand in your lobby all day long and just talk to the 1,000 that go through your lobby and you ain’t getting anything done. And you still might not actually get any more clients out of it. You just wasted your time talking to a whole bunch of people who weren’t actually ready and serious to do business.
And so, like, we found this effect as well. The more successful you are with online marketing, the more you have to start creating filters to push non-qualified people away and essentially make it a little bit harder for the people who are a good fit to come through. Because that way the only people who come through are a good fit and highly motivated. And you screen out the rest so you don’t waste too much time with people who aren’t going to work with you anyways.
Micah: And we found that out when we first started doing these online requests for appointments. We were getting a ton of them because they were all for free, but we had like a 40% no-show rate, right? And so they’re taking up time on the calendar, they’re no-showing. And so, we painfully went to charging for them, starting at $200. And yeah, it’s amazing that immediate qualifier of what happens. And then we would just slowly raise the rate ever since then.
Michael: Interesting. And how do you actually collect the fee? Like, do you literally bill them in advance? Do they come to the meeting and then you invoice them at the end, and, you know, if they didn’t like it they won’t pay, and that’s part of the guarantee structure? Like, is it a pay upfront or a pay after?
Micah: At this point, that makes it easier.
Micah: I’m just kidding. No, what we do is we…if they’re happy to sign up we have a one-page contract, they’ve got to sign the contract first that obligates them to pay if they found value. But we don’t collect payment until after the meeting. We get all their payment details in the system. We would take credit card. So it’s only via credit card that they can pay. As so we get their credit card information, we get it inside the system. That’s there. Then as we’re meeting with them kind of about that 45-minute marker then I’ll start kind of wrapping up the meeting. And it’s in there I ask them the question that, you know, did they find value in this meeting? And I don’t say, “Do you think it was worth $500?” I say, “Did you find value in this meeting?” And they say yes or no. And if they say yes, I say, “Great, well, then what we had talked about was a $500 initial fee. Is that okay if I charge your card because you found value in this meeting?” And they say yes and boom, there we go.
Michael: Interesting. Interesting. And you’re, I guess, driving a non-trivial amount of revenue just from that, given the volume of leads and conversations coming in.
Micah: Yeah. It’s been a great thing. We’re actually looking for another advisor, believe it or not, because of the traffic that we’re generating. We kind of need some more help with this. What a great problem to have. And we get a good conversion rate. You know, I think we’re about a 30% conversion rate on these initial prospect appointments that actually become clients. I think that’s pretty good because we charge a decent fee for our financial planning process. And when someone comes on as a financial planning client, we don’t rebate that $500 or they don’t get credit for it towards their financial plan, it’s an additional cost.
Their Fee Structure And How They Are Able To Charge Above-Average Fees [58:04]
Michael: Okay. And so, what’s the rest of the…just the cost structure for the business? So there’s this $500 fee upfront for the consultation waived if you came through the seminar in a timely manner, then what does the rest of the fee structure for the business look like?
Micah: Also waived for referrals. I should mention that, too. So if a current client gives us a referral, we do waive that initial appointment fee. So let’s say someone comes on, they hire us, we charge a financial planning fee, generally starting around $4,000, and it goes up from there, depending on the complexity. We have an all-or-nothing requirement now, so we do everything or nothing. There’s no middle ground.
Michael: Meaning like, we’ll manage all of your assets or nothing or, like, you have to do planning and assets or nothing? Like, what’s the all that constitutes all?
Micah: Planning and assets. We have to see everything. We have to help with everything. You know, you don’t get to say that, “My estate planning is already done.” Nope. So sorry. We’re going to go through all that. You don’t get to say your investments are good to go here. Nope, we’re going to look at all that. We’re going to help with all of that. If you don’t want our help with…because our clients know that your entire financial life is connected, and they want someone that’s going to help with all these different pieces. And Michael, we know this, right? If you pull one thing, it affects something else. And so, you know, we had a couple of issues with clients before we had this all-or-nothing requirement, and it really kind of pushed us to then saying, “No, we need to be all-or-nothing. We’re going to help with the entire picture.” That means, you know, from the estate planning, risk management, retirement income, investments, tax planning, whole nine yards, we’re in there.
Michael: Okay. Interesting.
Micah: We charge a AUM fee as well.
Michael: Okay. And then the AUM fee comes next. So what’s the AUM fee structure?
Micah: One and a half to 2%.
Michael: Okay. Like, yeah, 2% it’s smaller, tiering down to 1.5% as it grows?
Michael: And what’s a typical client for you in the first place?
Micah: Well, I would say by my numbers, I manage about $130 million in total assets, $80 million of which is discretionary. So I guess that’d be around what, $700,000, $800,000 per household size?
Michael: Okay. Okay. So, you know, 1.5% to 2% in that range. So how do you stack your fee up to others, right? Like, the proverbial rule of thumb is 1%, now granted, that’s 1% on $1 million. Most people have higher fees below that and your average client is lower than $1 million. But, like, how do you look at fees and fee comparisons?
Micah: Oh, I sure hope we’re on the higher side of that.
Michael: And so that’s good for you to be charging more than the average advisor?
Micah: You know, I think this fee…sorry, I kind of baited that out there.
Michael: A little bit.
Micah: I think this fee conversation is totally overblown in our industry because it’s never put in perspective, right? So let’s take an example. Let’s say you get a hotel room for $500 a night. Is that a good deal or did you get ripped off?
Michael: I don’t know. It depends on the hotel.
Micah: Aha, there we go. It depends on the hotel, right? If it’s a Super 8, yeah, okay, I’m going to so you kind of got ripped off. If it’s the Ritz-Carlton, maybe that was a pretty good deal. So we have to put price in perspective. That’s there. Our financial planning process is different. I think we add a lot of value in the questions in the way that we go through things. Our clients see that value, and we charge a premium for that. You know, premium service at a premium price.
We’re very transparent on our fees. Our clients know exactly what they’re paying. And when we onboard a client, Michael, it’s not an…I don’t think it’s enough to say, “Hey, you’re paying…” You know, my average fee is around 1.75%, so, “You’re paying 1.75%.” No. If it’s 1 million bucks, I’m going to say that $17,500 is that fee. Because I want them to be very clear what they’re paying us and the value that we’re providing. And about half of my clients, new clients that I bring on come from other advisors that are paying the typical 1%. So they know that they’re paying more, but they see the difference in our service. They see the difference in the planning that we’re doing, and they’re happy to pay it.
Michael: Interesting. And I guess to me that’s part of the key around, this is what happens when you have a niche, when you have a specialization. It’s like, “Oh, if you don’t like our 1.75% fee, you are welcome to find the other expert in federal employee retirement benefits in Anchorage to help you. Good luck with that.”
Micah: Yeah. So can I share a quick story with a client that actually that kind of happened with?
Micah: I got a call or the office got a call, and it was a prospect calling in for an initial appointment, and we were charging a fee, I think it was only $400 at the time. And I happened to walk by the operations person that was grabbing the phone call, and I could tell was a really difficult phone call. And so I kind of listened for a quick second. I kind of went over there and kind of listened a little bit more. And I didn’t recognize the person who she was talking to, but I could tell he was being very argumentative. And so I said, “What’s going on?” So she put it on mute real fast and explained that, “Hey, this guy called in, he doesn’t want to pay the $400 fee for an appointment.” I said, “Okay, where did he come from?” She said, “He just called us out of the blue.” And he’s really given fits to our operations person. So I said, “All right, well, put him on hold and I’m going to pick him up.” Because one of the things that I don’t tolerate at all is my team getting grief, getting negative feedback, having problems, right? I always tell my clients, “If there’s a problem, you come to me. This is not what my team deals with. This is my job.”
So she put him on hold, I picked up the phone, said, “Hi, this is Micah.” And he was kind of put off, you know. And Bob was like, “Hi.” And I said, “Well, I heard there’s a little bit of a disconnect and there’s a problem and I want to see what I could do.” And he said, “Well, I know you charge a fee and I don’t want to pay $400 to come see you.” I’m like, “Oh, great, you don’t have to.” And he said, “What?” I said, “No, you don’t have to pay the fee. I’m sorry for the confusion.” And he goes, “Oh, that’s great.” I said, “You just don’t have to come see me. There’s no obligation here.” And he said, “What are you talking about?” And I said, “Look,” I said, “I’m sorry, I don’t mean to be, you know, super cheeky or aggressive with you here, but I don’t like the fact that it sounds like you’re giving my team member a very hard time. I don’t think we solicited to you in any way. Did we? Did we call you? Did we email you? Anything like that?” He’s like, “No.”
Michael: No, you called us out of the blue asking for us to see you for free.
Micah: Right. And I said, “Look, do you walk into the store and take things off the shelf and leave?’ And he’s like, “No.” I said, “Well, this is the same thing. This is our intellectual property. We charge for it. It’s okay, you don’t have to come see us. It’s okay.” And there’s this long pause, and he goes, “My wife wants us to come see you.” And I said, “Well, I’m not sure this is going to work out.” He says, “Can you just answer me, Micah, why do I have to pay you this fee when I can meet with three other advisors that don’t charge anything?” And I said, “All right, Bob, I can answer you that question. Go meet with those other three advisors then come meet with me. And if I don’t tell you anything new, if I don’t add any different value to the conversation than those three other advisors did, you don’t owe me a dime. But if I do, you’re going to pay my fee. Does that sound fair?” And he said, “Yes.” And he came in a couple months later and with his wife and we wrapped up the meeting. And kind of at 45-minute mark I said, “So how was your meeting with the other advisors?” And his wife looked at him, and they looked at each other kind of shocked that I remember.
Michael: That’s what happens when you have a good CRM.
Micah: That’s right. These are notes are for, right? Absolutely. Because we put all of this stuff in the CRM. And so I just read it and said, “Look, this is…you know, did you get value out of our meeting?” They said, “Yes.” I said, “Okay, well, our deal was if I told you something those other advisors didn’t say, then you were going to pay my fee.” And his wife says, “We’re happy to pay the fee.” And she’s like, “And we would like to become clients as well.” I said, “Well, let’s talk about that.” I was like, “You know, I’m not sure this is going to be a good fit.” And she was like, “What do you mean?” I said, “Look, I like you, you’re great to talk with. You know, Bob, unfortunately, I do not tolerate people giving my staff a hard time. This is a deal breaker for me.” And he sat back in his chair and he said, “Micah, I apologize. I can be gruff at times. I will apologize with your team member, and it’s not going to happen again.” And his wife looked at me, she says, “If he causes you any fits, you call me.”
And actually, we brought them on as clients, and they’ve been great clients ever since. But it was that difference that was there. And I said, “Look, go meet with the free advisors then meet with me, and if there’s no difference, you don’t owe anything.” And when you can own that and you can embrace that as your different factor then it’s a game-changer, Michael.
Michael: Yeah, that to me is the striking thing. That, you know, for so many of us, like, you know, why should I work with you versus any other advisor? Like, I mean I’m not trying to knock our community, but I feel like for a lot of us, our answer is basically, “I do more better financial planning than the other advisor.” And, like, there’s no way to prove that. It may not even necessarily be true. And clients have absolutely no clue how to evaluate that anyways. And the odds you actually discover something that another reasonably smart comprehensive planner, you know, wouldn’t have discovered, like, your odds aren’t great unless you get pretty deep into a specialization. And if you’re sitting across from one of those clients, you know, odds are pretty darn good that you’re going to know some things about their situation that other advisors don’t just because no one else is going to do an hour of prep research before meeting with a prospect, and you will know all the nuances out of the gate because this is your specialization. These are all the people you work with.
Micah: You know, and if the only…and yeah, I agree 100%. And if the only thing you’re competing on is price, how are you going to beat Vanguard and now all these zero-cost ETFs that are coming out? I mean, how are you going to beat zero? So, I mean, we really as advisors, and I get so frustrated with this, I think that we push ourselves to a lower price when really we should be stepping back and talking to our clients and really finding out if we’re adding value to them in their life. And if we are, it’s okay to charge for that. They should know what it is. It should be very clear and transparent. Other than that, if the client came in thinking that you’re adding the value of the price in which you’re paying, why is that not okay? It’s okay to charge higher than an average fee.
Michael: Yeah. And again, to me, like, there’s…as you said, there’s so much fee focus. There’s so much fee angst out there right now. And like look, no one should be charging a premium price for substandard services. Like, that’s not good. But, you know, there’s nothing wrong with charging a premium price for a premium service. I think the trap, frankly, that some of us get into is, as you said, like, we may think we’re a little more premium than we actually are sometimes. And, you know, if you’re not sure, try charging an above-average fee and see how many conversations you get with fee push back. Because when you’re truly differentiated, particularly into some specialization niche like this, like, you can’t be fee-shopped because literally, no one else does what you do. How are they going to compare?
Micah: Right. And this is, again, but I want to spend this a little bit is say, it’s not just what does the advisor think is valuable, it’s what the client thinks is valuable, right? It’s, how are you helping them? If you take care of the client, the client will take care of you. How are you adding the value to them? Let that determine what your fee is going to be. And if you raise it and get pushback, maybe you need to change your value structure and how you have things set up to make sure clients are happy with paying your fee.
Michael: And again, I feel like, for a lot of advisors, the challenge becomes like, you know, “What do I do that’s so different?” And to me, like, you are now starting to paint that picture. Like, you know, “Did you know the average federal employee misreads their statements because they look at the gross of their pension and don’t realize they have to net out survivor benefits, health care and the rest off of their statement?” Like, no, you wouldn’t know that unless these are the people you regularly work with. And that’s the point.
Like, I know you have some stuff that we’ve covered a little as well around, like, the rules for voluntary contributions and to old CSRs plans and enrolling them to IRAs. And, like, there’s…you know, almost any focused area ends out with a couple of specialized planning opportunities, esoteric loopholes, things like that, but just you know off the top of your head because that’s what you do. No one else knows because it’s not what they do, so why would you know? And it’s being able to have those kinds of conversations ultra-specialized to a particular type of clientele that suddenly you move into the realm of, “Good luck price-shopping me because good luck finding anybody else that knows as much about people in your situation as I do.”
Micah: You know, and you brought up the VCP, and not to, you know, sound too arrogant about this, but I literally wrote the book on the VCP process. And, you know, when you do something like that and it’s a very unique benefit for a very small subset of federal employees, just as you said, I mean, that’s really a…makes you stand out compared to everyone else because you know those rules in and out. And as you said, good luck finding someone else that can actually do it.
Michael: Basically, like a giant backdoor mega-Roth deal? Like, it’s pretty lucrative…
Micah: Oh, it’s phenomenal.
Michael: …for the people who can do it.
Micah: Yeah. Yeah, if you have the money to do it. There’s the catch, right? It’s a phenomenal thing to do. And one of my clients actually, if I may, a quick little story and kind of one of our differentiating factors out there. I had one client we brought on. This is before I had an all-or-nothing requirement. And she was a really big Vanguard fan, so we were only doing the planning, but she could do the VCP, the voluntary contribution plan. So we were going to dump a whole bunch of money inside, and that was the plan, and she was going to do it all at Vanguard. And I was a little worried. I said, “Look, I’m concerned at how Vanguard is going to handle this,” right? This was back in 2010, so they’d just repealed the limits on the Roth conversion income. And so I was like, “Look I’m a little concerned how Vanguard is going to do this because, you know, you have to write things on the form, Vanguard doesn’t really do that on the OPM forms.” And so I dictated out a letter of exactly what had to happen and where I thought Vanguard was going to make a mistake.
And I’m not ragging on Vanguard. You know, Vanguard’s good, but this is just something a little different. And I sent it to her, and sure enough, two months later, she did the VC transfer on her own. And she came into my office, and she was hot. She was mad because it got screwed up and it was my fault and she was going to let me know about it. So we came into my conference room, and she went over and she took my chair, right, and sat down where I sit and put me where the client normally sits, and she let me have it about how I screwed this process up. And she took out that letter I gave her and tossed it across the table to me and says, “Look, at this, you did it wrong.” And again, you’ve got to let clients vent, especially when they’re mad because you’ve got to find out what their real issue is.
And she calmed down and I said, “Ma’am, is it okay if I…you know, can I say something back?” She says, “Yes.” And I flipped the letter back round to her and I pointed to the paragraph I said where Vanguard is going to screw it up, and I read to her what that paragraph was and told her. She goes, “Oh my gosh, Micah, Vanguard totally messed this up.” And because it was a complicated transfer, it wasn’t just moving money from one account, you had to do some kind of unique things along the transfer, especially back in 2010.
And then all of a sudden, and I love using this as an example when I talk with clients and they now ask me what’s the difference in us versus Vanguard or these other companies, and it’s what this client told me. And after this, we got it all fixed for her. There’s no tax issues, and then she transferred everything over to me, a couple million bucks from Vanguard over to us at our higher fees. And I asked her, I said, you know, “Why did you do this? You were loving Vanguard. They made one little mistake, but we’ve cleaned it up. It’s really not a big deal. Why did you do the transfer?” And she said, “Micah, because now I realize something working with your firm.” I said, “Okay.” She said, “Because Vanguard is vanilla, you know, and I love vanilla ice cream. And if you want a scoop of vanilla ice cream, I think they’re going to be phenomenal, but if you want the hot fudge, if you want the sprinkles and the whipped cream and the cherry on top then that’s not Vanguard, that’s you. And I want the whole sundae. I want everything that comes with it. And I know that’s the difference that you offer versus Vanguard.”
Michael: It’s a powerful statement for the future, particularly where we are now, where Vanguard just doesn’t do the usual Vanguard thing they’ve done in the past. Vanguard has an advisor division with human CFPs charging 30 basis points and $100 billion under management. You know, they’re now doing vanilla financial planning. And I don’t mean that to be pejorative to them, to call it vanilla financial planning, but, like, I think your vanilla analogy was good. Like, people who just want the baseline, like, “Okay, we’re going to do some retirement projections and make sure your portfolio aligns with your goals,” like, they’re going to do that for 30 basis points. So what else are you doing that’s so differentiated, right? I think the scary thing that we’ll find for some advisors is, if that’s your baseline planning process, charging 1% is going to become a premium above-average fee.
Micah: Exactly. And I think that’s the thing that we need to focus on advisors is where is that extra value add? And I love that Vanguard is doing it out there for 30 bips because it’s really going to make a very clear distinction between the difference in services that are offered. And you know what? Vanguard fills a great niche of people that just want that. And I love it. I think it’s phenomenal. And it allows us as advisors to do things different to help clients.
Michael: But it’s an interesting phenomenon to say, you know, “What are you doing to justify the extra 70 bips you’re going to charge above Vanguard for the planning process Vanguard already provides?” And, you know, that’s an answerable question, that’s a surmountable challenge, but you’re going to have to actually have a good answer.
Micah: Yeah. I agree.
Michael: And again, to me, and part of the reason that we, you know, tend to pound the drum out on this so much, like, you know, I guess you can just try to be super amazing, brilliant with this uniquely innovatively crafted experience that just gives clients an otherworldly outcome that makes them so excited to pay 1% and create a thing that no one else has figured out how to create, or you can just get really specialized to some particular group and have no competition, and then you don’t have to care about the rest. Like, that to me is the appeal of this direction, right? Like, you don’t have to get price-shopped against Vanguard because Vanguard literally doesn’t do what you do. So you can try to be better than Vanguard to try to charge more, or you can try to be different than Vanguard and charge more. And, you know, different is easier than better to me. Hopefully, the different is also better, but, like, different so that you don’t have to compete head-to-head on better. It’s an easier competitive opportunity.
Micah: Yeah, I agree. Yeah, being different is a wonderful thing, and it helps the clients so much because now they can pick an advisor that suits their needs, right? And that’s what this is all about is helping out the client. And this makes it really clear who you can help best. Yes, we can help everyone a little, but who you help the best.
Why Micah Had To Increase His Efficiency [1:17:34]
Michael: So talk to us a little bit about what happens in the other eight months of the year. You’ve built this, you know, business around four in and eight out. Like, I think you’ve managed to top Matthew Jarvis because, you know, he was only three or four months out, if we add up all his vacation days. Like, what do you do with this time, and what does this look like for you in practice? Like, where are you going with this?
Micah: That’s a great question. Well, I can talk a little bit where it came from and then a little bit of the kind of the turmoil we’re in now and then maybe what the future is of this. So we started this process back in 2007, the book “4-Hour Workweek” came out. And, you know, Michael, I was working so much at the time. I read the title and I thought it was a four-hour a day work, not four hours a week. And I just thought it was a bunch of BS. And my coach recommended it to me. And I went off. And I was working, like, you know, 80 hours a week. There’s no way that this guy is making all this money working four hours a day, blah, blah, blah. And my coach corrects me, Joe Lukacs is his name, and he’s like, “Micah, it’s not four hours a day, it’s four hours a week.” And I completely lost it.
Michael: Like, “Okay, so you just took my BS meter and, like, upped it by a factor of 10. Got it.”
Micah: That’s right. There’s no way that this is happening whatsoever. What a bunch of BS. And my coach was patient with me. And he got done. And he’s actually the one that sent this to me first which really changed my life. He said, “Micah, what if it works?” And that was a powerful question because I was looking at all the flaws in it and I wasn’t looking at the potential of what it was.
And then we kind of sat down and looked at…you know, I was married at the time, and my wife and I looked and we wanted to have kids in the future, of, “What does our life look like if I’m working 80 hours? There has to be a better way to this. There’s no quality of life that’s going to be there.” And so we started for fun, and it was painful, the process of really switching that in my mind, of saying…you know, I was always raised with a…it’s the butt in the seat mentality, right? The more time I spend in the office, the more successful you’re going to become. And really having to change that. And we started in small steps, like, changing that. First, it was like half a day a month and then it was like a day a month out of the office. I mean, really small steps and continually tweaking things to get better. And I realized that being out of the office was a forcing mechanism, and it forced me to be better at what I was doing when I was in the office.
And that was going really good. And we had our first child, Gabriel, and we had our second kid, Lana, and we’re still tweaking with that. You know, I was taking a couple months out of the office at the time. And 2013 came around, and this went from a fun thing to do to now a must. In 2013, our third child, Avianna, was born. And when Avi was born, it was a normal pregnancy. Everything was fine right up until delivery. And when she was born, she wasn’t breathing. And she had hypoxic-ischemic encephalopathy, which is a very serious brain injury, a lack of oxygen to the brain. And so we were in the NICU for well over a month.
And it must have been, like, the second or third day we were in the NICU and still stunned by everything that was happening. And in the NICU generally, if you’ve ever been there, there’s generally no windows, right? So have no sense of time. And Avi was under 24/7 intensive care. There was always a nurse with her throughout the day. And in the second or third day, the head neonatologist walked up to us and said that, you know, “You need to prepare yourself because your daughter is not going to make it.” And you want to talk about a devastating statement, right? And I wanted to deck him. I wanted to cry. You know, all of these range of emotions. And my beautiful bride, Kelly, she looked right at the doctor and said, “You know what? That may be your reality, but in our reality, we walk out of here and our daughter is fine.”
And that started a change in our life. And she crashed several times when she was there. And, God bless, we had a wonderful medical team that brought her back. And all the things that Avi…the doctor said Avi would never do, she started to do. They said she’d never wake up and she woke up. They said she’d never open her eyes and she’d opened her eyes. They said she’ll never breathe on her own and she started breathing on her own. We had to have a G-tube put in because she couldn’t take any food by mouth and she was never going to eat by mouth. But sure enough, after we got her home from the NICU, we were able to get her eating by the mouth. And because the way brain injuries work, not every injury is…even though it happens the same way, the brain is so complex, the outcome is so random, so different. There’s no commonalities between people with brain injuries. We didn’t really know what we were getting into, but at first, she was a baby, then she ate, slept, went to potty next. We had a little G-tube in there, but that was about it.
And so we were kind of going on with life and doing a little visit physical therapy with her. And one of the things we started to realize was that Avi was having a little bit more challenges, cognitive and physical, so we started to go out and say, “We want the best treatment for Avi,” which happened to be outside of Alaska. And so we started a little bit with treatments outside of Alaska. And this really became a big change in my practice because it wasn’t just now for fun anymore about being able to change your time and being able to take longer times out of the office, I had to. Avi required 24/7 care. She couldn’t control her arms or her legs or anything like that. You had to provide everything for her.
And as Avi’s care started to kind of ramp up, and we didn’t really kind of know what we were in for until about 2014/2015. And in 2014, my wife had spent two months doing treatment for Avi outside of the state of Alaska. And we were separated, physically separated, we’re still married, because she was there with Avi doing treatments and I had the other two kids. And that was really challenging as a family to be separated for long periods of time. And so one of the things we decided to do was, you know, Avi’s care would automatically comes first, but I still had to grow the business. I still had to do these things. And so we had to start…I had to start making shifts in how I did things in the office in order to maximize my time so we could be gone for her treatments. And so that was a huge focus of what it was.
And as Avi’s care progressed and she needed more and more care as she got older, later she was diagnosed with cerebral palsy, a severe case of cerebral palsy, and we started working through things, we would have to be out of town for large blocks of time to see specialists and to get treatments. And so sometimes what this would mean is I would travel with the family, I’d get them set up, I’d fly back to Alaska, see appointments, then I’d come back. You know, kind of going back and forth. And this was the catalyst to say, “How do I be 100% effective at everything I’m doing in my office? I don’t have time to…” It wasn’t a fun thing, right? It was a must thing. I don’t have time to lollygag when I’m in the office. I’ve got to get my stuff done, I’ve got to grow my practice, I’ve got to have these other things happen, and then I’ve got to get home to help my wife and take care of our children. And so as her care ramped up, we had to change the schedule, which is kind of how we got into the schedule that we have now so we could spend more time doing treatments for Avi.
Michael: Interesting. So I was going to say, like, the driver to figure out, like, you know, how do you get to seven appointments in a day five days a week, five or six weeks stints at a time, like, that’s part of the driving motivator is, you know, “The faster and more efficiently I can get through these meetings, the more time I have to get back with my family for my daughter receiving care.”
Micah: Absolutely. And because she was out of state a lot, right? This was the question I could, you know, do four appointments a day just for discussion, but now my weeks had doubled, right? Just roughly. So now I need, you know, twice as much time. Or how do I maximize this with family? And one of the things that we didn’t talk about in my schedule that I do is I block my in-person appointments and my telephone appointments. Well, that’s because my in-person appointments, I can do in Alaska and my telephone appointments, if we’re going to be gone for traveling, I can do those anywhere. And so we would also block that. Now, I still count that as my work time. So that’s still part of my 15 weeks. But we would block those times so I could travel with them. And sometimes we’d have to rent me another office or another hotel room just so I could do the appointments, but then in the morning and the evening, I could be with the family.
Michael: Doing those meetings and managing them when you have three young children is kind of challenging unto itself.
Micah: Very challenging, right? You know, so I had to have great family support. And they had to understand what we were doing and how it was. And we’re very blessed. And our kids were supportive, and Kelly is amazing and very supportive of that.
And we were making good progress with Avi in 2017. So as an example, Michael, if you can imagine like we would…so some of the issues that she had is, you know, she’d be laying on her back a lot because she couldn’t really move. She would understand things or take a while to process. You’d hold your hand up for like a high five and say, “Hey, give me a high five, Avi,” and it would take about 30 seconds for her to get her arms moving to come to get you a high five. Now, that’s a long time to be hanging out for a high five, right? But we saw the specialist in New Mexico, we were spending time down there, and he was able to work with Avi and he got that time cut in half. So it went from 30 seconds to under 15 seconds. He was amazing, right? We got her to do some great things. And we were making really good progress.
And unfortunately, we’re making cognitive process, but she still had other physical issues. And in 2018, we had to change and go see a different specialist. And we were there, which was great, and Avi was doing good up until about May. She got a little sick then she recovered. And, you know, we were taking a break from treatment. We got cleared to go home. And we were home for a little bit, then we came back for treatments again in September. And unfortunately, in September of 2018, Avianna passed away. And that was an extremely challenging thing to go through, just as a father, right? I’m sure you can understand that. I mean, all of those things when you just lost your little one at five years old.
But I’ll say one of the amazing part about Avi and one of the gifts that she continues to give us is she, in a beautiful way, you know, forced us to make changes, right? She was the forcing mechanism. We had to do things different to be better at what we did so we could help clients, we could grow the firm, and still take care of the family. So she changed our lives in amazing ways.
Michael: So what happens with this structure now? Like, on the one hand, it’s a fascinating model of just sheer efficiency to be able to get through 160 clients and $100-plus million that you’re supporting with this hyper-efficient schedule at, you know, meeting only 4 months of the year. But if so much of it was built around obvious care as part of the family needs, like, what happens to the practice and this structure now?
Micah: That is an awesome question. One of the things that we decided as advice that we give clients that just had a loss is don’t make big decisions for the next 6 to 12 months. I know you had…what is her name? You had someone on there talk about a decision-free zone, right?
Michael: Yeah, Kathleen Rehl just recently was on talking about this in the context of widows who’ve lost a spouse.
Micah: Yeah. And so we’re in that decision mode right now is we’re not going to make any big decisions. We already have 2019 schedule booked out. We already have those things in there, so we’re going to keep with that. That’s going to be there. And we’ll go from there. I mean, maybe we just redirect this time because it’s working, right? We’re seeing our clients, we’re helping them, maybe we direct the free time to more of our other two kids, Gabe and Lana, spend more time with them.
Michael: Well, and I’m presuming, I mean, correct me if I’m wrong, there were financial trade-offs as well to more hiring. You have to do more infrastructure, you have to have to be out of the office for such long stints of time that there’s, like, an income profitability trade-off to structuring this much time out of the office?
Micah: There is. You know, you have to be very intentional with how everything is set up and how everything is done, but I will say we are blessed. We’ve got a pretty high, you know, EBOC, E-B-O-C, you know, where our target is about 70%. We’re just shy of that for ’18. We had some kind of additional development expenses that kind of brought us down. But the staff that we’ve onboarded, that supported us through this, yes, that was a little bit more staff, but we’re not going to change that, right? They’re a great team, great structure.
Michael: Well, that’s still a monstrous number, particularly for 160 clients and $100-plus million under management. So, you know, for those who aren’t I guess familiar for some of, like, industry profitability lingo, so, you know, the classic for businesses in general is looking at profit margins where, you know, you bring in a certain revenue, you pay your advisors, you pay the rest of your staff, there’s a profit left at the end, and that’s your income as a business owner.
And, of course, for advisors, like, you participate usually in the advisor line because you pay yourself, like, a salary for what you do in your business and then there’s the bottom line of what you make as profits in the business. But for most of us, you know, until you’re a multi-advisor firm with a bunch of employee advisors besides you, the easier way to measure this is what’s called EBOC, which is short for earnings before owner’s compensation, E-B-O-C, which essentially just says like, you know, take your revenue, subtract your overhead and fixed expenses, and then just lump all the money you get as an owner into one big bucket. Like, we can say this is my salary in the business, this is my profits from the business, when it’s your business, like, you can kind of make those numbers look whatever you want. You know, if you’re an S corp, you may change them one way to try to, you know, adjust salary for FICA tax savings. Like, there’s all sorts of games that happen and just tax strategies that kind of obfuscate the number.
So the easiest way to look at it is just say, you know, “In essence, as the advisor-owner, of every dollar of revenue, how much of it comes back to me in some way, shape, or form?” Of which, you know, a 70% EBOC is a monstrous number at the size and practice that you’re at. I mean, not irrationally so or anything, like, there are some firms out there that are at 80%, which I guess speaks to your sort of note that you staffed up a little bit more for this. But, you know, $100-plus million under management, 8 months a year out of the office, 70 cents on the dollar comes out as profits to the owner is a phenomenally amazingly profitable practice, even for someone working 70 or 80 hours a week all the weeks of the year, never mind being able to structure for 8 months out of the office of just, you know, on-call for clients that need you and that’s it.
Micah: Yeah. And we’ve been extremely blessed. And I think, you know, necessity is the mother of all invention, right? These were things that, you know, we had to do, at least self-imposed, had to do for Avi’s care and decisions. And we had to be very tactical with the decisions that we’ve made. And we’ve been blessed by that. We’ve got a great team. We have great profitability. So I imagine that, you know, kind of going forward, we’re just going to hold off making big decisions. We have a couple other projects that we’re working on. You know, I’ve teamed up actually with Matthew Jarvis, which is kind of fun, and we’re kind of running a little podcast with him talking about, you know, what we call a Perfect RIA, lifestyle advising, etc.
Michael: Sorry, just to check, like, anybody who’s listening who wants to check it out, just, like, literally “The Perfect RIA” podcast, find it on iTunes or wherever else?
Micah: Yes. We’re so humble. That’s what we decided to name it, “The Perfect RIA.” Yeah. So, yeah, it’s on iTunes. So, you know, welcome. We’re looking for tons of feedback on that. Him and I are also cooking up a little other project, kind of a…we’ve got a lot of feedback from people, you know, that listen to the podcast that say kind of one of the biggest issues that they have, and Michael, I’d be actually interested to get your thoughts on this too, is one of the things that they say they can’t take time out of the office is because they don’t have good staff training. You know, they don’t have good staff. They don’t know how to educate and train their staff in that way. And so that’s one of the things that we’re kind of working on right now is how do we take the processes and details and all the things that we do in our office and streamline it so you could roll it out in another office, have that staff training? That’s there.
Michael: Interesting. It’s striking to me that just you found your way to doing a podcast with Matthew. You know, you two have strikingly similar practices in, you know, having firms where you’re hyper-efficient in the firm, you take a lot of time off out of the firm, but you’re running $100-plus million books and have a really high profit margins EBOC, dollars that you’re drawing out. Like, sort of that idealized lifestyle practice, what it looks like, high income, high margin, high time off, because you really systematize everything that’s there.
Micah: Yeah. And I think that’s the key. And just to be clear, Michael, that’s a thank you to you by the way because you’re responsible for that introduction for Jarvis. So I greatly appreciate that.
Michael: I was going to say was that how you found him originally was through the podcast? Just say, “Wait, he does a lifestyle practice like I do a lifestyle practice.”
Micah: I did. I did. And I was like, “I’ve got to meet this guy.” And it just so happened that we were going through Seattle and we saw them and just really kicked it off. And it’s been what, yeah, I think you said it’s been like two years and we’ve probably seen each other eight or nine times. We get our families together. So it’s just been a lot of fun.
Michael: Well, we’ll have, you know, links out to your website and your LinkedIn profile as well. So I don’t know if there’s other high-margin lifestyle practices out there and you all want to make a study group, give Matthew and Micah a call. You can make a whole group out of it, it seems.
Micah: We’ve got a little one forming actually. We have a little mastermind that’s come out of this, with a couple of us. But yeah, we’d love more people. That’d be great.
Michael: Very cool. Very cool. And so, like, who holds down the fort when you’re gone for eight months? I was just wondering, from a practical perspective, like, how exactly does that work? Like, that’s a long time.
Micah: Well, it is, but also keep in mind, it’s not eight consecutive months, and it’s not, call it sabbatical, but it’s not sabbatical time, right? I’m still connected. That’s there. So kind of the way that I like to say it is my six weeks that I have of tactical time, the next two weeks or so, and I get out of the office when I’m done. That’s my forcing mechanism, right, to physically…we kind of leave town. After my six-week block is time. Because, again, it was generally to go back for Avi’s treatment, so that made me leave town. And then generally, the next week after that, I’m still in high gear. I’m still amped up from the appointments, from meeting, from doing all these things, and so it takes me a good week or so to decompress from that high energy. So I still get a…even when I was traveling, we’d get me another room or an office and I’d go somewhere and I’d work in the mornings, I’d connect with the staff. Again, we generated a lot of work. So I put a couple hours of work in in the morning time to connect with them.
Then when I’ve gone through that kind of decompression time, really what I do is our ops manager, and I have a phenomenal operations manager, is I get together with her once to twice a week for 15 to 20 minutes, depending on what’s going on, and we real quick run through everything that’s happening in the office. That’s there. All the processes, everything that’s happening. We don’t need a lot of management, if you will, with our staff. They all know what to do. And that was one of the big benefits we’ve had in this year, 2018. We launched our own CRM. And we were able to really streamline and become so much more efficient at our other processes that we were, that it’s super easy to see where everything is, to build out our processes, and to get things done. I can see it when I’m remote, they can see it in person. And all of that trackability is really transparent to everybody. And that has helped out. I can’t even explain how much that’s helped out. It’s been great.
Why He Built His Own CRM [1:38:11]
Michael: I am curious about that. Like, why build your own CRM? I mean, there are a bunch of them out there. Like, are they really all that bad to you that you had to just make your own darn thing the way that you wanted it?
Micah: Well, no. And some of the CRMs are good, right? Like, we were on Redtail forever. And boy, Redtail was it 85 bucks a month or something like that? I mean, clearly, it’s not for price that you’re going to go build your own. And they have a good CRM. I liked theirs. The only challenge I had with all the CRMs, and every financial planning practice is different, right? But the only common tool I think any of us use is Excel, right? All of us use Excel. Other than that, it’s a fair, you know, mix of bag of softwares and technology. And it was the same in our office. And we realized that there was a lot of process and a lot of things we were tracking purely in Google Sheets, right? So we would build…Redtail’s process tracker didn’t work for our needs, so we built our own process tracker inside of there. Another system didn’t work, so we’d export that data and put in Excel. Then our other system didn’t really do that, what we wanted, so we exported and put it in this.
And I had a good friend who owns a technology company, and he was telling me for years I needed to go build my own stack. Because I complained to him about this and that and lack of integration, and he said, “You just need to build it.” I’m like, “That’s just ridiculous. I’m not spending that type of money to go build this system.” But he would work with high-end companies, I mean, like BP, etc. kind of companies, and they would build their own custom solutions, and it just so much increased their production. And so we started to go down that path. We’ve already had a little bit of web development experience back in 2011/2012 when we built an online financial planning tool for federal employees. And so we were…you know, that worked out pretty well. We had a lot of issues with developers with that. Developers, and I think, Michael, you’ll potentially relate with some of your projects, but we would hire developers to build this, and they would literally disappear halfway through the project. I mean, they’d have the money and they were gone.
Michael: Yeah, the very, very first version of our AdvicePay platform that we built when we were originally getting started, like, we hired a third-party development shop. You know, there’s a whole bunch of third-party firms out there that will…basically, they manage the project and the developers and the rest. Like, essentially, you go tell them what you want and give feedback on it over time that it’s getting built the way that you want and, like, they build it. That’s the deal. And, you know, you can get an app or a website or something built. Like, usually, not a website, it’s more like you’re building an app, you’re building a piece of software to do a thing. And that’s what they do.
And so, we’d hired a firm to do this, and, like, I forget what the original price tag was, but probably like $30,000 or $40,000 to, you know, build this fee-billing software that we wanted to build. And, you know, the project kept stretching longer and the price kept going up. And eventually, we got to something like $70,000 and were like, “All right, just you’ve got like…can we get something out there, like, we kind of get this off the ground?” And then suddenly, like, the developer sort of went dead and we couldn’t figure out what was going on. And what we eventually discovered was like the developer basically didn’t actually know how to build what we wanted them to build, and so there was like a lovely front-end interface, which is what they’d been showing us, and it wasn’t connected to anything on the back end. Like, it was like, they were just pretty screens. There was no software there. You know, the industry term is vaporware. Like, it looks pretty but there’s only vapor behind. And, like, we were basically taken.
And, you know, fortunately, the firm at least that we were working with kind of owned up to the mistake and did a whole bunch of dev work at their cost to sort of fix the screw-up. But ultimately, like, we had to go hire our own developers and over the past two years has completely rebuilt the entire thing from scratch. Because eventually, we just hired our own full-time developers so that we could really oversee them and, you know, make sure they knew what they were doing. Fortunately found some great developers who do now. But it was painful. Like, I didn’t quite understand the dynamic of why company…like even in large firms, like, why do large firms buy software when they’re so big and they could just hire some people to make it? Like, it’s way harder than it seems like it should be is what you really find out. Like, it seems like you just program up this thing and do it, but surprisingly not that easy sometimes.
Micah: It’s shocking, right, to find someone that actually can do what they say they can do. It’s amazing. So I’m not glad you had that experience, but man, I’m glad I’m not alone. How’s that?
Micah: Yes, so we spent gobs of money through developers, you know, that would literally disappear multiple times with them. And with our first project and then the same thing with our second project, building on our CRM, and then finally, what we realized, and so Michael, unfortunately, well, not unfortunately, you know, you are much smarter than I am, and this cakes it, proves it because you went and hired in-house developers. I wasn’t that smart. I kept trying again and again.
Michael: Alan just got fed up and likes to control things. He said, “Screw it, I’m hiring my own person!” We kept losing enough money on it, it was like, “Well, it’s not actually going to be more expensive at this point, so we may as well.”
Micah: Right. So, you know, finally to get ours launched, what I did is I went and hired three different developers simultaneously and told each that they were hired, they were all going to…and instead of asking them how it should be built, I then dictated it, “This is what’s going to happen, this is the language, this is the platform, and this is what it’s going to do. Bob you’re going to do this. Sue you’re going to do this. Mary you’re going to do this.” And I said, you know, “Sue, it’s okay, if you get bogged down and you don’t have time, it’s okay, I’ll kick your stuff over to Bob. It’s totally fine.” And there were three different teams that we hired. And right now we’re down to two. So we did have to get rid of one, but we launched our project in months because…and I told all of them, I said, “Look, there’s plenty of work for all of you, but I need this done.” And that competitive spirit was great. And we came in under budget. Well, overbudget if you count all those hundreds of thousands of dollars we spent with all the other developers that didn’t work out. But for the new project, it happened fast, it happened, you know, on budget. So that was really nice.
Michael: Like, you kind of put them in a race with each other?
Micah: Pretty much. You know, set the deadlines and said, you know, “Hit your deadlines. And if you can’t do your job, it’s okay, I’m going to find someone who can.” Which really, that shouldn’t be too much to ask, right? So that worked out.
Michael: And you actually feel like at the end of the day, like, just all the cost of this you will ultimately make back in efficiency? Like, I mean, I get, you know, it’s aggravating when CRMs won’t do everything you want to do and you end out living a little bit more in spreadsheet land than you want to, but, like, there’s the nuisance of spreadsheets and there’s tens of thousands of dollars of developer costs. So, like, how do you weigh this cost-benefit ratio? Like, is this, “I think I’m going to get ROI on my investment?” Is this just a, “Dammit, I want it to work my way, it’s not really just a profitability thing, I need our business to run our way?” How do you think about this decision to take the dive on developer cost like this?
Micah: You know, it is a combination. I will say one of the…my big issues is, you know, I don’t really like failure, so I will push through pain to get to the other end, sometimes out of dry and cost, right?
Micah: So just to be clear, really the way we gauge this is… So one of the services that we offer is we actually help advisors with their back-office, help run their money, take care of their back office, etc. And we’ve brought on two advisors running… So a year ago, before we launched this, our ops team came to us and said, “You know what? We’re kind of tapped out. If you want to grow, you know, much more than just our office,” because we talked about onboarding these other advisors, they said, “We need more people, just flat-out. You know, we don’t have the bandwidth to handle this.”
Well, we were able to launch our own CRM. We take all those other spreadsheets, we put them all in one place, we had integrations into the phone, the email, I mean, all the good stuff that should be there, and really broke down our processes where we can plug someone in and they just have to go through the process. All the tools are at their disposal to do it, making it very easy to accomplish things. And we rolled this out. First, we came out with it in March, just showing our team, they liked it a lot, which I didn’t expect, then we rolled it out in April. We weren’t expected to roll it out until June. Rolled it out in April, we’ve onboarded 2 back-office…other advisors, over 100 households, and we haven’t staffed up.
Micah: So from a pure effectiveness standpoint, right, that’s a lot for running the back office of 2 other advisors, 100 households before they are saying they’re capped, and we still think we have room to grow at our current team. And I think a lot of that has to do with the efficiencies that we’ve picked up just in building and saying, “No, this is how our firm needs to run and this is the process that it’s going to be.”
Steps Any Advisor Can Take To Improve Efficiency In The Office [1:47:22]
Michael: Interesting. So for advisors that are maybe interested in getting to this kind of, you know, more lifestyle-oriented practice short of, you know, “Go build your own software,” like, where do you start? I mean, because I know you…ultimately, it shifted for you because there was a necessity there. And for most advisors, like, we won’t necessarily have that necessity, but, hey, you know, 4 months in, 8 months out kind of sounds good to most people, especially when you can keep 70% EBOC. So where do you start? Like, because you said, you built up to this, you didn’t just come in one day and say, “Hey, let’s do seven meetings a day for five to six weeks and I’m going to go away for a few months.” Like, how do you get started down this path?
Micah: Start with going out of your comfort zone, all right? That’s the first thing that you have to do, at least for me. And maybe someone can pick this up and they enjoy the entire process. The entire process wasn’t enjoyable for me, it was painful to go through and to make the shifts because I would do things that were outside of my comfort zone. So I always say the first step is time blocking, right? Real quick math, look at your calendar and say how many households do you have, add how many you want to grow to, and then divide that by how many times a year you want to see them. This is now how many slots that…or times, actually, how many times a year you want to see them, that’s now the slots that you need throughout the year.
So let’s just make math really simple. Let’s say you have…you want to have 100 households, you want to see them twice a year, just to make it easy, that means you need 100 appointment slots in the spring and 100 appointment slots in the fall, right? Okay, now, how do you set your calendar up to do that? If you’re only doing two appointments a day, okay, make it three appointments. Now, for this next appointment go-around, try to squeeze your appointments together a little bit more. So start doing what we call time blocking. Pick the time of the year that you want to have your appointments and slowly start condensing that so that you’re forcing yourself to be more effective.
Now, I’ll say, Michael, that when you’re doing time blocking, I’d say one of the biggest things is at the end of your time block, you have to have a forcing mechanism that does not allow you to cheat, right? Because if you say, “Hey, I’m going to do all my appointments in five weeks,” but you have nothing booked after five weeks and something comes up, you’re going to put another client at the calendar, you’re going to move something, and now you’re breaking your rules, right?
Michael: So schedule five weeks of client meetings and then schedule a vacation on the sixth week so you have to do it in the five, otherwise, you take client meetings on your vacation and then your spouse gets really upset with you.
Micah: You got it. Now, I wasn’t that good, I had to start smaller than that. We rented a remote cabin without cell service because then I couldn’t work when I was away. I was done.
Michael: Renting a cabin without cell service. Like, all I can think is like, this is how horror movies start.
Micah: You know, you twitch a little bit. You know, but this is Alaska, so, you know, there’s plenty of lonely forest service cabins that you can go and rent and do it. But that was for me. That was my forcing mechanism because I knew if I had a tether, if I had the ability to jump online and to do something, I would do it. So I had to create something that really forced me to get done with my work in a specified period of time. Now, you can do that with appointment sets, do that with your current day, right? Force yourself to get out of the office at a particular day. Have an engagement with your kids, with your spouse or something else that forces you to get out of the office. But also, you can’t leave the office until you get some stuff done. So slowly move that way to make yourself more effective in the office. Because what I will say is we waste a lot of time playing office versus actually being effective. We justify it, but we waste a lot of time.
Michael: You know, there’s nothing like forcing yourself into more limited time blocks and then suddenly finding all this efficiency you didn’t know you had.
Micah: Yeah, it’s like having kids, right? I mean, you pop out with a couple of kids, you’re like, “Holy crap, I mean, I have no time. And what did I do before this?” But you’re still getting everything done. It’s the same thing but in your office.
What Success Means To Micah [1:51:27]
Michael: So as we wrap up, this is a podcast around success, and, you know, one of the themes that always comes up is that just the word “success” means different things to different people. So, you know, certainly, by any objective measure, you have a incredibly successful practice of, you know, upwards of $100 million and a 70% EBOC. And I know you’re mid-30s. You know, it’s an incredible business achievement. But for you at a personal level now, like, how do you define success for yourself?
Micah: That’s been a bit of a tough question recently. You know, you rewind the clock four months and I would probably have a different answer. But now with Avi passing, you know, it’s really changed that focus. As you said, you could look at the financial measurements of the practice and say, “Wow, you’re successful.” On the other hand, I could look at my personal life and, you know, I lost a child. And that’s extremely hard to own, to take responsibility of that. Now, her life expectancy was two and she made it to five. You know, her pediatrician that we had says, you know, “She wouldn’t have made it that far without you guys. You guys were phenomenal.” But we still have to own the loss of a child.
So that’s really kind of changed my thoughts on success. And so now I think really what it is is to say, to hell with the naysayers, damn the odds, do what you have to do to be successful. It’s, look at the mountain top and don’t focus on everything that’s in between there. What are you going to do to get there? And if you can stay focused on that mountain top and you can stay on that journey to success then you are successful. That is what successful people do. And you just have to have the will to do that.
Michael: Do you know what mountaintop you’re climbing towards now?
Micah: Ooh. You know, on the business side, you know, we’ve got a couple of different things going. One, we want to bring on new advisors in the office, you know, that specialize in federal benefits. We’re building this training module with Matthew Jarvis for The Perfect RIA. I think that’s going to be really neat. So I think we’re going to keep with those. And I think we’re going to…I hate to give you a soft answer, but I’m not going to make any…I don’t think we’re going to make any big decisions here for about another six months or a year. And we really need to see what that is. I mean, family time is really…you want to talk about the importance of spending time with your children, it’s really highlighted for us. And we want to help them. We want to help them grow. We want to be with them. And so I know that will be a very huge part of what our time looks like in the future.
Michael: Amen. I think a lot of us will be giving extra hug to our kids tonight after listening to this.
Michael: Well, thank you for joining us, Micah, and sharing the story in your journey. And, you know, I’m so sorry for your family’s loss of Avi. But, you know, thank you for just sharing what you’ve been through. You know, as you said, you know, necessity drives a lot of changes that are otherwise hard for us to achieve, but on the other end, you’ve created this practice, like, truly unlike anything I’ve seen, of 4 months in, 8 months out, 160 clients, doing these 30 appointment a week stints and then taking breaks. Like, it is unfortunate circumstances maybe that led you there, but a fascinating thing that got created in the process.
Micah: Yeah. That’s another…I like to say it’s another gift from Avianna. And Michael, thank you, again. I’ve said it a couple times, but this podcast is amazing. You’ve done a lot of great stuff with this and your current content. I still don’t believe that you sleep. I don’t care that your sleep cycle is online. I think that’s fake, how much stuff you put out, but it’s really great. Thank you.
Michael: Thank you. Thank you for joining us, Micah, on the “Financial Advisor Success” podcast.