Welcome, everyone! Welcome to the 50th episode of the Financial Advisor Success Podcast!
My guest on today’s podcast is Tracy Beckes. Tracy runs an eponymous financial advisor coaching firm, and in fact was one of the very first coaches to specialize in working with financial advisors nearly 20 years ago.
What’s fascinating about Tracy, though, is not merely her history as a coach for financial advisors, but the way that she’s been able to systematize her coaching strategies into concrete tools and templates that she uses with her coaching clients to help them navigate the common challenges of trying to run what she calls an “Effortless, Outrageous” practice.
In this episode, we talk in depth about some of Tracy’s coaching tools, from the value of creating Engagement Standards with clients that set the terms of both what the advisor commits to doing for the client and what the client is expected to do to be a productive part of the advisor-client relationship, to why it’s so important to create a “cadence of accountability” within an advisory firm with a regular series of daily, weekly, and quarterly scheduled meetings, to the benefits of creating a one-page strategic business plan that sets forth the business’ Core Values, its Purpose, its Big Stretch Goal, and a series of 3-year, 12-month, and 90-day objectives, all built to help the firm create better focus in what it does… and how establishing a clear target market or niche can actually bring tremendous efficiency to an advisory firm and an advisor’s time in the business.
We also talk about what financial advisor coaching itself actually is, how it differs from training or consulting, why successful financial advisors so often seek out coaches – even when they’re already fairly successful in their businesses – and why the real secret to advisory firm growth is all about systematizing, developing people, and honoring the power of the 80/20 rule… which a financial advisor coach can help you to focus on.
And be certain to listen to the end, where we talk about how the real secret to having more productive team meetings is all about your ability to actually structure meetings to make key decisions or solve problems… and how advisors can better craft a meeting agenda process that helps to target the most important issues at every meeting.
So whether you have been considering hiring a financial advisor coach to maintain business focus, contemplating how you can better set and manage expectations for your relationships with clients, or interested in how you can have more productive team meetings, I hope you enjoy this episode of the Financial Advisor Success podcast!
What You’ll Learn In This Podcast Episode
- Where “Effortless Outrageous Practice” comes from. [4:56]
- What coaching looks like for financial advisors in a business context. [14:17]
- How to have frequent meetings and ensure they are a good use of time. [31:02]
- How to format a one-page business plan to create clarity for employees. [44:33]
- Six items to focus on in order to effectively engage employees. [47:47]
- Why it’s so important to know your core values, as well as short-term and long-term goals. [49:31]
- Common areas where financial advisors tend to get stuck. [1:14:52]
- How improving leadership skills can lead to as much as a 38% increase in overall firm performance. [1:14:52]
- The kinds of problems advisors typically seek coaching to solve. [1:23:26]
- How Tracy defines success. [1:32:28]
Resources Featured In This Episode:
- Tracy Beckes – Tracy Beckes and Associates
- Effortless Outrageous Business Assessment
- Marketing Without Advertising by Michael Phillips and Salli Rasberry
- Hendricks Institute
- Carolyn McClanahan – FAS Podcast Episode 9
- Cheryl Holland – FAS Podcast Episode 35
- Nerd’s Eye View article on Meeting Agendas
- Mastering the Rockefeller Habits by Verne Harnish
- Scaling Up by Verne Harnish
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Full Transcript: The Value Of Hiring A Financial Advisor Coach To Maintain Your Business Focus with Tracy Beckes
Michael: Welcome, everyone. Welcome to the 50th episode of the Financial Advisor Success podcast. My guest on today’s podcast is Tracy Beckes. Tracy runs an eponymous financial advisor coaching firm, and in fact was one of the very first coaches to specialize in working with financial advisors nearly 20 years ago. What’s fascinating about Tracy, though, is not merely her history as a coach for financial advisors, but the way that she’s been able to systematize her coaching strategies into concrete tools and templates that she uses with her coaching clients to help them navigate the common challenges of trying to run what she calls an “effortless outrageous advisory practice.”
In this episode, we talk in depth about some of Tracy’s coaching tools. From the value of creating engagement standards with clients that set the terms of both what the advisor commits to doing for the client and what the client is expected to do to be a productive part of the advisor-client relationship. To why it’s so important to create a cadence of accountability within an advisory firm with a regular series of scheduled daily, weekly, and quarterly meetings, to the benefits of creating a one-page strategic business plan that sets forth the business’s core values, its purpose, its big stretch goal, and a series of 3-year, 12-month, and 90-day objectives, all built to help the firm create better focus in what it does. And how establishing a clear target market or niche can actually bring tremendous efficiency to an advisory firm and to an advisor’s own time.
We also talk about what financial advisor coaching itself really is. How it differs from training or consulting, why successful financial advisors so often seek out coaches, even if they’re already fairly successful, and why the real secret to advisory firm growth is ultimately all about systematizing, developing people, and honoring the power of the 80/20 rule, which a coach can sometimes help you stay focused on. And be certain to listen to the end, where we talk about how the real secret to having more productive team meetings is all about your ability to actually structure the meetings to either make key decisions or solve problems, and how advisors can better craft a meeting agenda process that helps to target what the most important issues are at every meeting. And so, with that introduction, I hope you enjoy this episode of the Financial Advisor Success podcast with Tracy Beckes.
Welcome, Tracy Beckes to the Financial Advisor Success podcast.
Tracy: Thank you, Michael. I’m excited to be here.
Michael: I’m really excited to have you on because you are truly one of the first practice management coaches, like financial advisor coaches, like, I ever remember becoming aware of. You know, this was probably, oh, man, I don’t know, like, maybe 15 years ago. And I was just a couple of years in the business, and I had just started going out to some conferences, and I was introduced to this world, like, there’s all these other advisors and there are coaches and consultants that just work with you to help you make your advisory business better. And it’s like, “Huh, that’s kind of neat.” Like, I was just so focused on, “How do I survive in my career or get the first few clients and then, you know, do well in my job and those sorts of things.” Like, just the whole idea that you would hire external people to come in and just help you be better at your business was kind of a new concept for me as someone that was only a few years into the business.
And you had this tagline, at the time, that you helped advisors to create “effortless outrageous businesses.” And I just remember thinking like, “Wow, an effortless outrageous practice. That sounds good. I think I want to be one of those. Like, that’s good marketing. I want that.” That term “effortless outrageous practices” has still stuck with me to this very day. So just, first and foremost, like, I have to give you credit for an incredible business tagline and marketing positioning statement of “effortless outrageous practice.”
Tracy: Thanks, Michael. It was something that developed over many years, but it started with my dream to have a business of my own, particularly when I was working in corporate America. There’s a long story behind how that all came about. But it’s not only something I want for my clients, it’s something, of course, that I want for myself.
Where “Effortless Outrageous Practice” Comes From [4:56]
Michael: So where did the label come from? Like, was this just a moment of like visionary intuition, “This is the tagline for my practice?” Like, I’m just…I don’t know, it’s such a powerful statement. Like, “an effortless outrageous practice.” Like, where did that come from?
Tracy: Well, we played with a lot of ideas around better business, better life, just realizing that when any professional is working at their best, it’s more likely to be easy. It’s things unfold naturally. When they’re playing from their highest and best, they’re able to serve people more effortlessly. So we just started playing with the idea that the more authentic a person can be, the more effective they can be. And it just…we played with a lot of different versions. And I actually have them written down somewhere. I mean, all this came about about 25 years ago. But yeah, that’s what we ended up with.
Michael: Effortless outrageous. So maybe to get us started, why don’t you just share a little bit more about what your coaching business is today. I think you’ve still got the tagline, “helping financial planners create effortless outrageous practices,” but can you talk a little bit more about what you do, who do you do it for, you know, what’s the nature of your coaching at this point?
Tracy: Yeah, so it’s interesting. On one hand it’s evolved quite a bit, and on the other hand not at all. I’m going to go back a few steps because it will help people understand what I do today. But when I started coaching, there were no other coaches out there. In fact, a lot of the pioneers, we all thought we developed this notion called “business coaching,” but we were all working independent of each other nationally. And then at the time, I actually started…this is my third business. I started one during graduate school, in college, when I was getting my MBA, and I had one going on the side, my second one, when I was working at Hewlett-Packard.
When I started this one 25 years ago, because there were no coach training programs in the country, I pretty much made it up. And a big part of it was inspired by a book called “Marketing Without Advertising.” I read this book during finals week in graduate school and fell in love with the concept, and then started wondering, “How could I blend my passion and love for personal development with business concepts and ideas, ideas for running better businesses?” And then started playing with how that might look, and had these two businesses that were going on the side. And then when I launched this one officially, it was just a one big experiment.
When I first started, I had done some coach training. It wasn’t called coach training. It was actually a couple of psychologists, Gay and Kathlyn Hendricks. They have a company called the Hendricks Institute. Both of them are experts in relationships, but they’ve done a lot of work with very well-known celebrities and business leaders. And I actually, because there were no coach training programs, I actually consider it to be one of the luckiest days of my life. I landed on their doorsteps somehow someway, and I got certified in all of their programs. And eventually, they ended up hiring me to co-lead their two-year leadership program. And that was the foundation of my work, without a shadow of a doubt. And it was a wisdom-based approach, an inside-out approach. And even though they weren’t calling it business coaching at the time, it was an action-based forward-looking approach. And so when I started, that’s where I began working with clients.
In fact, one of my clients I’ve worked with for over 20 years now, Cheryl Holland, and we spent a lot of our time in the first, I’d say, 3 to 4 years of our coaching relationship focused on those types of areas, and then it just started to morph. I had undergrad in business with an emphasis on marketing and finance, and then a master’s degree in marketing, and so as time went on, I kind of moved away from the material I had learned from these two psychologists. And then at the same time, the coaching industry started, so the two largest and the two first coaching programs had begun at the same time I started this third business 25 years ago.
And so, what happened is as time went on, I started to tap back into my passion for business. And so all the material I learned from the Hendricks, I started using that to support getting better business results. And that’s where I started developing things like the One Page Business Plan, speeches around creating alignment. We created this thing called “The Essential Formula.” Something that I first launched when I began my business was this notion around having engagement standards and how that can improve your ability to provide service. And it’s also, as a byproduct, a great way to market your services.
Michael: Yeah, we had Carolyn McClanahan on the podcast as well fairly early on, she was episode nine, and had talked about a version of that as well. That she was using a engagement standards document just to define the terms of engagement with the clients around, “Here’s what we do. Here’s what we expect you to do.” You know, very good at setting expectations. And she had noted the same thing. That it essentially becomes a form of a marketing document because the subset of people who are really a good fit for you will read your engagement standards and say like, “Oh my gosh, this is exactly what I wanted and what I was looking for.” “So well, great, ready to sign up now? Let’s go.” And you just only end out getting clients that are really good fits because those are the only people who’ll read your engagement standards and actually be excited about it.
Tracy: Yeah, and Carolyn’s done something very unique. She’s actually taken and applied that concept in lots of areas of her life. And when we were working together, I think she first introduced it to one of the trade associations. She was co-chairing one of the conferences and they came up with engagement…
Michael: Yeah, with NAPFA.
Tracy: Yeah, NAPFA came up with engagement standards for the speakers. Like, what they should expect from NAPFA, and what a speaker should expect from NAPFA. So she came up with some really great creative uses and currently is using it in some of the breakthrough work that she’s doing currently. I should let her describe in detail that. We just connect periodically as friends, and I know it’s evolved greatly since then.
But anyway, yeah, so it’s a concept. And at that time, I got a lot of press for that particular topic. And I spoke nationally about it, it became part of what we call the “Effortless Outrageous Business Speech,” you know, which is, of course, where that tagline also came into play. But yeah, so it’s been something, it’s been a lot of fun through the years. And then I just had my first client, the first person to ever show up at my doorstep, and they had a set of engagement standards and didn’t know that I was the person who originated that idea. So I’ve been having a lot of fun with it recently.
Michael: That’s very cool when it comes full circle like that. So you went through this kind of psychologist-driven coaching style from the Hendricks Institute, how did you land in the world of financial advisors and working with advisors in particular? I mean, I think you mentioned you were transitioning from corporate world in Hewlett-Packard. It’s like, how do you get from Hewlett-Packard corporate job to coaching Hendricks Institute to coaching for financial advisors in particular?
Tracy: Yeah, that’s also an interesting journey because I went and, you know, when I… Oh, let me go back a couple of steps. So how I got to the Hendricks was, I had a couple friends that were having some challenges in their relationship and they asked me who I thought were the best psychologists in the country from a relationship perspective. And that got me in a place of doing some really deep research, and I found their material, I had found it a few years ago and then pointed my friends towards them. And oddly enough, they didn’t participate in any of their programs, but I went off within two or three months and got certified in all of them. So that was a really great day for me as well, the day I landed on their doorstep because it so transformed everything that I do. I mean, that’s what makes my coaching very unique, is it’s an inside-out perspective. And you’ll get a lot of business coaches that are really well-trained in technical aspects of running a great advisory firm, but very few of them are trained to go a step deeper in that inside-out perspective, it comes in.
What Coaching Looks Like For Financial Advisors In A Business Context [14:17]
Michael: So can you talk a little bit more about just what that is? I mean, maybe for people who are less familiar with coaching or maybe have done a little bit of coaching but will say only the other type, I guess that would be outside-in, what is the inside-out perspective?
Tracy: Well, you know, I’ve only had one client actually get this to the point where they’ve spoken about it nationally. But one of my clients just gave a presentation and talked about that 50% of what they work on in their firm is technical and 50% is the soft skills. And, you know, I’ve never had anybody actually get it to the level that they would speak about that nationally. But when it comes down to it, running a great advisory firm is not very hard, you know. And if we all just acted on all the stuff we know would help us be better, we wouldn’t need any coaches. We would all just, you know, be thriving and meeting our dreams and our definition of success.
But what I have found is it’s not that simple for the majority of the people. So having an inside-out perspective and ability to really look at what’s going on underneath the surface that might be getting in the way, might be preventing that advisor from easily moving forward on some business initiatives, that has been an invaluable skill, and that is what makes my coaching very different from what the average consultant and coach is able to do. Just because of that background and training that I had for years with Hendricks.
Michael: Interesting. So what was the journey that got you to advisors in particular? I guess as you were maybe coming out of Hendricks and trying to decide, “Okay, I’ve got this…I’ve got some learning now, how do I apply it, where do I go, who am I going to work with?”
Tracy: Yes, when I was getting my undergraduate, I saw in the Career Center a posting for an advisory position, and I sent away a cover letter and my resume, and they sent back some material saying that I would need to become a CFP eventually if I wanted to work at their firm. And that was my first introduction, finance and marketing undergrad. It was, I had everything that they were looking for except that credential. And so I got curious and sent away for the self-study materials actually for five years in a row. I eventually decided not to become a CFP because I didn’t have a passion for stock market investments and numbers.
But what really caught my attention about the job posting was that they were centering their work around a person’s goals. And as an athlete in college, I had done enormous amount of research around visualization and goal-setting and writing affirmations. In fact, I did an internship at a company that specialized in that during college. They were at the time the Pacific Institute. They were doing I think revenue-wise about $20 million a year helping executives and business environments apply cognitive self-image psychology. So I got really interested in that. It tied right into everything I was doing as an athlete. And then I went off and, you know, explored becoming a CFP and just decided it just didn’t fit me perfectly. It was the numbers part of it that I wasn’t attracted to.
Michael: And so here we are kind of blending the two, then you got back to the advisor world but came at it from the coaching perspective. So can you talk a little bit more about, what does a coaching engagement look like, right? Because I think most of us have never been through coaching, never had any kind of coach, at least certainly not in a business context, right? At best coaching is maybe something we had experience with within a sports context, which means there’s a high probability that there was a lot of yelling involved. So what does coaching mean to you? Like, how do we understand what coaching is as financial advisors and not in a business context?
Tracy: Yeah, well, I think it helps, you know, to really make a distinction between coaching and what a therapist might do, a consultant might do and somebody in a training program. So coaching is like I mentioned a minute ago, it’s like forward action, forward-looking action-based approach to helping a person, whereas a therapist will spend a lot of time going backwards and looking at what might have happened in the past that might be getting in the way of a person’s performance. And then training is where you get a group of people all in the same room going through the same agenda at the same time. So those particular areas are very, very, different.
And so what I did, because there were no models in the coaching realm… Oh, and then the consultant. Let me add that one in there too because that’s a major distinction that will help people understand that consultants actually will step in with an area of expertise, and in most cases actually take over that part of the business and work on it, develop some solutions, and then hand it back to the advisor with the keys to start the engine. It’s all ready to go. Like, it could be somebody writing a business plan for the client, it could be somebody developing compensation schedules for everybody and career paths, so any aspect of the business.
So what I do and how I shaped what I do was it was purely on a coaching model. And I don’t really know how everybody else practices, but I ask clients to set a minimum timeframe of working with me at three years. And the reason why is because I like to have enough time where they can notice and experience some lasting shifts and changes in their lives and their businesses. And so what I’ve done is put together a model where I will interact with a client, usually once a month for 1 or 2 hours, and we’ll do 10 sessions over 12 months. And then we’ll ask that everybody that works with us spend a minimum of three years, but they can stop at any time for any reason. We have found that if a person is not feeling like they’re getting more value than what they’re paying for, we don’t feel like we should hold them to any level of obligation other than giving us a few sessions’ notice that they’re going to wrap up.
Michael: You’re not like contractually binding them into a three-year agreement. It’s just kind of a mental commitment to people to say, “Look, if you’re coming into this, like, I expect you’re coming in for real, for a sustained period of time. That you’re willing to give this a couple of years to work through and work to a better place.” And just asking people to make that mental commitment before they leap?
Tracy: Yes. And, you know, as you might imagine, we have engagement standards. In there, it clearly states that, you know, we’re just asking for the intention, and that they can stop at any time. Yeah. And then, you know, it’s a collaborative relationship. And I tell clients all the time. And this is good, you know, of course, for anybody working with any professional, but take responsibility for getting what you want from the relationship. And I encourage every single one of my clients that, “We’re going to collaborate. And the more feedback that you can give me, the better the coaching is going to be for you.” And so, we’ll start with some ideas on day one, of what they might want from the coaching relationship, but it changes so rapidly. I mean, I always make jokes that, you know, in the middle of a coaching session we might make a 180-degree turn and go someplace else. And that’s the beauty of coaching. It adapts and morphs to exactly where the client is and what they most need.
Michael: So can you give a little bit of perspective and at least what do those engagements or desires look like up front? Like, right, I get why I hire a consultant because, as you said, like, I’ve got a problem, I need some expertise, here’s my thing, tell me how to solve my thing because I’ve got other things to do in my business, right? Like, I think a lot of us get what that engagement looks like and why you go get someone. So who seeks out a coach and what kinds of problems are advisors typically coming to you to try to solve or figure out?
Tracy: Yeah, it’s so unique, Michael. Like, when I…yeah, I’ve had this happen 3 times in the 25 years I’ve worked with advisors is, I had a bunch of clients bump into each other at a national conference. And one time it was I was the magnet, I was standing in an exhibit hall, and before I knew it I turned around and there was a circle of eight people around me and all of them were clients. And it didn’t take long before they all figured out they were. And then throughout the conference, they would bump into each other in, you know, lunch, breakfast, and share notes on what I was doing with them. And it was so different.
I think that’s the thing when it’s happened three times where clients have bumped into each other. And when they start sharing notes, I think the thing that shocks them the most is that they think that I work the same way with everybody. Like, sometimes they hire me just for the same reason that you would hire a consultant, to really address a certain problem or a certain part of their business from a practice management standpoint, and then other times it’s just, “I want more balance.”
I remember one client when I first started, he had just hit his 50th birthday and he says, “You know, I’ve been really clear what my goals were up until now,” but he goes, “I’m not as clear. I’d like some support and I’d like to create a vision for the next 15.” So it can be something that you would typically guess any type of person working as an outside consultant or a coach would cover from practice management, and then it could be a specific issue that they’re particularly concerned about and they’ll seek out a coach to get support in that area.
Michael: And all of it for you, like, it ultimately rolls back to this effortless outrageous practice? I mean, is that part of what becomes the common theme for everyone? Just I want to somehow figure out like…I feel like there’s a common feeling for so many of us as advisors. I mean, I guess this is probably true of most industries, that just sometimes it feels like this is harder than it should be, right? Like, “I’m looking around at others and other firms seem to be doing better and struggling less. I feel like I’m working really hard and not quite getting the rewards out of it that I want.” Like, is that the sort of motivator that tends to drive people to engage you in the first place, that sort of something doesn’t feel right, there must be a better way to do this sort of feeling to it?
Tracy: Yeah, it does sometimes but not always. I mean, surprisingly, you would think more people would be drawn to work with me just on that particular theme, but it’s not. It’s actually not the case, and I’ve never really thought about it. But everyone appreciates the tagline, everybody wants that vision, but they really do show up at my doorstep because they’re challenged with something. Something’s not right that’s bugging them. At times it can seem so overwhelming to them that they haven’t even gone to that next step, you know, to the effortless outrageous business vision. It’s just some immediate need is what prompted them to call me. Or they heard me speak and something resonated or they talked to one of my clients and was just curious about the whole notion of having a coach for themselves.
Michael: And what are the…like for this meeting, once a month for one or two hours, most months of the year, like, what do you talk about for an hour or two? Again, like, I know how to think about it in a consultant. Like, I come in and like, “Hey, I’ve got this, you know, CRM operations problem.” And we spend two hours figuring out CRM operations things to make it work and get the report I want, right? Like, I know how to think about how a consultant gets engaged for a couple of hours, but what do ongoing coaching calls look like? Is there a style or like a format of what you take people through and how you run those calls of what you cover?
Tracy: Yeah, and that is a question that I get asked from a few of my clients even, but the process is they do a call prep form. They complete that before we have our call. Now, it’s not mandatory. I tell clients that, you know, taking the time out to work on the business not in the business, as Michael Gerber at the E-Myth would say years ago when I heard him speak. That is a really valuable use of your time, almost as valuable as the coaching session sometimes, just pausing. And that would be a good thing for us to talk a little bit about. About the nature of financial advisory work and how challenging it is at times for advisors to look up. Look at the big picture, look at all the people around them, look at resource allocation, and how to do that in an effective way.
But having them, you know, take the time out to complete a call prep process, I have four or five questions. Just, “What’s happened since we last spoke, what are your biggest challenges, what are your biggest opportunities, and how do you most want to use today’s call?” That makes a big difference because it allows me to be thinking about how to support that client before we start the call. Sometimes we will, at the end of a prior call, we’ll come to agreement on some areas that would be great for us to focus on in the next call, but those can change depending on what happens in the month, what opportunities and challenges come up for them. But some of my clients, by the way, don’t do any call prep. And I had one gentleman that worked with me for eight years and on the first day that we started, he basically said, “You will never get any call prep from me.” And he was honest and upfront. And the coaching worked beautifully for him. It’s not a mandatory exercise, but I think it helps them, and I think it helps me.
And then when we start the calls, like, it’s such a great question you ask because, you know, thinking out loud here, wow, yeah, it’s right. Like, what could you imagine talking about for two hours every month if we weren’t diving deep into some technical practice management area? And it’s, wow, you know, I think about that and these calls just fly by, they flow. And, you know, I get into lots of different modes with clients. Sometimes I’m in a bit of a tutorial mode where I’m…you know, I’ve done, you know, probably one of my most popular speeches ever, it was on my One Page Business Plan. And, you know, so when I get into framing that up for the clients, helping them understand that. I also have meeting structures that I share with clients about how to create a cadence of accountability and transparency, and authenticity, and moving towards big business goals and objectives. So there’s tutorials at time where I actually will send them off may be a handout from one of my speeches and we’ll work through that, and then they’ll go out and apply it. They’ll come back with questions.
And sometimes they just bring all kinds of questions and issues and opportunities, and we just work through them one by one. So it’s very, very different call to call, and as I was saying earlier, person-to-person. It really depends on how they learn, how they process, you know, their learning styles. It’s a big part of how each of my calls go. I tell clients at the very beginning, “My job is to work from a place of integrity, in other words, to show up and to be at my very best, but I’m willing to modify my style somewhat as long as I’m true to myself and I’m not trying to be something I’m not.” But I tell them, “I’m willing to modify it somewhat to meet your needs, but I don’t know how to make those modifications unless I get feedback from you.” So that’s why, you know, we spend a lot of time talking about how to partner and how to collaborate so that they get the most value from it. But it’s very unique and different for each person.
How To Ensure Meetings Are A Good Use Of Time [31:02]
Michael: So you’ve mentioned a couple of interesting tools in here. One Page Business Plan framework, which I’d like to hear more about, and you used a phrase there that I’m just very curious to know quite what this means, “creating a cadence of accountability.” What is a cadence of accountability?
Tracy: Well, all of this started for us when we started wondering about creating self-managing work teams, and, you know, where you really distribute leadership and management to every single person in the advisory firm. So we actually went off, and I myself, in particular, I went off and did a tremendous amount of research. I mean, everything from, you know, going through the certification courses at Holacracy, which I think I would imagine Rick Kahler talked about in his podcast, but yeah.
So I went off and studied that and found some just great resource, so started looking at what some of the high-tech companies were doing, and I thought, “If we were to think about how to structure a great advisory firm amidst all this volatility and uncertainty and in a lot of ways disruption, how could we do that?” And I started to think the high-tech companies, you know, they’re in a very disruptive environment. They have very short timelines, they have a lot of competitors, and I thought, “If we could start to understand what they do and adapt and adopt some of their ideas and bring them into the advisory world, that’d be great.” So that’s what prompted this whole area for us.
But what we found out was that it wasn’t…and that’s where the cadence of accountability, I’ll wrap that up in a second, but what we found out was that it wasn’t really the external structure that was most important, it was equipping each advisor in an advisory firm to adapt, to change. That’s where we’ve actually landed after doing all of this research. But the cadence of accountability is where we adopted a lot of meeting structures from a lot of different sources, where an advisory team can take a One Page Business Plan and they can actually meet on a quarterly review basis as an entire firm, and then they can meet weekly in an operational meeting, and then they can have a daily stand-up meeting or a weekly meeting to basically address what we call “Mount Everest projects.” And those are just one-off projects with a subteam in the firm usually dedicated towards working on that project. And we have a meeting structure for that particular meeting as well.
So the cadence of accountability was distributing leadership and management, and creating transparency where the burden of managing an advisory firm would then be distributed. And the thinking behind it was that if everybody could show up to work every day and bring their gifts, their talents, their wisdom, their experience, and to really be of service to the advisors, the firm’s goals, the One Page Business Plan, then the firm would be much, much better off. So we got really excited about all these different meeting structures as a way to support that agenda. So that’s what I mean.
Michael: And so, kind of literally the cadence is knowing that, you know, we’re going to have a daily stand-up meeting where we’re going to check in on things for a couple of minutes in the morning, we’re going to have a weekly meeting where we’re going to look at these measures or indicators or reports or something, and we’re going to have quarterly meetings where we’re tracking some other kind of key indicators. And the accountability is knowing that there’s a meeting coming up, that you’re going to have to report this, and the cadence is that you do them on daily, weekly, quarterly cycles? Is that kind of the essence of the structure then?
Tracy: Yes. And, you know, so even if the founder or founders are equity partners, if they’re not even in the office, the whole firm knows these meetings happen, they know what they’re responsible for, they know the agenda, they know exactly what to expect. There’s usually mechanisms to track results and who’s accountable for what, and that they use these meeting structures with or without the at least designated leader in the room, and they become part of the culture, part of the DNA. So that’s how we started to play with distributing leadership and management to everybody on the bus, so to speak, as Jim Collins would say.
Michael: So how do you figure out what you’re supposed to talk about at the meetings or measure at the meetings? I mean, I get having regular meetings, but I feel like most of us are not happy with how much time we spend in meetings. Maybe I’m projecting myself a little bit there, but, you know, like, there’s plenty of tired clichés about wasted meetings and death by meeting and overwhelm of meetings, so like, how do you have regular meetings like this and not feel like you’re in a death by meeting environment?
Tracy: Well, we like to frame this particular meeting up as like for instance our weekly operational meeting, which is played off of the Holacracy Tactical Meeting agenda. We blended several pieces of work to kind of create a specific agenda. But we say this is the most valuable hour of the week, and if it’s done well, can produce spectacular results. And at the end of the meeting, we have everybody evaluate its effectiveness. So on a score of 1 to 10, 1 being low, 10 being high, please rate how effective you thought today’s meeting was. And if somebody rates it below an 8, 9, 10, they are then responsible for sharing why they rated it so low, and what they’re going to specifically do next week to increase the effectiveness of that meeting so that it ends up being, from their perspective, one of the best hours of the week that they spend.
And, without, you know, getting into all the details, there’s one part of the meeting that also makes a big difference, and that’s where people get to bring up issues that they’re experiencing in the firm and ask for help. It could be brainstorming an idea, it could be making a decision, it could be talking about a challenge with a client. Knowing that everyone is there in the room to support them and getting the help that they need can make resolving whatever challenge they’re facing really easy. So people actually start…if you run these meetings really well, people actually start to look forward to them because they know it’s going to be a productive use of time, and in a very short period of time, they might get some invaluable support and help for whatever they’re working on. Now, not everybody shows up with an agenda item, but for those that do, you know, we’ve heard time and time again how valuable that’s been for them.
Michael: Yet it’s a striking thing to me that, you know, when I just think of my end, like, what are the most like actual useful productive meetings, it virtually always is a meeting that culminates in one of two fairly related outcomes. Like, either we finally made a decision about something, right? Like, there was something that was lingering, we finally got everybody in a room, made a decision, and now we know where the heck we’re going and we can get things done again. And I think that feels like a really productive meeting because often those challenges can sometimes build up in businesses for a while, so the productive meeting is we actually got something decided so we know where we’re going, or it’s the second version of what you were just saying, which is we actually solved a problem. Like, I had a problem. I had a thing and didn’t know how to figure it out. We got everybody in the room together and freaking solved it and got it done.
And just that whole idea of what would meetings look like if the primary purpose of every meeting was you have to decide something or get something done. And if you don’t have something to decide or get something done, don’t bother having the meeting. Suddenly your meetings get a whole lot more effective. And the ones that are just talking for the sake of talking kind of go away. Like, look if it’s a report, just share the report. Don’t have a meeting unless there’s something to be cited or something to actually be done.
Tracy: Yeah, and that’s part of why these meeting structures are received well and so effective, is because there’s…like, the agenda is made in different ways. One is there could have been items that people didn’t have time to address the prior week. It could be as the check-ins at the beginning of the meeting where people share the status update on various things that they have responsibility for. Somebody might have a question or see something that’s concerning or want to just discuss it in general. And then another thing that comes up is people come to the meeting with an agenda item. And so it’s very, very purposeful. People show up and they know exactly what to expect, they know how the process is going to work, and, you know, you can see progress. And you’re tracking these things visually on a Google Docs spreadsheet, on the big screen in the conference room, and people see who’s responsible for things. They see progress or in some cases lack of progress, and they know what to expect. So people in general really like these.
I will say this has been fascinating. Through the years coaching, I have found about 15%, if I was just to make a guess, about 15% of my clients don’t see the value in some of these types of exercises. For whatever reason, it just doesn’t click. And oftentimes those are my clients that are actually most challenged at running an advisory firm and leading other people. And I’ve had on more than one occasion a few clients say, “You know, we’ve been doing this quarterly review meeting process or this weekly meeting process for a while and I’m just not sure if we’re getting the value,” and they’ve contemplated stopping.
And in every single one of those cases, you know, they report the story after the fact to me because I’m horrified when I hear it, you know, in some cases, you know, but after the fact they say, “Yeah, I brought it up to the team and asked everybody if we really should be doing these meetings and every single time the staff has said, “Oh, you know, we absolutely want to keep this meeting. You know, it’s one of the best things that we’ve done.” And that’s because leading has been so challenging for the advisor they just…they don’t have that natural ability, so a meeting structure like this supports everybody in the firm at a level I think they’re not even aware of.
Michael: Interesting, interesting. And part of your work is you’re giving advisors some of the templates on how to do this or at least helping them figure out how to make their own templates? Like, where does Tracy get involved in how advisors figure this out?
Tracy: Yeah, we did a lot of research and we have the templates, but we like everybody when we start working with them to use the templates that we’ve developed just until they start to understand that there’s agendas within agendas with all these meeting structures. For example, when you go through each step, like one step is a check-in, and there’s a lot of different ways that you can check in. You can just talk about what’s your inner experience in the moment, so what you’re maybe distracted with. You could talk about a couple good things that’s happened over the last week. You could come with a funny one or two-sentence humorous antidote. It could be lots of different ways. You can start a meeting and have a check-in where everybody shares an appreciation. So there’s lots of different ways that you can start a meeting.
And we like to rotate through some of those over time so that you start to develop that confidence in the firm. If everybody in the firm starts to look at what’s working, that will help the firm over time. If everybody starts to learn how to appreciate everybody else in the firm that will help the firm perform better over time. So there’s an actual purpose of the check-in, and that’s to get everybody grounded in that particular meeting, present and grounded.
But we also add other things on top of it. So there’s agendas within agendas as you go through these particular meeting structures. And we like to have everybody start with what we developed, but we also encourage them, once they get it, they get the essence behind why it’s structured the way it’s structured and the benefit, the multiple benefits from the way it’s structured, then we say, “Add in the things from your strategic planning process, for instance, that’s really worked well for your firm in the past.” And then as time goes on and they really own these different meeting agendas, then we encourage them to take them to a whole another level. And that’s, you know…but it’s really understanding the essence behind and the purpose behind all the different parts. That’s what we want them to walk away with.
How To Format A One Page Business Plan To Create Clarity For Employees [44:33]
Michael: And so, is that true of the business plan as well? You mentioned a few times a One Page Business Plan structure for setting strategic planning for the business. And, you know, I know a lot of advisors that struggle with strategic planning of either it’s too long or it’s not long enough, or it’s detailed or it’s not detailed enough. Like, you should plan for one year or three years or five years. Like, all these open debates about what strategic planning should look like. So, share with us a little bit about this One Page Business Plan and your perspective on what strategic planning should look like for advisory firms.
Tracy: Well, similar…like, when I started working with advisors 25 years ago, it wasn’t uncommon for them to write 50 to 100-page financial plans. And there are still advisors out there that deliver a big binder to this day. But as time went on, you know, I started to see eight-page summaries. And then one of my favorite stories was a person who said they summarized the essence of a person’s financial situation on one piece of paper, and to their great shock and surprise, after they did that for a few months, they started telling clients that if you don’t want to take that one piece of paper, you don’t have to. And they were really surprised at how many people left it on the table.
So, you know, when I started my business, I actually wrote a plan, this would be more like what a consultant would do, but there was one engagement that I had, and I actually wrote an 83-page business plan for a client. And I know for a fact, you know, they weren’t able to use it. It was just too long and too much information. And so like advisors, we started to play with, “How can we hone in on the things that will move the needle?” And so I started doing a lot of research on that. And of course, anybody who would work in this area would come across Jim Collins’ book, “Good to Great.” And so I went and looked at his material around core values, purpose, and 10 to 30-year stretch goals, and then kind of blended that with a model of a one-page plan I had seen from Verne Harnish. There was a book I used to send out to all my clients years ago, it was called “Mastering the Rockefeller Habits.”
And so what I did was I blended the very best of Jim Collins with what Verne Harnish had done, but made it really, really simple. And that has been the magic in this whole process. I think in the early days when I was formulating this and playing with lots of different ideas, I shared it with a client, he went and did a quarterly review meeting with his team and came back and said, “Our receptionist said for the first time in the seven or eight years that she had worked there, that she finally understood what the firm did, why her position was so important, and how she could make the biggest contribution to the success of the firm.” And that was kind of our gold standard. How can we create a strategic process that every single person in the company could understand? And so we developed that and put some handouts together.
The Six Items To Focus On In Order To Effectively Engage Employees [47:47]
Michael: Can you walk us through just a little bit of what does that process look like? Like, how do you…what are the steps on a One Page Business Plan that could drive towards that sort of clarity?
Tracy: Yeah, what it was is, and it was only six items. We only have six items on our One Page Plan. And you can have support documents. If you need more detail for other reasons, you can have those. But we have people write this on their letterhead, so it fits on one piece of paper. And it’s, what are their core values, purpose, and big stretch goal. So core values, why they do what they do, core purpose, you know, why they do what they do, and then stretch goals, what they most want.
Then we have them identify the most important objectives for the firm over the next 3 years, 12 months and 90 days. And we used to encourage them to write no more than five items per timeframe, now we’re down to three at the most. And ideally, if you can get one or two items per timeframe, that’s even better. It’s just allowing them to have that clarity and focus is what moves the needle. That’s what’s been making the biggest difference. But it took a long time, you know, to simplify it at that level. And that has been the thing that has by far worked the most for us over all these years, is when we got it down to those six items.
Michael: So core values, purpose, big stretch goal, and then objectives over 3-years, 12 months, 90 days. Like, those six items are the big six.
Tracy: Correct, yes.
Why It’s So Important To Know Your Core Values [49:31]
Michael: Interesting. And I guess I’m imagining, like, as you go through with them and do strategic plan updates, your core values and purpose probably don’t move much. Your big goal might change over a bunch of years, but probably not much from year-to-year. And then you just kind of reset your objectives, your 3-month, 12-month and 3-year objectives just get reset as you regularly update this?
Tracy: Yes. So we have everybody go through a quarterly review meeting process where they do a check in, they celebrate victories and successes, and then we…I call it stress testing their One Page Plan. Step number two is to review core values, purpose, and stretch goal. And Jim Collins calls it “BHAG,” big hairy audacious goal. But we have them stress test. And what I mean by that is a lot of times, and I’ll see it with advisors, their first draft of core values, for instance, are kind of the platitudes you might see in any large corporation. The advisors that select core values that resonate with their heart and their soul, those are the ones that outperform their peers from so many different levels. There’s a passionate connection to who the advisors are and the work that they do.
So if you pick your core values, and we recommend that you have six or less, and ideally three four or five, that that would be a sweet spot, that you want to pick core values that represent who you were when you were in sixth grade. And I know in a larger firm you’ve got to look at that exercise collectively, but when you can passionately make the connection between who you are and what you are agreeing as a firm your core values are, we start to see magic happen. You know, you’ll hire people because they align with your core values, and you will fire people because they violate your core values.
Every single one of my clients that have engaged in this process at a deep level have gotten more than their money’s worth. And I can talk about core values as a decision filter here in a minute, but we’ll have them stress test it. So we’ll have them look at their core values, purpose, and stretch goal, and if it isn’t alive and present in their advisory firm, meaning it’s top of mind, it’s the core values, for instance, is how employees are interacting with employees, how employees are interacting with clients, how the firm is interacting with the community that they’re serving, if those core values are not present, we encourage them to go back and look at what they’re doing and revise them or put a strategy in place to bring that core value back to life.
Like sometimes we’ll say a core value is dead on arrival. You know, it’s just it never had any alignment, there’s no passion for them around it, it was just something they thought they should have. Like one of my favorite core values that people would pick on their first draft was fiduciary. And I said, “Were you fiduciary in sixth grade? Be honest with me.” And they laugh. So they’ll go and revisit that. So every three months, they have built in and systematized checking to make sure that One Page Plan is on the mark.
So after they review values, purpose, and big stretch goal, making sure they’re alive and present, they weren’t comatose and in a coma, wake them up or switch them out, then we go into another step in this review meeting where we talk about how they performed in the last 90 days. And this is where the firm gets a chance to learn. They get to learn on, “Wow, in the last 90 days, when we looked at our objectives, did we bite off more than we could chew? Or on the other end of the spectrum, did we not push ourselves hard enough?”
One of my favorite stories is an advisor I was working with for years, and when we formulated this thing, he implemented and said, he goes, “We got our 90-day goals, all of them were achieved within 30 days.” He said, “Who knew the power of focus could be so effective?” You know, so you’ll see when you stop and pause and ask everybody to think, “How are we doing? You know, are we pushing ourselves hard enough? Not pushing ourselves hard enough?” And learning from that every three months. That’s when you start to see some big shifts and changes.
And then the 3-year and the 12-month and 90-day goals, so once you know what your big stretch goal is, it’s easy to figure out what your 3-year goals are, and then once you know that, it’s easy to know of course, what your 12-month goals are and your 90-day goals. And so that’s pretty easy to update. It’s really making sure the values and the purpose and the stretch goal are right on the mark because that is what I see changes a culture and a firm more than anything in my experience, is when people are really aligned and connected with those three areas. You’ll see it show up as a decision filter.
I had a client tell me a few months ago that he walked into the office and they had some cubicles, and he saw a couple of his team members across the room, and he overheard them using their core values to make a decision. And, you know, that’s when he knew it had really, really impacted what the firm was doing, when everybody was using that material even if one of the equity partners was not around.
Michael: Yeah, it’s…this is certainly something that it took me a long time to really own or accept in my own business world, like my own evolution as a business owner. I feel like early on, you know, we’re just trying to grow, we’re trying to survive, right? Like, if they can fog a mirror, they’re a prospect. Anybody you can get to get in the door. You’ll do anything for anyone because it brings in revenue, and more revenue is better than not having revenue when you’re getting started. And then at some point, your time fills up and you don’t have a lot of spare time anymore, and you’ve got a lot of clients to serve, and maybe there’s some staff, and there’s some other stuff to work on. And you get stuck in not having enough time anymore to spend time working on the business because you’re just spending so much time managing the people and handling the clients and responding to all the issues and problems that crop up.
And this sort of stupidly obvious outcome of getting through it that I still remember kind of hit me as a bullet when it happened and I really internalized it was just, you know, I wanted to spend more time planning and trying to think more about the business, and I couldn’t find the time to spend at the time to think about the business. And just sort of had this realization like if you don’t have the time to do it because of all this stuff, then do less stuff, do less things. And then that immediately leads to the question of figuring out how are you going to filter out what you’re not going to do? And the answer becomes, well, you set a strategic plan about where you’re trying to go and the core values that you want to embody, and then you’ll usually find pretty quickly there’s some things that you’re doing that don’t really fit that that could probably be let go.
And it’s the letting go and really accepting that you can’t do more stuff until you start doing less stuff that, at least for me, was the real breakthrough moment. The strategic planning that even I do now for myself and businesses is all about figuring out what are these filters of what things am I going to spend my time on and what am I not going to spend my time on because the time isn’t flexible, we all have the same amount of hours in the day and week and month and year. But it wasn’t until I really internalized, like, the only way this ever gets better is I just have to do less stuff and start saying no to things because I’m never going to get more time. You just have to do less.
Tracy: Yeah, and that is a very challenging thing for I think everybody. In the world that we live in today, the amount of change coming at us. I tell clients all the time, “Well, there’s no generation before ours that’s dealt with this much information coming at them.” I spend a lot of time with clients talking about the 80/20 rule. So 80% of the value comes from 20% of the actions, 80% of your revenue comes from 20% of your clients. I mean, we can apply that endlessly in advisory firms. And it’s a tough, tough, journey for some people.
I think, you know, looking back over the years, the advisors I’ve seen that have done really well are those who have been able to focus on the few things that matter and move the needle consistently. There’s some kind of way that they have found to not…you know, that bright shiny object syndrome, right? They don’t get off-track, they stay focused on a few things that matter, and they actually move the needle on those things. And so I think every advisor, every successful advisor has to go on that journey, and they have, you know, these tools that I’m talking about that helps.
We’ve been doing a lot of research on what creates and supports great leadership in advisory firms. And, you know, when you think about what advisors are dealing with on a day by day basis, the amount of stuff, it’s a very detailed process. So there’s never a shortage of things to do. It doesn’t matter what their CRM system is. I mean, there’s…we’ve heard lots of jokes about how many actions are in certain CRM systems and that it can be hundreds at times for senior advisors. And so there’s never a shortage of things to do. So how do they stay focused on the few things that matter? And that is a critical skill that I have found that’s necessary for success. And success I would say with less stress.
Michael: Yeah, that’s the interesting effect. You know, when you start stripping out all the stuff that didn’t really actually matter that much anyways, the additional time is…and just the things you’re not dealing with that you probably didn’t really want to anyways but weren’t able to until you had the courage to let go, like, it’s amazing how much less stressful it is on the other side of that.
Tracy: Yeah. You know, and there’s another area that I like to spend a lot of time on with clients, which is picking what I call a target market. I shy away from niche, but I like target market because it’s strategic in nature. And, you know, I tell clients that also will support this and that they pick a community of people that I say are going to be lucky because an advisory firm has made a decision that they’re going to serve them. And the intention is that by picking a target market that they can proactively provide service, that they know that particular community’s issues and challenges in some cases actually better than they do themselves. That when they show up to an advisory firm, where the firm has actually courageously made that decision, at least focus on them. It doesn’t mean they have to shut…
And this is where people get stopped and stuck and don’t choose a target market, is it doesn’t mean you shut the doors and don’t let anybody else that doesn’t fit your target market in as a client. What it means is you actually use precious resources, time, money, and energy, to actually focus on a lucky group of people. And when you do that, you can proactively create value that they’re just not going to find anyplace else. You know, I use this word “magic” every once in a while, I just did earlier today, but it’s where I see the magic happen is when you get everybody excited. And when you get new advisors coming on board, because you have a focus, it allows them to get up to speed faster, to feel more confident that they can provide tremendous value to clients. I mean, we could talk for a long time about all these different things a person can do to handle just the overwhelming nature at times of being an advisor.
Michael: Yeah, it’s funny. I still remember I was talking to an advisor last year who had, you know, made a particular decision to go into a niche or target market actually here in our D.C. area. So D.C. has lots of government employees, given the home base is here for federal government. And so he had a mixture of, you know, some local federal government employees and lots of people and lots of different businesses and industries around D.C., and he made a decision to focus the business on just working with federal employees. And, you know, really dug in and learned all the FERS and CSRS and all the special retirement plans and acronyms for government employees.
And the comment he made to me, you know, he said the thing that surprised him most about how his business changed when he focused is how much less time he spends producing financial plans now. And it’s not that he doesn’t do really in-depth detailed financial plans, he does, but the problem actually was that every time he would go do a plan, he would spend hours and hours of time like researching and analyzing all the stuff in the client’s life so that he gave him a really good accurate thorough plan because he got paid for planning and so that was what he did. And once he picked into his target market and just went after government employees, he realized, like, all the hours he was spending researching went away because they’re the same problems once you focus on consistent clients. It’s like he knew everything there was to know about all the weird esoteric rules on TSP plans and FERS and CSRS and all the rest, and he just knew this stuff.
And he was adding just as much value to the clients because he had all this expertise that they didn’t have, that he could convey in the plan and give them advice and good strategies, but he didn’t have to reinvent the value of advice every time he met with the client, which is what I think most of us end out doing without even realizing. And the deeper we go on planning, the more we tend to do it because we try to go deep and we try to research things, and we try to share new insights to demonstrate our value. And we spend all this time trying to demonstrate our value because we have to learn it every time we deal with a new client. And that goes away when you get the focus because you learn your particular target client and then you’re just sharing that expertise you’ve learned over and over and over again. And it gets a whole lot easier. Just to me is one of the most striking versions of how those focus filters make everything easier.
Tracy: Yeah. And, you know, it’s such a scary concept for most advisory firms. You know, it’s like if there was a short list of things I wish every advisory firm had, this would be on that short list. But, you know, once the person…like, when they first start, it’s not as magical as we’re talking about it. When you first start, I tell clients, “You know, draw an imaginary line down your advisory firm. And on one half is your business as it exists today, the clients that you’re serving, but on the other half of that imaginary line, that’s your future. That’s where you’re going. That’s your better life. It’s better service for your clients. You know, more efficiency, whatever your dream is.” And target marketing fits on that side. It’s front row and center, cannot recommend something more than that. Just the…when you awaken a community of people in the advisory firm, serving a community of people where there’s resonance and they’re proactively providing tremendous value with every single interaction, I don’t know if it gets any better than that. So yeah, it’s a big opportunity, and if people can just realize that they don’t have to get rid of their existing clients.
And I tell this to clients all the time, too. When you’re first starting, you know, I say, “Create a hypothesis because you want the target market to be a great fit. So create a hypothesis of who you think that ideal client will be, but be prepared to change it if it doesn’t pan out the way you thought it was going to.” So I’ve had clients go through two or three tries before they found the best fit client, but once they find it then it’s off to the races they go. That’s when energy picks up.
And then I always tell clients, it’s like, it’s so easy to create value for a target market because of the focus. I say like, “You know, pick a target market and go spend an hour and do Google research and write a 10-step checklist for that particular group of people.” You can do it in very little time. Now, obviously, over time, you’ll create tremendous value. I’ve had clients write white papers for their target markets. I’ve had them bring in outside experts to speak to them. They’ve purchased books for their target market and sent them to them. So there’s just so many ways to create the value.
And then once they get really well-steeped in it, the other thing that I have found is as time goes on, it becomes more and more painful to work outside of the target market. Like I always say, you know, when you first start this journey, if a widow shows up with $10 million, by all means, you can bring them on board. It’s not shutting the door down, it’s just focusing your resources more effectively.
Michael: But when it goes well enough all of a sudden you’re like, “No, I really don’t want to actually deal with this person because it’s going to be 10X…you know, they might have more money, but it’s going to be 10X the work because I’ve got to relearn a whole bunch of stuff I haven’t been doing. And they’re never going to refer me to anyone in my target market, and they don’t give me more visibility, and there’s no multiplying effects by working with this person that’s not in my target market.” And all of a sudden, like, people that might have seemed like good clients in the past don’t seem like good clients anymore because they’re so much more work than the much easier process of working with people in your target market, that you already know cold and you can deliver the value in a fraction of the time.
Tracy: Yeah, and, you know, even for myself, you know, I’ve been focusing on financial advisors. And many, many years ago, somebody in my study group equivalent, we call it a Mastermind Group, but I’m interacting with some of the best coaches in the country every week. And I’ve been doing that for 15 years. And one of my study group members referred me a client outside of the advisory world, and I said, “No, I’m not interested.” And they said, “Please, please, just consider.” I said, “No, you don’t understand. It’s just too much work. You know, it hurts my brain cells to even think about it, you know.” And long story short, I did agree to have the conversation, and the person hired me. And I said, “Look, I will not spend one minute researching your profession, your world, what’s in it. And if you want to hire me under those circumstances, I’m open to that.” And they said yes. And we ended up working with each other for seven years. And they got value from it, but I never lifted a finger. And they knew that before we started.
So coaching, you know, it works even if you hire a coach that doesn’t have expertise in this profession. But somebody like myself and lots of other choices that advisors have, you know, we live, breathe, and think it. Every single day I’m working with some of the top advisors in the country. And I tell clients, it’s like, “When you hire me, you’re tapping into that community, that wisdom that I’m getting from the community.” And I’ve even had, Michael, it’s been interesting, I’ve had people actually create something really brilliant and say, “You have my permission to share this with all your other clients.” Like, they start to see that, “Wow, when I contribute something good, it can benefit everybody.” And I’ve been the benefactor of that. I’ve benefited from other people’s wisdoms and brilliance. So it’s a really beautiful concept and experience for people that they tap into that community and on a coach, or in your listeners’ case an advisor who specializes. And that makes a huge difference from a value proposition perspective.
Michael: So you mentioned that one of the common challenges and I see this all the time as well, of advisors talking about focusing into a niche is just the fear of what business I’m going to lose or walk away from if I go into this niche. I’m curious then of what other kinds of common challenges and blocking points and issues do you see that crop up with advisors, right? Like, what else do we have where it would be really, really good if we just did blank but we’re all stuck in our heads and we don’t want to do it, but it really is good if we do it in the way that target marketing is? Are there other examples like that that come to mind?
Tracy: Well, that one is always at the top of list because it is so scary. And the perception is people are so scared to do it. And let me just say one last thing on it because it just came to mind and it might help people understand. That target marketing was developed back when big companies like Procter & Gamble, they were selling soap, bars of soap. And they realized, “Pretty much anybody in America can benefit from a bar of soap, so how do we differentiate our soap from somebody else’s, and use our limited marketing budget most effectively?” So it’s really…you know, it was designed to help people use resources more effectively. And that’s definitely what it does.
Michael: Well, I think even more to the point in our context, like, it was designed to help people figure out how to stand out in a marketplace where it’s hard for consumers to differentiate something, right? In the context of bars of soap it’s I guess because it’s kind of a commodity, right? Like, it cleans me. Okay, I get it, how else are you going to differentiate a bar of soap? So you have to start coming up with more refined target markets. But I feel like we collectively deal with this in the advisor space right now as well. Like, to me the best example of the fact is that most “find an advisor” websites today, like, all those portals give consumers a way to search for advisors by zip code.
And to me just it’s a sad statement when for most of us our greatest differentiator about the incredible value that we provide to clients is that our office is geographically convenient to their home or office. They’re not searching by expertise, years of experience, specializations, any of that. We encourage people to search by zip code because geographic convenience is the only way we’re differentiating ourselves. And to me, that’s just…like, that’s our own version of consumers so can’t figure out which one of us to choose, they just pick whichever one happens to be convenient to a zip code. So what does it look like when you get a target market and differentiate more effectively so that consumers actually find you for you and not the zip code of your office?
Tracy: Yeah, and they’re just adding so much value with every single thing they do. Like I just had a client telling me this story where executive at a large corporation came in and interviewed him, and my client could speak his language. He proactively, you know, was actually a couple of steps ahead of him, that this gentleman could feel it and made the comment, “Wow, within 20 minutes of speaking to you I knew I was going to hire you. You so outperformed all the other people I’ve been talking to.”
But, you know, I think kind of back to what you just said, what’s challenging for the consumers, they just aren’t educated. They don’t know what the choices are. I mean, that could be several phone calls in and of itself just to address how to communicate to the general public. It’s the thing that I feel saddest about. There’s all these great advisors and very few people know they exist, and they don’t know how to find them. They don’t know how to hire them. I think there’s a huge opportunity for everybody in that area. I think it’s an educational process, and, you know, just, again, I feel for the consumer out there in the world that we live in today.
Common Areas Where Financial Advisors Tend To Get Stuck [1:14:52]
Michael: So are there other common kind of blocking points or breakthroughs that you tend to see in your coaching work with advisors? I mean, are there are other common areas where we tend to get stuck?
Tracy: Yeah. You know, maybe not just defining it as being stuck, it’s just it’s things that if people do them will make a big difference. But, you know, I’ve played for many years with this concept that I call “The Essential Formula,” which is creating alignment between strategy and your target market, your ideal client, the services that you provide them, the systems and technology that you use to serve them, the people that you hire to serve them, and your marketing strategies. And I have seen, you know, through the years…I mean, we’ve talked about strategy, we’ve talked about client selection, and then service menus, just to fallout from that, once you get clear on your target market becomes very easy to figure out exactly what you’re going to offer those clients.
Then we get into systems and people and marketing. And the systems and technology, it’s not an area that I specialize in, but it’s an area I believe distinguishes the most successful advisors I coach. Those that show up at my doorstep, that have a natural ability for systematizing, I believe they outperform their peers in significant ways. And it could be something as simple as just keeping their business model and their service menu in the simplest possible way. Like really honing in on that 80/20 rule, the few things that will make the biggest difference, or it could just be somebody that is absolutely masterful at systematizing.
And, you know, I’ve made some jokes with my clients who’re just really gifted at this in this area. I’ve said, “You know, if I was to give a speech about what are the things that the most successful advisors do, that never makes it to the front page of the, you know, the trade magazines, this would be definitely one of them.” So I think systematizing, I’ve seen that through the years. Those that have that natural gift and ability, they’re able to kind of look on multiple levels, not just one area, Michael, they can kind of globally look at the whole business system, and they can look at one process. So they kind of see and think in systems. So that’s one thing.
And then I think people that…you know, your biggest expense in any advisory firm are your people. And we’ve all heard how there’s a dearth of talent. It’s one of the biggest concerns I think nationwide. Right before the recession, the biggest issue I was hearing was how difficult it was becoming to attract truly talented people. So I think anything around that area of the business is going to pay off in huge dividends. How do you create a culture that attracts people and keeps people? How do you manage that resource that you’re spending an enormous amount of money on? You know, where 70% or more of every dollar spent in an advisory firm is in this area. So how do you maximize that investment? So I think that, you know, we could again talk for hours about all the different things that go into managing advisory teams. And that’s something we’re doing a lot of research on currently.
It started by looking at leadership, and it’s led into high-performance and high-performing advisory teams. So we’ve been doing enormous amount of research. It kind of takes me back to my Hendricks days, where we’re drawing on all those conscious living skills around, you know, telling the truth and taking responsibility and listening. Just basic, basic, communication skills that really move the needle. Again, if we’re going to talk about things that really shift an advisory firm, is great communication skills among all the different team members. But we’ve been really looking at the leadership material because it’s a way to frame up all those soft skills. We’re finding this whole thing around the complexity, the detailed nature of the work the typical advisor does. Again, it’s really easy to keep their head down and not look at the bigger picture. Like all the different people, what the strategy is, how to make…you know, what the systems and technology are.
I can’t tell you how many times advisors just get busy, and they lose sight of one of their most important jobs, which is to lead in that whole area. It’s like I think all the advisors that I’ve coached over the years, I don’t know if any of them have had any formal leadership training. You know, it’s often times they’ll start with 1 or 2 employees, and before you know they’ve got 20 or 30, and they’ve never had any formal training at all, you know. And probably one of the most important levers that any advisor has, in fact, we’ve seen some research that shows you can get up to a 38% increase in overall firm performance just by improving your leadership skills. So this whole area of people management is it’s another, I think, untapped area.
And maybe one last comment on that before I pause is people, I think they…if I go back and just think about all my clients, like, the ones that have seemed to create success more easily than others, they’ve all understood this one aspect even to the point where they won’t hire somebody unless it’s a really, really good fit for the firm, knowing one bad fit employee can really cause a lot of havoc for everybody. So anyway, it’s a huge area of opportunity with advisors.
Michael: So where do you see, like, leadership training going? I mean, I feel like there’s not exactly even a lot of options for us in the advisory space as it exists right now.
Tracy: On that note, even like when I was working at Hewlett-Packard, we had a budget, an HR budget to bring in the best leadership trainers in the country. And even with that, it was what we call episodic training. So you’d go off-site, you’d go through a training. They’d create an artificial environment, and everyone would enjoy it, but then we’d all go back to work, and we wouldn’t be able to apply it.
Michael: And then we’d all revert back to whatever the normal habits were that we’ve had all along now that we’ve come back from this excursion and get stuck in the same ruts?
Tracy: Yep, absolutely. So we started looking at all the options, seeing this as an opportunity, and it…what prompted it, one of them was my senior associate, Sandra Wells. She encouraged me. I was asked to give a speech, and we were thinking about what’s the next topic I’m going to choose. And this was in the top three, and she strongly recommended that I pursue this topic. And it’s just opened up some great doors for us.
But yeah, so I started looking at all the options out there, and what happened is it was able for us to tie in all the things that we had known to work in advisory firms. Like I said, it was kind of like an umbrella structure or framework, so to speak. But yeah, we went and started looking and I found an assessment. I’ve never used any assessments in my career until now, but we found an assessment. It’s called “The Leadership Circle Profile,” and we’ve been using this. And it has been a game changer. It’s basically helped advisors understand what great leaders do.
This is a worldwide assessment. There’s been 1 million evaluators. It’s a very sophisticated 360-assessment with algorithms and lots of norm databases that they run each advisor’s data against, and they get essentially a really strong picture of how they’re doing in this area. And so we’ve been building out, like, not just giving them the feedback on how they’re performing as a leader, but we’re also building out programs to help them develop leadership skills. So that’s what we’re most excited about in my office these days, is playing with this material.
The Kinds Of Problems Advisors Seek Out Coaching To Solve [1:23:26]
Michael: For advisors who are interested in some of this direction around coaching, can you just talk a little bit more about, like, who’s the typical advisor that I guess engages with the coach in general or engages with you as a coach in particular, since obviously, you know your advisor clients more than everybody else’s. But, like, who seeks out a coach or who’s a particularly good coaching fit for you?
Tracy: It’s interesting because I always tell everybody the reason I’ve been successful in this space is because I work with successful advisors. And it’s just so interesting that typically the most successful advisors are the ones who seek out coaches. And so it just makes it really easy for somebody like myself.
Michael: That’s an interesting point. The most successful advisors tend to seek out coaches. So they kind of find their way to you. So what is it that’s…I mean, I’m going to guess it’s not literally coaching seeking, maybe it is, but, like, what is it about successful coaching seeking advisors do you think that’s making them successful, that other people are missing out on?
Tracy: Well, just it goes back to…it’s like half the job is technical and the other half is what’s getting in the way of you easily implementing ideas that really aren’t that hard. When somebody realizes that we all have areas where we’re challenged or we’re not moving forward, it’s just it’s usually an inside-out journey, and those that understand that are the ones that, in my experience, have been the most successful advisors. I have an assessment with 100 items on it. It’s called the “Effortless Outrageous Business Assessment.” And I had it from many, many years ago. I haven’t shared it with people for years.
But I had this one advisor from one of the largest independent RIA firms in the country. And he took the assessment, and he called me and he said, “I can honestly tell you I could answer yes to all 100 of those items.” And it was a really tough assessment. I’ve never had anybody say that. Then he goes on to say, “And I can honestly tell you, Tracy that I can, you know, stand to improve in every single one of those areas.
Michael: So it’s that, like, continuous learning, continuous improvement attitude, and mentality that would tend to make you want to seek out coaching and engage in coaches and recognize that the journey is never done, that’s what drives it or that’s what seems to drive the successful folks?
Tracy: Yeah. It’s just, you know, it’s like people play with it around failure. It’s like every failure is an opportunity to learn and creating a learning organization. That’s a big push that we have right now in my business. But just anybody who’s wanting to get better and is curious about if they can get better. And so that’s the typical person that will seek out a coach. And those are typically the people that are most successful in the profession.
I remember when I first bought this house I live in 10 years ago, I had another guy come out that was…he was actually…I have two and a half acres. He was assessing the health of my trees, and he was a arborist. And he and I were talking about how, you know, we basically had been a student of some similar authors and personal growth and business, and we’d both benefitted tremendously. And he was just scratching his head saying, “I just don’t understand why everybody doesn’t access this information. It’s easily available.” But in the community where I live, which is on south part of an island, it’s you rarely meet anybody who’s interested in studying these types of things.
Michael: For advisors who are interested or thinking about coaching maybe for the first time, like, what does coaching cost? I mean, what should people come in with a realistic expectation about what it costs for these kinds of engagements of an hour, a few a month on an ongoing basis?
Tracy: Yeah, so again, I don’t know what everybody else is charging, but I charge around $10,000 a year, at a minimum starting point. So we’re looking to work with advisory firms typically with about $100 million under management.
Michael: So, you know, they’ll spend 1% of their revenue to make them get better at the other 99%.
Tracy: Yeah, and it’s different. You know, there’s so many great choices now. When I first started coaching 25 years ago, I think for the first 8 years, I was the first coach everybody had, you know, and now, it’s most people come to me after having experiences with maybe 1 or in some cases 2 other coaches. So yeah, it’s a lot of choices. And for those that are looking for a coach, always recommend, especially if this is your first coach that you’re going to hire is to go interview at least two or three people. And you’ll know very, very quickly if there’s resonance, if you connect with that person.
Michael: Very cool. So as, you know, kind of like the OG financial coach, as you look…I guess look back at this over the past 20-plus years of doing it, what do you feel like has moved and changed the most in just the advisory business overall? Like, how we do things today compared to how we were doing them 20 years ago?
Tracy: Yeah, you know, I don’t get into the technical nuts and bolts, my coaching is just about the practice, but I remember Philip Palaveev talking recently about the average size of an advisory firm has grown significantly. And it paused me to stop and reflect, “Wow, when I started, the businesses in general on average were so small, and now, you know, these are going concerns, these are vibrant healthy businesses with lots of employees.” So I think that’s one thing that really struck me. But also something Mark Tibergien had said a long time ago is that the thing that strikes me the most is that the fees in typical have not gone up, but the amount of value that advisors have added has increased significantly. There’s the scope of the engagement, and, you know, all the new technology.
You know, just I remember when reporting and vaults and, you know, all of these things that they were adding, and just all the technology that didn’t exist when I started. And automatic rebalancing and just all these different things. So I think that’s the stuff that has been, taking a moment to pause and reflect, those were some of the big shifts and changes. But as far as the formula, what goes on for an individual advisor, that’s not changed very much. I mean, the similar challenges, you know, that I experience with my clients today are very similar to what I experienced when I first started coaching.
Michael: Yeah, it’s…I feel like sort of one of those truisms that the challenges of business are remarkably common and consistent. I think particularly when you get down to advisory businesses like ours, because it’s a people business, as you said almost 70% of most advisors’ expenses are human beings and staff, so it’s, we’re a business of human beings, manage other human beings, serving other human beings. Like, it’s all human stuff. The technology and the toys are neat to be able to do some things more efficiently and redirect some resources and time and focus, but at the end of the day, it’s a people business that we manage and it’s a people business that we serve. And, you know, human challenges haven’t changed much for thousands of years, that’s why we still read old wise philosophers can find things that are relevant in today’s world.
Tracy: Yeah, and, you know, I joke about that still. You know, you’re not managing paper clips and desks and computers and chairs, you’re managing people, you know. And it’s, you know, what a leader does. It’s their emails and it’s phone…it’s conversations. It’s meetings, its strategic gatherings where they’re thinking about things, but they do that with people, not with inanimate objects. And it’s a people business. And if you understand that how you show up, it’s like as a leader, you’re deploying yourself into each of these situations. It’s like you become the tool. And how present you are, how capable you are of listening, how, you know, efficient and effective you are with how you process, you know, all of these soft skills can really translate into big changes on the bottom line.
And, you know, the type of advisor that tends to hire me comes, you know, batteries included, right? They’re coming all of this in mind. They understand that, but there’s a lot of advisors who really don’t understand the nature of what it’s like to be in a high-performing advisory business, where it is truly centered around people.
How Tracy Defines Success [1:32:28]
Michael: So, as we come to the end and wrap up, you know, this is a show about success, and one of the themes that always comes up is that success means different things to different people, sometimes different things to us at different points in our lives. And one of the things that’s always kind of fascinated me about what you do Tracy is that I know you are…you don’t just do a lot of coaching work with advisors around trying to get focused around how you structure your business and your life to move in your direction of what success means to you, like you don’t just coach advisors about it, you do that very deliberately in how you build your own business and manage your own time and allocate your own resources. And so as someone that takes that kind of deliberate focus around setting your own vision for what success is and then trying to move towards that with focus, I’m just curious for where you stand today. Like, how do you define success for you?
Tracy: Yeah, you know, the lead-in is definitely what it means for me. It’s just living…like I live on southern tip of an island, and I look at two mountain ranges and water, and it’s just paradise. I looked 10 years before I purchased this property. It’s got 1,000 square foot, separate entrance office on it for my business. But, you know, when I left corporate America, it was all about designing an ideal life as I defined it. Every single one of my clients has a completely different definition. But for me, it includes a lot of time off, a lot of time in nature, beautiful place with family that I love. And that is what I have here, and that is how I’ve been defining success, and how I will most likely continue to define success.
Michael: Well, fantastic, and thank you for sharing a little bit of that time and perspective with us. You know, we’ll make sure we get links out to your site as well in the show notes. So for those listening, this is episode 50, so if you go to kitces.om/50, we’ll have some links out to Tracy if you want to go down this journey for yourself, either if you’ve got a coach and maybe you want to try someone new and different or for those of you who don’t have coaches, maybe you just have been wondering what coaching looks like. At a bare minimum, hopefully, the conversation gave people a lot of food for thought about areas that they could do a little self-reflection on. I think we gave a lot of food for thought for everyone listening today. So thank you so much, Tracy, for sharing your story and just sharing your wisdom and experience.
Tracy: Thank you, Michael. I enjoyed it.