What You'll Learn In Today's Episode:

  • Why we should never make exceptions to our processes.
  • When an appropriate time to graduate a client is.
  • How to provide more value to your other clients.
  • What framework you should have in place to avoid having to graduate clients.
  • Why having more clients is not always a good thing.
  • How to respectfully graduate a client.

The decision to graduate a client can be incredibly hard. You may have worked with them for many years, or you may know them outside of your practice. However, if your client is not fitting your processes and you find yourself consistently making exceptions for them, it may be time to let them go. So, in this episode, Micah and Matthew will be explaining how you can respectfully graduate, upgrade, or transfer a client in order to ensure your needs—and those of your clients—are met.

Listen in as the guys share their advice for determining which clients you need to remove from your practice and the clear framework to put in place moving forward so you can avoid this happening again. You will learn the importance of being intentional in your practice, why having more clients does not necessarily mean a better practice, and how to earn referrals.

Podcast Article:

How to Fire a Client 

 If it isn’t working out with a client, it’s your duty to graduate them to another advisor so you can focus on the clients you serve best.

If you’re bending over backward to keep clients who don’t fit your business model, you’re not focusing on the ones for whom you really deliver the most value. In this article, you’ll learn how to fire a client you’re no longer serving so you can focus on those you help best, plus the red flags that tell you it’s time.

Actionable Items in This Article

  • Make a list of your clients with the names hidden and rank them in terms of income. Focus on the underperforming clients, then look at the names and make the necessary steps to graduate them to another advisor, no matter what your excuse.
  • Make another list and hide the account value, then rank the names from who brings you the most joy to who you dread meeting with. Don’t let your biggest sources of stress stick around just because they’re your top earners.
  • Set expectations from the very beginning. If clients know what happens when they don’t follow your advice, it won’t come as a surprise, and you won’t have to feel like a jerk.

How to Know When It’s Time to Fire a Client

Micah Shilanski, host of The Perfect RIA podcast, wants you to know he isn’t just being a jerk when it comes to firing clients. It’s not just because some accounts are less profitable than others, and it’s not because he hates doing favors. As Micah explains, “It’s all about serving the clients we specialize in delivering massive value to.”

According to Micah, when it comes to your legacy “exception” clients who fall outside your usual parameters, you’re not really doing them the favor you think you are. You can’t be everything to everybody, and trying to be will only devalue your services and rob your attention from the clients who most deserve it.

So how do you know when it’s time to fire a client? Here’s one sign: You look at your meeting calendar and see that particular client’s name, and your heart drops. That dread to connect with a client is a clear sign that there’s a problem you need to face. It could be an unaddressed issue in the relationship, in which case it’s up to you to face your own head trash—or it could be that they just aren’t a good fit for your business and you’ve been making an exception for them all along.

Another warning sign: They aren’t following your advice where it really matters. If you typically recommend keeping five years of income in reserves, but they’re more comfortable with six, that’s a negotiable position. If they want to scrap the reserves and invest everything in precious metals (which has actually happened to Micah), that’s an insurmountable problem. If a client isn’t doing what you advise, they aren’t receiving the same value as your other clients.

How to Stay Friends 

Just because it doesn’t work out with a client, that doesn’t mean you have to be the villain, and it doesn’t have to take your client by surprise. Here are two ways to prepare yourself for graduating a client without hurting anyone’s feelings or sacrificing your own reputation.

Set Good Expectations from the Beginning

The best way to avoid an uncomfortable conversation in the future is to set clear expectations today. Here’s how Micah tells new clients what they might expect if they disagree with his recommendations:

“I will not waste my time and your money. If we ever come to a point where my advice isn’t being followed and we don’t have a good rhythm together, that is a hundred percent okay, and we need to part ways. Because let’s face it: We’re way too expensive for you not to follow our advice.”

Setting expectations from the very beginning of your relationship helps make the graduation conversation a little bit easier, should it ever arise. Do it during the onboarding process, do it in your monthly meetings, do it in your newsletters and your emails, and never waste an opportunity to reset expectations around how you best deliver value and what happens when that value isn’t being delivered.

Reexamine Your Client Roster

New advisors often fall into the trap of waiting until some arbitrary milestone to graduate clients that no longer work for their business model. The problem is, you’ll never get to that next level if you’re tied down by smaller clients.

To trick your brain into prioritizing what’s really important, make a list of all your clients, but hide the income column for now. What names stand out? Who are you excited to meet with, and who do you dread reaching out to? If any particular client gives you anxiety or other headtrash—whether they’re a top earner or not—you owe it to yourself to graduate them to another advisor.

Then, hide your client names and rank them in terms of income. Make a plan for graduating the clients responsible for the lowest earnings, and keep yourself on track by giving yourself just a few exceptions per 100 accounts.

As you do this exercise, remember that making an exception isn’t doing your client any favors. If you’re not delivering massive value, you owe it to your client to help them find someone who can.

Resources In Today's Episode:

Read the Transcript Below:

This is The Perfect RIA, in case you didn’t know. Bringing you all the strategies to help your business grow. Are you happy? Are you satisfied? Are you hanging on the edge of your seat? Sit back and listen in while you feel the beat. Another myth bites the dust…

Matthew Jarvis:   Hello, everyone. Welcome to The Perfect RIA podcast. I’m your co-host, Matthew Jarvis and with me as usual, the man, the myth, the legend Micah Shilanski. Micah, how are you today?

Micah Shilanski:  Jarvis, I am doing absolutely wonderful. I am in rainy Seattle with you believe it or not.

Matthew Jarvis:   Wait, you are in Seattle. I’m in Seattle.

Micah Shilanski:  What are the odds? I don’t know how that actually works since as our podcaster are never recorded together.

Matthew Jarvis:   Interesting note, and for those of you that are podcasters, you may scoff at this, but Micah and I follow the same system every single week when we record a podcast, which is each of us sitting at our own laptop with our own headset on and so forth. And we’ve tried when we’re together in the same space to get like a fancy microphone and do it in the same room and it’s just kind of a hassle.

So, we’re actually literally in the same hotel right now. We’re in adjoining like… Next door rooms.

Micah Shilanski:  Not adjoining rooms.

Matthew Jarvis:   Not adjoining rooms. Micah is in the penthouse and I’m down with the servant quarter, but we’re still recording in our own rooms with the same setup. Why is this a critical distinction? It’s so easy to make an exception to your process and to tell yourself, hey it’s not a big deal. I’ll make this exception, which Micah, I thinks segues into our topic today of having clients that are exceptions.

Micah Shilanski:  This is a brilliant segue because the process is key in so many things. If I look at where mistakes happen or where we fail to deliver value, again and again, and again, it’s we fail to follow the process and they normally starts at the top. So, unfortunately that would be me. I fail to follow a process. I don’t set a good process in place. I don’t instruct the team very well on our process. And then we start having issues and this can really come up.

We talked to a lot of advisors recently, and one of the big things that we were talking about with them was graduating clients. We’re going to use the term graduate, just consist. What we mean by that for a little definition, I’ve kind of put it in one or three categories, graduate, upgrade or transfer, but these are clients we’ll talk about, that aren’t meeting our ideal standards, that we are not adding the most value to. That’s what we mean by ideal standards. Can we deliver massive value to their situation? And the answer is no. So how do we do that? Do we need to graduate them? That means they need to work with somebody else.

Do we need to upgrade them? Because maybe they’re at the wrong level of tier of our service and maybe we need to upgrade them and add more value. Okay, sweet. Let’s have that conversation. Or like transfer them to another advisor in your office. It’s kind of the graduate concept of it.

Matthew Jarvis:   A queue for this, would be any client that you look at them on the list and you say, yeah they’re not really a good fitter or I’m not really delivering value, but! And then there’s something like, but they’re family, but they’ve been clients for a long time, but no one can serve them as well as I could. But we live in a small town, but they have a small—whatever it is, we have this but there. So one that we would not take as a client today, and I guess that’s really the way to look at it. If I wouldn’t take this person as a client today, they cannot be in the practice now.

Micah Shilanski:  Jarvis, and another thing that really comes up on this, maybe we’ll get a little bit more in the head trash. Is that aspect of saying, well, Micah, you don’t understand it’s a small client. They don’t really take that much time. Okay for one, I’ve been doing this over 20 years, I do understand. But on time of that, great. How many of those just one clients do you have, that are small accounts that don’t take that much time. I was talking to an advisor the other day and Jarvis, his combos are all these small accounts that really doesn’t take that much time. It’s over half of his book! He had 480 clients, of which only 200 were in that ideal category that he wanted to work with.

I’m like look, you can’t say that 280 clients are not taking up time. That’s going to be there. They take up service time. They take up hassle, more importantly, they are a chamber in the compliance wheel of Russian roulette and the question’s going to happen, when is that chamber going to come up? And if you are not delivering value and guess what? If you’re already treating them in your mind as a small client, that you’re doing them a favor that you’re just bring them on this. You were not delivering massive value. You are setting yourself up for a problem.

Matthew Jarvis:   You really are. Here’s the thing, right? So if these are a small client, someone says, hey, they’re not taking very much time. I always like to push back on myself and Micah you as well and say, tell me how much time they are taking. Show me where you’re measuring the amount of time, because it’s easy to say, oh they don’t take very much up. Great. Well, how much time is it? Is it seven minutes? Is it 40 minutes? Is it two hours? 99 times out of a hundred, when an advisor tells me that a client isn’t taking very much time, they have no idea how much time that client is actually taking.

This is where you can fall into that trap, especially newer advisors. You can say, hey, these people aren’t taking that much time. When I get more clients, then I’ll graduate them. The problem is you’ll never get to that more client level, if you’re sort of hamstrung or if you’re tied down by these smaller clients or these clients that aren’t an ideal fit.

Micah Shilanski:  And Jarvis, that’s really a key distinction that we’re going to make right there, is great when do I pull the trigger on this? When do I make this change? I’m going to tell you, I am going through this right now. And I am very uncomfortable on a plane ride down here. I followed the exact advice I gave to a dozen plus advisors, I talked to this last week. I followed my own advice, which I did not find very comfortable, on what do I need to do? And what clients do I need to deliver massive value with. So before we get into those steps though, short of people just think we’re a bunch of jerks talking about firing clients, because they’re not profitable. That it’s not what we’re talking about. What we’re talking about is clients where we specialize in delivering massive value to. And where are those clients that you do not deliver massive, massive value on, but you have them there anyway, for some exception that really you are doing them a disservice. So Jarvis, let’s define what that is.

Matthew Jarvis:   Yeah, and to echo what you said about, this isn’t about just unprofitable clients. In my book I talked about a few years ago, I graduated one of my most profitable clients. They were in our top 10 clients as far as revenue, but they were not following our advice. They were difficult to work with, but I had waited because I’m like, no this is a difficult client, but it’s in a top 10 and they’re paying us so much. We sort of deserve that. Like, it’s this head trash, like why deserve to be treated poorly? Because, they’re paying us so much. So it’s anybody Micah, to your point, to whom we’re not delivering massive value, to whom we’re not looking forward to their call or to whom it’s just not a good fit. Whether it’s fees or anything else.

Micah Shilanski:  Jarvis actually, I really like that distinction. There’s two things that I look for right away to say, okay, outside of a normal reviewing my clients, who do I need to graduate? If I am reluctant to call a client back, Ooh, that’s a sign right there. Why don’t I want to get this client on the phone? That’s a really big sign that there needs to be a graduation. Or if, I get a message from the office that I need to call. And I say, holy crap, I hope it’s not X. Have you ever had that in your mind? Okay, great. That’s a warning flag. That’s a client you need to graduate. Even if it’s because in your mind it’s taking up negative mental space. It is taking away from you delivering value to your other clients.

Matthew Jarvis:   Yeah. In fact, I think the first step on this, and Micah you talked about a version of this on your flight down here to Seattle, the first step, let’s look at clients that you just don’t enjoy talking to. What I recommend advisors do, print a list of all your clients in reverse alphabetical order. Why reverse alphabetical order. It kind of gets your brain to think a little bit differently. It sort of disrupts your thought pattern. And then just mark each one, kind of a plus a neutral or a negative. Is this someone I look forward to hearing from, is this someone I’m indifferent to? Or is this someone that I dread hearing from them? Anyone that’s on the dread has to be graduated.

Don’t tell yourself, you’ll do it someday. Do it now, you can do it in ways if you want, you can rip off the bandaid, but you can’t have anybody in your practice that pulls you down. Our job is too difficult already to have those people on board.

Micah Shilanski:  Now come couple of pro tips when you’re doing this is, number one I want to disassociate revenue with client names. So if you’re taking the first step, which is saying, great, let’s get a list of names. I would hide revenue columns. I’d hide AUM columns. Yes. Your mind is already going to go there, but don’t throw it in front of your face because then what you’ll do, at least what I’m going to do, I’m going to start justifying, and I’m going to start altering the results, right? Because of, oh crap they’re in the top 10, no I can’t lose them. All that head trash is going to come in. So you must separate names, assets, and revenue completely off of this list.

Matthew Jarvis:   I love that. Well then Micah, then you segue, once you’ve done people that are difficult to deal with, people who aren’t following your advice. Then, it’s people who aren’t a good fit from the revenue model. And that’s where, Micah to your point, you look at just the revenue, no names. Take the names back off, because, that same head game that you described will happen. Take the revenue sorted smallest to largest and look at where the 80-20 rule falls into effect. That 20% of your clients are delivering 80% of your revenue.

I like to look to, Micah, how many of my clients are subsidizing my other clients? Like can I go to my top 10 and let them know, hey listen, you’re paying 10 times as much as my smallest client, but you’re getting more or less the same service. How’s that discussion going to go down, where’s the equity there?

Micah Shilanski:  Well, that’s a poor sales pitch. So on, but that’s a really good way to look at it. So I need to put, and this is just… Jarvis I’m going to speak to my head trash. So push back on this one. I need to put some clear framework around that. So, that mentality of saying, great, what clients are subsidizing other ones, well, at some aspect, yes it’s the same billing fee, but it’s not always the same dollar fee. So I want to put it into one of three different categories.

Matthew Jarvis:   Please.

Micah Shilanski:  If I say okay, great. Number one. So what I do, and this is what I did on the plane right down. I hide all my clients, their client names, then I say, great, what’s their revenue? What’s their AUM? What’s the rolling sum? And then what’s the percentage of that revenue? And then I break it down, say great, what’s my ideal revenue per client, per household that’s going to be there. And then all those get conditional formatted green. So it’s a great, everyone above this dollar amount gets a green format.

Then I say, great. What’s the minimum. Everyone below this threshold needs to get really reduced. So I said, great, what’s that minimum threshold everyone has to be above, great. And then I put that dollar amount in there, everyone below that is red. Everyone else is either clear or blue. And so you have these three different categories that are going to be there. And so now I get a look at these different categories, and now I can see really quickly, great where are they at? And my mind can automatically scan past that top section of the clients. Then I can go to that bottom section of clients and then Jarvis the next thing that I have to do. And again, I know these baby steps in my mind. So it’s just killing, it took me three hours to do a 10 minutes exercise by the way, because all this really takes is 10 minutes.

I said, I had to be done by the time I got off the plane and it was, but I used all of that time to justify why I should do something different. And I wrote out what my exceptions are going to be. So it’s great. I know there’s going to be a segment of clients that I need to graduate. What are my exceptions to those rules? For example, my mother-in-law, I’m not firing her. It’s just for the family dynamics, sister-in-law got to go.

Just kidding, I don’t have family as clients because that creates a lot of other issues. So those ones I’m going to have, but what are those exceptions? I got one client that has had a really string of bad luck, heart transplant, other things. They’re still paying us a fee, but their assets have been depleted a lot more than we expected, he’s below that revenue, but I’m going to keep him.

Great, I get five of those exceptions total. I have a total of five exceptions, and so now I know I’m going to put those clients in those categories. And once I’m up to five, the rest have got to go.

Matthew Jarvis:   So Micah, you categorized it in three groups, so again, you’re looking at revenue, no names. What happened when you turned the names back on?

Micah Shilanski:  Oh, of my, I wanted to puke, because these are clients that are just one of your clients. And even if they are one of your own clients, they’re clients I’ve made a commitment to work with. So my head trashing here Jarvis is like look, they hired me, now granted they hired me one quarter at a time. Granted they hired me one year at a time. But in our mind, at least in my mind I have this commitment, I’m going to be with them for the next 50 years.

But I got to look at it and say, great, which of these clients am I really delivering massive value to? Now, there’s some inside of there that are retiring in the next couple years. And they’re going to move from a red to a green by stage of retirement. So I get rid of those ones real fast. So the first thing I’m trying to do is, I’m trying to weed down that list to the actual ones I have to deal with. So I look at the names, which ones have upcoming retirements, which some money’s coming in, et cetera, perfect. Then I look at that list and say, great, I got two options upgrade or graduate, that’s it. Upgrade is saying, we need to get their fee up to that level. So what fee that needs to be charged to get them there or number two graduate, maybe they need to work with another advisor in my office.

Now the flip side of that Jarvis, I could keep all of those clients. There is no gun to my head that says I have to do it. But then again, am I really delivering value? And can I really grow my practice, if I’m limited? Because, if could we do surge meetings. And right now I have a long surge, compared to a lot of other advisors. I have six weeks of surge to get 200 clients in. And really my goal is to pare that down so I can deliver more value to my existing clients. And if I say great, I’m not going to do that. Well how many more clients should I bring on a 100, 200?

Matthew Jarvis:   Yeah, where does it stop.

Micah Shilanski:  Exactly.

Matthew Jarvis:   I’m glad you brought up about the length of surge. Everything we talk about at The Perfect RIA is about being intentional. Micah and I have very strong belief about how a practice should look, and we believe our beliefs are structured in sound fact and a lot of experience, but it’s about being intentional. So the other way to slash that list is to say, how long do I want my surge to be? That depends a lot on you. How many meetings can you handle in a day or a week?

And then, if I can handle a surge that has 50 slots, all right then my cap is 50 clients and you need to go back and look at that list. Say, great I’ve got 50 spots, where do these spots go? And if I want to have more than 50, I just need to be intentional and say, I’m either going to open up more weeks of surge or I’m going to figure out some other solution, but you’ve got to be, again intentional, advisors end up with this list of clients that they sort of gathered over time. Sort of like clients that we get. And they’ve got to a list of accounts all over the place. We’ve got to be intentional about this and everything we do.

Micah Shilanski:  So Jarvis to pick up on our Ben Brandt podcast, we had a little bit ago.

Matthew Jarvis:   Yes.

Micah Shilanski:  About surge blocking, and what’s going to be there. In my mind this is how I frame it, because I am a pleaser. I do want to please clients. I want to bring on more, that’s how most of us are wired in this space, but here’s the decision that I’m making. What I’m saying is if I take on another week of surge, if I go from six to seven weeks of surge, what I’m telling my family is that these clients are more important than they are. Directly saying that, and so now it’s like, holy crap now.

Yes, I know there’s some dichotomy. If I don’t work, well then you know what, I don’t have income coming in. Then I lose my house and my wife divorces me. Yeah, we can play those games. But we’ve hit a basic financial metric, which is there, and now I want to grow TPR. I want to do these other things, we have other businesses that we run as well by the way that take time. And the more I increase my surge, the more I increase my time in those other businesses, it takes away from my family. And my kids are young like yours. I want to spend time with them. So again, this is my force, I’m justifying it. So thank you guys for this therapy session, but these are all the things I’m going through on the plane, as to why this is so important to me.

Matthew Jarvis:   Micah, it strikes me that this isn’t a lot different than delegation in general. When we talk about delegation, we try to point out, you’re already delegating, essentially everything in your life. You did not sew your clothing that you’re wearing. You did not the iPhone that we’re doing this podcast on. So you’re already delegating nearly everything.

Same is true for clients. You’re you’re already saying no to almost every person that’s on the planet earth. You’re saying no to people that live in other countries. You’re saying no to people who just need a home mortgage who need a credit card. Statistically, you’re saying no to everyone. So it’s easy to get caught up, Micah to your point about, well you’re just being greedy or you’re not seeing enough clients or whatever the head trash is, but all of us listening have already made incredible barriers to entry. What we’re suggesting, what you’re suggesting Micah is, I’m going to make those just one tiny degree tighter so that I can stick with what’s important to me.

Micah Shilanski:  And that’s right. It’s one tiny degree tighter. And it’s not like we’re going to send these 83—how many households I have to graduate is 83. I’m not going to send them a letter that says, great go pound sand. No, no, no, that’s not the way it’s going to work. They’re going to work with our other advisor in our office or we’re going to help them transition to another advisor. I mean that’s outside of our office. So we’re not kicking people to the curb at all. This isn’t a firing and this is different.

A firing is when you have a very negative relationship with a client, and they have done something very bad and they need to go. Yelling at a team member, this is firing. No, that is not tolerated in my office. So this is a graduation, and so we’re going to bridge that because I’m still going to deliver value for them.

Matthew Jarvis:   Oh, I like that. Now I want to just do a quick shout out. Anybody that heard Micah say, that he’s graduated 83 clients and I was just thinking to myself, I need to call Micah and ask for those 83 clients, please do not waste your time or his team’s time. You certainly will not get through to Micah.

There’s certainly a place to be had as a newer advisor to say, listen, I’m going to talk to the other advisors in the area and say, any clients that don’t fit your minimum, can I earn that business? But there’s the key. How do you earn that business? Do not come to an advisor, to a CPA, to anyone and disrespect them and say, hey, listen, I know you’ve done all this work. Can I just have this? Because, I feel like I deserve it. Don’t make that mistake. That’s how you don’t get referrals. If you’re going to try that strategy, you’ve got to figure out a way to earn it.

Micah Shilanski:  Yeah, and I got two of those calls right after my podcast. They called me up and said, hey, this is a great strategy, it works. I guess they heard it from XYPN and not picking on XY. But that’s just where they said they came from, and they want to pick up these clients and they’ll do a good job. But basically it was such ungrateful, it’s what it was. I was like, no, this isn’t a good fit. Where’s your earning? Where’s your effort you’re putting into this. Maybe that’s my own head trash, but again, A. You’re not going to get through to me. B. You have to earn these in some capacity.

Matthew Jarvis:   And you also have to understand this goes back kind of a side rant on referrals, that anytime someone gives a referral, if I recommend that Micah go to my favorite restaurant, I’m staking my reputation on that restaurant. I’m also staking some little bit of fear of rejection there. Because, if Micah goes to my favorite restaurant and says this restaurant was terrible. A. I’ve damaged a relationship, also causes me to question what it is that I liked about it. So you have to remember anytime someone’s given you a referral, this is like this ultimate sense of professional trust. It should not be approached lightly in any circumstance.

Micah Shilanski:  That is a great, great thing to think about. All right. So Jarvis, we talked about graduating clients. Let’s also talk about what that conversation is going to look like. I know recently you had to graduate a client. So you want to share that and we could talk about the upgrade conversation as well.

Matthew Jarvis:   Yeah. By recently, I mean directly before this podcast, we recorded this the same day an hour before I had a discussion with a client who for various reasons is not able or willing to follow my advice any longer. This is specific to how he keeps is money invested and we’ll call them Bob and Sue, because that’s what we always call clients when we’re talking about them. And I said, great, Bob, no problem. We can go ahead and make that change that you requested, but I’m going to need to then resign from the account. And Bob, this isn’t any kind of spite. I’m not upset by any means, my door is always open to you. But, I don’t feel right charging a client a fee if they’re not following my advice.

It doesn’t make sense to pay me, if you’re not going to follow my advice. So we’ll go ahead and make the change that you requested. Then we will resign from your accounts. We’ll refund the last quarter’s fee as a gesture of good faith. And if you ever want to come back by all means, give us a call.

Now side note to me, it’s going to be pretty tough for him to get back in, but I don’t wish him any ill will. And that’s kind of how the discussion went. He says, well, Matthew, I really appreciate that. It’s been great working with you. I wish we could keep working together. Bob, me too. But I have just very strict rules about how we do things and that doesn’t seem to fit for you.

Micah Shilanski:  Now, Jarvis, this wasn’t something that he came up and I’m going to make up a circumstance to go with me. He came up and said, great. I want to put a hundred percent of my money in cash today. And he said, by the end of that phone call, you fired him on that phone call. This was leading up to it a little bit, correct?

Matthew Jarvis:   It was leading up to it. He’s got some extenuating circumstances, that you can easily justify where he wants to go.

Micah Shilanski:  Sure, sure.

Matthew Jarvis:   At the end of the day, it’s his money. And I told him as much. I said, Bob, this is always your money and whatever you want to do with it is yours to do. If you’re working with me, here’s how we do it. Here’s how we invest. Here’s how we deal with taxes. Here’s all these things. And if that doesn’t fit for you, great news, there’s 300,000 other advisors. I’m sure you can find one that will follow this strategy. It’s just not a strategy I can do.

Micah Shilanski:  I have a similar one that I’m going to graduate a little bit sooner and she went ahead and she took a lot of her retirement money and went and bought precious metals against my advice. I said, great, here’s the timeframe. And, I did. I said, look, I’m not going to fire you right away because of this. Here’s the timeframe we have to correct this. And if it’s not corrected and it’s coming up in October, if it’s not, well I guess by the time this airs it’ll already been corrected, we’re going to transfer money back in and get rid of the precious metals or we’re going to graduate her in the relationship. The same thing, you’re not following my advice. You really shouldn’t be paying me if this is the case.

Now this isn’t as simple as something like a, warchest a cash bucket thing. Where if a client said, so we have five years generally of money protected for market downsize for distribution and a client comes up and says, well, I’d really prefer six years. If it doesn’t harm their financial picture, yes, we could argue they could have more of the market, blah, blah, blah. But it doesn’t harm them. That’s totally fine. We can negotiate that. If we flip that around, and the client says, well, great, I’m going to take that five years of reserves. I’m going to put it to six months. No, no, no, no, no. I’m not playing that game. We have a problem. So again, what are your lines? Where are your deal breakers? Really important to know. And is it a deal breaker you’re going to terminate them right away for? Or is it something you’re going to give them a time to correct, and then graduate?

Matthew Jarvis:   This goes back again. I feel like I’m beating this drum, but it goes back to having an intentional practice. What types of clients do you want to work with? What’s your niche? What are your rules? So much of what we do is subjective. It’s very difficult to say, this is the right way to go. And you got to just say, this is the way I’m going to go with my practice, with my clients, with my investment strategies, with my tax strategies, guardrails versus buckets, whatever it is.

You got to see, this is the direction I’m going to go. And I’m only going to work with people who also want to go this direction. If they want to trade derivatives on cryptocurrencies, good for them. That’s just a different direction. I’m not going in that direction.

Micah Shilanski:  Absolutely. Really, really important. Now, we can always justify things, we’ll go back to this. Well, they’re a huge COI. They refer a lot of clients to me. I get a lot of referrals inside of this. They know all of my clients, look, I get that as well. All of my federal employee clients know each other in some connection, at some point they all know each other. We’ll find that out, we’ll walk out of a client meeting with a client because our client appointments are stacked up and the next client is waiting and then they’ll start chitchatting. Didn’t even know they were mutual clients, and they start talking and going through things. So we see this all the time, but this is an aspect of just being a professional and saying great, where am I going to add the most value? And I’m not going to charge you.

I am way too expensive to keep on the sidelines if you’re not going to follow my advice. So the only reason it makes sense to pay me is if I’m playing the game, you going to put me on the sidelines. It’s not a good use of your money or my time.

Matthew Jarvis:   The last one I want to highlight. And I think I mentioned this earlier, but I want to highlight it again. Wherever you are in your practice evolution, there’s always this all do it when card and Micah, I know you kind have the same thing as you’re looking at that list.

Micah Shilanski:  Totally.

Matthew Jarvis:   Well, you know what, maybe I won’t do it now. I’ll do it. When my kids get another year older, when I get 10 more clients. And so there’s this win conversation, and the terrible reality of this is you’ll never get to that win. Hey, when I get to a million dollars of revenue, then I’ll graduate clients. You’ll never get there. When I get to this, then I’ll only do four weeks of surge instead of seven, you just won’t, that when will never come. You’ll never find time. You can only make time, please.

Micah Shilanski:  You’re going to move the when though. It’s not a fixed point in time. It’s not like on Friday, I’m catching an airplane. That’s not it at all. This is the aspect of saying, when I get to a million dollars, then you’re going to get to a million. Well, that was three years ago. And there’s been inflation and everything else. And really it should be $4 million. So you’re going to move that goal line again and again and again. So, so really important to have that now is the time. It’s the carpe diem. There’s tons of stuff on backstage pass, there’s tons of stuff with Invictus on exactly how to implement this, but these are things to do.

Jarvis, one other thing I want to put inside of here real fast, is going to be setting expectations from the beginning of the relationship. Now, if you’ve missed this opportunity, good news you can do it with all clients going forward, and you can reintroduce expectations at any time to clients. There’s great ways to do it. But one of the things, when a client is onboarding, I tell them very consistently I will not waste my time and your money. So if we come to a point where our advice isn’t being followed and we don’t have a good rhythm to be together, that is a hundred percent, okay. And we need to part ways as friends, because we’re way too expensive for you not to follow our advice.

So we’re setting an expectation with that client and it helps make the graduation conversation a little bit easier at that time. And now I can tell all of my clients, in case it comes up, Bob comes in and said, hey, you fired Fred. What happened? Says, you know what I said, just same thing I say to you. I want to make sure I am not wasting my time or your money. And I want to make sure we’re delivering that massive value. And if it comes to a point where I’m not delivering value, you shouldn’t keep me around.

Matthew Jarvis:   Micah, how would you have that discussion with existing clients? So you mentioned setting that from the beginning, but a lot of advisors didn’t set that. Is it as simple as when you’re doing surge, like most advisors are in surge right now, just at the end of the meeting saying, Hey Bob, I just want to remind you. I will never waste my time or your money. Would you do it that straightforward?

Micah Shilanski:  You know, I like that terminology because it’s very clear. I wouldn’t just lead with that as an agenda point. Maybe that’s not the best sales pitch conversation starter. But I like to set an expectation and maybe it’s this surge or next surge. Have you ever given an update on where you’re at in your firm and where you guys are going with your clients? This isn’t a 100 slide PowerPoint presentation kind of thing, but you could say, hey, great news. This next year, we’re still looking for five or six new clients. We’re still looking for 20 new clients. Just like you, we’re continuing to grow. We have these classes coming up, so there’s a lot of wonderful things we can phrase inside of there, and I would bring it up just there.

One of the things that you know Bob, in working together, I don’t want to waste my time in your money. So we only want to work with clients that are dedicated to making substantial changes in their financial future and that we can deliver that value too. So you can give a little state of the union address and where you’re going and put that conversation right in there.

Matthew Jarvis:   Yeah. I do something similar that expectations when it comes to my travel, I would say, Hey, Bob and Sue, you know that I have young children and I love to spend time with them. And I’ve intentionally limited the number of clients that I work with so that I always have time with my family. I think Micah to your point, you can reset that. You can do it in person, you can do it in your newsletters. You can do it in your emails, never waste an opportunity to reset expectations.

Micah Shilanski:  And just because you told them once 20 years ago doesn’t count. These are things we have to continually bring up to clients because we all forget we’re human.

Matthew Jarvis:   All right, speaking of you’ll always have another when, like that when deadline will always move, lets get to some action items that you can implement this week. Like literally this week, things that you can implement. Micah, where would you have advisors start this week?

Micah Shilanski:  Number one, make a list of clients without names and rank them. I want to see it by… Again, what I like to do is I like to break it by revenue. And then when you have the revenue side, divide it into three categories, green, yellow, red, works really well. I like blue instead of yellow personally, but whatever, it’s the same thing.

And really it just comes in and says, great, what’s my ideal revenue? What’s okay revenue? And what’s clients that need to be graduated, below my minimums that are today. And then you have a conversation that says, great, are you going to upgrade or graduate those. Now again on that list, what we talked about in the podcast, write out what your exceptions are and you can only have five exceptions per 100 households.

So if you got a hundred households, you only get five exceptions to those. And then once all it’s written out, once it’s all outlined what you need to do, then you unhide the names because now you know who you need to get to work on.

Matthew Jarvis:   That’s perfect. Action item number two. This is a selfish one here. I would recommend you go out and buy a pretty exceptional book, Deliver Massive Value by yours, truly Matthew Jarvis. There’s an entire chapter on how to go through this process. These lists that we discussed here and then how to have those graduation letters. And there is in fact samples of those graduation letters in there. If you are like—you like to send a letter versus making a phone call. So Deliver Massive Value available on the Perfect RIA website and on Amazon.

Micah Shilanski:  And I will say hands down, I read the book from start to cover. It is great. There’s a phenomenal line in it. It’s not the one you’re thinking though, if you read the book that just cracks me up every single time. But if you can’t pull some value out of that, if you get the book and don’t find value, I’ll just volunteer Jarvis’s money, he’ll be happy to refund you.

Matthew Jarvis:   For sure.

Micah Shilanski:  Because there’s so much value inside of that. And if he won’t, I’d be delighted to do it because there’s a lot of great stuff in there.

Matthew Jarvis:   I appreciate that. Action item number three, this one is not selfish or bias at all. I’ll just be honest, it’s really tough to graduate clients. And Micah, you kind of mentioned here, the 83 da da. This is a discussion that you and I have had for months, for years together about what’s the ideal practice size and intentionality and all these things. If you have clients, you know you need to graduate or any other major change for your practice, you’ve got to find a mastermind where you can hold each other accountable, where you can have these difficult discussions, where you can set that extreme accountability that’s required. And in fact, Micah, we’re going to have a webinar in December with our good friend Benjamin Brendt we like to call talent, AKA talent, about how to build your own mastermind. I’m really excited looking forward to that webinar.

Micah Shilanski:  Yeah, that’ll be outstanding. Now, one of the things with the masterminds, actually some of the advisors talking to, we’re actually, Jarvis and I are headed off to at mastermind. And there’s several advisors that I was talking to before this, one of the reasons they’re going is they want that extreme accountability in this mastermind. Because, they have some big changes they need to do. And they’re comments… And these are some really successful advisors by the way. So these aren’t people that are sitting on the sidelines, but they’re comment is, you know what, I need that extra push to get it done. I need to get out of my comfort zone, because sometimes it’s not enough to know what you need to do. We got to have a bigger reason why we, got to have that forcing mechanism. and that’s what a great mastermind can help you with.

Matthew Jarvis:   Yeah, I’m actually stoked for this mastermind, we’re headed to down to Tennessee. Like you said, some very, very successful advisors, some advisors starting out as well, but very successful advisors and Micah to your point, they’re saying, hey, I want to get to the next level. And I know I need some kind of transformation to get there.

Micah Shilanski:  Perfect. Well this is really important. Take action on these things, because this is going to help you dramatically improve your practice. We love to get your feedback by the way, lifestyle@theperfectria.com and until next time happy planning.

Matthew Jarvis:   Happy planning.

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