Full Transcript:

Speakers: Micah Shilanski and Matthew Jarvis

Speaker 1: 00:01 Welcome to the Perfect RIA Podcast, the only show dedicated to helping you build a highly-effective financial planning practice, that delivers both an amazing client experience and an amazing lifestyle for you and your family. What you will hear today is not theory, but rather, real world, tested in the trenches systems that your hosts, Micah Shilanski and Matthew Jarvis, have developed in their own respective practices, which have been recognized as some of the best in our industry.

Speaker 1: 00:40 Before we get started, a quick reminder from our attorneys. This podcast is intended only for a professional audience and should not be considered as tax, legal, financial, investing, or even cooking advice. Past performance is no guarantee of future results, and you alone are responsible for you. And now, lean forward and let Micah and Matthew show you how to build the perfect RIA.

Micah Shilanski: 01:11 Well, welcome everyone to the Perfect RIA Podcast. I’m your host, Micah Shilanski, here with Matthew Jarvis, and we have had a really wonderful time. Our families actually got together, and we went down to Disney together, Disney World in Florida. We learned some amazing takeaways while we were down there that we wanted to kinda breakdown not just the obvious ones that everybody sees, but kinda looking a little bit more in depth about what are five business lessons that we really need to take away from Disney.

Matthew Jarvis: 01:45 Yeah, you know, and maybe you could question our sanity, the fact that while we’re enjoying Disney World, The Most Magical Place on Earth, we’re examining everything for business lessons, but really as entrepreneurs, we always wanna be looking, especially outside our industry, saying, “Wait. What lessons, good or bad, can I take away from this experience?” Where am I going? In fact, the Airbnb that we’re staying at, there was a couple of lessons we took away on how to have a bad client experience. But from Disney World, we took away five, if you will, business lessons that were really [inaudible 00:02:17] and we think it will apply to our practices.

Matthew Jarvis: 02:21 Micah, let’s start with our first one. We went online and looked. We wondered, how much money is Disney making off of their parks? In round numbers, according to their public filings, Disney does about $5 billion of revenue from their parks, so that’s all Disney Parks, not just Disney World here in Orlando, $5 billion in gross revenue, about $2.5 billion in profit. Disney runs, on average, a 50% margin on their parks.

Matthew Jarvis: 02:47 Now, Micah, as you and I noted, that’s only their average margin. They certainly have items that are significantly higher than that,

Micah Shilanski: 02:53 That’s right. One of the things that I think is just so fascinating with Disney is that you’re so happy to be there.

Matthew Jarvis: 03:00 That’s right.

Micah Shilanski: 03:00 And you’re already committed. You already paid a lot to be there, especially taking a family, right?

Matthew Jarvis: 03:04 Sure.

Micah Shilanski: 03:05 So, you’re already committed with all of this money that’s in there, and now all of a sudden, these other charges, which I don’t know if I would say are egregious, but are really high, right? Like, a bottle of water.

Matthew Jarvis: 03:15 Sure.

Micah Shilanski: 03:16 So, bottle of water, you can get from Costco for what? Like, 18 or 19 cents [crosstalk 00:03:20], something like that. Well, at Disney, it’s costing like $3.50. So, what’s that? An 1800% price increase…

Matthew Jarvis: 03:27 Yeah.

Micah Shilanski: 03:27 … that’s right there. And people are buying bottles of water all the time, that are there. Now, what the interesting part is with this, I think with Disney, is with this 50% profit margin, this is total voluntary, right?

Matthew Jarvis: 03:40 That’s right.

Micah Shilanski: 03:41 And we’re not knocking Disney. We’re marveling at it. This is amazing. But not only is it total voluntary, but you’re happy to spend the money. This is the beautiful part about the way they have set this experience up, is that you don’t have a problem shelling out, and in fact, they even have the shirts that say “The most expensive day ever” that people wear around. So, they’re just embracing that they’re just gonna spend a lot of money at Disney, and Disney is delighted to provide that service.

Matthew Jarvis: 04:09 That’s right. Now, it’s easy for the more cynical of us to say, “Well, Disney’s extorting people. They’re playing off of emotions. They’re a casino for children.” And those things may be true, but at the end of the day, Disney, it’s a voluntary transaction. They’re not extorting anybody. They’re not forcing anybody. It’s not a government agency. You’ll have to excuse the background noise, we’re recording outside, but this is a voluntary transaction.

Matthew Jarvis: 04:31 A lot of times I run into advisors, and Micah, I know you have as well, that say, “Hey, you know, so-and-so charges X,” right? “Ric Edelman’s charging 1.5%, what a bum. How can he charge that much?” Again, that’s a voluntary transaction. Ric is not forcing his clients to pay 1.5%. Disney is not forcing people to pay $3.50 for an 18-cent bottle of water.

Micah Shilanski: 04:51 So, I would kinda challenge you, when you’re going out there thinking about it, and sometimes I have to do this to myself as well, when you’re paying a really high price for something, and you’re paying it, instead of saying, “Man, this is egregious,” or “This is so much money,” or blah, blah, blah. Say, wow, what experience was created in this environment for me to voluntarily pay this money, and how can I take that back and what’s a lesson, not saying go out and double your rates, right? Just, yeah, we’ll say that at the end, but what are things that you need to take away to implement with your clients, though, because you’re voluntarily paying this higher price. So, what lessons do you need to learn from that?

Matthew Jarvis: 05:27 Yeah, and not to play with this too much, but Disney is also totally transparent with their model. They’re saying, “Hey, our ticket prices are $150.” Then, you can look online how long the lines are gonna be, right? You’re gonna pay $150 to come in, lines are gonna be three hours for each ride on a busy day. Maybe you’ll get three rides in. The food is gonna be at this price. I mean, everything’s transparent. It is a totally voluntary transaction.

Micah Shilanski: 05:51 Well, the other one that I kinda love, that’s kinda on that voluntary transaction side, as we move down the list is number two, is Disney has paid prospecting. Disney, what they do is, you gotta pay the cover charge just to get in.

Matthew Jarvis: 06:06 That’s right.

Micah Shilanski: 06:06 Which is $120 to $150 bucks per person. I think it was a $5 child discount.

Matthew Jarvis: 06:12 That’s right. That’s right.

Micah Shilanski: 06:13 So, you pay that price to get in, then, everything costs. Yes, the rides are included, and you can walk around that’s free, but pretty much anything else you’re gonna do is at a higher price. Every time a ride ends, and I love this, I made this comment so many times now, my kids make it, right? Oh, it’s a Disney ride. It ends in a gift shop, right?

Matthew Jarvis: 06:30 Yeah, that was true. It does.

Micah Shilanski: 06:32 It does. So, you had a great experience. They’re gonna put you back in a gift shop so you can potentially buy more things, again, a voluntary transaction.

Matthew Jarvis: 06:39 That’s right. And we were trying to think, and maybe one of our listeners can put it in … Actually, don’t put it in. Use your time for something more effective. We really couldn’t think of anything that Disney gives away before you’ve paid. There’s plenty of things that they provide as part of the experience, but until you pay that ticket fee and walk in the gates, you’re not really getting anything. So, how does this apply to advisors, and how do we apply this lesson?

Matthew Jarvis: 07:00 There’s this real temptation, of course, to give things away. As listeners, knowing my own practice, we do our initial appointments without a cost, as something we’re sort of evolving out of. But advisors often get caught in this, if I give enough things away for free, then at some point, magically, here’s Disney, magically, people will want to pay for my services.

Micah Shilanski: 07:18 Right. Well, at the Magical Kingdom, The Most Magical Place on Earth, you pay for everything. They don’t let you go ride all the rides for free, then at the end of it say, “Pay what you think it was worth.”

Matthew Jarvis: 07:27 That’s right. That’s right.

Micah Shilanski: 07:28 “How much fun did you have? Why don’t you just write us a check or give us cash for that?” No. They say, this is the cost to play, and you’re gonna have this phenomenal experience. As advisors, we need to do that same thing. We have so much intellectual property. We have so much time and energy that goes into the creation of plans, which makes radical transformations in people’s lives. It makes such a meaningful difference, and it cheapens this, not financially, but it really cheapens that experience and that value that you give when, you know … And there’s this other advisor that we’ve heard about that, I think Matt was talking about, that does the plan this is pay what it’s worth, right? Pay me what you think it was worth.

Micah Shilanski: 08:08 That’s a horrible thing to do. The client, ’cause they have no relative cost that’s gonna be there.

Matthew Jarvis: 08:13 That’s right.

Micah Shilanski: 08:13 But look at the other businesses that are out there, that are really successful. Run it like a business. I know on our farm, we don’t… Unless you’re a referral from an existing client, we’ll wave our initial fee, other than that, we charge $495 for an initial consultation. Really the reason we’re setting this up is, number one, we only want people who are serious about retiring. If you’re not serious about planning, you don’t need to waste my time and your time. So, that makes people serious when they come in. Number two, it’s gonna set expectations that they’re gonna pay for services. That mindset, that shift that takes place when you start charging is different, just like with Disney. You had to pay to get in. Now, you have a mindset that’s there, that I’m going to spend money when it’s there hence Disney having a 50% profit margin.

Matthew Jarvis: 08:56 You know, it’s funny, Micah. Now that you mention this example of Disney charging you before you come in, I’m trying to think are there any other business that does our kinda widely accepted model in the industry, which is give something away for free and hope that people will pay later. Really, the only one that comes to mind is Timeshare sales. I mean, we went as families and got smoothies the other day. The smoothie shop didn’t say, “Hey, we’ll make you smoothies, and you try it out, and if you like it, then we’ll charge you for it.” Ninety nine percent of businesses, you pay upfront for that service.

Micah Shilanski: 09:26 Oh my gosh, comparing free services of financial planning to Timeshare salesmen, that hurts.

Matthew Jarvis: 09:30 It does hurt, but …

Micah Shilanski: 09:32 Yeah, but I mean, that’s a great comparison, though.

Matthew Jarvis: 09:35 We’ll have to do an episode on it. I have a brother who is a construction manager, and he builds Timeshare centers, that’s one of his clients.

Micah Shilanski: 09:40 Oh, fascinating.

Matthew Jarvis: 09:41 And the signs behind it is off the charts. The manipulation that goes on, certainly no fiduciaries there. Okay, so paid prospecting, right? Every other industry, almost every other industry charges their prospects. Do the same in your practice. I would say number three is as we were getting ready to go to Disney World, a friend of a friend said, “Hey, I know a guy that’s a guide at Disney World.” And I say, “Well, he works for Disney World?” He said, “No, no, no. He’s totally private. He just knows how the park works, and you hire him for the day, and he will make your ride experience amazing.” So, there was 11 of us in our group. My family, Jarvis family, and the Shilanski family and Micah’s parents. So, there’s 11 of us, so he said, “You know what? Let’s hire this guy.” He was not cheap, just by the dollar amount. We were already paying to go to Disney, so we hire this guy, and Disney World, this is two days before Thanksgiving, we got to the Magic Kingdom, and for those of you that have been there, we get to every major ride. The longest line we stood in was 10 minutes, and we had every ride hit by 2 o’clock in the afternoon.

Matthew Jarvis: 10:40 For those of you that have been to Disney, this is a mind-blowing thing. All the other lines were a hour and a half, two hours, and so we kept asking this guy. We said, “What do you have? Some kind of cheat code? Do you have some kind of insider access?”

Micah Shilanski: 10:52 What, are you giving them cash to get through the Fast Pass line?

Matthew Jarvis: 10:52 Yeah. Right? I mean, Micah and I-

Micah Shilanski: 10:52 What’s happening?

Matthew Jarvis: 10:54 Micah and are watching, like, is he slipping them money?

Micah Shilanski: 10:56 And no, he wasn’t.

Matthew Jarvis: 10:57 He wasn’t. No. He says, “No, I just know how this system works. I sat up half the night waiting for Fast Passes to become available online. I know which lines.” He says, “I have another guy here at the park that’s scouting locations for me.” And he just knows the system inside and out. For Micah and I, this was like a real revelation, at least for me it was. Here’s the point for advisors, this guy was not giving us anything that we couldn’t have done for ourselves, right? Which as advisors, by the way, we’re not giving clients anything that they couldn’t, given enough time, energy, and money, couldn’t do for themselves, right?

Micah Shilanski: 11:29 Right.

Matthew Jarvis: 11:29 Micah has an extensive knowledge of the tax code, but that’s all public information. I’m kind of ranting here. Micah, I’ll hand it back over to you, but this was an example of somebody providing a service that we could’ve done for ourselves, but that we were more than willing to pay, because it made our day so much better.

Micah Shilanski: 11:45 Absolutely. I think a really great comparison was the day before, just my family went to Animal Kingdom. When we went to Animal Kingdom, we were there for about seven hours, and we did two rides. They were three-hour lines. I was beating my head against the wall. It was a long time. Now, again, this was a voluntary transaction that we paid to be there, but compare that to the next day when we had an expert come in and show us how to run the park, what lines to do and what rides to hit, and in what order to hit, and how to use Fast Pass effectively, we had over 10 rides done in less time. It was absolutely amazing, and that’s what we do for clients. This was a private guide for Disney, but really, we’re a private guide for retirement. We help clients navigate the complexity, which is out there, and again, that goes to having that expertise, having that knowledge, and getting paid for what we do.

Matthew Jarvis: 12:40 I wanna add just one other thing on that private guide. The time savings, as Micah pointed out, was astronomical, right? That alone, for Micah and I, as you know, we value our time very highly, that alone was worth the price of this guide. But the other thing that we all commented on, everyone in our group, was what a luxury it was to have someone else make those decisions. So, we didn’t as a group say, “Well, are we gonna go to this ride versus that ride?” “Do we go to Splash Mountain before we go to Space Mountain?” We didn’t have to. The guide just said, “Hey, here’s where we’re at, and here’s where will go next.” As advisors, I know I’m guilty of this myself, we underestimate the value of guiding clients through decisions. It’s not just our vast knowledge. It’s our ability to say the next step is X. In this situation, you do Y. That is an invaluable service. Don’t ever discount that in your practice.

Micah Shilanski: 13:28 I think one of the takeaways that advisors need to take from this is the guided experience, not just the delivery of information. Your job as an advisor is not just to provide information. It’s to provide a path on how clients can use that information effectively. One of the things that I absolutely hate is when you ask an attorney for something, say, “Hey, give me a recommendation for XYZ.” And they send you a page of 50 different people to choose from, and say, “These are all the people I would choose from for that particular issue.” And I’m looking at Jarvis ’cause he did this to me, actually. But really, our job as advisors for clients is to give them that guided path. Yes, you need to give them options, because it’s their choice. Say, “Look, this is the best path for you. This is why, because it’s gonna meet the most goals.” That’s what clients want. That’s the reason they’re hiring you is to help simplify those decisions.

Matthew Jarvis: 14:22 Yeah. It really is, and I just can’t overstate that enough. This guide, he was brilliant at this, and he’d asked us a few days before what are our goals, which park do we wanna go to, what do we wanna see most, and then once we started there were no asking questions. He didn’t say, “Hey, do you wanna go and do Thunder Mountain now?” He says, “Hey, we’re doing this ride, and now, we’re doing this ride.” As advisors, same thing, you told me your goals were X. That means we need to check your beneficiaries, rebalance your account, take this tax strategy, do this, do that. We need to have a steady hand, if you will.

Matthew Jarvis: 14:51 Now, again, the guide was kind of taking a pulse. He wanted to know how hungry we were, ’cause he had a time for us to stop for lunch. But he was the guide, and we are for our clients the guide, not Jiminy Cricket, a voice in the corner saying, “Hey, maybe you should do this.” We have to be the guide.

Micah Shilanski: 15:06 Right. And the guide also, one last thing, then we’ll go on to the next one, but he also pivoted, just like we have to do. We got there, our plan was to hit XYZ first, and then all of a sudden, there was a huge bump in the line. He’s like, “You know what? We’re gonna pivot. This line is too long. We’re gonna go here, because it has a shorter time.” And he was able to navigate that. That’s just like us, right? We’re gonna come down a path, and then something happens in a client’s life, whether it’s a tax reform, whether they get an inheritance, whether, God forbid, they have a health concern. Now, we have to do a major pivot in their plan. We do that same thing. We have a path we’re going down. Life throws this curve ball, we pivot that client, still guiding them as with ever to why we have to make that pivot. Yeah.

Matthew Jarvis: 15:47 Yeah, you really do.

Micah Shilanski: 15:48 All right, so the next one, I think number four on our list, business lessons to take away from Disney, increasing pricing.

Matthew Jarvis: 15:54 Yes.

Micah Shilanski: 15:55 And they have no concern or reservation, at least that we can see, about that. They consistently increase their prices over time. Now, their pricing is a little different, because their pricing is, they have different surge pricing for different times of the year that you’re gonna go, and I haven’t seen any clients set that up, right? “Hire me in December, I’m gonna charge you 30% more.” I haven’t seen that, but they consistently know they’re adding value, and they raise their price across the board. I don’t think they grandfather any season pass holders or annual pass holders, right?

Matthew Jarvis: 16:28 Not that I’ve heard of.

Micah Shilanski: 16:28 If they raise the price 10% next year for annual pass holders, they don’t go back and say, “Oh, you paid a lower price last year. I’m gonna give you that price again.” They say, no, the new price is X.

Matthew Jarvis: 16:39 It’s interesting to note that, so in the Orlando area, and the same is true for Disney California, they’re surrounded by multiple theme parks. There’s a lot of copy cats that have said, hey, Disney’s here. There’s a crowd being drawn. Right near here is Universal Studios. Disney, typically, is leading the curve on prices. They’re not saying, “Boy, we’re charging $150, and Universal’s charging $130. We probably better lower our price.” Which is what we hear in every advisor discussion, it seems like. “Hey, Vanguard’s doing it for 30 basis points, and I’m doing it for whatever. I better bridge that gap.”

Matthew Jarvis: 17:10 Disney is almost doing the opposite. They’re saying, “Boy, Universal’s charging almost as much as we are. We better increase our prices again.” So, they’re aware of what the competition is charging, but in no means are they doing a race to the 0. If anything, they’re doing a race to the top. I mean, where is the top of that price curve?

Micah Shilanski: 17:27 This goes back to what value do you add, and can you really articulate that value that you add with clients? If you’re increasing your prices versus lowering them, or either one, I guess increasing or lowering them, you are setting a tone. You’re telling people if your service is a highly valuable service, or if you’re a commodity. That is what you’re doing subconsciously. Jarvis, let me know if you disagree with this.

Matthew Jarvis: 17:49 Oh, no.

Micah Shilanski: 17:50 But I think by the fact that by lowering the price, what you’re doing is you’re going out and saying, “I’m cheaper. I’m a commodity. You should be focused on price.” That’s really what I think a lower price tells people. Versus a higher price, you say, “I’m the best.”

Matthew Jarvis: 18:05 That’s right.

Micah Shilanski: 18:06 Done. There’s no more conversation. I’m the best. If you want the best, great. This is the cost to play, if not, that’s totally fine. Good luck with 1-800-ADVISOR. I truly wish you the best in your retirement planning. You get to make that choice. One of the things that I think is pretty big on prices, and I’ll go a little bit on my tangent here if that’s all right.

Matthew Jarvis: 18:26 Go for it.

Micah Shilanski: 18:27 One of the things with advisors that people get so concerned with is that fear of rejection, is a client rejecting you, that’s gonna be there. So, you’re willing to break your own rules. You’re willing to make accommodations and to lower things in order to get them in. For one, think back in your experiences, when is one client, that you’ve ever violated some of your onboarding rules for, that it turns out to be a good relationship for? For me it’s not. A pot calling the kettle black here. I have done this before. I’ve broken my own rules ’cause I wanted to bring on a client, because you know what? He’s a really great guy, and I think I can help him, and all these other things, and …

Matthew Jarvis: 19:04 They’ll come around, right? They’ll come around.

Micah Shilanski: 19:06 They’ll come around, right. I mean, these are all keywords, if you’re saying or thinking these, that’s not a good relationship that you need to look at graduating. By setting that price and by negotiating it, you’re saying price is the most important thing. If someone is hiring a financial advisor, price is not the concern. If price is the concern, they will go to Wikipedia, or wherever online, and they will get those answers online. If they want a guide, if they want that premiere service, that is why they are hiring you. That is why they’re hiring the adviser, so set that premier pricing and have no concerns about that.

Matthew Jarvis: 19:43 Yeah, I would totally agree. As you were saying that, Micah, I thought, boy, if you’re lowering your price, does a client then go back and worry, “Hey, was I overpaying before?”

Micah Shilanski: 19:51 Great point.

Matthew Jarvis: 19:52 Right? “He was charging me, 1 and now he’s charging. Was I overpaying before?” Whereas if you’re raising the price, they might think, “I was getting a good deal before.”

Micah Shilanski: 20:00 Yeah.

Matthew Jarvis: 20:00 In fact, we’ll have to do a podcast on this, ’cause I’m just in the process of doing another round of fee increases on clients. So, we’ll do a breakdown on that, and just the one or two objections we got on that. All right, Micah, any other Disney lessons that you had? The only other one that came to mind for me was Disney’s really well known for accommodating their customers, but at the same point, Disney has very hard rules. There are a lot of things that Disney will not bend on, and one that came up … Micah is laughing, ’cause he knows. When my wife was going to Disney the other day, when we didn’t have a guide, and she knew she was gonna wait in line, she thought it’d be a great idea to bring her ukulele so she could play ukulele in line. The Disney people were very nice in saying, “No, absolutely not. You cannot bring musical instruments into Disney.” It just doesn’t work. And she says, “Well, wait a second. People have their cell phones going.” And the Disney people say, “You know, well, that’s its own thing.”

Matthew Jarvis: 20:54 But Disney has very firm rules that you cannot bring musical instruments, and that people over the age of 14 cannot be dressed up in costume at all, because somebody might confuse you as a part of the cast. That may sound like a small thing, but Disney knows what things are instrumental to their experience, and they will not budge on them. They just will not. If you drop your ice cream cone, they’ll give you a new ice cream cone for free, ’cause that’s part of the experience. But there are things where there are no exceptions. Micah, I don’t if you noticed that when you were there.

Micah Shilanski: 21:23 Yeah, and that’s one of the things that I think they’re protecting their brand. Because if you had your wife, and you’re just picking on the ukulele in line-

Matthew Jarvis: 21:31 That’s right. That’s right.

Micah Shilanski: 21:31 … right? This could distract from the experience. Now, I argue the same thing. The freaking place on YouTube blasting out videos on speaker phone distracts from my experience, but that’s not the point. The point is Disney provides an experience with music, with people playing those instruments, and they don’t want any confusion taking place. They’re gonna protect that brand at almost all costs, because that provides their ability to charge that premier pricing.

Matthew Jarvis: 21:56 That’s right. Even though [Jackie 00:21:58], my wife she could’ve said, “You know what? Then, I want a refund on my ticket.” And my guess is they would’ve said, “Great. Here’s your money back. Leave.” They’re not gonna cheapen that, and we as advisors need to have those same rules. Not about musical instruments. I don’t know if a client should bring musical instruments to your office, we need to have rules, lines in the sand where you say I never cross this line, no matter the cost. Even if Jackie had been there with a group of 100, Disney still would’ve said no exception, even if she had paid for the Ultra Premier Pass, no exception. So, we need that in our practice where we say, “There are lines here. I will not cross these lines.”

Micah Shilanski: 22:32 Again, I’m just gonna hit this again, that adds to client values.

Matthew Jarvis: 22:37 That’s right.

Micah Shilanski: 22:38 Because you can’t penalize 99% of your clients for the sake of one. You can’t take away from 99% of the value that you’re adding to your other clients because of one rule that you make an exception. ‘Cause once you start making exception, now you have something off in the queue, and now your processes don’t happen the way they should, everything is different, and you’re taking away from your clients, and you’re taking away from your team by having those exceptions. You really gotta be hard-fast in what your rules are.

Matthew Jarvis: 23:03 Micah, can you give us, and I’ll start, but can you give us some examples of what that is in your practice? I know one in my practice is we manage all of the money or none of the money. If a client comes in, no matter how much money they’re bringing in, well, I have one exception in my list on that, and I’ll share that in a minute. But if they come in and they say, “I wanna put $5 million with you, Matthew, and I wanna put $5 million with somebody else.” No. “Matthew, I wanna put $5 million with you, and I wanna put $50,000 with somebody else.” No. That is a hard rule for me. I will not share management of accounts. Part of it is it creates a lot of work for me. I don’t know what’s going on in the other account, I don’t know what the other advisor’s recommending. It becomes a performance race between the two accounts. The client gets distracted by it, and so I just won’t make that exception.

Matthew Jarvis: 23:48 For me, if I make an exception for one client, it now sort of becomes, and this is just for me, an integrity issue with everybody else. If I say, “I’ll make an exception for you because of whatever.” The next guy that comes in to ask me for that same exception, I have a lot harder time saying no. Because I can’t with integrity say, “Hey, this is a solid line.” It’s like, well, it’s a line unless it’s not. Micah, do you have examples from your practice? Things that are … Actually, I-

Micah Shilanski: 24:10 Yeah.

Matthew Jarvis: 24:10 … know you do.

Micah Shilanski: 24:10 Yeah, so I got at least two that I’m gonna give you. Number one, right along the same lines as yours, is you do everything or we do nothing.

Matthew Jarvis: 24:15 Yes.

Micah Shilanski: 24:16 Right?

Matthew Jarvis: 24:16 There’s no à la carte.

Micah Shilanski: 24:18 There’s no à la carte. What that means is, we do the estate planning, risk management, retirement income, investments, and taxes. You can’t come in and just say, “Micah, we want the retirement income and the assets. I’m gonna give you the money to run, and you know what? I want that stuff, but I don’t want you to look at my risk management.” Nope. I call myself a financial planner, and in my world, that means I do five things. I’m gonna do all of those things. Now, you don’t want them? Great. Then, go somewhere else. I’m not trying to be rude about this, right? But you’re just not a great fit for our firm. Because what happens is, if we bring someone on and we’re just taking care of the investment management, but we didn’t do the risk management, come on. There’s grave concerns that are there. We, potentially, could be liable, ’cause we hold ourselves out saying we do everything. Then, client dies, heirs come up and go around to sue us, and say, “You said you did everything.” We’ll say, “Yeah, but your dad didn’t want that.” Well, where was that at? Creates all sorts of issues that we don’t wanna deal with.

Micah Shilanski: 25:13 The second one is, no conversation is off limits. Sometimes we’re gonna have to have challenging conversations with clients, and I set this stage from day one, this is before they sign contracts, they have to agree no conversation is off limits. Here’s a sensitive one, for a lot of clients anyways, is long-term care.

Matthew Jarvis: 25:35 Sure.

Micah Shilanski: 25:35 Right? So, all of my clients have to have a long-term care plan. Now, that’s not long-term care insurance, but they gotta have a plan. But a lot of clients are really sensitive about that long-term care topic. But you know what? It’s not off limits. We have to go through it. By setting the stage at the beginning that there’s no conversation off limits, it allows me to get in depth into things, kinda putting on your therapist hat working with clients, sometimes a little bit deeper. Frankly, sometimes when there’s a little bit of marriage trouble, we start getting involved. When there’s issues with kids, we start getting involved, because those things affect the finances, but it gives us permission to talk about those things that affect their financial lives because of how they’re spending.

Micah Shilanski: 26:15 Now, you can take the kid issue. You got a 37-year-old that’s still living at home, you’re paying all of his bills, or kids out of the house that you’re still giving $800 a month to as an allowance, and they have jobs and they’re quasi-independent. No, I’m sorry. This needs to end. But by setting the stage that no conversation is off limits, it allows us the ability to have those conversations with them.

Micah Shilanski: 26:36 Those are our two really hard-fast rules that there is no bending on. If you deviate from this, we’re gonna fire you. We’re gonna graduate you, because you’re just not a fit for our firm.

Matthew Jarvis: 26:46 I really like that. I wanna touch on this à la carte thing that you mentioned, Micah, ’cause I know it’s something advisors run into a lot of times, where a prospect will call in and they’ll say, “Micah, I’d like to hire you just for a couple of hours to give me some tax advice. I’ve heard you’re really good on taxes.” I don’t know if you run into this, Micah, but I know advisors that run into this all the time. Again, I wanna come back to Disney, ’cause that’s where we were just at, Disney has a core offering, and there’s not a level below the core offering, right? They have a single park or multi-park or a multi-day, but you can’t say, “Hey, I just wanna come and ride Everest in the Animal Kingdom.” They’ll say, “Great. It’s $150 to come in the park, and if you only wanna ride one ride, by all means.” They will not give you a one ride pass. They won’t give you a half-day pass. They won’t give you a two hour pass. It’s, you pay to come in, and Disney has no qualms turning people away. You cannot make a case to just let you pay them for one ride.

Matthew Jarvis: 27:40 And an advisor, we have to do the same thing. To Micah’s point, it’s a liability concern, but it’s also a professionalism concern. I do my best work when I’m doing the whole project, therefore, I do the whole project or no project. Micah, do you run into that? I know you must, when people call and say, “Hey, could we just hire you …” for a really narrow scope.

Micah Shilanski: 27:57 Well, you know, I’m so isolated from that now. I’m so spoiled with my team that they do such a great job. I used to run into that, and that’s another great part about having a team with these rules is they won’t budge versus you will, because you know you can fudge the rules.

Matthew Jarvis: 28:12 That’s a good point.

Micah Shilanski: 28:12 But if I tell my team this is a hard rule, they’re like, “I can’t do it.” They don’t have the authority to budge from that rule. They’re sort of like the Disney front-end person, right? They don’t have the authority to give you a 30% discount because you don’t wanna wait in line or negotiate. They have no authority. The computer says pay $150, and that’s all you’re gonna get.

Micah Shilanski: 28:31 I used to run into this a little bit more when we were charging lower hourly rates. They would do multiple first time consultations. They kinda …

Matthew Jarvis: 28:38 Oh really?

Micah Shilanski: 28:39 Yeah.

Matthew Jarvis: 28:40 [inaudible 00:28:40] the system there.

Micah Shilanski: 28:40 Yeah. [crosstalk 00:28:41] So, not really wanting to hire us, but they would do multiple one time consultations when we were charging $250 for a consultation. They’d do two or three times, and then I’d be like, look, no dice. I didn’t have a rule in place for that. They would just call up say, “I wanna book with Micah. It’s my first time.” And we’d get their credit card, and we’d move on. And I’d meet with … their name would come up, and I’m like, “I think I’ve met with him before.” And they’ve just help advance the plan. But I put a top to that, and I really had to explain to them why that à la carte doesn’t work.

Micah Shilanski: 29:09 The reality is, this is something on me, I will do more work than what I’m gonna bill them for, because in my world, in my mind, I do everything or nothing. So, they’re just hiring me for that tax piece, but I’m thinking about the state planning, and I’m thinking about the risk management, and I’m thinking about all these other things. And I’m saying, “No. It fits in here. You gotta do this.” I’m helping with that anyways, and now I’m not getting paid for it, and I’m doing a half butt job at it, because I’m crammed into … Oh, I’m sorry.

Matthew Jarvis: 29:35 No, I was just saying you’re taking 100% of the liability for it.

Micah Shilanski: 29:37 Yeah. Yeah, I’m cramming all that planning into a real short period of time. I’m taking the liability, so no. That’s gotta be a hard rule. So, yes, I dealt with that in the past, and now it’s a nope, there’s initial consultation to see if it’s a good fit. Then, after that if you wanna move forward, it’s full planning.

Matthew Jarvis: 29:52 I only have just one narrow window. If it’s a referral from a client, I will do a very limited hourly engagement, not to exceed two hours. I’ll meet with you twice, and then you need to go find somebody who’s a better fit for you. That’s just my own limiting belief. If it a referral from a client, I don’t just wanna send them away, but I’m not gonna take them on just because they’re a referral.

Micah Shilanski: 30:13 Well, let me ask you a question. So, your top client calls and says, “Hey, I got my kids. They don’t really got any money just yet, but they need some basics. I really want them to meet with you to kinda get some things out there.” What are you gonna do in that case?

Matthew Jarvis: 30:25 Boy, kids … wait. I’m not gonna spend more than two hours. That’s just my rule. If we’re doing a family meeting, that’s a different [crosstalk 00:30:35]. If they say I want my kids to understand my finances, but if they say, “Hey, you know, my kid needs some financial advice.” Great. Send them on in, and I’ll meet with them for an hour. For a referral from a client, I’ll waive that fee, similar to you. But after that, if the referral says, the referee, referral, the person coming in, if they want more time, so you know I’m just not a good fit. I use my medical example. What you need here is a brain surgeon, and I’m a heart surgeon. All I do is heart surgery, and you need brain surgery. Let me introduce you to a brain surgeon. I won’t take that further than two hours.

Micah Shilanski: 31:04 That’s great.

Matthew Jarvis: 31:04 Yeah. All right, Micah. Let’s talk about action steps. This podcast is all about taking action. It was really fun to sort of dissect the lessons we can learn from Disney, but what action steps can advisors take from this podcast?

Micah Shilanski: 31:18 Well, the first one that they should be thinking about is, let’s go back to the first thing, Disney is 50% margins, so 50% profitability. Now, let’s define that, ’cause there’s a big difference here in what people think profitability is.

Matthew Jarvis: 31:29 Yes, please.

Micah Shilanski: 31:30 Profitability is after the executives got paid their comp.

Matthew Jarvis: 31:35 That’s true. That’s after they paid the whole organization.

Micah Shilanski: 31:37 That’s after all salaries are paid, including the executives, so you as the advisor, an executive, after you’ve got your salary, then they had a 50% margin that’s inside of there.

Matthew Jarvis: 31:47 That’s true.

Micah Shilanski: 31:48 Right? So, this is how you need to be pricing things. So often we get the question of how do you price things. First thing is take it, look at it, and say, you know what? If you’re gonna run it like a serious business, you should have a 50% profit margin. What does that look like? If you’re nowhere near that, just do the exercise. Don’t freak out on us just yet, but do that exercise and break it down to say what are your costs, what would you end to charge, or what would you need to do, in order to have that 50% margin?

Matthew Jarvis: 32:15 Yeah, I think that’s a really great one, and to always be aware of that. We’ve talked about this before. Our industry gets so hung up on assets under management as if that’s the only number that matters. Micah, you and I always point this out to each other. It’s almost like table stakes. We don’t even have to say it anymore. What we’re concerned about is the net, any business opportunity, financial advisor or otherwise, what is the net time and money that’s coming out of this.

Micah Shilanski: 32:36 Right, right.

Matthew Jarvis: 32:36 So, I would say another action item is to, like Disney, create rules that are cast in stone. They are not gonna allow musical instruments, to my wife’s chagrin, they are not gonna allow them. They are not gonna allow adults in costumes. The Disney guys told us that around the holidays right now, they turn away dozens of Santa’s a day. People think that it’s a funny idea to come to Disney Land dressed as Santa, and they say absolutely not. You are not coming into Disney Land dressed as Santa. It’s not that they’re opposed to Christmas. They have great Christmas decorations. That’s just their rule in stone. No one comes in in a costume.

Matthew Jarvis: 33:07 As an advisor, we need to have those same rules. Micah shared some of his, I shared some of mine. You need to have rules, and you need to empower your team to help hold the line on those rules.

Micah Shilanski: 33:16 I’m gonna say a third one is be the guide. Embrace the rule. Embrace the guide, as in you are telling clients what they need to do. That is your job, is to guide them based on their goals, based on the values in which they’ve expressed to you. It’s not subjective, it’s not open to 50 different opinions, this I show they need to take the path for their success.

Matthew Jarvis: 33:39 I’m gonna share one more action item, and this is almost like a total shot out into left field. Something that I know that advisors are guilty of, and I’m reminded this when I got to Disney world, is a lot of times we’re kind of a cynical lot, and we will sit and just dissect everything from a negative basis. Micah and I, we were talking about business ideas, but we were really trying to look at it from a positive spin. While we were at the park, I never once saw Micah check his email, and I was watching, by the way, Micah, ’cause I wanted to bust your chops on it.

Micah Shilanski: 34:07 Oh, really?

Matthew Jarvis: 34:07 Yeah, yeah.

Micah Shilanski: 34:07 I wasn’t even thinking about it.

Matthew Jarvis: 34:09 No. I never once saw him check his email. Now, I will admit, and I have to confess this, here’s a hypocrite here. There was a call that I had scheduled poorly, and a series of mistakes happened, and I had to step out for a call. So, I’m gonna take a real hit on that one. But when you’re out with your family, be with your family. Don’t be thinking about the office. Don’t be thinking about how you’re getting ripped off by Disney. Don’t be thinking about the $6.00 bottle of water. Just be with your family. Be in the moment, and think, all right, how can I be the best dad, the best mom, the best spouse possible in this moment? That’s my soap box there.

Micah Shilanski: 34:41 I love it.

Matthew Jarvis: 34:42 For so many years I was so guilty of just, I’m here, I’m physically here with the family, that’s what counts, but I’m on my phone. I’m complaining about whatever, that doesn’t count. When you’re gonna be with your family, be with your family.

Micah Shilanski: 34:55 I love it. So, remember if you want more great information, like this, jump on our website, tprdev0.wpengine.com. Under show notes, we’re gonna start adding some additional things inside of there, so you can jump in there, put your email address on so you’re on our list, and we’re gonna have some additional content and breakdown as we go through with these episodes. Remember, if you made it this far, give us a five-star rating!

Matthew Jarvis: 35:18 That’s right.

Micah Shilanski: 35:18 So, if you didn’t make it this far, you shouldn’t like the show. So, jump on iTunes. It’s really helped. We’re continuing to grow and getting more word out there, so share this with your friends, with your colleagues, and allow them this great experience, as well, to learn more about the practice.

Matthew Jarvis: 35:32 Be sure to let us know if there’s a topic you’d like us to cover. We’re having a lot of fun with this podcast, and we’re covering topics that seem relevant to us. But if there’s a topic saying, boy, I really wish how Micah did X, or how Matt did this, let us know.

Micah Shilanski: 35:43 Well, until next time, remember, it’s you adding value to your clients in everything that you do. So, happy planning.

Matthew Jarvis: 35:52 Happy planning.

Speaker 1: 35:55 You have been listening to The Perfect RIA Podcast. For more information on how you can build a highly effective financial planning practice, please visit tprdev0.wpengine.com.