Don’t Underestimate Simplicity: Matthew Jarvis on Streamlining Your Practice [Episode 9]
Podcast Article:
This episode of the Perfect RIA is chock-full of very helpful principles for simplifying and streamlining your practice. From start to finish, Matthew shares with Certified Financial Planner Neil Rossiter, some of his favorite techniques for managing what can become a chaotic workplace. The take-home message of the entire episode being that simplicity is often better than complexity when dealing with clients who often just want the reassurance that their money is in the right place and that their retirement, nest egg, etc., is as it should be. In short, when it comes to financial advising, Occam’s razor is frequently the best choice. The three most important principles of the episode are the following:
Trying out/implementing a one-page financial plan for clients. This means that advisors should try and boil down the entirety of a financial plan–the many documents and reports printed from complicated accounting software–into a single, digestible page for clients.
2. Establish a robust protocol for whenever a client calls the office. Without an adequate buffer between client and advisor, time management can quickly suffer. Instead, a protocol needs to be set up that demands clients schedule an appointment before being patched through. Often all that is needed is administrative in nature and can be handled accordingly without disrupting the advisor who is almost always busy with something
else. This will free up a lot of time and will streamline your entire business venture.
3. Lastly, any advisor or entrepreneur in general should look to take control of their calendar. This means that meetings can be scheduled for the first 2-3 weeks of every quarter, (Matthew manages 4-6 per day) and then the rest of the time is blocked into various other value-driven tasks like prospecting, traveling, or even podcasting!
To flesh the first two of these ideas out further, and to accentuate the principles of this very enlightening talk between Matthew and Neil, we should explore the one-page financial plan in a deeper manner. To start, Carl Richards has an entire book on ways to trim lengthy, complex financial forecasts into really succinct strategies that are easy assimilated by clients. As Matthew has continually expressed, most clients just want to make sure their money is where it should be; they don’t particularly care about Monte Carlo simulations or other abstruse algorithms for determining financial minutiae. Matt even recounts the time he accidentally gained a client who had more money and assets than half of his total clients. And it was because of the one-page plan that he could actually understand that he was convinced he should stay with Jarvis. A streamlined, clear-cut report is all it takes. The one-page plan, although difficult to implement, can provide a world of difference for getting and maintaining clients. The simplicity of a neat and organized single page is all it takes. And then if they want to delve deeper into some of the numbers, advisors also have all of the other data that was extraneous during the first stage, but which is now relevant as the client asks for more information. Having options and making the complex simple are very important elements to consider for the client. For more on this, you are definitely going to want to listen to the episode; both Matthew and Neil have some pretty cool insights on the topic.
In addition to the one-page plan, establishing a protocol to create the buffer zone between client and advisor is something that Matthew really loves to implement. He does tell Neil though that it might take awhile to “shift the client’s expectations”–to set up the practice of having to schedule to speak to an advisor over direct communication; but, in his experience, Matthew states that almost every client he has ever had has understood the need for scheduling. And one of the most powerful things about scheduling the call is that advisors can then have ample time to prepare for whatever the meeting might entail. You can get your notes out, put all of the files in order, and you are ready to go. If you choose not to implement this protocol every time a client calls and wants answers to their particular queries, a mad scramble of trying to remember the unique details of their files, their names, and information, might ensue. For simplicity’s sake, set up the buffer!
And lastly, Matthew has a few action items he wants listeners of the podcast to try in their own practice. These are, (1) Don’t take incoming phone calls without scheduling unless it is an emergency and (2), try out the one-page plan in your practice. For much more, listen to the entire episode of the Perfect RIA. And read along if you want!
NOTE: If you want to read along while you listen, below is the transcript modified for your convenience and reading pleasure. We highly recommend you to listen to the audio, which includes emotion and humor that you won’t pick up in the transcript. Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please compare the provided audio before quoting in print.
Speaker 1: 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 and systems that your hosts, Micah Shilanski [00:00:30] and Matthew Jarvis have developed in their own respective practices, which have been recognized as some of the best in our industry.
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 [00:01:00] you alone are responsible for you.
And now lean forward and let Micah and Matthew show you how to build the perfect RIA.
Transcript:
Matthew: Hello everyone and welcome to another episode of the Matt and Micha Podcast, officially known as the Perfect RIA Podcast. In this episode I have the opportunity to chat with an advisor in the UK by [00:01:30] the name of Neil. Neil is one of hundreds of advisors who reached out to me after the [inaudible 00:01:37] podcast, asking for some of my time, and as much as I would love to say yes to all those requests, there simply is just not enough time in my life to do so. So instead I say yes on a very selective basis and I’ve started recording these podcasts. This is not the first one, but I am recording these interviews so that you can glean information from our discussion.
In this specific episode with Neil, we’re gonna talk [00:02:00] about things such as the one-page financial plan, ways to kind of ease into the one-page financial plan, not going cold turkey from your hundred-page plan but easing into that.
We’re gonna talk about what to do or what your team should do if a client calls your office when you’re on some kind of extended leave and we’re also gonna discuss how to really take control of your calendar, which is something we’re very passionate about here at the Perfect RIA, but how to take control of your calendar in a way that empowers you, [00:02:30] empowers your client, empowers your team, empowers everyone in your life.
So with no further ado, please enjoy my discussion with Neil.
Neil: I was so impressed by the practice that you built, listen to your [inaudible 00:02:43] podcast. I’m a big advocate of Nick Mowie of financial planning and a lot of what you do speak is a lot of things that I would like to do. So, it was really learning from you—I guess how you got to where you are now and the sort of things that could help me speed up my journey.
Matthew: Well tell me a little bit about where your [00:03:00] practice is right now and where you’d like it to be.
Neil: So, we’re in [inaudible 00:03:03] Summerset and that’s South West England. We have [inaudible 00:03:06] have their own client banks that work under our umbrella.
Matthew: Okay.
Neil: So I’m the lead advice to the clients that would be [inaudible 00:03:12] the firm, if you will.
Matthew: Sure.
Neil: We have these self [inaudible 00:03:16] advice, which work with us.
Matthew: Well, you had mentioned in the sheet that you sent in about questions about how to streamline the client process without reducing client service, so could you tell me a little bit about your client process? You also mentioned about attracting clients [00:03:30] that are a good fit and trying to not necessarily attract ones that aren’t a good fit.
Neil: Yeah, okay, so, the client [inaudible 00:03:36] position is that we get a new inquiry from some source and that would typically have a discovery meeting, face-to-face.
Matthew: Sure.
Neil: Try and preface that with a phone call where possible to see is there a fit that would necessitate a meeting, so we have a discovery meeting, which is about an hour.
Matthew: Okay.
Neil: We go through goals and objectives and what the client is looking for and that would then lead into do we take it further to a full fact finding meeting?
Matthew: Sure.
Neil: We [00:04:00] have a fact finding meeting where the client would bring all their paperwork in and we would go through all that and take more information. We would then analyze that [inaudible 00:04:07] financial plan and then arrange a meeting to go through the financial plan and what that’s told us about what we can look to do.
Matthew: Okay.
Neil: [inaudible 00:04:15] be doing when we search on pensions, investments, and are they still suitable and therefore there’d typically be another meeting after the planning meeting where we would present our portfolio recommendations to the client.
Matthew: Okay.
Neil: They may or may not agree at that meeting. If they [00:04:30] do, then we onboard at that meeting. If not, we schedule them another meeting to get the paperwork completed.
Matthew: Sure.
Neil: And then that would start the ongoing client arrangement, which is a yearly full planning meeting.
Matthew: Okay. When the contacts first, when you’re first contacted by a potential client, when do you sort of explain or how do you explain this process to them? So maybe in that first phone call or when you first sit down. Are they aware when you’ll ask them to become a client, when they’ll sort of be put in a spot to [00:05:00] make a decision?
Neil: Yeah. Well, what we say we’d always say that the first meeting is our expense and we’ll go into our position on fees and costs at that meeting. And at the end of that meeting [inaudible 00:05:11] kind of stock phrases. If I think that, if we both think we can see value in this relationship, then we’d look to move forward from there.
Matthew: Sure. Sure.
Neil: Kind of the wording we’d look to use. Yeah.
Matthew: Yeah. And again, the nuances are probably a little bit different from just where I am in the world and where you are in the world. I talk to planners all over the world, but kind of human philosophy is pretty much [00:05:30] the same. None of us like to be sold something, right? None of us want to feel like we’ve been backed into a corner. And so it’s nice to set expectations as often as you can with a prospect. Right?
What we don’t want to have is them to come in to your office and think, “All right, at any moment, Neil’s going to try to sell me something and so I’ve gotta have my defenses up. I’ve gotta be ready to sort of thwart that attack, if you will.”
I do something very similar to you. I have that initial phone meeting to kinda screen if they’re a good fit, but I also like to explain in great detail how that process works. Just [00:06:00] like you, I say, “Hey, that first meeting’s at our expense. Before you trust us with a dollar of your nest egg or pay us a penny in fees, we want you to see how it is that we can help you.” And then I let them know right away, I say, “Listen. The only thing I’m gonna sell on this first meeting is to do a financial plan for you. That’s it. Right? There’s not gonna be any paperwork to sign. There’s not gonna be a fee to pay.” And you know, you can adapt that for however your planning process works, but we want to make sure before people come in to your office, they know exactly what’s gonna happen.
Neil: Yeah.
Matthew: That way they can be more transparent with you. [00:06:30] They can be more focused on your discussion and less worried on, “All right, is he going to use my answer to this question to try to sell me something later on?”
Neil: Yeah, yeah. Okay. Yeah.
Matthew: And even just the little bit I know about you. I know that you’re goal is not to try to push somebody into a product or into something that’s not suitable. Right? In your heart of hearts, you want to do what’s best by the client. But again, they’re coming in saying, “Boy, I don’t know Neil from anybody else, and I bought a car at the car dealership and they sold me something I didn’t want, and I still regret that. I don’t want Neil to do the same thing.”
And so anything we can do [00:07:00] in that process to show people what’s going to happen, right? So there’s no surprises. Kinda pull back the curtain, if you will. That’s real helpful.
We also have it on our website. We explain, here’s our process for new clients. And, by having that defined again, they can look and see that, a prospect could. But also, you want your existing clients to know your process. That way, as they’re introducing you to their friends, they know what’s going to happen if their friend calls you.
Neil: Yeah.
Matthew: They’re not sort of left wondering, “Well, if I send my friend to Neil, what will he do with [00:07:30] them? I mean, he took good care of me, but maybe that was an accident.” I mean, I don’t know what they’re thinking, but we wanna eliminate any barriers for referrals, introductions, and so forth.
Neil: So, do you … you would send [inaudible 00:07:41] post that first conversation. Would you be sending literature or something by email to set that out or just [inaudible 00:07:47] the website.
Matthew: You know, we do both. So when my office manager, so when somebody contacts our office, my office manager, Colleen, will talk to them. The very first thing she’ll say is, “Hey, go to our website and review through it, we have a tab called ‘Sleep On It’ [00:08:00] at JarvisFinancial.com” and so she’ll tell them that first of all. And it also has on there on that page the kind of people we work with, because it was an uncomfortable discussion for her to say, “Well, how much money do you have? And are you willing to pay this— “
Neil: Yeah.
Matthew: ” …kind of fee?” And so on our website, it says, “Hey, we work best with people that are in this range.” And so, right away people can screen themselves, but it also gives them an outline of kind of how this process works. So you can either post that to your website or you could email it to them right away or mail [00:08:30] it to them. Just anything you can do to set those expectations.
Neil: Yeah, ’cause I think one of the challenges we have, and this leads on to the lead [inaudible 00:08:39] form is our firm’s been around for some time and the local area. We’re quite well-known…
Matthew: Good.
Neil: And [inaudible 00:08:44] we generate a good degree of inquiries, but also not all those inquiries are often ideal clients. My experience of being a planner and I said the same for you is we’re here to try to want to help people and somebody rings up with a query you know you can help with, but you sense they’re not an ideal client. [00:09:00] It’s very hard, so how do you manage that? ‘Cause you know you can help, you want to help, but…
Matthew: That’s right. Yeah.
Neil: …you’re not sure that you should.
Matthew: Yeah.
Neil: And how do you square that circle? Without saying no or I don’t know. I’m curious of your view on that.
Matthew: Yeah, yeah. And you put that very well. I think kind of in our soul is this desire to help people, right? It’s who we are. But at the same time, we have to run a profitable business, right?
Neil: Yeah.
Matthew: So, I handle that a couple of ways. One is in that initial phone call, if I determine that someone’s [00:09:30] probably not a good fit. I’ll give them the best advice I can during that 10 or 15 minute phone call, so I’ll say, “Hey, you really need to pay down this credit card. You really should take care of this.” Really try to give them good advice. And then I always use this analogy of a heart surgeon versus a brain surgeon.
Neil: Okay.
Matthew: So, I say, “You know, in my practice, we’re like a heart surgeon and we’re one of the best heart surgeons there are, but what you need is a brain surgeon. Right? And I just don’t do brain surgery.” Or knee surgery. Use whatever analogy you want, Neil, but then I say, “You know, what? Who you should really talk to [00:10:00] is… ” and I know the names of most of the other firms in town, so I’ll say, “Oh, my friend Dave down the road, he specializes in what you need. I want you to call Dave up. In fact, I’ll introduce you to Dave. I’ll call and tell him that you’re calling. Dave’s really the guy you want to talk to.”
Neil: Okay.
Matthew: That way I’m not just telling them to go away, which is both rude in a way and it doesn’t kind of satisfy my need to help people. I’m saying, “Listen. You need help. Here’s some initial help, but you need to go see the right kind of specialist for your situation.” And you know, I have clients, maybe you do [00:10:30] as well, I have clients that are doctors. I have a client who is a heart surgeon and I asked him, “Hey, Bob, if a friend came in and asked you to do knee surgery, would you do knee surgery?” And he laughs and says, “Of course I wouldn’t do knee surgery. All I do is heart surgery, no matter what. That’s all I do. Just heart surgery.”
And we as planners need to adapt that philosophy and say, “This is the kind of clients that I work with and these are the only clients that I work with, because that’s my specialty.”
Neil: Yeah. And one thing you talked about is [inaudible 00:10:59] a, because we have to do service models. We [00:11:00] have our full planning model and we have a like a lighter version of that…
Matthew: Yeah, sure.
Neil: …yeah. And all the clients I look after on the full-service model and that’s where I get the most fun and enjoyment and [inaudible 00:11:11]…
Matthew: Yeah, of course.
Neil: But we get these queries from clients that maybe don’t fit that model, but the firm could still help. So one thing we’re toying with is bringing in a junior or younger advisor maybe and so rather than your example of referring to another firm, we can retain the client within the firm, but to a different [00:11:30] advisor. And that client may grow and may become a full-service client, maybe down the track, maybe. That’s something we’re kind of toying with.
Matthew: Yeah. And that really is a great model. I know several advisors that do that. So the lead advisor handles this tier of clients and the next and the tiers down. As long as that tier is profitable.
Neil: Yeah.
Matthew: So, a lot of times as advisors our desire to help overwhelms our desire to run a profitable business.
Neil: Yeah.
Matthew: And we say, “Well, I want to help everybody, but if I [00:12:00] help everybody I can’t help anybody.” And so, yeah, to have a junior advisor as long as those are still profitable relationships, and as long as they don’t in the end become your relationship that you’re managing, when really the junior should be managing it.
Neil: Do you have any advice on what we talked about was if I look at the client bank that I’m managing now is bringing in junior advisor and maybe moving some of those ships over to pass on ideal fits, because maybe—on your podcast you talked about how you’re minimum fee was arbitrarily put up because you actually had [00:12:30] the quote confidence to do it.
Matthew: Yeah, yeah.
Neil: I think it’s a journey we’re on. You see you start with a minimum fee and then you realize that actually—so if we end up with a, it’s not a long tail, but it’s still a tail, which would fit into the new client category. And the thought was to migrate those relationships over to the junior advisor, still with me available, but do you have any thoughts on that?
Matthew: Yeah, you know what, a lot of advisors do that as well, and it’s complicated by the fact [00:13:00] that that long tail of people are usually people you’ve known a long time.
Neil: Yeah.
Matthew: People that still really need your help, and so there’s—you know, from a business decision, we could say easily, “Well, we just won’t work with those people anymore,” but again we’re planners, we want to help people. So yeah, bringing a junior in place, and again there are people that just aren’t a good fit for your firm anymore. So we’ve done it several times. In fact, I’ll send you a copy of the letters and the things that we’ve used when we decided to transition clients to other firms.
I was kind of adverse to the idea of bringing more people in, [00:13:30] more staff on, but that’s just my personality. I don’t want a big team. I want a lean team. But you could adapt this for your team. If you said, “Boy, we brought in Sam and Sam is now going to work with you, but I’ll still be here, right? I’ll be here. Anything Sam can’t handle, I will handle. We’re still your person. We’re still your phone call.” And then yeah, to transition that. So I would really look and say, “All right, what’s my top tier of clients, whether it’s my top fifty or my top hundred, whatever that is, and everything below that is gonna either need to work with same or go [00:14:00] work with another firm.”
Neil: Yeah. Okay. Yeah, and that’s what we’re working on. And to your point, we were looking at the spreadsheet of all the clients, and yes, you can look at it numerically and then it’s like, well that’s an expense. And it doesn’t become a number, it becomes a person. Then it’s not so easy then.
Matthew: You have to take the names off of it. So when I run those spreadsheets, I have to delete the name off of it, because otherwise I do that. “Well, it’s Mrs. Smith, I can’t, I have to be, I have to be strong in my business sense. Right? Which is not easy [00:14:30] to do.
Neil: No.
Matthew: It’s really not. But if, like you said, if you can bring somebody in house, a junior advisor of sorts, or if you can find another advisor in town. If you decide, hey, you don’t want to train somebody, we don’t want to bring somebody up. There’s gotta be another firm near you that has a younger advisor who’s doing really good things by clients who would probably give this client better service than you do. Right? Because our long tail clients, maybe not for you Neil, but for me, our long tail clients, they kind of get less service than our top clients. And so there’s got to be a young advisor out there who you can either bring in house or to whom [00:15:00] you can send clients who you can, in your heart of hearts, know that they’ll actually give them better service than you will.
Yeah, and maybe you start with just the bottom ten clients. And I always allow my team, anytime we’re making a big change like that, I allow everybody on my team five exceptions. So, I say, “I know there’s somebody in our client book that you just absolutely love that you can’t imagine life without or it’s a family member or something. You get five exceptions. Everybody else we can’t make exceptions for. Because if we’re going to hit our goals, just like we would tell [00:15:30] our clients with their financial goals, we’d say, ‘Hey, you have to make these sacrifices to reach your goals, we as advisors have to make sacrifices to reach our goals as well.”
Neil: Yeah, okay. That’s good. Thank you.
Matthew: Well, that’s easy for me to say, right? And it’s harder for you to do. They’re not my clients and so it is a challenging thing to do, but I’ll send you over a couple of pieces, couple of pieces on it that we’ve used over time that’ll help with that. Gotta get your mind around that.
Neil: Yeah. Thank you. Yeah.
Matthew: Other areas that I could help you with, Neil. Let me pull up your [inaudible 00:16:00] [00:16:00] in here. Striking a balance between business growth and personal time. We could talk about that for a minute. Tell me a little about how you balance that currently.
Neil: Okay, I think. I mean, I tend to work a Monday Friday week. I rarely work weekends.
Matthew: Good.
Neil: I went in a few hours this Saturday, but that’s a real rarity. [inaudible 00:16:19] This week, so I had some stuff to do this day, so that was the reason for that. I think, the practice that I’m a part owner of I was an employee of before I bought into the practice, [00:16:30] so I think you have that strange dynamic of previously being an employee and now—therefore, you have this mentality of working these set hours, ’cause that’s always what you did.
Matthew: That’s right. That’s right. And that’s what everybody you know does, right?
Neil: Yeah. Yeah.
Matthew: Everybody you know works those hours.
Neil: Yeah, or you buy into a practice to generate more try work for them work more hours than before you [inaudible 00:16:54] did. Kind of like you’re more free and you work less maybe. So, I think I’ve got quite a good balance, but it’s trying to—[00:17:00] I know that listening to your, Micha’s [inaudible 00:17:02] podcast and the amount of time you take off is, is a lot by conventional measures. And it’s just how you manage that with the clients. If you’re away from the office for a long period of time, and—how does that work really? You know?
Matthew: Yeah, yeah. How do you not be in the office and still deliver on client service, right? That’s kind of the big one. So on the extreme is when I take trips where I’m totally out of, off the grid, so I took my family to China [00:17:30] for three weeks. And for three weeks I didn’t have phone service, I didn’t have internet service. So, something like that, we warned clients ahead of time.
We said, “Hey, listen, I have this chance for an adventure. I have the chance to take my family to China. We’re gonna do that. And here’s what’s gonna happen while I’m gone. My team’s still gonna be there. They’re still gonna answer any phone calls. They’re gonna take care of anything you need. We just won’t be able to meet together.” So, on those situations, I let them know in advance, because I don’t like people to be surprised.
Neil: Yeah.
Matthew: Otherwise, what we do is we steer client expectation [00:18:00] so it’s more about getting their needs met and less about talking to me directly. So, if a client has an expectation that they can call the office at any time and get me on the phone, that makes it really difficult for me to leave. Right? Because they’re going to call and I won’t be there. If instead, we shift their expectations that they can call our office at any time and their needs will be met, well that could be handled whether I’m there or not. And that seems like a subtle distinction, but it has to do even with the way my office answers the phone.
So, a client calls in, even my best client, whether I’m in the office or not, [00:18:30] my office manager Colleen, she’ll say, “Hey, who is this?” She’ll greet nicer than that, and they’ll say, “Oh, it’s Dave. I need to talk to Matthew.” And she’ll say, “Dave that’s great. Matthew would love to talk to you, but he’s with another client right now. Is there something that I can help you with?” And sometimes they’ll say, “Sure. Colleen, what I needed was this form. Or I needed to change the smallest thing.” But other times, they’ll say, “Actually, Colleen, I really need to talk to Matthew.” So, she’ll say, “Great. Matthew can call you tomorrow at 3 pm. Is that okay with you?” And they say, “Oh yeah, sure that’s fine.” As long as they know when I’m [00:19:00] gonna call them.
And then, here’s the real trick, now, she says, “What can I tell him it’s regarding, so he that he can be prepared for the call?” And then they’ll say, “I need to change my monthly distribution.” And she’ll say, “Oh, great. You know what, I can help you with that.” And so she’s taking care of those things.
So, the reason for that process is that normally they would say, “Hey, I need to talk to Neil. I need to talk to Neil” ’cause we’ve programmed them as such. This way she can kind of pull out, “Do you really need to talk to Neil or is there just something you need taken care of?” And most [00:19:30] clients, even if let’s say they really do need to talk to you, Neil, they have some tax questions, something specifically that only you can answer. It would be better for them to be scheduled to talk to you than for you to just pick up the call.
Neil: Yeah.
Matthew: Because if they ring in straight to you, you’re trying to open their file. You’re trying to remember their situation. You’re trying to remember whatever it is they want to talk about. Whereas, if it’s scheduled tomorrow at 3 pm, you can be totally prepared. Just like I am today, I have everything laid out on my desk and I’m ready for that call.
Neil: Yeah.
Matthew: And rarely will a client object to that. Rarely will a client say, “No. I need [00:20:00] to talk to Neil right now, this very second.” Most people aren’t that way or at least people you shouldn’t have those people as clients. So that takes several weeks or months to set that expectation. We put it in our client letters, we say, “Hey, you know, we work with a lot of clients. We’ll always return your call within 24 hours. I just might not be available the moment that you call.” And whether I’m not available because I’m out with my family, or I’m not available because I’m in a meeting with a client. That doesn’t really matter. We’re not gonna disclose that one way or another. We’re just setting the expectation [00:20:30] that you can’t just get Neil on the phone as soon as you ring him. You’re gonna be scheduled to talk to him.
Neil: Yeah, and so is that your service standard is 24 hours to go back to your client. If it’s, if you’re not on an extended break?
Matthew: Yeah. If it needs, for me, my team will get back to them the same day, usually within a few hours, but if they need to talk to me, they can’t always get me the same day. Now, Colleen will always tell them, “If this is really an urgent issue, I’ll pull Matthew away from whatever he’s doing and I’ll have him give you a call back by the end of the day,” and in that case she [00:21:00] would ring me wherever I’m, whether I’m at my house, whether I’m on vacation with my kids. But that almost never happens. Rarely does a client have an issue so urgent that they say, “Boy, I have to talk to Matthew right now, this very second.”
Neil: I guess they say it’s filtering the what is administration, what is advice? And I’m not sure US regulations, but we’re quite clear on administration can handle. As soon as it ticks over to advice, well then it comes over to the advisors we mentioned.
Matthew: Yeah, so, and you and I understand that. And [00:21:30] your team understands that, but the client doesn’t. They just know, Neil’s my guy and if I have an issue, I call Neil. And it turns out they just need to update a beneficiary. Well, they don’t need to talk to you about that. That’s not advice, that’s just an administration.
Neil: Yeah.
Matthew: And so, but we want to be tactful with that, right? You don’t want your team to answer the phone and say, “Mr. Client is this advice or administration?” Well, not only do they not know, it’s just rude.
Neil: Yeah.
Matthew: And so, that’s why they say, “All right. Well can I tell Neil what it’s regarding, so he can be prepared [00:22:00] for your call?”
“Oh, yeah, it’s regarding my address change.”
“Oh, you know what? Great news. I can help you with that.”
Or they say, “Hey, I wanna change my investments.”
“You know what. That’s really good. Neil will be prepared to talk with you about that tomorrow at 3 pm. Is that okay with you?”
Neil: Yeah.
Matthew: And even if you’re in the office, Neil, it still makes your job better, because you’re not getting interrupted in the moment. You were working on some project and the phone rings and now you’ve been distracted by the phone call, versus having that scheduled for next day.
Neil: So how many meetings and things would you schedule [00:22:30] in your diary when you’re in the office?
Matthew: When I’m in the office, and I keep condensing this more and more, I’ll have anywhere between four and six meetings a day, when I’m doing meetings.
Neil: Okay.
Matthew: Yeah, which —
Neil: It’s a lot.
Matthew: …the advantage of that—It is a lot and it takes a while to get up to that. I used to only be able to handle three to four meetings a day. But instead of having my meetings … Let’s say you want to meet with your clients four times a year. It’s just an easy number. You know a hundred, right? So, that’s a hundred meetings each quarter. So, I could either—Most advisors spread that out. They do one this [00:23:00] day, they do two the next day, they skip a day, they do one on Thursday. Instead, I try to get all my clients to come in during a two week or a three week period of time. That way, my whole team is focused on meetings, which is also what lets me travel. Right? So clients all come in the first couple weeks of the quarter. I’ve met with everybody, well not everybody, probably about 90 percent of clients come in during that block of time, and then I have some stragglers throughout the remainder of the quarter.
Neil: And they all come into the office, or do you go out and meet with your clients? Or is it by Skype? [00:23:30] Or how does that…
Matthew: Most of them come into the office. Some of them I Skype with. I don’t go out and meet with anybody. Years ago I did. Maybe I do one or two meetings a year out of the office. Clients who can’t travel anymore. Or meeting a client for lunch, something like that. But I try to block those together. Even if you just do it by month. Even if you just pick one week a month where you say, “This week I don’t do any client meetings.” Maybe it’s ’cause I’m working on my business. Maybe it’s because I’m traveling, but the last week of the month, I won’t do client meetings.
And then just force your [00:24:00] meetings into the other three weeks, or two weeks, or whatever period of time.
Neil: Would you set aside different days for new prospective clients, or they just fit in the meeting schedule in line with your normal diary?
Matthew: I do them all during that normal diary. I don’t—I know some advisors that say, “Hey, Tuesdays are when I meet with new clients.” I just get in the mode of doing meetings and I just do all my meetings as quickly as I can.
Neil: Yeah.
Matthew: So, I do my meeting for an hour and then I have a 30-minute break. And then my next meeting. That way [00:24:30] my meetings don’t overlap. I have some time to go use the bathroom. To check notes. Whatever the case may be.
Neil: And on the podcast, what I was interested in and intrigued by was the lack of financial planning software you mentioned that you would use. We use [inaudible 00:24:51] Truth. Here in the UK, it’s very comprehensive. It’s very good. You can put everything in. You can do all of the tax calculations, the estate planning, the catastrophe [00:25:00] planning, the pension planning, the cash flows. It’s all in one. And it’s very good, very comprehensive.
Matthew: Sure.
Neil: But sounds a lot more comprehensive than what you use.
Matthew: Sure.
Neil: Given the amount of clients you look after, I was just curious how that came about and the one-page plan. Those are the two…
Matthew: Yeah.
Neil: …the two seem to be synonymous.
Matthew: Yeah.
Neil: And I’m a great fan of Carl Richard’s work as well and trying to simplify things as much as possible and yeah the comments on that would [00:25:30] be good.
Matthew: So, part of that, one thing to keep in mind is that all of my clients are retirees. They’re either retired or they’re getting ready to retire. So their number one question is, “How do I not run out of money in retirement?” They’re not worried about paying off student loans. They’re not worried about putting their kids through college. They’re not worried about buying a house. They’re just worried, they’re saying, “I have this nest egg, this lump sum of money. How do I get income out of that?” And I think as I mentioned on the [inaudible 00:25:53] podcast, we follow a dynamic distribution rate.
Neil: Mm-hmm (affirmative).
Matthew: [inaudible 00:25:58] made that really popular. And so, all I need to be able to do is to [00:26:00] illustrate to them how much money they can take out this year? And I do that on one page, just a single illustration: “Here’s your portfolio balance. Here’s how much we can safely take out this year.” Not really interested in a Monte Carlo simulation forty years out, because that’s all made up numbers anyway. And the client doesn’t understand it. Right? We’re saying, “Hey, some computer thinks this is what the rain forecast is gonna be thirty years from now.” Nobody knows.
The one-page financial plan, which Carl Richards talks a lot about, I actually learned that from Tom Gowe. He runs a coaching program [00:26:30] now called The Academy of Preferred Financial Advisors, and the idea is, his idea was that a client can only absorb one piece of information. One page worth of information. And that the more pages we got, the more confused they got. And so he would summarize all of his advice on one piece of paper.
And when I first started doing that, it seemed impossible, right? Because the planning software would generate dozens of pages and so I said, “Great. I have one sheet of paper. I’ve gotta fill up that one sheet and that’s all I get.” And so, I had to exclude all of the noise, all of the commentary. [00:27:00] It had to just be advice. I recommend you save this much. I recommend you do this with your legal documents. I recommend you do this with your tax documents. And no commentary. Just pure advice on that. So, what you could try, Neil, is still use your planning software, and then on top of that, write up a one-page summary. And you can say to the client, “Mr. and Mrs. Client, here’s this big stack of papers, and we can go through every page if you’d like, or I’ve done a one-page summary.” In the States, we usually call that an executive summary. [00:27:30] Just a one-page executive summary, “Which would you like to look at?” And every single client, even the engineers will say, “Just the one-page summary. I just wanna know what I need to do.”
And part of that, Neil, is also Google knows everything that we know. Right?
Neil: Yeah.
Matthew: Everything that we know, the financial planning software, everything. All of that is available on the internet. The client wants to know what they need to do. They don’t want a whole education on financial planning. Am I saving enough money, yes or no? If no, how much do I need to save? So, the one-page financial plan is all about simplifying. It doesn’t mean you need to abandon [00:28:00] your planning software, it just [pause] you need to have a one-page summary.
Neil: Yeah. And I think that comes back to another point about value isn’t it? That there’s still a perception the longer more complex the [inaudible 00:28:12] a big fee. That’s what they’re getting.
Matthew: That’s right.
Neil: A tangible product for what is an intangible service.
Matthew: Yeah, that they’re paying you by the page. Right?
Neil: Yeah.
Matthew: That. Yeah.
Neil: [inaudible 00:28:24]. That’s what you’ve paid for.
Matthew: That’s right.
Neil: And I guess maybe, [inaudible 00:28:30] we’re talking is one thing [00:28:30] I say to clients is when if we’ve got their cash flow on screen, so then once we’re really sure, we know this is not gonna be what the future’s gonna look like it’s just our best guess with what we know today. So that’s why we’re printing it out and binding it and giving the illusion of certainty.
Matthew: Yes. Down to the hundredth of a percent, right?
Neil: Well they just changed the inflation rate by half percent, it’s gonna be, it’s gonna look different. Over here in the UK, the regulatory paperwork is still quite extensive. [00:29:00] I don’t think you find the same in the U.S. But maybe the summary would be, “This is what you need to do.” And then you’d still have to supply them the regulatory piece, which is quite a tome, but that’s the accepted document in its entirety.
Matthew: Yeah, and maybe you need to bind those together to meet the regulatory requirements, right? We don’t want to skirt those, but you can tell the client, “Hey, listen, you know, the government requires that I give you all this paper and we can review every page of it if you like. Or, as your advisor, I’ve done up one page of what you need to do. Which would you like [00:29:30] to look at?” And they’re all going to say, “Go. Forget the paperwork. Let’s just look at the one page.”
Neil: Yeah.
Matthew: But it will take some time, Neil, to [inaudible 00:29:38]. It’s a lot of work to condense all of that paper into just one page.
Neil: Oh, yeah. What’s that wonderful phrase? It’s much harder to work at what to take out than what to put in.
Matthew: That’s right. That’s right. It’s easy to click another box on that software and generate another report.
Neil: Yeah, yeah.
Matthew: But really, clients, regardless of their situation, right, you can sort [00:30:00] of put them into a couple areas, right? They all have questions about cash flow, whether that’s saving for retirement or taking income in retirement. They all have questions about risk management, right? What happens if I get sick? What happens if I die? They all have questions about taxes. And they all have questions about their investment portfolio. So, you really could just break it into four areas. Summarize their goals. And this is what I do. Summarize their goals in a couple of bullet points, right? Retire when you’re 63. Whatever the case may be. Talk about cash flow. Talk about risk management. Talk about taxes. Talk about investments. [00:30:30] In that order. And I just bullet point each one of those.
And it actually, I think, Neil, it actually makes you more valuable to the client, because you’re giving them more personalized advice and you’re acknowledging that this is not a perfect process. That we cannot sort of guarantee we map out the next forty years. We know how things look right now and we know with certainty they’ll look different next year, which is why you need to keep working with a planner ongoing, because this will always be changing, and we’ll always be changing with you.
Neil: Yeah.
Matthew: You know, even just experiment [00:31:00] with it. Just with your next client or your next prospect, do your normal process, like you always do, that’s worked very well for you. And just try it. Just give your best effort at a one-page summary and see what they say. In the worst case, they’ll say, “You can revert back to the big plan like you always do, and that’s fine.” And maybe they’ll love the short plan. And once you see it work a few times, I remember the first time, a couple times I used it, I thought, “There’s no way this will work. This person’s paying a lot of money. They have a lot of money. Millions of dollars. There’s no way they’re going to buy a one page piece of paper.” And every single time [00:31:30] they say, “This is exactly what I wanted.” In fact, I don’t, I can’t remember if this was in the podcast or not. I have very wealthy client who met with me by accident, somehow got referred to me, and he had as much … his nest egg was equal to half of all of the money we manage. [crosstalk 00:31:48]
Neil: What? Okay.
Matthew: It was kind of a fluke, an accident that he came, and he says, “Well, I’m in the wrong place, right? I have almost as much money as half your clients combined. I’m gonna go to the bigger firms. I’m gonna go to the big city and I’m gonna meet with [00:32:00] all the big firms.” And I said, “Well, you’re here. Let me just do this one page financial plan, and you can just take it with you, ’cause you’re already here.” So I sent it to him, thinking I’ll never hear from him again, right? ‘Cause he’s meeting with all these best financial planners and attorneys and lawyers and all accountants and a few weeks later, he calls me back and he says, “Matthew, I met with all the top firms in the state and you were the only person I understood. Everybody else gave me all these reports, all this stuff I couldn’t figure out what they were saying. I understand what you’re saying. So, even though I have as much money as half your clients combined, I wanna work with [00:32:30] you.”
And so that was a real testament to me that clients want simplified advice. They just want to know what to do.
Neil: Yeah.
Matthew: Google can give them an endless supply of paper.
Neil: Yeah, and I guess that leads into the value side. Is still charging the AUM fee, which we do and I know you do.
Matthew: Yep.
Neil: And the, as the clients and such grow, also that number grows with it, and there’s the value conversation. How do you, if you had somebody of [inaudible 00:32:58] into specifics, that [00:33:00] number can get large, with larger clients, in terms of value add and discussion of fee, and I’m just curious to know how you position that.
Matthew: Yeah, that’s a good one. I will mention that I charge an AUM fee. I personally, I cap that at 5 million dollars. Our largest annual fee is 50,000 dollars a year.
Neil: Okay.
Matthew: And that’s more of a confidence issue than it is anything else.
Neil: Mm-hmm (affirmative).
Matthew: Right? Like everything we do. But again, for a client who’s paying us 10, 20, 40, 50,000 dollars a year, [00:33:30] that’s a lot of money, right? So how do we provide value that’s equal to that? And like you, I’m a big fan of Dick Murray, I talk about his value proposition, right? If we can save you time, effort, or worry, that’s worth more than our fees a year. But something I always keep in mind, I always try to imagine that clients can only remember 90 days in the past. So, our fees come out of the client account each quarter. Once a quarter our fee comes out, I’m not sure the timing on yours, but I always imagine the client sees that fee come out and they remember back for the last 90 days and say, “What [00:34:00] has Matthew done for me these last 90 days?” And I wanna make sure there’s something that comes to mind.
So, not something subjective, not something kind of, “Well, I’m sure he’s looking after my money”. I want them to be able to point to something and say, “Hey, Matthew did this for me in the last 90 days, and I’m going to keep paying him to do these things.” So that means every quarter we’re sending something to clients that’s some kind of value add. We’re reviewing their beneficiaries, we’re reviewing their tax returns, we’re talking about their retirement income. Something that we can send out to every client whether they meet with us or not that demonstrates our value. [00:34:30] And something that no one else is doing.
So, all the other big firms, they’re sending them all sorts of market commentary and just sort of junk. But it’s not valuable. It’s not saying, “Hey, here’s where your beneficiaries are and this is where they should be.” It’s not saying, “here’s how you’re currently invested. Here’s how I think you should be invested.” Right? We want to be really proactive with advice, with clients, so they’re getting that every 90 days. And then I have to remind myself, and I think, yeah, Carl Richards talks about this The Imposter Syndrome.
Neil: [00:35:00] Yeah.
Matthew: Where we get good at something and we think, “Well, it’s so easy, I can’t be that valuable.” I have to remind myself that clients are working with me voluntarily. In fact, I tell clients that every time I see them. I say, “Hey, listen, our fee comes out of your account every quarter. And you look at that number, and I look at that number. And we both got to agree that the value that we’re bringing to you is worth more than the fee. And if the value is, then we go another quarter. And if it’s not, then we need to have a heart-to-heart discussion. Something needs to change or we need to part ways as friends.”
And so I’m really up front with them on that discussion. That way I’m not shying away from the discussion on fees. [00:35:30] I’m not hoping they don’t notice that their fee is on this schedule or I’m kinda mumbling their fee. I’m saying, “Hey, our fee is X, right? Last quarter you paid us 10,000 dollars. You saw that number. I saw that number. It’s either worthwhile in your mind and we keep going, or it’s not and we part ways as friends.”
Neil: Yeah. Okay.
Matthew: But I have to remind myself of that as much as I have to remind them. Right? I’m not forcing anybody. No one’s under contract to stay with me. If they didn’t think what I was doing was valuable, then they would leave. Same with your clients.
Neil: Yeah. Yeah. Over here we have an annual meeting.
Matthew: Sure.
Neil: And [00:36:00] what we say to clients is, we have an annual full planning meeting and that’s the minimum and that will typically be a couple of hours…
Matthew: Okay.
Neil: …because we’re going through the plans, it’s quite a long meeting, but it’s going through the goals, objectives, the financial plan, the investments, and just tidying everything up. [inaudible 00:36:16] new client today, and what we say that’s the minimum contact. Some years you might need us three or four times, in which case you come in as many times as you need. Some years it will just be annual.
Matthew: Yeah.
Neil: Our client fees are taken from the cash account on the platform [00:36:30] and it’s paid monthly.
Matthew: Okay.
Neil: To us. The client will get a statement every year. It’s like a bank statement: “Here’s what you paid over the last 12 months.” So we’re really clear, “This is what you paid us.” And we, facing to you, we [inaudible 00:36:44] that this is every 12 months. There’s no contract here. If you’d like to continue first 12 months, then please sign our client agreement accepting that you can leave any time.
Matthew: Nice.
Neil: It’s more so that we’ve, we enforced it with a signature [00:37:00] from the client and they see the number in pounds [inaudible 00:37:02] what they paid us.
Matthew: Oh, good for you. That’s really, that’s great. So they re-up every year then? You have them sign again every year?
Neil: Yeah. Yeah, absolutely. And yeah, most interesting reflecting back is no one’s ever, we’ve not lost anybody. And we—and then I start—this is the imposter syndrome. Then I start saying, “Well, markets have been rising for several years…”
Matthew: That’s right That’s right.
Neil: ” … Who’s gonna leave in a rising tide anyway?”
Matthew: That’s right. There has to be ten clients that are thinking about leaving. They just haven’t done [00:37:30] it yet. Yeah.
Neil: Yeah. [crosstalk 00:37:32]
Matthew: … rabbit hole.
Neil: Absolutely. Yeah. It’s just thought. It hasn’t actually happened, really. So, yeah.
Matthew: And that’s part of the reason why I have that regular schedule of value add. I want to make sure I’m doing something every quarter, just, it’s almost for my own peace of mind, right? So I can look and say, “Hey, I’m doing something proactive for these clients every quarter. I’m showing them my value.” I think nine times out of ten they don’t even look at it, but it makes me feel better, right? I have something I can point to that I’m doing.
Neil: Is that something where you would say, ” [00:38:00] Okay, this quarter we’re gonna do the beneficiaries across the client bank.” Rather than doing it bespoke for each client each time? How do you systematize that?
Matthew: Yeah, we would do it across the client bank, so we would have the custodian give us a report of all of the beneficiaries. Now, the custodian sends a letter to the clients every year, or at least ours does, saying, “Here’s your beneficiaries.” But it’s just with percentages.
Neil: Right.
Matthew: And I always remind people that you and I can think about percentages, clients can’t. Clients don’t know what 10 percent means. They don’t know what 50 percent means. [00:38:30] They think in dollars or pounds, in your case. And so what we’ll do is get the report from the custodian and then we’ll use their account balances and say, “Well, all right. Heaven forbid something happens to you today, here’s how your money would get divided up. Your million dollars would go to your two kids, so each of your kids would get 500,000 dollars or 500,000 pounds. Is that what you want?” And they would say, “Yeah, that’s what I want” or they would, they might say, “Wow. $500,000. I can’t just leave Johnny $500,000 all at once. He would blow the money.”
“Okay, great. Let’s have a discussion about that.”
So [00:39:00] I’m creating awareness for them that no one else has created for them.
Neil: Okay.
Matthew: Or we’ll do one, let’s … long-term care. Nursing home care is a big issue in the States. All right, so what if you get Dementia and you need nursing home care? What happens then? And we’ll sort of pencil out that scenario. Or, what if you get dementia and you can’t make your own financial decisions? Who are we supposed to talk to about your financial decisions. And so we’ll run, we’ll run through that.
Every year we do a tax planning one. We say, “Hey, here’s your tax return from the United States, and [00:39:30] here’s how much you paid in taxes, and here’s what we recommend that you do next year.” And a lot of times there’s nothing we can change, because their life is kinda set, but at least they know we’ve looked at it.
Now, I don’t know how tax planning works in the UK. I’m not familiar with that. But again, we have sort of a, what is it, a six quarter rotation, so every six quarters we’re going back through the same rotation of value adds.
Neil: Okay, so you say that these are the categories of what we’re going to look at and [crosstalk 00:39:54] quarter three is long-term care, and quarter four is tax planning, and…
Matthew: That’s right.
Neil: Yeah, okay. Yeah, ours [00:40:00] isn’t so structured in the sense that we go through a financial health check every year at the planning meeting, which will cover off tax, and investment, and risk, and cash flow, and so…
Matthew: Sure.
Neil: …so it’s done, yeah, it’s done per client. It’s done at each meeting, which is why our meetings are longer than [inaudible 00:40:18] an hour. It’s generally a good two hours. Which is a long session.
Matthew: It is a long session. Yeah.
Neil: You know, the clients have to be—you can kind of sense when you’ve got to the point of like [pause] it’s bouncing off now.
Matthew: [00:40:30] Yeah.
Neil: [inaudible 00:40:31] for us really. So.
Matthew: Yeah, and that’s where I would [pause] just personally, I prefer to do two, my ideal is two meetings a year. I like to see them in the springtime and the fall for an hour each meeting. Not all clients do that. Some just want to come in once a year. Some clients only come in every other year. But that’s what I like to do. I sort of feel like after an hour, like you said, we all kinda glaze over and it just doesn’t absorb anymore.
Neil: Yeah, absolutely. So, if you’re [00:41:00] doing long-term care planning and so forth. Do you use financial planning software for that, rather than just a simple spreadsheet? Or how do you, how do you model that?
Matthew: I gotta admit I do simple spreadsheets for everything. So…
Neil: Do you?
Matthew: …I would pull up a report and I would say, “Well, how much does long-term care cost in our area? All right. Let’s say it’s $10,000 a month. Right? How would we come up with $10,000 a month? Well, you have some income already. You have your pension. You have whatever and then it’s gonna go into your nest egg and then it’s gonna go into your house. How much long-term care could we pay for?” And so, it’s really [00:41:30] kind of simple, you know, it’s a pretty simple math equation. Right? $10,000 a month into your portfolio. That gets us however far it gets us.
Neil: Yeah.
Matthew: And if it’s a short number, if we say, “Boy, that wouldn’t get us very far,” then maybe we need to have a discussion about alternatives. And if it’s a long number, if it says, “Boy, that’ll buy you 15 years of care. All right, odds are you’re not going to spend 15 years in a nursing home. I think we’re covered.”
Neil: Yeah, ’cause our cash flow—again it comes back to the power of the software. It’s got all the data in there. We can then produce any illustrations we [00:42:00] like, but whether we choose to, print them out and give them to the client, that’s a whole separate conversation. But if you can just draw up a lifetime cash flow that says, “Look, if you [inaudible 00:42:08] yesterday, your [inaudible 00:42:09] would last you nine years. [inaudible 00:42:11] …four years. I think you’re covered.”
Matthew: Yeah, yeah. If you start generating more reports, you say, “Well, what if it happens in ten years or seven years.” Well, now we’re confusing the client. There’s too many, I would say…
Neil: Yeah.
Matthew: …”Listen, heaven forbid if it happened today, what would happen?” Cause a client can think about today. They can’t think about 15 years from now. [00:42:30] It’s hard enough to think about when we get sick or when we die. That’s a tough discussion in general. All right, if something happened to you today, here’s how your money would get divided up to your beneficiaries. Here’s how your spouse would get taken care of. Here’s how you would pay for long-term care. Just if it happened today. And so, same with when the client says, “Well, how much money can I take from my next egg?”
“Hey, here’s how much you can take this year.”
“Well how much can I take 27 years from now?”
“I don’t know. It’ll depend on what goes on in 27 years.”
Neil: Yeah, and that’s where that whole, in the UK, currently, there’s a dog fight, there’s a [00:43:00] deterministic versus [inaudible 00:43:02] argument on cash flow, and there’s pros and cons to both.
Matthew: Yeah.
Neil: But I usually say, both are just guessing.
Matthew: Yeah, you hit it on the head, Neil. At the end of the day, we’re just guessing. We’re hoping that the future will look something like the past.
Neil: Yeah.
Matthew: I mean, that’s what all of these models are based off of, and so we say, all right, well, I think that this distribution rule, I think this is the safest way to go, whether you’re using a 4 percent rule or the 3 percent rule or whatever kind of guidelines you like to use [00:43:30] for income. We say, all right, this is what we think is gonna work and so that’s what we’re gonna stick to until something better comes out. We’re not gonna pretend we know what’s gonna happen in 30 years. We just, we’re gonna do what we’re gonna do right now.
One of the reasons I really like the dynamic distribution rate is that it tells clients, “Hey, what are we gonna do when the markets go down?” So the dynamic distribution rate has these guardrails in it that says if the market falls to a certain point then we’re gonna adjust your income. And clients really like that it gives them something they can do when the markets go down, right? Like you said, we’ve been on a seven, eight, nine [00:44:00] year run? Markets are gonna go down and clients are gonna want to do something. Their default do is to sell. “We need to sell. We need to sell.” We don’t want to sell. So instead, we say, “All right, we’re not gonna sell, but the markets have gone down to this guardrail, this threshold, and so we’re gonna take less income until the markets come back up.” And clients feel really good about that. They say, “All right. I’m doing something about these markets and it’s something that’s actually healthy to do.”
Neil: Yeah, because the Monte Carlo would say that the point to doing it is that you can continue at the same number of income irrespective, because you’ve got a 95 percent [00:44:30] success rate based on [crosstalk 00:44:32].
Matthew: Yeah, yeah.
Neil: Yeah, yeah. One of the favorite [inaudible 00:44:36] I use for clients is [inaudible 00:44:39] Nick Mowe? I think it was Nick Mowe. So, you know, a car is going 100 miles an hour and there’s a cliff a hundred miles away, how long does it drive till it gets to the cliff. I ask all the clients, and they all go, “An hour.”
Matthew: An hour, yeah.
Neil: Yeah, well, no. Because you wouldn’t drive off a cliff, you’d course correct when you’d got there. And all we’re saying is that we’ve hit [inaudible 00:44:56] situation extrapolate it forward. There might be a cliff edge there, [00:45:00] but we’re gonna be ahead of time, slowing down, changing the steering or something to avoid that catastrophe happening, and that’s really where the value of that is. It’s trying to be proactive as it’s coming towards you. We’re not reacting, when often it’s too late.
Matthew: Yeah, and then trying to streamline that across clients helps. That saves a lot of time. Part of the reason I’m able to take so much time out of the office is instead of doing, you now, today I’m going to do this for one client and I’m gonna do this for another client, we decide this quarter we’re doing this for all our clients and next quarter we’re doing this for all our clients, so my whole team gets focused [00:45:30] on one thing and it lets us, we get better at that thing, right? The more you do one thing the better you get at it. And so if we’re doing beneficiary review for all of our clients, we’re getting very good at looking for issues of beneficiaries. Whereas, if I look at beneficiaries today for this client and then in six months for another client, my thinking is not as organized as it would be.
Neil: Yeah. And [inaudible 00:45:58] back to clients, if you’ve [inaudible 00:45:58] electronically or do you send something in the post, or both?
Matthew: You know, I send a lot in the post [00:46:00] still, because we all get so much electronic that I, I think it just sort of blends in, right? You get a thousand emails. I like to send a couple things tangible to a client that they can hold in their hand and a lot of times I’ll judge the success of it, if they bring it back in a meeting. So, if we’ve mailed something in to them in the post and they bring it in, then I think, “All right. Well this was actually valuable to them.” I have never had a client print an email and bring that in to discuss, but I have had a lot of clients say, “You sent me this about beneficiaries and I want to look at this.” Great. Let’s [00:46:30] look at it.
They are retirement income guardrails. I have clients bring that in all the time. “Hey, Matthew, say that the market falls to here, we have to do that. Where are we at right now?” And we look and we say, “All right. Here you are.” So it does cost to use the post, obviously, but it’s nice to have something in hand.
Neil: Yeah. It’s funny that you’re saying that because our clients at the end of each planning meeting will electronically send them a copy of the report and [inaudible 00:46:53] the fees just talked about.
Matthew: Yeah. Yeah.
Neil: And but [inaudible 00:46:58] over six months and we communicate the outcome [00:47:00] of that to our clients. And that gets posted with evaluation. And it’s a very simple evaluation. This is the accounts, the value. Whereas the one that goes with the annual planning meeting is 10, 11, 12, 13, 14 pages, because it rates per fund and annual turn, rate of return, classification, you know. And it’s good, but it’s detailed. Often, when they come in, they’ll bring in that single sheet with just evaluations on.
Matthew: Yeah.
Neil: Because I guess to them, their [00:47:30] world, their eyes, it’s what’s it worth?
Matthew: Yeah. That’s what they can understand, right? And that’s something as advisors where we get stuck. Like I mentioned earlier, our brains are, there are so many numbers in our brain, right? It’s just, we’re just drawn to numbers. Clients aren’t.
Neil: Yeah.
Matthew: And the more numbers we send them, the more confused they get. So it’s not a surprise to me that they say, “I just want to know what’s the bottom line? What’s that—how much money do I have?”
Neil: Yeah. Yeah. And I think that comes in two places. For me, as an individual, it’s conscious of are we showing value and there’s a tendency [00:48:00] to think more stuff equals more value. But also, I said to you, I said [inaudible 00:48:06] podcast, I enjoy this stuff. I enjoy reading articles and studying and therefore, if you like something, you end up talking about it.
Matthew: Yeah.
Neil: And if you’re not careful, you talk too much, because you’re enjoying it, not because you’re trying to baffle, but you are, probably, if you’re not careful.
Matthew: Yeah.
Neil: The [inaudible 00:48:24] was right. The implementation is perhaps not surplus.
Matthew: Yeah, and let clients guide that for you, Neil. Just like [00:48:30] they’re bringing back that one evaluation, when you meet with them, when you do your annual meeting, just ask them, “Which of this information would you like to keep, take home, and which would you like me to just put in your file?” And see what they say. And if they say, “oh, I want to keep all of it.” Then keep doing all of it. If they say, “You know what, I’ll just keep this one page.” Then maybe you need to dial it down.
Neil: Yeah.
Matthew: Let them be the guide for that.
Neil: Moderation in terms of you have an ongoing, as do we. Our upfront fee is a combination of a [00:49:00] percentage sum from an assets and a [inaudible 00:49:03] planning works. And, I don’t know, I mean, I’m not sure how well this translates to the U.S., but how does, how does your model work? Without going into specifics?
Matthew: Yeah, well, I’ll be glad to go, I mean, you could, pull my—in the United States, our regulatory disclosures have all of our fees on them, so it’s not like it’s, I can’t keep it hidden anyway. So, I, until recently, very recently, until this year, I didn’t charge any planning fees, because a lot of people in, a lot of advisors in the states don’t charge [00:49:30] planning fees. And so what would happen is a client would go and they would see me and I would say, “It’s 5,000 dollars to do a plan,” and they would go down the road to somebody selling some insurance product and they would say, “Oh, well I’ll do a plan for free.” And the client didn’t know that quality difference. They didn’t know the difference between a BMW and Chevrolet. They just thought, “Oh. A car is a car.”
And so I’d stopped charging to remove that barrier of entry. And I just put it all in the AUM fee. So, our AUM fee right now, for clients that are less than a million dollars, it’s [00:50:00] 1.5 percent a year. Million dollars and more it’s 1 percent a year.
Neil: And does that include the custodian fee? Do you pay that yourself? [inaudible 00:50:08]
Matthew: Yeah, we pay that ourselves. So that covers everything, and then we’re using index funds, so there’s very little expense inside of those.
Neil: Yeah.
Matthew: Yeah, but that, the custodian fee, we cover that. Right now.
Neil: Yeah.
Matthew: The custodian fees are changing in the states. Right now, it’s a very small dollar amount, but that’s changing.
Neil: Yeah, over here, I think it’s pretty rare that advisors pay a custodian [00:50:30] fee. It’s an explicit cost the client would pay. But we would charge at 1 percent AUM and then the portfolio would be the custodian fee and the fund fee. So probably not the same number that you’re talking. But it’s just paid in a slight, different way. So.
Matthew: Yeah.
Neil: [inaudible 00:50:48] in planning fees now, you said that you didn’t used to.
Matthew: I charged, so now, because I’m not, I’d rather start my time doing my podcast and talking with other advisors, I’m not looking to take a lot of clients on, and so [00:51:00] I’m now charging for my initial meeting. So I’ll still do the phone appointment. Then if you want to do an initial meeting, it’s 500 dollars to meet with me. So it’s, if you want to meet with me, you have to pay to meet with me. I just … I don’t have time to give away anymore.
Neil: Yeah.
Matthew: But that’s because I’m not in a growth mode. If I was in a growth mode, I wouldn’t charge still, because I would want, I would want to play the long game. I’m really not interested in upfront finance fee. I’m interested in a lifetime relationship.
Neil: Yeah.
Matthew: So, I’m okay foregoing a few thousand dollars in planning fees if I get a client that has a million dollars. Now, to have that approach, you have to be [00:51:30] very diligent in your screening. Right? If I was letting anybody in the door for a free financial plan, I would go out of business promptly. Right? So, I would only do that free process for people that met my requirements, which previously were they had to have at least $500,000 of investible assets. Now it’s a million. But that’s part of the reason I wouldn’t charge. ‘Cause I would only meet with people like the heart surgeon. I’m only gonna meet with people who that are eligible for heart surgery. If you’re looking for brain surgery, we’re not even gonna have a meeting together.
Neil: Yeah, which is being very clear on the, [00:52:00] you say niche, we say niche, yeah, your niche, you’re gonna work with it. And the [inaudible 00:52:06] you put on your product, I suppose, isn’t it, to know that. Yeah, we have, I think we’ve had one client disengage in about 8 years.
Matthew: Perfect.
Neil: And that was really early on, due to a difference of opinion on investment philosophy. And that’s gonna happen. [crosstalk 00:52:24] large numbers. And so we’re confident that once client’s on board. That’s my other point, [00:52:30] that part of you that goes, “Well, don’t forget everything’s been going up, so who’s gonna leave in rising when the markets are rising, ’cause they’re not.” You gotta test when the tide goes out.
Matthew: Yeah.
Neil: Isn’t it.
Matthew: Which it will.
Neil: For a period. But I’d like to think that we’ve done a lot of education around using [inaudible 00:52:48] the wording of it [inaudible 00:52:50] not correction.
Matthew: Yeah.
Neil: You know, and then we have lots of, try not to use too many glossy charts because I think if you’re not careful, they become the message then, not you, as [00:53:00] in this will pass. So I was trying to combine those two together, isn’t it really?
Matthew: Yeah, it really is. It really is. Well, Neil, we’ve got just a few minutes left [crosstalk 00:53:10] are there any other questions or yeah the time has just flown by.
Neil: It has, hasn’t it?
Matthew: Any other questions or things I can answer for you? It’s been a real pleasure talking to you today, hopefully this was useful for you.
Neil: It was. It was. Yeah. No, I don’t think so. It was more, yeah, it was the fact that your posts seem very simple. How do you simplify what seems quite complex to deliver it, so you can, [00:53:30] you can work with a good number of clients, but also have that balance of time out of the office and time in the office.
Matthew: Just, Neil, kind of in conclusion. I would definitely recommend pick a time in your calendar each month, maybe a week each month where you don’t see any clients. And what that will do…
Neil: Okay.
Matthew: …is it will force you to become more streamlined in the other three or four weeks of the month. So, my friend Micha and I, we call that a forcing mechanism.
Neil: Yes.
Matthew: You may be familiar with Parkinson’s Law.
Neil: Yeah, yeah.
Matthew: Parkinson’s Law, right? It works in reverse, too. So, just pick [00:54:00] one week a month and say, “I’m not gonna do any client meetings this week,” outside of emergencies, right? If it’s an emergency, we’ll be with a client whenever they need. But maybe the last week of the month. And if you need to be in the office working, then great. And if you don’t, then be out with your family. And then to make that work, you need to get your clients conditioned that you won’t pick up their phone call right away. Not out of disrespect, but because you’re busy helping other clients and you want to be prepared for their call when it comes in.
Those will be your two biggest ones. And then, like I said, streamline. How do you find your niche? How do you [00:54:30] streamline for your group so it’s less customized, it’s less bespoke work, and it’s more streamlined work. While still delivering that ultimate client experience. We always feel as advisors that everything has to be perfectly customized, and it doesn’t.
You know, imagine if we got on the airplane and the pilot says, “You know, hey, I’m not gonna follow the checklist and we’re just gonna arrive wherever we’re gonna arrive.” You would be terrified, right? We want systems in place. We need to have them in our practice wherever we can.
Neil: So, in conclusion, if it becomes a system in our head, which we do [inaudible 00:54:59] outcome. [00:55:00] The concern is that it looks like it is a system. Of course, each client is only experiencing it once.
Matthew: Exactly.
Neil: To them it’s not systematized. To them it’s personalized ’cause it’s their plan with their numbers.
Matthew: That’s right.
Neil: How we choose to deliver that. Yeah. Okay. Yeah. That’s good.
Matthew: And so much of our life is systematized. Even if we think of the highest quality products, right? When I buy a Mercedes, right? That’s a systematized process, right? When I fly first class on an airplane, that’s a systematized process. When I go to see my heart surgeon, [00:55:30] that’s a systematized process. So, we’re systematized everywhere. We just need to do it in a way that’s high touch.
Neil: Yeah, yeah. I like that. That’s good. Thank you.
Matthew: Neil, it was great talking with you. And if you have any follow up questions, shoot me an email, I’d be glad to reply back to that.
Neil: Yeah. Thank you for that. That’s really kind. Thank you for your time today.
Matthew: Yeah, my pleasure. Have a great afternoon.
Neil: You too. Yeah. Have a great day.
Matthew: Thank you, take care.
Neil: Cheers. Bye for now.
Matthew: Well, I hope you enjoyed this discussion with Neil. We covered a lot of ground very quickly as we [00:56:00] always do. I hope like me, you enjoyed Neil’s accent. It’s always fun to speak with people outside of the United States to see how planning works outside of the country. And, as much as I hope that you got a few ideas from this podcast, remember that ideas are worth nothing unless you implement them, right? We have to implement. We all know how to get six pack abs and become billionaires, but knowing isn’t enough. Doing is what counts.
So, if I may, let me recommend two action items from this podcast. [00:56:30] Number 1: Never ever, ever again take an incoming phone call, unless it’s an emergency. Anyone who wants to speak with you must have an appointment. Now that appointment could be for later today, it could be for tomorrow morning, but people must have an appointment to speak with you. This is for two reasons. Number 1 is it will dramatically improve your productivity by not being interrupted, but a far more important having a client or a prospect or anyone scheduled means that you [00:57:00] can be prepared for that call and you can deliver massive value in a way that you simply cannot do if you’re being caught off guard, if you’re being asked to respond to all these questions without any time to prep yourself.
The second recommendations is to put your toe in the water of the one-page financial plan. As I mentioned in the podcast, Carl Richards has written a great book on the one-page financial plan. Tom Gowe has talked about the one-page financial plan. He calls it a financial action checklist for many [00:57:30] years.
But here’s how you can test it. Go ahead and draw up your normal hundred page financial plan or however god awful long it is and with that do a one page executive summary. And when the client comes in or the prospect comes in present both: the stack of papers and the one pager and say, “Mr. And Mrs. Prospect I have created an elaborate financial plan that has an immense number of detail in it and I would be glad to review this with you, page by page by page. Or, [00:58:00] if you prefer, we can look at the executive summary of action steps.”
And again, just present this to the prospect. Let them decide. I will be willing to bet that ninety-nine prospects out of hundred, ninety-nine clients out of a hundred will say, “You know what, let’s just go with the executive summary.” But just try it out. Just try it out. If they say they want the details, then go with the details. An as always, thank you for listening. If you would like an opportunity to be a guest on the Perfect RIA podcast with Micha and/or myself, [00:58:30] please send us a message at ThePerfectRIA.com. Until next time, keep working on your own version of the perfect RIA.
Speaker 1: 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 ThePerfectRIA.com.
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In this episode of the Perfect RIA podcast:
Matt chats with Neil, a UK-based financial planner, about ways to simplify his practice.
This episode of the Perfect RIA is chock-full of very helpful principles for simplifying and streamlining your practice. From start to finish, Matthew shares with Certified Financial Planner Neil Rossiter, some of his favorite techniques for managing what can become a chaotic workplace. The take-home message of the entire episode being that simplicity is often better than complexity when dealing with clients who often just want the reassurance that their money is in the right place and that their retirement, nest egg, etc., is as it should be. In short, when it comes to financial advising, Occam’s razor is frequently the best choice. The three most important principles of the episode are the following:
Trying out/implementing a one-page financial plan for clients. This means that advisors should try and boil down the entirety of a financial plan–the many documents and reports printed from complicated accounting software–into a single, digestible page
for clients.
2. Establish a robust protocol for whenever a client calls the office. Without an adequate
buffer between client and advisor, time management can quickly suffer. Instead, a
protocol needs to be set up that demands clients schedule an appointment before being
patched through. Often all that is needed is administrative in nature and can be handled
accordingly without disrupting the advisor who is almost always busy with something
else. This will free up a lot of time and will streamline your entire business venture.
3. Lastly, any advisor or entrepreneur in general should look to take control of their
calendar. This means that meetings can be scheduled for the first 2-3 weeks of every
quarter, (Matthew manages 4-6 per day) and then the rest of the time is blocked into
various other value-driven tasks like prospecting, traveling, or even podcasting!
To flesh the first two of these ideas out further, and to accentuate the principles of this very enlightening talk between Matthew and Neil, we should explore the one-page financial plan in a deeper manner. To start, Carl Richards has an entire book on ways to trim lengthy, complex financial forecasts into really succinct strategies that are easy assimilated by clients. As Matthew has continually expressed, most clients just want to make sure their money is where it should be; they don’t particularly care about Monte Carlo simulations or other abstruse algorithms for determining financial minutiae. Matt even recounts the time he accidentally gained a client who had more money and assets than half of his total clients. And it was because of the one-page plan that he could actually understand that he was convinced he should stay with Jarvis. A streamlined, clear-cut report is all it takes. The one-page plan, although difficult to implement, can provide a world of difference for getting and maintaining clients. The simplicity of a neat and organized single page is all it takes. And then if they want to delve deeper into some of the numbers, advisors also have all of the other data that was extraneous during the first stage, but which is now relevant as the client asks for more information. Having options and making the complex simple are very important elements to consider for the client. For more on this, you are definitely going to want to listen to the episode; both Matthew and Neil have some pretty cool insights on the topic.
In addition to the one-page plan, establishing a protocol to create the buffer zone between client and advisor is something that Matthew really loves to implement. He does tell Neil though that it might take awhile to “shift the client’s expectations”–to set up the practice of having to schedule to speak to an advisor over direct communication; but, in his experience, Matthew states that almost every client he has ever had has understood the need for scheduling. And one of the most powerful things about scheduling the call is that advisors can then have ample time to prepare for whatever the meeting might entail. You can get your notes out, put all of the files in order, and you are ready to go. If you choose not to implement this protocol every time a client calls and wants answers to their particular queries, a mad scramble of trying to remember the unique details of their files, their names, and information, might ensue. For simplicity’s sake, set up the buffer!
And lastly, Matthew has a few action items he wants listeners of the podcast to try in their own practice. These are, (1) Don’t take incoming phone calls without scheduling unless it is an emergency and (2), try out the one-page plan in your practice. For much more, listen to the entire episode of the Perfect RIA. And read along if you want!
NOTE: If you want to read along while you listen, below is the transcript modified for your convenience and reading pleasure. We highly recommend you to listen to the audio, which includes emotion and humor that you won’t pick up in the transcript. Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please compare the provided audio before quoting in print.
Speaker 1: 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 and systems that your hosts, Micah Shilanski [00:00:30] and Matthew Jarvis have developed in their own respective practices, which have been recognized as some of the best in our industry.
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 [00:01:00] you alone are responsible for you.
And now lean forward and let Micah and Matthew show you how to build the perfect RIA.
Matthew: Hello everyone and welcome to another episode of the Matt and Micha Podcast, officially known as the Perfect RIA Podcast. In this episode I have the opportunity to chat with an advisor in the UK by [00:01:30] the name of Neil. Neil is one of hundreds of advisors who reached out to me after the [inaudible 00:01:37] podcast, asking for some of my time, and as much as I would love to say yes to all those requests, there simply is just not enough time in my life to do so. So instead I say yes on a very selective basis and I’ve started recording these podcasts. This is not the first one, but I am recording these interviews so that you can glean information from our discussion.
In this specific episode with Neil, we’re gonna talk [00:02:00] about things such as the one-page financial plan, ways to kind of ease into the one-page financial plan, not going cold turkey from your hundred-page plan but easing into that.
We’re gonna talk about what to do or what your team should do if a client calls your office when you’re on some kind of extended leave and we’re also gonna discuss how to really take control of your calendar, which is something we’re very passionate about here at the Perfect RIA, but how to take control of your calendar in a way that empowers you, [00:02:30] empowers your client, empowers your team, empowers everyone in your life.
So with no further ado, please enjoy my discussion with Neil.
Neil: I was so impressed by the practice that you built, listen to your [inaudible 00:02:43] podcast. I’m a big advocate of Nick Mowie of financial planning and a lot of what you do speak is a lot of things that I would like to do. So, it was really learning from you—I guess how you got to where you are now and the sort of things that could help me speed up my journey.
Matthew: Well tell me a little bit about where your [00:03:00] practice is right now and where you’d like it to be.
Neil: So, we’re in [inaudible 00:03:03] Summerset and that’s South West England. We have [inaudible 00:03:06] have their own client banks that work under our umbrella.
Matthew: Okay.
Neil: So I’m the lead advice to the clients that would be [inaudible 00:03:12] the firm, if you will.
Matthew: Sure.
Neil: We have these self [inaudible 00:03:16] advice, which work with us.
Matthew: Well, you had mentioned in the sheet that you sent in about questions about how to streamline the client process without reducing client service, so could you tell me a little bit about your client process? You also mentioned about attracting clients [00:03:30] that are a good fit and trying to not necessarily attract ones that aren’t a good fit.
Neil: Yeah, okay, so, the client [inaudible 00:03:36] position is that we get a new inquiry from some source and that would typically have a discovery meeting, face-to-face.
Matthew: Sure.
Neil: Try and preface that with a phone call where possible to see is there a fit that would necessitate a meeting, so we have a discovery meeting, which is about an hour.
Matthew: Okay.
Neil: We go through goals and objectives and what the client is looking for and that would then lead into do we take it further to a full fact finding meeting?
Matthew: Sure.
Neil: We [00:04:00] have a fact finding meeting where the client would bring all their paperwork in and we would go through all that and take more information. We would then analyze that [inaudible 00:04:07] financial plan and then arrange a meeting to go through the financial plan and what that’s told us about what we can look to do.
Matthew: Okay.
Neil: [inaudible 00:04:15] be doing when we search on pensions, investments, and are they still suitable and therefore there’d typically be another meeting after the planning meeting where we would present our portfolio recommendations to the client.
Matthew: Okay.
Neil: They may or may not agree at that meeting. If they [00:04:30] do, then we onboard at that meeting. If not, we schedule them another meeting to get the paperwork completed.
Matthew: Sure.
Neil: And then that would start the ongoing client arrangement, which is a yearly full planning meeting.
Matthew: Okay. When the contacts first, when you’re first contacted by a potential client, when do you sort of explain or how do you explain this process to them? So maybe in that first phone call or when you first sit down. Are they aware when you’ll ask them to become a client, when they’ll sort of be put in a spot to [00:05:00] make a decision?
Neil: Yeah. Well, what we say we’d always say that the first meeting is our expense and we’ll go into our position on fees and costs at that meeting. And at the end of that meeting [inaudible 00:05:11] kind of stock phrases. If I think that, if we both think we can see value in this relationship, then we’d look to move forward from there.
Matthew: Sure. Sure.
Neil: Kind of the wording we’d look to use. Yeah.
Matthew: Yeah. And again, the nuances are probably a little bit different from just where I am in the world and where you are in the world. I talk to planners all over the world, but kind of human philosophy is pretty much [00:05:30] the same. None of us like to be sold something, right? None of us want to feel like we’ve been backed into a corner. And so it’s nice to set expectations as often as you can with a prospect. Right?
What we don’t want to have is them to come in to your office and think, “All right, at any moment, Neil’s going to try to sell me something and so I’ve gotta have my defenses up. I’ve gotta be ready to sort of thwart that attack, if you will.”
I do something very similar to you. I have that initial phone meeting to kinda screen if they’re a good fit, but I also like to explain in great detail how that process works. Just [00:06:00] like you, I say, “Hey, that first meeting’s at our expense. Before you trust us with a dollar of your nest egg or pay us a penny in fees, we want you to see how it is that we can help you.” And then I let them know right away, I say, “Listen. The only thing I’m gonna sell on this first meeting is to do a financial plan for you. That’s it. Right? There’s not gonna be any paperwork to sign. There’s not gonna be a fee to pay.” And you know, you can adapt that for however your planning process works, but we want to make sure before people come in to your office, they know exactly what’s gonna happen.
Neil: Yeah.
Matthew: That way they can be more transparent with you. [00:06:30] They can be more focused on your discussion and less worried on, “All right, is he going to use my answer to this question to try to sell me something later on?”
Neil: Yeah, yeah. Okay. Yeah.
Matthew: And even just the little bit I know about you. I know that you’re goal is not to try to push somebody into a product or into something that’s not suitable. Right? In your heart of hearts, you want to do what’s best by the client. But again, they’re coming in saying, “Boy, I don’t know Neil from anybody else, and I bought a car at the car dealership and they sold me something I didn’t want, and I still regret that. I don’t want Neil to do the same thing.”
And so anything we can do [00:07:00] in that process to show people what’s going to happen, right? So there’s no surprises. Kinda pull back the curtain, if you will. That’s real helpful.
We also have it on our website. We explain, here’s our process for new clients. And, by having that defined again, they can look and see that, a prospect could. But also, you want your existing clients to know your process. That way, as they’re introducing you to their friends, they know what’s going to happen if their friend calls you.
Neil: Yeah.
Matthew: They’re not sort of left wondering, “Well, if I send my friend to Neil, what will he do with [00:07:30] them? I mean, he took good care of me, but maybe that was an accident.” I mean, I don’t know what they’re thinking, but we wanna eliminate any barriers for referrals, introductions, and so forth.
Neil: So, do you … you would send [inaudible 00:07:41] post that first conversation. Would you be sending literature or something by email to set that out or just [inaudible 00:07:47] the website.
Matthew: You know, we do both. So when my office manager, so when somebody contacts our office, my office manager, Colleen, will talk to them. The very first thing she’ll say is, “Hey, go to our website and review through it, we have a tab called ‘Sleep On It’ [00:08:00] at JarvisFinancial.com” and so she’ll tell them that first of all. And it also has on there on that page the kind of people we work with, because it was an uncomfortable discussion for her to say, “Well, how much money do you have? And are you willing to pay this— “
Neil: Yeah.
Matthew: ” …kind of fee?” And so on our website, it says, “Hey, we work best with people that are in this range.” And so, right away people can screen themselves, but it also gives them an outline of kind of how this process works. So you can either post that to your website or you could email it to them right away or mail [00:08:30] it to them. Just anything you can do to set those expectations.
Neil: Yeah, ’cause I think one of the challenges we have, and this leads on to the lead [inaudible 00:08:39] form is our firm’s been around for some time and the local area. We’re quite well-known…
Matthew: Good.
Neil: And [inaudible 00:08:44] we generate a good degree of inquiries, but also not all those inquiries are often ideal clients. My experience of being a planner and I said the same for you is we’re here to try to want to help people and somebody rings up with a query you know you can help with, but you sense they’re not an ideal client. [00:09:00] It’s very hard, so how do you manage that? ‘Cause you know you can help, you want to help, but…
Matthew: That’s right. Yeah.
Neil: …you’re not sure that you should.
Matthew: Yeah.
Neil: And how do you square that circle? Without saying no or I don’t know. I’m curious of your view on that.
Matthew: Yeah, yeah. And you put that very well. I think kind of in our soul is this desire to help people, right? It’s who we are. But at the same time, we have to run a profitable business, right?
Neil: Yeah.
Matthew: So, I handle that a couple of ways. One is in that initial phone call, if I determine that someone’s [00:09:30] probably not a good fit. I’ll give them the best advice I can during that 10 or 15 minute phone call, so I’ll say, “Hey, you really need to pay down this credit card. You really should take care of this.” Really try to give them good advice. And then I always use this analogy of a heart surgeon versus a brain surgeon.
Neil: Okay.
Matthew: So, I say, “You know, in my practice, we’re like a heart surgeon and we’re one of the best heart surgeons there are, but what you need is a brain surgeon. Right? And I just don’t do brain surgery.” Or knee surgery. Use whatever analogy you want, Neil, but then I say, “You know, what? Who you should really talk to [00:10:00] is… ” and I know the names of most of the other firms in town, so I’ll say, “Oh, my friend Dave down the road, he specializes in what you need. I want you to call Dave up. In fact, I’ll introduce you to Dave. I’ll call and tell him that you’re calling. Dave’s really the guy you want to talk to.”
Neil: Okay.
Matthew: That way I’m not just telling them to go away, which is both rude in a way and it doesn’t kind of satisfy my need to help people. I’m saying, “Listen. You need help. Here’s some initial help, but you need to go see the right kind of specialist for your situation.” And you know, I have clients, maybe you do [00:10:30] as well, I have clients that are doctors. I have a client who is a heart surgeon and I asked him, “Hey, Bob, if a friend came in and asked you to do knee surgery, would you do knee surgery?” And he laughs and says, “Of course I wouldn’t do knee surgery. All I do is heart surgery, no matter what. That’s all I do. Just heart surgery.”
And we as planners need to adapt that philosophy and say, “This is the kind of clients that I work with and these are the only clients that I work with, because that’s my specialty.”
Neil: Yeah. And one thing you talked about is [inaudible 00:10:59] a, because we have to do service models. We [00:11:00] have our full planning model and we have a like a lighter version of that…
Matthew: Yeah, sure.
Neil: …yeah. And all the clients I look after on the full-service model and that’s where I get the most fun and enjoyment and [inaudible 00:11:11]…
Matthew: Yeah, of course.
Neil: But we get these queries from clients that maybe don’t fit that model, but the firm could still help. So one thing we’re toying with is bringing in a junior or younger advisor maybe and so rather than your example of referring to another firm, we can retain the client within the firm, but to a different [00:11:30] advisor. And that client may grow and may become a full-service client, maybe down the track, maybe. That’s something we’re kind of toying with.
Matthew: Yeah. And that really is a great model. I know several advisors that do that. So the lead advisor handles this tier of clients and the next and the tiers down. As long as that tier is profitable.
Neil: Yeah.
Matthew: So, a lot of times as advisors our desire to help overwhelms our desire to run a profitable business.
Neil: Yeah.
Matthew: And we say, “Well, I want to help everybody, but if I [00:12:00] help everybody I can’t help anybody.” And so, yeah, to have a junior advisor as long as those are still profitable relationships, and as long as they don’t in the end become your relationship that you’re managing, when really the junior should be managing it.
Neil: Do you have any advice on what we talked about was if I look at the client bank that I’m managing now is bringing in junior advisor and maybe moving some of those ships over to pass on ideal fits, because maybe—on your podcast you talked about how you’re minimum fee was arbitrarily put up because you actually had [00:12:30] the quote confidence to do it.
Matthew: Yeah, yeah.
Neil: I think it’s a journey we’re on. You see you start with a minimum fee and then you realize that actually—so if we end up with a, it’s not a long tail, but it’s still a tail, which would fit into the new client category. And the thought was to migrate those relationships over to the junior advisor, still with me available, but do you have any thoughts on that?
Matthew: Yeah, you know what, a lot of advisors do that as well, and it’s complicated by the fact [00:13:00] that that long tail of people are usually people you’ve known a long time.
Neil: Yeah.
Matthew: People that still really need your help, and so there’s—you know, from a business decision, we could say easily, “Well, we just won’t work with those people anymore,” but again we’re planners, we want to help people. So yeah, bringing a junior in place, and again there are people that just aren’t a good fit for your firm anymore. So we’ve done it several times. In fact, I’ll send you a copy of the letters and the things that we’ve used when we decided to transition clients to other firms.
I was kind of adverse to the idea of bringing more people in, [00:13:30] more staff on, but that’s just my personality. I don’t want a big team. I want a lean team. But you could adapt this for your team. If you said, “Boy, we brought in Sam and Sam is now going to work with you, but I’ll still be here, right? I’ll be here. Anything Sam can’t handle, I will handle. We’re still your person. We’re still your phone call.” And then yeah, to transition that. So I would really look and say, “All right, what’s my top tier of clients, whether it’s my top fifty or my top hundred, whatever that is, and everything below that is gonna either need to work with same or go [00:14:00] work with another firm.”
Neil: Yeah. Okay. Yeah, and that’s what we’re working on. And to your point, we were looking at the spreadsheet of all the clients, and yes, you can look at it numerically and then it’s like, well that’s an expense. And it doesn’t become a number, it becomes a person. Then it’s not so easy then.
Matthew: You have to take the names off of it. So when I run those spreadsheets, I have to delete the name off of it, because otherwise I do that. “Well, it’s Mrs. Smith, I can’t, I have to be, I have to be strong in my business sense. Right? Which is not easy [00:14:30] to do.
Neil: No.
Matthew: It’s really not. But if, like you said, if you can bring somebody in house, a junior advisor of sorts, or if you can find another advisor in town. If you decide, hey, you don’t want to train somebody, we don’t want to bring somebody up. There’s gotta be another firm near you that has a younger advisor who’s doing really good things by clients who would probably give this client better service than you do. Right? Because our long tail clients, maybe not for you Neil, but for me, our long tail clients, they kind of get less service than our top clients. And so there’s got to be a young advisor out there who you can either bring in house or to whom [00:15:00] you can send clients who you can, in your heart of hearts, know that they’ll actually give them better service than you will.
Yeah, and maybe you start with just the bottom ten clients. And I always allow my team, anytime we’re making a big change like that, I allow everybody on my team five exceptions. So, I say, “I know there’s somebody in our client book that you just absolutely love that you can’t imagine life without or it’s a family member or something. You get five exceptions. Everybody else we can’t make exceptions for. Because if we’re going to hit our goals, just like we would tell [00:15:30] our clients with their financial goals, we’d say, ‘Hey, you have to make these sacrifices to reach your goals, we as advisors have to make sacrifices to reach our goals as well.”
Neil: Yeah, okay. That’s good. Thank you.
Matthew: Well, that’s easy for me to say, right? And it’s harder for you to do. They’re not my clients and so it is a challenging thing to do, but I’ll send you over a couple of pieces, couple of pieces on it that we’ve used over time that’ll help with that. Gotta get your mind around that.
Neil: Yeah. Thank you. Yeah.
Matthew: Other areas that I could help you with, Neil. Let me pull up your [inaudible 00:16:00] [00:16:00] in here. Striking a balance between business growth and personal time. We could talk about that for a minute. Tell me a little about how you balance that currently.
Neil: Okay, I think. I mean, I tend to work a Monday Friday week. I rarely work weekends.
Matthew: Good.
Neil: I went in a few hours this Saturday, but that’s a real rarity. [inaudible 00:16:19] This week, so I had some stuff to do this day, so that was the reason for that. I think, the practice that I’m a part owner of I was an employee of before I bought into the practice, [00:16:30] so I think you have that strange dynamic of previously being an employee and now—therefore, you have this mentality of working these set hours, ’cause that’s always what you did.
Matthew: That’s right. That’s right. And that’s what everybody you know does, right?
Neil: Yeah. Yeah.
Matthew: Everybody you know works those hours.
Neil: Yeah, or you buy into a practice to generate more try work for them work more hours than before you [inaudible 00:16:54] did. Kind of like you’re more free and you work less maybe. So, I think I’ve got quite a good balance, but it’s trying to—[00:17:00] I know that listening to your, Micha’s [inaudible 00:17:02] podcast and the amount of time you take off is, is a lot by conventional measures. And it’s just how you manage that with the clients. If you’re away from the office for a long period of time, and—how does that work really? You know?
Matthew: Yeah, yeah. How do you not be in the office and still deliver on client service, right? That’s kind of the big one. So on the extreme is when I take trips where I’m totally out of, off the grid, so I took my family to China [00:17:30] for three weeks. And for three weeks I didn’t have phone service, I didn’t have internet service. So, something like that, we warned clients ahead of time.
We said, “Hey, listen, I have this chance for an adventure. I have the chance to take my family to China. We’re gonna do that. And here’s what’s gonna happen while I’m gone. My team’s still gonna be there. They’re still gonna answer any phone calls. They’re gonna take care of anything you need. We just won’t be able to meet together.” So, on those situations, I let them know in advance, because I don’t like people to be surprised.
Neil: Yeah.
Matthew: Otherwise, what we do is we steer client expectation [00:18:00] so it’s more about getting their needs met and less about talking to me directly. So, if a client has an expectation that they can call the office at any time and get me on the phone, that makes it really difficult for me to leave. Right? Because they’re going to call and I won’t be there. If instead, we shift their expectations that they can call our office at any time and their needs will be met, well that could be handled whether I’m there or not. And that seems like a subtle distinction, but it has to do even with the way my office answers the phone.
So, a client calls in, even my best client, whether I’m in the office or not, [00:18:30] my office manager Colleen, she’ll say, “Hey, who is this?” She’ll greet nicer than that, and they’ll say, “Oh, it’s Dave. I need to talk to Matthew.” And she’ll say, “Dave that’s great. Matthew would love to talk to you, but he’s with another client right now. Is there something that I can help you with?” And sometimes they’ll say, “Sure. Colleen, what I needed was this form. Or I needed to change the smallest thing.” But other times, they’ll say, “Actually, Colleen, I really need to talk to Matthew.” So, she’ll say, “Great. Matthew can call you tomorrow at 3 pm. Is that okay with you?” And they say, “Oh yeah, sure that’s fine.” As long as they know when I’m [00:19:00] gonna call them.
And then, here’s the real trick, now, she says, “What can I tell him it’s regarding, so he that he can be prepared for the call?” And then they’ll say, “I need to change my monthly distribution.” And she’ll say, “Oh, great. You know what, I can help you with that.” And so she’s taking care of those things.
So, the reason for that process is that normally they would say, “Hey, I need to talk to Neil. I need to talk to Neil” ’cause we’ve programmed them as such. This way she can kind of pull out, “Do you really need to talk to Neil or is there just something you need taken care of?” And most [00:19:30] clients, even if let’s say they really do need to talk to you, Neil, they have some tax questions, something specifically that only you can answer. It would be better for them to be scheduled to talk to you than for you to just pick up the call.
Neil: Yeah.
Matthew: Because if they ring in straight to you, you’re trying to open their file. You’re trying to remember their situation. You’re trying to remember whatever it is they want to talk about. Whereas, if it’s scheduled tomorrow at 3 pm, you can be totally prepared. Just like I am today, I have everything laid out on my desk and I’m ready for that call.
Neil: Yeah.
Matthew: And rarely will a client object to that. Rarely will a client say, “No. I need [00:20:00] to talk to Neil right now, this very second.” Most people aren’t that way or at least people you shouldn’t have those people as clients. So that takes several weeks or months to set that expectation. We put it in our client letters, we say, “Hey, you know, we work with a lot of clients. We’ll always return your call within 24 hours. I just might not be available the moment that you call.” And whether I’m not available because I’m out with my family, or I’m not available because I’m in a meeting with a client. That doesn’t really matter. We’re not gonna disclose that one way or another. We’re just setting the expectation [00:20:30] that you can’t just get Neil on the phone as soon as you ring him. You’re gonna be scheduled to talk to him.
Neil: Yeah, and so is that your service standard is 24 hours to go back to your client. If it’s, if you’re not on an extended break?
Matthew: Yeah. If it needs, for me, my team will get back to them the same day, usually within a few hours, but if they need to talk to me, they can’t always get me the same day. Now, Colleen will always tell them, “If this is really an urgent issue, I’ll pull Matthew away from whatever he’s doing and I’ll have him give you a call back by the end of the day,” and in that case she [00:21:00] would ring me wherever I’m, whether I’m at my house, whether I’m on vacation with my kids. But that almost never happens. Rarely does a client have an issue so urgent that they say, “Boy, I have to talk to Matthew right now, this very second.”
Neil: I guess they say it’s filtering the what is administration, what is advice? And I’m not sure US regulations, but we’re quite clear on administration can handle. As soon as it ticks over to advice, well then it comes over to the advisors we mentioned.
Matthew: Yeah, so, and you and I understand that. And [00:21:30] your team understands that, but the client doesn’t. They just know, Neil’s my guy and if I have an issue, I call Neil. And it turns out they just need to update a beneficiary. Well, they don’t need to talk to you about that. That’s not advice, that’s just an administration.
Neil: Yeah.
Matthew: And so, but we want to be tactful with that, right? You don’t want your team to answer the phone and say, “Mr. Client is this advice or administration?” Well, not only do they not know, it’s just rude.
Neil: Yeah.
Matthew: And so, that’s why they say, “All right. Well can I tell Neil what it’s regarding, so he can be prepared [00:22:00] for your call?”
“Oh, yeah, it’s regarding my address change.”
“Oh, you know what? Great news. I can help you with that.”
Or they say, “Hey, I wanna change my investments.”
“You know what. That’s really good. Neil will be prepared to talk with you about that tomorrow at 3 pm. Is that okay with you?”
Neil: Yeah.
Matthew: And even if you’re in the office, Neil, it still makes your job better, because you’re not getting interrupted in the moment. You were working on some project and the phone rings and now you’ve been distracted by the phone call, versus having that scheduled for next day.
Neil: So how many meetings and things would you schedule [00:22:30] in your diary when you’re in the office?
Matthew: When I’m in the office, and I keep condensing this more and more, I’ll have anywhere between four and six meetings a day, when I’m doing meetings.
Neil: Okay.
Matthew: Yeah, which —
Neil: It’s a lot.
Matthew: …the advantage of that—It is a lot and it takes a while to get up to that. I used to only be able to handle three to four meetings a day. But instead of having my meetings … Let’s say you want to meet with your clients four times a year. It’s just an easy number. You know a hundred, right? So, that’s a hundred meetings each quarter. So, I could either—Most advisors spread that out. They do one this [00:23:00] day, they do two the next day, they skip a day, they do one on Thursday. Instead, I try to get all my clients to come in during a two week or a three week period of time. That way, my whole team is focused on meetings, which is also what lets me travel. Right? So clients all come in the first couple weeks of the quarter. I’ve met with everybody, well not everybody, probably about 90 percent of clients come in during that block of time, and then I have some stragglers throughout the remainder of the quarter.
Neil: And they all come into the office, or do you go out and meet with your clients? Or is it by Skype? [00:23:30] Or how does that…
Matthew: Most of them come into the office. Some of them I Skype with. I don’t go out and meet with anybody. Years ago I did. Maybe I do one or two meetings a year out of the office. Clients who can’t travel anymore. Or meeting a client for lunch, something like that. But I try to block those together. Even if you just do it by month. Even if you just pick one week a month where you say, “This week I don’t do any client meetings.” Maybe it’s ’cause I’m working on my business. Maybe it’s because I’m traveling, but the last week of the month, I won’t do client meetings.
And then just force your [00:24:00] meetings into the other three weeks, or two weeks, or whatever period of time.
Neil: Would you set aside different days for new prospective clients, or they just fit in the meeting schedule in line with your normal diary?
Matthew: I do them all during that normal diary. I don’t—I know some advisors that say, “Hey, Tuesdays are when I meet with new clients.” I just get in the mode of doing meetings and I just do all my meetings as quickly as I can.
Neil: Yeah.
Matthew: So, I do my meeting for an hour and then I have a 30-minute break. And then my next meeting. That way [00:24:30] my meetings don’t overlap. I have some time to go use the bathroom. To check notes. Whatever the case may be.
Neil: And on the podcast, what I was interested in and intrigued by was the lack of financial planning software you mentioned that you would use. We use [inaudible 00:24:51] Truth. Here in the UK, it’s very comprehensive. It’s very good. You can put everything in. You can do all of the tax calculations, the estate planning, the catastrophe [00:25:00] planning, the pension planning, the cash flows. It’s all in one. And it’s very good, very comprehensive.
Matthew: Sure.
Neil: But sounds a lot more comprehensive than what you use.
Matthew: Sure.
Neil: Given the amount of clients you look after, I was just curious how that came about and the one-page plan. Those are the two…
Matthew: Yeah.
Neil: …the two seem to be synonymous.
Matthew: Yeah.
Neil: And I’m a great fan of Carl Richard’s work as well and trying to simplify things as much as possible and yeah the comments on that would [00:25:30] be good.
Matthew: So, part of that, one thing to keep in mind is that all of my clients are retirees. They’re either retired or they’re getting ready to retire. So their number one question is, “How do I not run out of money in retirement?” They’re not worried about paying off student loans. They’re not worried about putting their kids through college. They’re not worried about buying a house. They’re just worried, they’re saying, “I have this nest egg, this lump sum of money. How do I get income out of that?” And I think as I mentioned on the [inaudible 00:25:53] podcast, we follow a dynamic distribution rate.
Neil: Mm-hmm (affirmative).
Matthew: [inaudible 00:25:58] made that really popular. And so, all I need to be able to do is to [00:26:00] illustrate to them how much money they can take out this year? And I do that on one page, just a single illustration: “Here’s your portfolio balance. Here’s how much we can safely take out this year.” Not really interested in a Monte Carlo simulation forty years out, because that’s all made up numbers anyway. And the client doesn’t understand it. Right? We’re saying, “Hey, some computer thinks this is what the rain forecast is gonna be thirty years from now.” Nobody knows.
The one-page financial plan, which Carl Richards talks a lot about, I actually learned that from Tom Gowe. He runs a coaching program [00:26:30] now called The Academy of Preferred Financial Advisors, and the idea is, his idea was that a client can only absorb one piece of information. One page worth of information. And that the more pages we got, the more confused they got. And so he would summarize all of his advice on one piece of paper.
And when I first started doing that, it seemed impossible, right? Because the planning software would generate dozens of pages and so I said, “Great. I have one sheet of paper. I’ve gotta fill up that one sheet and that’s all I get.” And so, I had to exclude all of the noise, all of the commentary. [00:27:00] It had to just be advice. I recommend you save this much. I recommend you do this with your legal documents. I recommend you do this with your tax documents. And no commentary. Just pure advice on that. So, what you could try, Neil, is still use your planning software, and then on top of that, write up a one-page summary. And you can say to the client, “Mr. and Mrs. Client, here’s this big stack of papers, and we can go through every page if you’d like, or I’ve done a one-page summary.” In the States, we usually call that an executive summary. [00:27:30] Just a one-page executive summary, “Which would you like to look at?” And every single client, even the engineers will say, “Just the one-page summary. I just wanna know what I need to do.”
And part of that, Neil, is also Google knows everything that we know. Right?
Neil: Yeah.
Matthew: Everything that we know, the financial planning software, everything. All of that is available on the internet. The client wants to know what they need to do. They don’t want a whole education on financial planning. Am I saving enough money, yes or no? If no, how much do I need to save? So, the one-page financial plan is all about simplifying. It doesn’t mean you need to abandon [00:28:00] your planning software, it just [pause] you need to have a one-page summary.
Neil: Yeah. And I think that comes back to another point about value isn’t it? That there’s still a perception the longer more complex the [inaudible 00:28:12] a big fee. That’s what they’re getting.
Matthew: That’s right.
Neil: A tangible product for what is an intangible service.
Matthew: Yeah, that they’re paying you by the page. Right?
Neil: Yeah.
Matthew: That. Yeah.
Neil: [inaudible 00:28:24]. That’s what you’ve paid for.
Matthew: That’s right.
Neil: And I guess maybe, [inaudible 00:28:30] we’re talking is one thing [00:28:30] I say to clients is when if we’ve got their cash flow on screen, so then once we’re really sure, we know this is not gonna be what the future’s gonna look like it’s just our best guess with what we know today. So that’s why we’re printing it out and binding it and giving the illusion of certainty.
Matthew: Yes. Down to the hundredth of a percent, right?
Neil: Well they just changed the inflation rate by half percent, it’s gonna be, it’s gonna look different. Over here in the UK, the regulatory paperwork is still quite extensive. [00:29:00] I don’t think you find the same in the U.S. But maybe the summary would be, “This is what you need to do.” And then you’d still have to supply them the regulatory piece, which is quite a tome, but that’s the accepted document in its entirety.
Matthew: Yeah, and maybe you need to bind those together to meet the regulatory requirements, right? We don’t want to skirt those, but you can tell the client, “Hey, listen, you know, the government requires that I give you all this paper and we can review every page of it if you like. Or, as your advisor, I’ve done up one page of what you need to do. Which would you like [00:29:30] to look at?” And they’re all going to say, “Go. Forget the paperwork. Let’s just look at the one page.”
Neil: Yeah.
Matthew: But it will take some time, Neil, to [inaudible 00:29:38]. It’s a lot of work to condense all of that paper into just one page.
Neil: Oh, yeah. What’s that wonderful phrase? It’s much harder to work at what to take out than what to put in.
Matthew: That’s right. That’s right. It’s easy to click another box on that software and generate another report.
Neil: Yeah, yeah.
Matthew: But really, clients, regardless of their situation, right, you can sort [00:30:00] of put them into a couple areas, right? They all have questions about cash flow, whether that’s saving for retirement or taking income in retirement. They all have questions about risk management, right? What happens if I get sick? What happens if I die? They all have questions about taxes. And they all have questions about their investment portfolio. So, you really could just break it into four areas. Summarize their goals. And this is what I do. Summarize their goals in a couple of bullet points, right? Retire when you’re 63. Whatever the case may be. Talk about cash flow. Talk about risk management. Talk about taxes. Talk about investments. [00:30:30] In that order. And I just bullet point each one of those.
And it actually, I think, Neil, it actually makes you more valuable to the client, because you’re giving them more personalized advice and you’re acknowledging that this is not a perfect process. That we cannot sort of guarantee we map out the next forty years. We know how things look right now and we know with certainty they’ll look different next year, which is why you need to keep working with a planner ongoing, because this will always be changing, and we’ll always be changing with you.
Neil: Yeah.
Matthew: You know, even just experiment [00:31:00] with it. Just with your next client or your next prospect, do your normal process, like you always do, that’s worked very well for you. And just try it. Just give your best effort at a one-page summary and see what they say. In the worst case, they’ll say, “You can revert back to the big plan like you always do, and that’s fine.” And maybe they’ll love the short plan. And once you see it work a few times, I remember the first time, a couple times I used it, I thought, “There’s no way this will work. This person’s paying a lot of money. They have a lot of money. Millions of dollars. There’s no way they’re going to buy a one page piece of paper.” And every single time [00:31:30] they say, “This is exactly what I wanted.” In fact, I don’t, I can’t remember if this was in the podcast or not. I have very wealthy client who met with me by accident, somehow got referred to me, and he had as much … his nest egg was equal to half of all of the money we manage. [crosstalk 00:31:48]
Neil: What? Okay.
Matthew: It was kind of a fluke, an accident that he came, and he says, “Well, I’m in the wrong place, right? I have almost as much money as half your clients combined. I’m gonna go to the bigger firms. I’m gonna go to the big city and I’m gonna meet with [00:32:00] all the big firms.” And I said, “Well, you’re here. Let me just do this one page financial plan, and you can just take it with you, ’cause you’re already here.” So I sent it to him, thinking I’ll never hear from him again, right? ‘Cause he’s meeting with all these best financial planners and attorneys and lawyers and all accountants and a few weeks later, he calls me back and he says, “Matthew, I met with all the top firms in the state and you were the only person I understood. Everybody else gave me all these reports, all this stuff I couldn’t figure out what they were saying. I understand what you’re saying. So, even though I have as much money as half your clients combined, I wanna work with [00:32:30] you.”
And so that was a real testament to me that clients want simplified advice. They just want to know what to do.
Neil: Yeah.
Matthew: Google can give them an endless supply of paper.
Neil: Yeah, and I guess that leads into the value side. Is still charging the AUM fee, which we do and I know you do.
Matthew: Yep.
Neil: And the, as the clients and such grow, also that number grows with it, and there’s the value conversation. How do you, if you had somebody of [inaudible 00:32:58] into specifics, that [00:33:00] number can get large, with larger clients, in terms of value add and discussion of fee, and I’m just curious to know how you position that.
Matthew: Yeah, that’s a good one. I will mention that I charge an AUM fee. I personally, I cap that at 5 million dollars. Our largest annual fee is 50,000 dollars a year.
Neil: Okay.
Matthew: And that’s more of a confidence issue than it is anything else.
Neil: Mm-hmm (affirmative).
Matthew: Right? Like everything we do. But again, for a client who’s paying us 10, 20, 40, 50,000 dollars a year, [00:33:30] that’s a lot of money, right? So how do we provide value that’s equal to that? And like you, I’m a big fan of Dick Murray, I talk about his value proposition, right? If we can save you time, effort, or worry, that’s worth more than our fees a year. But something I always keep in mind, I always try to imagine that clients can only remember 90 days in the past. So, our fees come out of the client account each quarter. Once a quarter our fee comes out, I’m not sure the timing on yours, but I always imagine the client sees that fee come out and they remember back for the last 90 days and say, “What [00:34:00] has Matthew done for me these last 90 days?” And I wanna make sure there’s something that comes to mind.
So, not something subjective, not something kind of, “Well, I’m sure he’s looking after my money”. I want them to be able to point to something and say, “Hey, Matthew did this for me in the last 90 days, and I’m going to keep paying him to do these things.” So that means every quarter we’re sending something to clients that’s some kind of value add. We’re reviewing their beneficiaries, we’re reviewing their tax returns, we’re talking about their retirement income. Something that we can send out to every client whether they meet with us or not that demonstrates our value. [00:34:30] And something that no one else is doing.
So, all the other big firms, they’re sending them all sorts of market commentary and just sort of junk. But it’s not valuable. It’s not saying, “Hey, here’s where your beneficiaries are and this is where they should be.” It’s not saying, “here’s how you’re currently invested. Here’s how I think you should be invested.” Right? We want to be really proactive with advice, with clients, so they’re getting that every 90 days. And then I have to remind myself, and I think, yeah, Carl Richards talks about this The Imposter Syndrome.
Neil: [00:35:00] Yeah.
Matthew: Where we get good at something and we think, “Well, it’s so easy, I can’t be that valuable.” I have to remind myself that clients are working with me voluntarily. In fact, I tell clients that every time I see them. I say, “Hey, listen, our fee comes out of your account every quarter. And you look at that number, and I look at that number. And we both got to agree that the value that we’re bringing to you is worth more than the fee. And if the value is, then we go another quarter. And if it’s not, then we need to have a heart-to-heart discussion. Something needs to change or we need to part ways as friends.”
And so I’m really up front with them on that discussion. That way I’m not shying away from the discussion on fees. [00:35:30] I’m not hoping they don’t notice that their fee is on this schedule or I’m kinda mumbling their fee. I’m saying, “Hey, our fee is X, right? Last quarter you paid us 10,000 dollars. You saw that number. I saw that number. It’s either worthwhile in your mind and we keep going, or it’s not and we part ways as friends.”
Neil: Yeah. Okay.
Matthew: But I have to remind myself of that as much as I have to remind them. Right? I’m not forcing anybody. No one’s under contract to stay with me. If they didn’t think what I was doing was valuable, then they would leave. Same with your clients.
Neil: Yeah. Yeah. Over here we have an annual meeting.
Matthew: Sure.
Neil: And [00:36:00] what we say to clients is, we have an annual full planning meeting and that’s the minimum and that will typically be a couple of hours…
Matthew: Okay.
Neil: …because we’re going through the plans, it’s quite a long meeting, but it’s going through the goals, objectives, the financial plan, the investments, and just tidying everything up. [inaudible 00:36:16] new client today, and what we say that’s the minimum contact. Some years you might need us three or four times, in which case you come in as many times as you need. Some years it will just be annual.
Matthew: Yeah.
Neil: Our client fees are taken from the cash account on the platform [00:36:30] and it’s paid monthly.
Matthew: Okay.
Neil: To us. The client will get a statement every year. It’s like a bank statement: “Here’s what you paid over the last 12 months.” So we’re really clear, “This is what you paid us.” And we, facing to you, we [inaudible 00:36:44] that this is every 12 months. There’s no contract here. If you’d like to continue first 12 months, then please sign our client agreement accepting that you can leave any time.
Matthew: Nice.
Neil: It’s more so that we’ve, we enforced it with a signature [00:37:00] from the client and they see the number in pounds [inaudible 00:37:02] what they paid us.
Matthew: Oh, good for you. That’s really, that’s great. So they re-up every year then? You have them sign again every year?
Neil: Yeah. Yeah, absolutely. And yeah, most interesting reflecting back is no one’s ever, we’ve not lost anybody. And we—and then I start—this is the imposter syndrome. Then I start saying, “Well, markets have been rising for several years…”
Matthew: That’s right That’s right.
Neil: ” … Who’s gonna leave in a rising tide anyway?”
Matthew: That’s right. There has to be ten clients that are thinking about leaving. They just haven’t done [00:37:30] it yet. Yeah.
Neil: Yeah. [crosstalk 00:37:32]
Matthew: … rabbit hole.
Neil: Absolutely. Yeah. It’s just thought. It hasn’t actually happened, really. So, yeah.
Matthew: And that’s part of the reason why I have that regular schedule of value add. I want to make sure I’m doing something every quarter, just, it’s almost for my own peace of mind, right? So I can look and say, “Hey, I’m doing something proactive for these clients every quarter. I’m showing them my value.” I think nine times out of ten they don’t even look at it, but it makes me feel better, right? I have something I can point to that I’m doing.
Neil: Is that something where you would say, ” [00:38:00] Okay, this quarter we’re gonna do the beneficiaries across the client bank.” Rather than doing it bespoke for each client each time? How do you systematize that?
Matthew: Yeah, we would do it across the client bank, so we would have the custodian give us a report of all of the beneficiaries. Now, the custodian sends a letter to the clients every year, or at least ours does, saying, “Here’s your beneficiaries.” But it’s just with percentages.
Neil: Right.
Matthew: And I always remind people that you and I can think about percentages, clients can’t. Clients don’t know what 10 percent means. They don’t know what 50 percent means. [00:38:30] They think in dollars or pounds, in your case. And so what we’ll do is get the report from the custodian and then we’ll use their account balances and say, “Well, all right. Heaven forbid something happens to you today, here’s how your money would get divided up. Your million dollars would go to your two kids, so each of your kids would get 500,000 dollars or 500,000 pounds. Is that what you want?” And they would say, “Yeah, that’s what I want” or they would, they might say, “Wow. $500,000. I can’t just leave Johnny $500,000 all at once. He would blow the money.”
“Okay, great. Let’s have a discussion about that.”
So [00:39:00] I’m creating awareness for them that no one else has created for them.
Neil: Okay.
Matthew: Or we’ll do one, let’s … long-term care. Nursing home care is a big issue in the States. All right, so what if you get Dementia and you need nursing home care? What happens then? And we’ll sort of pencil out that scenario. Or, what if you get dementia and you can’t make your own financial decisions? Who are we supposed to talk to about your financial decisions. And so we’ll run, we’ll run through that.
Every year we do a tax planning one. We say, “Hey, here’s your tax return from the United States, and [00:39:30] here’s how much you paid in taxes, and here’s what we recommend that you do next year.” And a lot of times there’s nothing we can change, because their life is kinda set, but at least they know we’ve looked at it.
Now, I don’t know how tax planning works in the UK. I’m not familiar with that. But again, we have sort of a, what is it, a six quarter rotation, so every six quarters we’re going back through the same rotation of value adds.
Neil: Okay, so you say that these are the categories of what we’re going to look at and [crosstalk 00:39:54] quarter three is long-term care, and quarter four is tax planning, and…
Matthew: That’s right.
Neil: Yeah, okay. Yeah, ours [00:40:00] isn’t so structured in the sense that we go through a financial health check every year at the planning meeting, which will cover off tax, and investment, and risk, and cash flow, and so…
Matthew: Sure.
Neil: …so it’s done, yeah, it’s done per client. It’s done at each meeting, which is why our meetings are longer than [inaudible 00:40:18] an hour. It’s generally a good two hours. Which is a long session.
Matthew: It is a long session. Yeah.
Neil: You know, the clients have to be—you can kind of sense when you’ve got to the point of like [pause] it’s bouncing off now.
Matthew: [00:40:30] Yeah.
Neil: [inaudible 00:40:31] for us really. So.
Matthew: Yeah, and that’s where I would [pause] just personally, I prefer to do two, my ideal is two meetings a year. I like to see them in the springtime and the fall for an hour each meeting. Not all clients do that. Some just want to come in once a year. Some clients only come in every other year. But that’s what I like to do. I sort of feel like after an hour, like you said, we all kinda glaze over and it just doesn’t absorb anymore.
Neil: Yeah, absolutely. So, if you’re [00:41:00] doing long-term care planning and so forth. Do you use financial planning software for that, rather than just a simple spreadsheet? Or how do you, how do you model that?
Matthew: I gotta admit I do simple spreadsheets for everything. So…
Neil: Do you?
Matthew: …I would pull up a report and I would say, “Well, how much does long-term care cost in our area? All right. Let’s say it’s $10,000 a month. Right? How would we come up with $10,000 a month? Well, you have some income already. You have your pension. You have whatever and then it’s gonna go into your nest egg and then it’s gonna go into your house. How much long-term care could we pay for?” And so, it’s really [00:41:30] kind of simple, you know, it’s a pretty simple math equation. Right? $10,000 a month into your portfolio. That gets us however far it gets us.
Neil: Yeah.
Matthew: And if it’s a short number, if we say, “Boy, that wouldn’t get us very far,” then maybe we need to have a discussion about alternatives. And if it’s a long number, if it says, “Boy, that’ll buy you 15 years of care. All right, odds are you’re not going to spend 15 years in a nursing home. I think we’re covered.”
Neil: Yeah, ’cause our cash flow—again it comes back to the power of the software. It’s got all the data in there. We can then produce any illustrations we [00:42:00] like, but whether we choose to, print them out and give them to the client, that’s a whole separate conversation. But if you can just draw up a lifetime cash flow that says, “Look, if you [inaudible 00:42:08] yesterday, your [inaudible 00:42:09] would last you nine years. [inaudible 00:42:11] …four years. I think you’re covered.”
Matthew: Yeah, yeah. If you start generating more reports, you say, “Well, what if it happens in ten years or seven years.” Well, now we’re confusing the client. There’s too many, I would say…
Neil: Yeah.
Matthew: …”Listen, heaven forbid if it happened today, what would happen?” Cause a client can think about today. They can’t think about 15 years from now. [00:42:30] It’s hard enough to think about when we get sick or when we die. That’s a tough discussion in general. All right, if something happened to you today, here’s how your money would get divided up to your beneficiaries. Here’s how your spouse would get taken care of. Here’s how you would pay for long-term care. Just if it happened today. And so, same with when the client says, “Well, how much money can I take from my next egg?”
“Hey, here’s how much you can take this year.”
“Well how much can I take 27 years from now?”
“I don’t know. It’ll depend on what goes on in 27 years.”
Neil: Yeah, and that’s where that whole, in the UK, currently, there’s a dog fight, there’s a [00:43:00] deterministic versus [inaudible 00:43:02] argument on cash flow, and there’s pros and cons to both.
Matthew: Yeah.
Neil: But I usually say, both are just guessing.
Matthew: Yeah, you hit it on the head, Neil. At the end of the day, we’re just guessing. We’re hoping that the future will look something like the past.
Neil: Yeah.
Matthew: I mean, that’s what all of these models are based off of, and so we say, all right, well, I think that this distribution rule, I think this is the safest way to go, whether you’re using a 4 percent rule or the 3 percent rule or whatever kind of guidelines you like to use [00:43:30] for income. We say, all right, this is what we think is gonna work and so that’s what we’re gonna stick to until something better comes out. We’re not gonna pretend we know what’s gonna happen in 30 years. We just, we’re gonna do what we’re gonna do right now.
One of the reasons I really like the dynamic distribution rate is that it tells clients, “Hey, what are we gonna do when the markets go down?” So the dynamic distribution rate has these guardrails in it that says if the market falls to a certain point then we’re gonna adjust your income. And clients really like that it gives them something they can do when the markets go down, right? Like you said, we’ve been on a seven, eight, nine [00:44:00] year run? Markets are gonna go down and clients are gonna want to do something. Their default do is to sell. “We need to sell. We need to sell.” We don’t want to sell. So instead, we say, “All right, we’re not gonna sell, but the markets have gone down to this guardrail, this threshold, and so we’re gonna take less income until the markets come back up.” And clients feel really good about that. They say, “All right. I’m doing something about these markets and it’s something that’s actually healthy to do.”
Neil: Yeah, because the Monte Carlo would say that the point to doing it is that you can continue at the same number of income irrespective, because you’ve got a 95 percent [00:44:30] success rate based on [crosstalk 00:44:32].
Matthew: Yeah, yeah.
Neil: Yeah, yeah. One of the favorite [inaudible 00:44:36] I use for clients is [inaudible 00:44:39] Nick Mowe? I think it was Nick Mowe. So, you know, a car is going 100 miles an hour and there’s a cliff a hundred miles away, how long does it drive till it gets to the cliff. I ask all the clients, and they all go, “An hour.”
Matthew: An hour, yeah.
Neil: Yeah, well, no. Because you wouldn’t drive off a cliff, you’d course correct when you’d got there. And all we’re saying is that we’ve hit [inaudible 00:44:56] situation extrapolate it forward. There might be a cliff edge there, [00:45:00] but we’re gonna be ahead of time, slowing down, changing the steering or something to avoid that catastrophe happening, and that’s really where the value of that is. It’s trying to be proactive as it’s coming towards you. We’re not reacting, when often it’s too late.
Matthew: Yeah, and then trying to streamline that across clients helps. That saves a lot of time. Part of the reason I’m able to take so much time out of the office is instead of doing, you now, today I’m going to do this for one client and I’m gonna do this for another client, we decide this quarter we’re doing this for all our clients and next quarter we’re doing this for all our clients, so my whole team gets focused [00:45:30] on one thing and it lets us, we get better at that thing, right? The more you do one thing the better you get at it. And so if we’re doing beneficiary review for all of our clients, we’re getting very good at looking for issues of beneficiaries. Whereas, if I look at beneficiaries today for this client and then in six months for another client, my thinking is not as organized as it would be.
Neil: Yeah. And [inaudible 00:45:58] back to clients, if you’ve [inaudible 00:45:58] electronically or do you send something in the post, or both?
Matthew: You know, I send a lot in the post [00:46:00] still, because we all get so much electronic that I, I think it just sort of blends in, right? You get a thousand emails. I like to send a couple things tangible to a client that they can hold in their hand and a lot of times I’ll judge the success of it, if they bring it back in a meeting. So, if we’ve mailed something in to them in the post and they bring it in, then I think, “All right. Well this was actually valuable to them.” I have never had a client print an email and bring that in to discuss, but I have had a lot of clients say, “You sent me this about beneficiaries and I want to look at this.” Great. Let’s [00:46:30] look at it.
They are retirement income guardrails. I have clients bring that in all the time. “Hey, Matthew, say that the market falls to here, we have to do that. Where are we at right now?” And we look and we say, “All right. Here you are.” So it does cost to use the post, obviously, but it’s nice to have something in hand.
Neil: Yeah. It’s funny that you’re saying that because our clients at the end of each planning meeting will electronically send them a copy of the report and [inaudible 00:46:53] the fees just talked about.
Matthew: Yeah. Yeah.
Neil: And but [inaudible 00:46:58] over six months and we communicate the outcome [00:47:00] of that to our clients. And that gets posted with evaluation. And it’s a very simple evaluation. This is the accounts, the value. Whereas the one that goes with the annual planning meeting is 10, 11, 12, 13, 14 pages, because it rates per fund and annual turn, rate of return, classification, you know. And it’s good, but it’s detailed. Often, when they come in, they’ll bring in that single sheet with just evaluations on.
Matthew: Yeah.
Neil: Because I guess to them, their [00:47:30] world, their eyes, it’s what’s it worth?
Matthew: Yeah. That’s what they can understand, right? And that’s something as advisors where we get stuck. Like I mentioned earlier, our brains are, there are so many numbers in our brain, right? It’s just, we’re just drawn to numbers. Clients aren’t.
Neil: Yeah.
Matthew: And the more numbers we send them, the more confused they get. So it’s not a surprise to me that they say, “I just want to know what’s the bottom line? What’s that—how much money do I have?”
Neil: Yeah. Yeah. And I think that comes in two places. For me, as an individual, it’s conscious of are we showing value and there’s a tendency [00:48:00] to think more stuff equals more value. But also, I said to you, I said [inaudible 00:48:06] podcast, I enjoy this stuff. I enjoy reading articles and studying and therefore, if you like something, you end up talking about it.
Matthew: Yeah.
Neil: And if you’re not careful, you talk too much, because you’re enjoying it, not because you’re trying to baffle, but you are, probably, if you’re not careful.
Matthew: Yeah.
Neil: The [inaudible 00:48:24] was right. The implementation is perhaps not surplus.
Matthew: Yeah, and let clients guide that for you, Neil. Just like [00:48:30] they’re bringing back that one evaluation, when you meet with them, when you do your annual meeting, just ask them, “Which of this information would you like to keep, take home, and which would you like me to just put in your file?” And see what they say. And if they say, “oh, I want to keep all of it.” Then keep doing all of it. If they say, “You know what, I’ll just keep this one page.” Then maybe you need to dial it down.
Neil: Yeah.
Matthew: Let them be the guide for that.
Neil: Moderation in terms of you have an ongoing, as do we. Our upfront fee is a combination of a [00:49:00] percentage sum from an assets and a [inaudible 00:49:03] planning works. And, I don’t know, I mean, I’m not sure how well this translates to the U.S., but how does, how does your model work? Without going into specifics?
Matthew: Yeah, well, I’ll be glad to go, I mean, you could, pull my—in the United States, our regulatory disclosures have all of our fees on them, so it’s not like it’s, I can’t keep it hidden anyway. So, I, until recently, very recently, until this year, I didn’t charge any planning fees, because a lot of people in, a lot of advisors in the states don’t charge [00:49:30] planning fees. And so what would happen is a client would go and they would see me and I would say, “It’s 5,000 dollars to do a plan,” and they would go down the road to somebody selling some insurance product and they would say, “Oh, well I’ll do a plan for free.” And the client didn’t know that quality difference. They didn’t know the difference between a BMW and Chevrolet. They just thought, “Oh. A car is a car.”
And so I’d stopped charging to remove that barrier of entry. And I just put it all in the AUM fee. So, our AUM fee right now, for clients that are less than a million dollars, it’s [00:50:00] 1.5 percent a year. Million dollars and more it’s 1 percent a year.
Neil: And does that include the custodian fee? Do you pay that yourself? [inaudible 00:50:08]
Matthew: Yeah, we pay that ourselves. So that covers everything, and then we’re using index funds, so there’s very little expense inside of those.
Neil: Yeah.
Matthew: Yeah, but that, the custodian fee, we cover that. Right now.
Neil: Yeah.
Matthew: The custodian fees are changing in the states. Right now, it’s a very small dollar amount, but that’s changing.
Neil: Yeah, over here, I think it’s pretty rare that advisors pay a custodian [00:50:30] fee. It’s an explicit cost the client would pay. But we would charge at 1 percent AUM and then the portfolio would be the custodian fee and the fund fee. So probably not the same number that you’re talking. But it’s just paid in a slight, different way. So.
Matthew: Yeah.
Neil: [inaudible 00:50:48] in planning fees now, you said that you didn’t used to.
Matthew: I charged, so now, because I’m not, I’d rather start my time doing my podcast and talking with other advisors, I’m not looking to take a lot of clients on, and so [00:51:00] I’m now charging for my initial meeting. So I’ll still do the phone appointment. Then if you want to do an initial meeting, it’s 500 dollars to meet with me. So it’s, if you want to meet with me, you have to pay to meet with me. I just … I don’t have time to give away anymore.
Neil: Yeah.
Matthew: But that’s because I’m not in a growth mode. If I was in a growth mode, I wouldn’t charge still, because I would want, I would want to play the long game. I’m really not interested in upfront finance fee. I’m interested in a lifetime relationship.
Neil: Yeah.
Matthew: So, I’m okay foregoing a few thousand dollars in planning fees if I get a client that has a million dollars. Now, to have that approach, you have to be [00:51:30] very diligent in your screening. Right? If I was letting anybody in the door for a free financial plan, I would go out of business promptly. Right? So, I would only do that free process for people that met my requirements, which previously were they had to have at least $500,000 of investible assets. Now it’s a million. But that’s part of the reason I wouldn’t charge. ‘Cause I would only meet with people like the heart surgeon. I’m only gonna meet with people who that are eligible for heart surgery. If you’re looking for brain surgery, we’re not even gonna have a meeting together.
Neil: Yeah, which is being very clear on the, [00:52:00] you say niche, we say niche, yeah, your niche, you’re gonna work with it. And the [inaudible 00:52:06] you put on your product, I suppose, isn’t it, to know that. Yeah, we have, I think we’ve had one client disengage in about 8 years.
Matthew: Perfect.
Neil: And that was really early on, due to a difference of opinion on investment philosophy. And that’s gonna happen. [crosstalk 00:52:24] large numbers. And so we’re confident that once client’s on board. That’s my other point, [00:52:30] that part of you that goes, “Well, don’t forget everything’s been going up, so who’s gonna leave in rising when the markets are rising, ’cause they’re not.” You gotta test when the tide goes out.
Matthew: Yeah.
Neil: Isn’t it.
Matthew: Which it will.
Neil: For a period. But I’d like to think that we’ve done a lot of education around using [inaudible 00:52:48] the wording of it [inaudible 00:52:50] not correction.
Matthew: Yeah.
Neil: You know, and then we have lots of, try not to use too many glossy charts because I think if you’re not careful, they become the message then, not you, as [00:53:00] in this will pass. So I was trying to combine those two together, isn’t it really?
Matthew: Yeah, it really is. It really is. Well, Neil, we’ve got just a few minutes left [crosstalk 00:53:10] are there any other questions or yeah the time has just flown by.
Neil: It has, hasn’t it?
Matthew: Any other questions or things I can answer for you? It’s been a real pleasure talking to you today, hopefully this was useful for you.
Neil: It was. It was. Yeah. No, I don’t think so. It was more, yeah, it was the fact that your posts seem very simple. How do you simplify what seems quite complex to deliver it, so you can, [00:53:30] you can work with a good number of clients, but also have that balance of time out of the office and time in the office.
Matthew: Just, Neil, kind of in conclusion. I would definitely recommend pick a time in your calendar each month, maybe a week each month where you don’t see any clients. And what that will do…
Neil: Okay.
Matthew: …is it will force you to become more streamlined in the other three or four weeks of the month. So, my friend Micha and I, we call that a forcing mechanism.
Neil: Yes.
Matthew: You may be familiar with Parkinson’s Law.
Neil: Yeah, yeah.
Matthew: Parkinson’s Law, right? It works in reverse, too. So, just pick [00:54:00] one week a month and say, “I’m not gonna do any client meetings this week,” outside of emergencies, right? If it’s an emergency, we’ll be with a client whenever they need. But maybe the last week of the month. And if you need to be in the office working, then great. And if you don’t, then be out with your family. And then to make that work, you need to get your clients conditioned that you won’t pick up their phone call right away. Not out of disrespect, but because you’re busy helping other clients and you want to be prepared for their call when it comes in.
Those will be your two biggest ones. And then, like I said, streamline. How do you find your niche? How do you [00:54:30] streamline for your group so it’s less customized, it’s less bespoke work, and it’s more streamlined work. While still delivering that ultimate client experience. We always feel as advisors that everything has to be perfectly customized, and it doesn’t.
You know, imagine if we got on the airplane and the pilot says, “You know, hey, I’m not gonna follow the checklist and we’re just gonna arrive wherever we’re gonna arrive.” You would be terrified, right? We want systems in place. We need to have them in our practice wherever we can.
Neil: So, in conclusion, if it becomes a system in our head, which we do [inaudible 00:54:59] outcome. [00:55:00] The concern is that it looks like it is a system. Of course, each client is only experiencing it once.
Matthew: Exactly.
Neil: To them it’s not systematized. To them it’s personalized ’cause it’s their plan with their numbers.
Matthew: That’s right.
Neil: How we choose to deliver that. Yeah. Okay. Yeah. That’s good.
Matthew: And so much of our life is systematized. Even if we think of the highest quality products, right? When I buy a Mercedes, right? That’s a systematized process, right? When I fly first class on an airplane, that’s a systematized process. When I go to see my heart surgeon, [00:55:30] that’s a systematized process. So, we’re systematized everywhere. We just need to do it in a way that’s high touch.
Neil: Yeah, yeah. I like that. That’s good. Thank you.
Matthew: Neil, it was great talking with you. And if you have any follow up questions, shoot me an email, I’d be glad to reply back to that.
Neil: Yeah. Thank you for that. That’s really kind. Thank you for your time today.
Matthew: Yeah, my pleasure. Have a great afternoon.
Neil: You too. Yeah. Have a great day.
Matthew: Thank you, take care.
Neil: Cheers. Bye for now.
Matthew: Well, I hope you enjoyed this discussion with Neil. We covered a lot of ground very quickly as we [00:56:00] always do. I hope like me, you enjoyed Neil’s accent. It’s always fun to speak with people outside of the United States to see how planning works outside of the country. And, as much as I hope that you got a few ideas from this podcast, remember that ideas are worth nothing unless you implement them, right? We have to implement. We all know how to get six pack abs and become billionaires, but knowing isn’t enough. Doing is what counts.
So, if I may, let me recommend two action items from this podcast. [00:56:30] Number 1: Never ever, ever again take an incoming phone call, unless it’s an emergency. Anyone who wants to speak with you must have an appointment. Now that appointment could be for later today, it could be for tomorrow morning, but people must have an appointment to speak with you. This is for two reasons. Number 1 is it will dramatically improve your productivity by not being interrupted, but a far more important having a client or a prospect or anyone scheduled means that you [00:57:00] can be prepared for that call and you can deliver massive value in a way that you simply cannot do if you’re being caught off guard, if you’re being asked to respond to all these questions without any time to prep yourself.
The second recommendations is to put your toe in the water of the one-page financial plan. As I mentioned in the podcast, Carl Richards has written a great book on the one-page financial plan. Tom Gowe has talked about the one-page financial plan. He calls it a financial action checklist for many [00:57:30] years.
But here’s how you can test it. Go ahead and draw up your normal hundred page financial plan or however god awful long it is and with that do a one page executive summary. And when the client comes in or the prospect comes in present both: the stack of papers and the one pager and say, “Mr. And Mrs. Prospect I have created an elaborate financial plan that has an immense number of detail in it and I would be glad to review this with you, page by page by page. Or, [00:58:00] if you prefer, we can look at the executive summary of action steps.”
And again, just present this to the prospect. Let them decide. I will be willing to bet that ninety-nine prospects out of hundred, ninety-nine clients out of a hundred will say, “You know what, let’s just go with the executive summary.” But just try it out. Just try it out. If they say they want the details, then go with the details. An as always, thank you for listening. If you would like an opportunity to be a guest on the Perfect RIA podcast with Micha and/or myself, [00:58:30] please send us a message at ThePerfectRIA.com. Until next time, keep working on your own version of the perfect RIA.
Speaker 1: 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 ThePerfectRIA.com.
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In this episode of the Perfect RIA podcast:
Matt chats with Neil, a UK-based financial planner, about ways to simplify his practice.
This episode of the Perfect RIA is chock-full of very helpful principles for simplifying and streamlining your practice. From start to finish, Matthew shares with Certified Financial Planner Neil Rossiter, some of his favorite techniques for managing what can become a chaotic workplace. The take-home message of the entire episode being that simplicity is often better than complexity when dealing with clients who often just want the reassurance that their money is in the right place and that their retirement, nest egg, etc., is as it should be. In short, when it comes to financial advising, Occam’s razor is frequently the best choice. The three most important principles of the episode are the following:
Trying out/implementing a one-page financial plan for clients. This means that advisors should try and boil down the entirety of a financial plan–the many documents and reports printed from complicated accounting software–into a single, digestible page
for clients.
2. Establish a robust protocol for whenever a client calls the office. Without an adequate
buffer between client and advisor, time management can quickly suffer. Instead, a
protocol needs to be set up that demands clients schedule an appointment before being
patched through. Often all that is needed is administrative in nature and can be handled
accordingly without disrupting the advisor who is almost always busy with something
else. This will free up a lot of time and will streamline your entire business venture.
3. Lastly, any advisor or entrepreneur in general should look to take control of their
calendar. This means that meetings can be scheduled for the first 2-3 weeks of every
quarter, (Matthew manages 4-6 per day) and then the rest of the time is blocked into
various other value-driven tasks like prospecting, traveling, or even podcasting!
To flesh the first two of these ideas out further, and to accentuate the principles of this very enlightening talk between Matthew and Neil, we should explore the one-page financial plan in a deeper manner. To start, Carl Richards has an entire book on ways to trim lengthy, complex financial forecasts into really succinct strategies that are easy assimilated by clients. As Matthew has continually expressed, most clients just want to make sure their money is where it should be; they don’t particularly care about Monte Carlo simulations or other abstruse algorithms for determining financial minutiae. Matt even recounts the time he accidentally gained a client who had more money and assets than half of his total clients. And it was because of the one-page plan that he could actually understand that he was convinced he should stay with Jarvis. A streamlined, clear-cut report is all it takes. The one-page plan, although difficult to implement, can provide a world of difference for getting and maintaining clients. The simplicity of a neat and organized single page is all it takes. And then if they want to delve deeper into some of the numbers, advisors also have all of the other data that was extraneous during the first stage, but which is now relevant as the client asks for more information. Having options and making the complex simple are very important elements to consider for the client. For more on this, you are definitely going to want to listen to the episode; both Matthew and Neil have some pretty cool insights on the topic.
In addition to the one-page plan, establishing a protocol to create the buffer zone between client and advisor is something that Matthew really loves to implement. He does tell Neil though that it might take awhile to “shift the client’s expectations”–to set up the practice of having to schedule to speak to an advisor over direct communication; but, in his experience, Matthew states that almost every client he has ever had has understood the need for scheduling. And one of the most powerful things about scheduling the call is that advisors can then have ample time to prepare for whatever the meeting might entail. You can get your notes out, put all of the files in order, and you are ready to go. If you choose not to implement this protocol every time a client calls and wants answers to their particular queries, a mad scramble of trying to remember the unique details of their files, their names, and information, might ensue. For simplicity’s sake, set up the buffer!
And lastly, Matthew has a few action items he wants listeners of the podcast to try in their own practice. These are, (1) Don’t take incoming phone calls without scheduling unless it is an emergency and (2), try out the one-page plan in your practice. For much more, listen to the entire episode of the Perfect RIA. And read along if you want!
NOTE: If you want to read along while you listen, below is the transcript modified for your convenience and reading pleasure. We highly recommend you to listen to the audio, which includes emotion and humor that you won’t pick up in the transcript. Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please compare the provided audio before quoting in print.
Speaker 1: 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 and systems that your hosts, Micah Shilanski [00:00:30] and Matthew Jarvis have developed in their own respective practices, which have been recognized as some of the best in our industry.
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 [00:01:00] you alone are responsible for you.
And now lean forward and let Micah and Matthew show you how to build the perfect RIA.
Matthew: Hello everyone and welcome to another episode of the Matt and Micha Podcast, officially known as the Perfect RIA Podcast. In this episode I have the opportunity to chat with an advisor in the UK by [00:01:30] the name of Neil. Neil is one of hundreds of advisors who reached out to me after the [inaudible 00:01:37] podcast, asking for some of my time, and as much as I would love to say yes to all those requests, there simply is just not enough time in my life to do so. So instead I say yes on a very selective basis and I’ve started recording these podcasts. This is not the first one, but I am recording these interviews so that you can glean information from our discussion.
In this specific episode with Neil, we’re gonna talk [00:02:00] about things such as the one-page financial plan, ways to kind of ease into the one-page financial plan, not going cold turkey from your hundred-page plan but easing into that.
We’re gonna talk about what to do or what your team should do if a client calls your office when you’re on some kind of extended leave and we’re also gonna discuss how to really take control of your calendar, which is something we’re very passionate about here at the Perfect RIA, but how to take control of your calendar in a way that empowers you, [00:02:30] empowers your client, empowers your team, empowers everyone in your life.
So with no further ado, please enjoy my discussion with Neil.
Neil: I was so impressed by the practice that you built, listen to your [inaudible 00:02:43] podcast. I’m a big advocate of Nick Mowie of financial planning and a lot of what you do speak is a lot of things that I would like to do. So, it was really learning from you—I guess how you got to where you are now and the sort of things that could help me speed up my journey.
Matthew: Well tell me a little bit about where your [00:03:00] practice is right now and where you’d like it to be.
Neil: So, we’re in [inaudible 00:03:03] Summerset and that’s South West England. We have [inaudible 00:03:06] have their own client banks that work under our umbrella.
Matthew: Okay.
Neil: So I’m the lead advice to the clients that would be [inaudible 00:03:12] the firm, if you will.
Matthew: Sure.
Neil: We have these self [inaudible 00:03:16] advice, which work with us.
Matthew: Well, you had mentioned in the sheet that you sent in about questions about how to streamline the client process without reducing client service, so could you tell me a little bit about your client process? You also mentioned about attracting clients [00:03:30] that are a good fit and trying to not necessarily attract ones that aren’t a good fit.
Neil: Yeah, okay, so, the client [inaudible 00:03:36] position is that we get a new inquiry from some source and that would typically have a discovery meeting, face-to-face.
Matthew: Sure.
Neil: Try and preface that with a phone call where possible to see is there a fit that would necessitate a meeting, so we have a discovery meeting, which is about an hour.
Matthew: Okay.
Neil: We go through goals and objectives and what the client is looking for and that would then lead into do we take it further to a full fact finding meeting?
Matthew: Sure.
Neil: We [00:04:00] have a fact finding meeting where the client would bring all their paperwork in and we would go through all that and take more information. We would then analyze that [inaudible 00:04:07] financial plan and then arrange a meeting to go through the financial plan and what that’s told us about what we can look to do.
Matthew: Okay.
Neil: [inaudible 00:04:15] be doing when we search on pensions, investments, and are they still suitable and therefore there’d typically be another meeting after the planning meeting where we would present our portfolio recommendations to the client.
Matthew: Okay.
Neil: They may or may not agree at that meeting. If they [00:04:30] do, then we onboard at that meeting. If not, we schedule them another meeting to get the paperwork completed.
Matthew: Sure.
Neil: And then that would start the ongoing client arrangement, which is a yearly full planning meeting.
Matthew: Okay. When the contacts first, when you’re first contacted by a potential client, when do you sort of explain or how do you explain this process to them? So maybe in that first phone call or when you first sit down. Are they aware when you’ll ask them to become a client, when they’ll sort of be put in a spot to [00:05:00] make a decision?
Neil: Yeah. Well, what we say we’d always say that the first meeting is our expense and we’ll go into our position on fees and costs at that meeting. And at the end of that meeting [inaudible 00:05:11] kind of stock phrases. If I think that, if we both think we can see value in this relationship, then we’d look to move forward from there.
Matthew: Sure. Sure.
Neil: Kind of the wording we’d look to use. Yeah.
Matthew: Yeah. And again, the nuances are probably a little bit different from just where I am in the world and where you are in the world. I talk to planners all over the world, but kind of human philosophy is pretty much [00:05:30] the same. None of us like to be sold something, right? None of us want to feel like we’ve been backed into a corner. And so it’s nice to set expectations as often as you can with a prospect. Right?
What we don’t want to have is them to come in to your office and think, “All right, at any moment, Neil’s going to try to sell me something and so I’ve gotta have my defenses up. I’ve gotta be ready to sort of thwart that attack, if you will.”
I do something very similar to you. I have that initial phone meeting to kinda screen if they’re a good fit, but I also like to explain in great detail how that process works. Just [00:06:00] like you, I say, “Hey, that first meeting’s at our expense. Before you trust us with a dollar of your nest egg or pay us a penny in fees, we want you to see how it is that we can help you.” And then I let them know right away, I say, “Listen. The only thing I’m gonna sell on this first meeting is to do a financial plan for you. That’s it. Right? There’s not gonna be any paperwork to sign. There’s not gonna be a fee to pay.” And you know, you can adapt that for however your planning process works, but we want to make sure before people come in to your office, they know exactly what’s gonna happen.
Neil: Yeah.
Matthew: That way they can be more transparent with you. [00:06:30] They can be more focused on your discussion and less worried on, “All right, is he going to use my answer to this question to try to sell me something later on?”
Neil: Yeah, yeah. Okay. Yeah.
Matthew: And even just the little bit I know about you. I know that you’re goal is not to try to push somebody into a product or into something that’s not suitable. Right? In your heart of hearts, you want to do what’s best by the client. But again, they’re coming in saying, “Boy, I don’t know Neil from anybody else, and I bought a car at the car dealership and they sold me something I didn’t want, and I still regret that. I don’t want Neil to do the same thing.”
And so anything we can do [00:07:00] in that process to show people what’s going to happen, right? So there’s no surprises. Kinda pull back the curtain, if you will. That’s real helpful.
We also have it on our website. We explain, here’s our process for new clients. And, by having that defined again, they can look and see that, a prospect could. But also, you want your existing clients to know your process. That way, as they’re introducing you to their friends, they know what’s going to happen if their friend calls you.
Neil: Yeah.
Matthew: They’re not sort of left wondering, “Well, if I send my friend to Neil, what will he do with [00:07:30] them? I mean, he took good care of me, but maybe that was an accident.” I mean, I don’t know what they’re thinking, but we wanna eliminate any barriers for referrals, introductions, and so forth.
Neil: So, do you … you would send [inaudible 00:07:41] post that first conversation. Would you be sending literature or something by email to set that out or just [inaudible 00:07:47] the website.
Matthew: You know, we do both. So when my office manager, so when somebody contacts our office, my office manager, Colleen, will talk to them. The very first thing she’ll say is, “Hey, go to our website and review through it, we have a tab called ‘Sleep On It’ [00:08:00] at JarvisFinancial.com” and so she’ll tell them that first of all. And it also has on there on that page the kind of people we work with, because it was an uncomfortable discussion for her to say, “Well, how much money do you have? And are you willing to pay this— “
Neil: Yeah.
Matthew: ” …kind of fee?” And so on our website, it says, “Hey, we work best with people that are in this range.” And so, right away people can screen themselves, but it also gives them an outline of kind of how this process works. So you can either post that to your website or you could email it to them right away or mail [00:08:30] it to them. Just anything you can do to set those expectations.
Neil: Yeah, ’cause I think one of the challenges we have, and this leads on to the lead [inaudible 00:08:39] form is our firm’s been around for some time and the local area. We’re quite well-known…
Matthew: Good.
Neil: And [inaudible 00:08:44] we generate a good degree of inquiries, but also not all those inquiries are often ideal clients. My experience of being a planner and I said the same for you is we’re here to try to want to help people and somebody rings up with a query you know you can help with, but you sense they’re not an ideal client. [00:09:00] It’s very hard, so how do you manage that? ‘Cause you know you can help, you want to help, but…
Matthew: That’s right. Yeah.
Neil: …you’re not sure that you should.
Matthew: Yeah.
Neil: And how do you square that circle? Without saying no or I don’t know. I’m curious of your view on that.
Matthew: Yeah, yeah. And you put that very well. I think kind of in our soul is this desire to help people, right? It’s who we are. But at the same time, we have to run a profitable business, right?
Neil: Yeah.
Matthew: So, I handle that a couple of ways. One is in that initial phone call, if I determine that someone’s [00:09:30] probably not a good fit. I’ll give them the best advice I can during that 10 or 15 minute phone call, so I’ll say, “Hey, you really need to pay down this credit card. You really should take care of this.” Really try to give them good advice. And then I always use this analogy of a heart surgeon versus a brain surgeon.
Neil: Okay.
Matthew: So, I say, “You know, in my practice, we’re like a heart surgeon and we’re one of the best heart surgeons there are, but what you need is a brain surgeon. Right? And I just don’t do brain surgery.” Or knee surgery. Use whatever analogy you want, Neil, but then I say, “You know, what? Who you should really talk to [00:10:00] is… ” and I know the names of most of the other firms in town, so I’ll say, “Oh, my friend Dave down the road, he specializes in what you need. I want you to call Dave up. In fact, I’ll introduce you to Dave. I’ll call and tell him that you’re calling. Dave’s really the guy you want to talk to.”
Neil: Okay.
Matthew: That way I’m not just telling them to go away, which is both rude in a way and it doesn’t kind of satisfy my need to help people. I’m saying, “Listen. You need help. Here’s some initial help, but you need to go see the right kind of specialist for your situation.” And you know, I have clients, maybe you do [00:10:30] as well, I have clients that are doctors. I have a client who is a heart surgeon and I asked him, “Hey, Bob, if a friend came in and asked you to do knee surgery, would you do knee surgery?” And he laughs and says, “Of course I wouldn’t do knee surgery. All I do is heart surgery, no matter what. That’s all I do. Just heart surgery.”
And we as planners need to adapt that philosophy and say, “This is the kind of clients that I work with and these are the only clients that I work with, because that’s my specialty.”
Neil: Yeah. And one thing you talked about is [inaudible 00:10:59] a, because we have to do service models. We [00:11:00] have our full planning model and we have a like a lighter version of that…
Matthew: Yeah, sure.
Neil: …yeah. And all the clients I look after on the full-service model and that’s where I get the most fun and enjoyment and [inaudible 00:11:11]…
Matthew: Yeah, of course.
Neil: But we get these queries from clients that maybe don’t fit that model, but the firm could still help. So one thing we’re toying with is bringing in a junior or younger advisor maybe and so rather than your example of referring to another firm, we can retain the client within the firm, but to a different [00:11:30] advisor. And that client may grow and may become a full-service client, maybe down the track, maybe. That’s something we’re kind of toying with.
Matthew: Yeah. And that really is a great model. I know several advisors that do that. So the lead advisor handles this tier of clients and the next and the tiers down. As long as that tier is profitable.
Neil: Yeah.
Matthew: So, a lot of times as advisors our desire to help overwhelms our desire to run a profitable business.
Neil: Yeah.
Matthew: And we say, “Well, I want to help everybody, but if I [00:12:00] help everybody I can’t help anybody.” And so, yeah, to have a junior advisor as long as those are still profitable relationships, and as long as they don’t in the end become your relationship that you’re managing, when really the junior should be managing it.
Neil: Do you have any advice on what we talked about was if I look at the client bank that I’m managing now is bringing in junior advisor and maybe moving some of those ships over to pass on ideal fits, because maybe—on your podcast you talked about how you’re minimum fee was arbitrarily put up because you actually had [00:12:30] the quote confidence to do it.
Matthew: Yeah, yeah.
Neil: I think it’s a journey we’re on. You see you start with a minimum fee and then you realize that actually—so if we end up with a, it’s not a long tail, but it’s still a tail, which would fit into the new client category. And the thought was to migrate those relationships over to the junior advisor, still with me available, but do you have any thoughts on that?
Matthew: Yeah, you know what, a lot of advisors do that as well, and it’s complicated by the fact [00:13:00] that that long tail of people are usually people you’ve known a long time.
Neil: Yeah.
Matthew: People that still really need your help, and so there’s—you know, from a business decision, we could say easily, “Well, we just won’t work with those people anymore,” but again we’re planners, we want to help people. So yeah, bringing a junior in place, and again there are people that just aren’t a good fit for your firm anymore. So we’ve done it several times. In fact, I’ll send you a copy of the letters and the things that we’ve used when we decided to transition clients to other firms.
I was kind of adverse to the idea of bringing more people in, [00:13:30] more staff on, but that’s just my personality. I don’t want a big team. I want a lean team. But you could adapt this for your team. If you said, “Boy, we brought in Sam and Sam is now going to work with you, but I’ll still be here, right? I’ll be here. Anything Sam can’t handle, I will handle. We’re still your person. We’re still your phone call.” And then yeah, to transition that. So I would really look and say, “All right, what’s my top tier of clients, whether it’s my top fifty or my top hundred, whatever that is, and everything below that is gonna either need to work with same or go [00:14:00] work with another firm.”
Neil: Yeah. Okay. Yeah, and that’s what we’re working on. And to your point, we were looking at the spreadsheet of all the clients, and yes, you can look at it numerically and then it’s like, well that’s an expense. And it doesn’t become a number, it becomes a person. Then it’s not so easy then.
Matthew: You have to take the names off of it. So when I run those spreadsheets, I have to delete the name off of it, because otherwise I do that. “Well, it’s Mrs. Smith, I can’t, I have to be, I have to be strong in my business sense. Right? Which is not easy [00:14:30] to do.
Neil: No.
Matthew: It’s really not. But if, like you said, if you can bring somebody in house, a junior advisor of sorts, or if you can find another advisor in town. If you decide, hey, you don’t want to train somebody, we don’t want to bring somebody up. There’s gotta be another firm near you that has a younger advisor who’s doing really good things by clients who would probably give this client better service than you do. Right? Because our long tail clients, maybe not for you Neil, but for me, our long tail clients, they kind of get less service than our top clients. And so there’s got to be a young advisor out there who you can either bring in house or to whom [00:15:00] you can send clients who you can, in your heart of hearts, know that they’ll actually give them better service than you will.
Yeah, and maybe you start with just the bottom ten clients. And I always allow my team, anytime we’re making a big change like that, I allow everybody on my team five exceptions. So, I say, “I know there’s somebody in our client book that you just absolutely love that you can’t imagine life without or it’s a family member or something. You get five exceptions. Everybody else we can’t make exceptions for. Because if we’re going to hit our goals, just like we would tell [00:15:30] our clients with their financial goals, we’d say, ‘Hey, you have to make these sacrifices to reach your goals, we as advisors have to make sacrifices to reach our goals as well.”
Neil: Yeah, okay. That’s good. Thank you.
Matthew: Well, that’s easy for me to say, right? And it’s harder for you to do. They’re not my clients and so it is a challenging thing to do, but I’ll send you over a couple of pieces, couple of pieces on it that we’ve used over time that’ll help with that. Gotta get your mind around that.
Neil: Yeah. Thank you. Yeah.
Matthew: Other areas that I could help you with, Neil. Let me pull up your [inaudible 00:16:00] [00:16:00] in here. Striking a balance between business growth and personal time. We could talk about that for a minute. Tell me a little about how you balance that currently.
Neil: Okay, I think. I mean, I tend to work a Monday Friday week. I rarely work weekends.
Matthew: Good.
Neil: I went in a few hours this Saturday, but that’s a real rarity. [inaudible 00:16:19] This week, so I had some stuff to do this day, so that was the reason for that. I think, the practice that I’m a part owner of I was an employee of before I bought into the practice, [00:16:30] so I think you have that strange dynamic of previously being an employee and now—therefore, you have this mentality of working these set hours, ’cause that’s always what you did.
Matthew: That’s right. That’s right. And that’s what everybody you know does, right?
Neil: Yeah. Yeah.
Matthew: Everybody you know works those hours.
Neil: Yeah, or you buy into a practice to generate more try work for them work more hours than before you [inaudible 00:16:54] did. Kind of like you’re more free and you work less maybe. So, I think I’ve got quite a good balance, but it’s trying to—[00:17:00] I know that listening to your, Micha’s [inaudible 00:17:02] podcast and the amount of time you take off is, is a lot by conventional measures. And it’s just how you manage that with the clients. If you’re away from the office for a long period of time, and—how does that work really? You know?
Matthew: Yeah, yeah. How do you not be in the office and still deliver on client service, right? That’s kind of the big one. So on the extreme is when I take trips where I’m totally out of, off the grid, so I took my family to China [00:17:30] for three weeks. And for three weeks I didn’t have phone service, I didn’t have internet service. So, something like that, we warned clients ahead of time.
We said, “Hey, listen, I have this chance for an adventure. I have the chance to take my family to China. We’re gonna do that. And here’s what’s gonna happen while I’m gone. My team’s still gonna be there. They’re still gonna answer any phone calls. They’re gonna take care of anything you need. We just won’t be able to meet together.” So, on those situations, I let them know in advance, because I don’t like people to be surprised.
Neil: Yeah.
Matthew: Otherwise, what we do is we steer client expectation [00:18:00] so it’s more about getting their needs met and less about talking to me directly. So, if a client has an expectation that they can call the office at any time and get me on the phone, that makes it really difficult for me to leave. Right? Because they’re going to call and I won’t be there. If instead, we shift their expectations that they can call our office at any time and their needs will be met, well that could be handled whether I’m there or not. And that seems like a subtle distinction, but it has to do even with the way my office answers the phone.
So, a client calls in, even my best client, whether I’m in the office or not, [00:18:30] my office manager Colleen, she’ll say, “Hey, who is this?” She’ll greet nicer than that, and they’ll say, “Oh, it’s Dave. I need to talk to Matthew.” And she’ll say, “Dave that’s great. Matthew would love to talk to you, but he’s with another client right now. Is there something that I can help you with?” And sometimes they’ll say, “Sure. Colleen, what I needed was this form. Or I needed to change the smallest thing.” But other times, they’ll say, “Actually, Colleen, I really need to talk to Matthew.” So, she’ll say, “Great. Matthew can call you tomorrow at 3 pm. Is that okay with you?” And they say, “Oh yeah, sure that’s fine.” As long as they know when I’m [00:19:00] gonna call them.
And then, here’s the real trick, now, she says, “What can I tell him it’s regarding, so he that he can be prepared for the call?” And then they’ll say, “I need to change my monthly distribution.” And she’ll say, “Oh, great. You know what, I can help you with that.” And so she’s taking care of those things.
So, the reason for that process is that normally they would say, “Hey, I need to talk to Neil. I need to talk to Neil” ’cause we’ve programmed them as such. This way she can kind of pull out, “Do you really need to talk to Neil or is there just something you need taken care of?” And most [00:19:30] clients, even if let’s say they really do need to talk to you, Neil, they have some tax questions, something specifically that only you can answer. It would be better for them to be scheduled to talk to you than for you to just pick up the call.
Neil: Yeah.
Matthew: Because if they ring in straight to you, you’re trying to open their file. You’re trying to remember their situation. You’re trying to remember whatever it is they want to talk about. Whereas, if it’s scheduled tomorrow at 3 pm, you can be totally prepared. Just like I am today, I have everything laid out on my desk and I’m ready for that call.
Neil: Yeah.
Matthew: And rarely will a client object to that. Rarely will a client say, “No. I need [00:20:00] to talk to Neil right now, this very second.” Most people aren’t that way or at least people you shouldn’t have those people as clients. So that takes several weeks or months to set that expectation. We put it in our client letters, we say, “Hey, you know, we work with a lot of clients. We’ll always return your call within 24 hours. I just might not be available the moment that you call.” And whether I’m not available because I’m out with my family, or I’m not available because I’m in a meeting with a client. That doesn’t really matter. We’re not gonna disclose that one way or another. We’re just setting the expectation [00:20:30] that you can’t just get Neil on the phone as soon as you ring him. You’re gonna be scheduled to talk to him.
Neil: Yeah, and so is that your service standard is 24 hours to go back to your client. If it’s, if you’re not on an extended break?
Matthew: Yeah. If it needs, for me, my team will get back to them the same day, usually within a few hours, but if they need to talk to me, they can’t always get me the same day. Now, Colleen will always tell them, “If this is really an urgent issue, I’ll pull Matthew away from whatever he’s doing and I’ll have him give you a call back by the end of the day,” and in that case she [00:21:00] would ring me wherever I’m, whether I’m at my house, whether I’m on vacation with my kids. But that almost never happens. Rarely does a client have an issue so urgent that they say, “Boy, I have to talk to Matthew right now, this very second.”
Neil: I guess they say it’s filtering the what is administration, what is advice? And I’m not sure US regulations, but we’re quite clear on administration can handle. As soon as it ticks over to advice, well then it comes over to the advisors we mentioned.
Matthew: Yeah, so, and you and I understand that. And [00:21:30] your team understands that, but the client doesn’t. They just know, Neil’s my guy and if I have an issue, I call Neil. And it turns out they just need to update a beneficiary. Well, they don’t need to talk to you about that. That’s not advice, that’s just an administration.
Neil: Yeah.
Matthew: And so, but we want to be tactful with that, right? You don’t want your team to answer the phone and say, “Mr. Client is this advice or administration?” Well, not only do they not know, it’s just rude.
Neil: Yeah.
Matthew: And so, that’s why they say, “All right. Well can I tell Neil what it’s regarding, so he can be prepared [00:22:00] for your call?”
“Oh, yeah, it’s regarding my address change.”
“Oh, you know what? Great news. I can help you with that.”
Or they say, “Hey, I wanna change my investments.”
“You know what. That’s really good. Neil will be prepared to talk with you about that tomorrow at 3 pm. Is that okay with you?”
Neil: Yeah.
Matthew: And even if you’re in the office, Neil, it still makes your job better, because you’re not getting interrupted in the moment. You were working on some project and the phone rings and now you’ve been distracted by the phone call, versus having that scheduled for next day.
Neil: So how many meetings and things would you schedule [00:22:30] in your diary when you’re in the office?
Matthew: When I’m in the office, and I keep condensing this more and more, I’ll have anywhere between four and six meetings a day, when I’m doing meetings.
Neil: Okay.
Matthew: Yeah, which —
Neil: It’s a lot.
Matthew: …the advantage of that—It is a lot and it takes a while to get up to that. I used to only be able to handle three to four meetings a day. But instead of having my meetings … Let’s say you want to meet with your clients four times a year. It’s just an easy number. You know a hundred, right? So, that’s a hundred meetings each quarter. So, I could either—Most advisors spread that out. They do one this [00:23:00] day, they do two the next day, they skip a day, they do one on Thursday. Instead, I try to get all my clients to come in during a two week or a three week period of time. That way, my whole team is focused on meetings, which is also what lets me travel. Right? So clients all come in the first couple weeks of the quarter. I’ve met with everybody, well not everybody, probably about 90 percent of clients come in during that block of time, and then I have some stragglers throughout the remainder of the quarter.
Neil: And they all come into the office, or do you go out and meet with your clients? Or is it by Skype? [00:23:30] Or how does that…
Matthew: Most of them come into the office. Some of them I Skype with. I don’t go out and meet with anybody. Years ago I did. Maybe I do one or two meetings a year out of the office. Clients who can’t travel anymore. Or meeting a client for lunch, something like that. But I try to block those together. Even if you just do it by month. Even if you just pick one week a month where you say, “This week I don’t do any client meetings.” Maybe it’s ’cause I’m working on my business. Maybe it’s because I’m traveling, but the last week of the month, I won’t do client meetings.
And then just force your [00:24:00] meetings into the other three weeks, or two weeks, or whatever period of time.
Neil: Would you set aside different days for new prospective clients, or they just fit in the meeting schedule in line with your normal diary?
Matthew: I do them all during that normal diary. I don’t—I know some advisors that say, “Hey, Tuesdays are when I meet with new clients.” I just get in the mode of doing meetings and I just do all my meetings as quickly as I can.
Neil: Yeah.
Matthew: So, I do my meeting for an hour and then I have a 30-minute break. And then my next meeting. That way [00:24:30] my meetings don’t overlap. I have some time to go use the bathroom. To check notes. Whatever the case may be.
Neil: And on the podcast, what I was interested in and intrigued by was the lack of financial planning software you mentioned that you would use. We use [inaudible 00:24:51] Truth. Here in the UK, it’s very comprehensive. It’s very good. You can put everything in. You can do all of the tax calculations, the estate planning, the catastrophe [00:25:00] planning, the pension planning, the cash flows. It’s all in one. And it’s very good, very comprehensive.
Matthew: Sure.
Neil: But sounds a lot more comprehensive than what you use.
Matthew: Sure.
Neil: Given the amount of clients you look after, I was just curious how that came about and the one-page plan. Those are the two…
Matthew: Yeah.
Neil: …the two seem to be synonymous.
Matthew: Yeah.
Neil: And I’m a great fan of Carl Richard’s work as well and trying to simplify things as much as possible and yeah the comments on that would [00:25:30] be good.
Matthew: So, part of that, one thing to keep in mind is that all of my clients are retirees. They’re either retired or they’re getting ready to retire. So their number one question is, “How do I not run out of money in retirement?” They’re not worried about paying off student loans. They’re not worried about putting their kids through college. They’re not worried about buying a house. They’re just worried, they’re saying, “I have this nest egg, this lump sum of money. How do I get income out of that?” And I think as I mentioned on the [inaudible 00:25:53] podcast, we follow a dynamic distribution rate.
Neil: Mm-hmm (affirmative).
Matthew: [inaudible 00:25:58] made that really popular. And so, all I need to be able to do is to [00:26:00] illustrate to them how much money they can take out this year? And I do that on one page, just a single illustration: “Here’s your portfolio balance. Here’s how much we can safely take out this year.” Not really interested in a Monte Carlo simulation forty years out, because that’s all made up numbers anyway. And the client doesn’t understand it. Right? We’re saying, “Hey, some computer thinks this is what the rain forecast is gonna be thirty years from now.” Nobody knows.
The one-page financial plan, which Carl Richards talks a lot about, I actually learned that from Tom Gowe. He runs a coaching program [00:26:30] now called The Academy of Preferred Financial Advisors, and the idea is, his idea was that a client can only absorb one piece of information. One page worth of information. And that the more pages we got, the more confused they got. And so he would summarize all of his advice on one piece of paper.
And when I first started doing that, it seemed impossible, right? Because the planning software would generate dozens of pages and so I said, “Great. I have one sheet of paper. I’ve gotta fill up that one sheet and that’s all I get.” And so, I had to exclude all of the noise, all of the commentary. [00:27:00] It had to just be advice. I recommend you save this much. I recommend you do this with your legal documents. I recommend you do this with your tax documents. And no commentary. Just pure advice on that. So, what you could try, Neil, is still use your planning software, and then on top of that, write up a one-page summary. And you can say to the client, “Mr. and Mrs. Client, here’s this big stack of papers, and we can go through every page if you’d like, or I’ve done a one-page summary.” In the States, we usually call that an executive summary. [00:27:30] Just a one-page executive summary, “Which would you like to look at?” And every single client, even the engineers will say, “Just the one-page summary. I just wanna know what I need to do.”
And part of that, Neil, is also Google knows everything that we know. Right?
Neil: Yeah.
Matthew: Everything that we know, the financial planning software, everything. All of that is available on the internet. The client wants to know what they need to do. They don’t want a whole education on financial planning. Am I saving enough money, yes or no? If no, how much do I need to save? So, the one-page financial plan is all about simplifying. It doesn’t mean you need to abandon [00:28:00] your planning software, it just [pause] you need to have a one-page summary.
Neil: Yeah. And I think that comes back to another point about value isn’t it? That there’s still a perception the longer more complex the [inaudible 00:28:12] a big fee. That’s what they’re getting.
Matthew: That’s right.
Neil: A tangible product for what is an intangible service.
Matthew: Yeah, that they’re paying you by the page. Right?
Neil: Yeah.
Matthew: That. Yeah.
Neil: [inaudible 00:28:24]. That’s what you’ve paid for.
Matthew: That’s right.
Neil: And I guess maybe, [inaudible 00:28:30] we’re talking is one thing [00:28:30] I say to clients is when if we’ve got their cash flow on screen, so then once we’re really sure, we know this is not gonna be what the future’s gonna look like it’s just our best guess with what we know today. So that’s why we’re printing it out and binding it and giving the illusion of certainty.
Matthew: Yes. Down to the hundredth of a percent, right?
Neil: Well they just changed the inflation rate by half percent, it’s gonna be, it’s gonna look different. Over here in the UK, the regulatory paperwork is still quite extensive. [00:29:00] I don’t think you find the same in the U.S. But maybe the summary would be, “This is what you need to do.” And then you’d still have to supply them the regulatory piece, which is quite a tome, but that’s the accepted document in its entirety.
Matthew: Yeah, and maybe you need to bind those together to meet the regulatory requirements, right? We don’t want to skirt those, but you can tell the client, “Hey, listen, you know, the government requires that I give you all this paper and we can review every page of it if you like. Or, as your advisor, I’ve done up one page of what you need to do. Which would you like [00:29:30] to look at?” And they’re all going to say, “Go. Forget the paperwork. Let’s just look at the one page.”
Neil: Yeah.
Matthew: But it will take some time, Neil, to [inaudible 00:29:38]. It’s a lot of work to condense all of that paper into just one page.
Neil: Oh, yeah. What’s that wonderful phrase? It’s much harder to work at what to take out than what to put in.
Matthew: That’s right. That’s right. It’s easy to click another box on that software and generate another report.
Neil: Yeah, yeah.
Matthew: But really, clients, regardless of their situation, right, you can sort [00:30:00] of put them into a couple areas, right? They all have questions about cash flow, whether that’s saving for retirement or taking income in retirement. They all have questions about risk management, right? What happens if I get sick? What happens if I die? They all have questions about taxes. And they all have questions about their investment portfolio. So, you really could just break it into four areas. Summarize their goals. And this is what I do. Summarize their goals in a couple of bullet points, right? Retire when you’re 63. Whatever the case may be. Talk about cash flow. Talk about risk management. Talk about taxes. Talk about investments. [00:30:30] In that order. And I just bullet point each one of those.
And it actually, I think, Neil, it actually makes you more valuable to the client, because you’re giving them more personalized advice and you’re acknowledging that this is not a perfect process. That we cannot sort of guarantee we map out the next forty years. We know how things look right now and we know with certainty they’ll look different next year, which is why you need to keep working with a planner ongoing, because this will always be changing, and we’ll always be changing with you.
Neil: Yeah.
Matthew: You know, even just experiment [00:31:00] with it. Just with your next client or your next prospect, do your normal process, like you always do, that’s worked very well for you. And just try it. Just give your best effort at a one-page summary and see what they say. In the worst case, they’ll say, “You can revert back to the big plan like you always do, and that’s fine.” And maybe they’ll love the short plan. And once you see it work a few times, I remember the first time, a couple times I used it, I thought, “There’s no way this will work. This person’s paying a lot of money. They have a lot of money. Millions of dollars. There’s no way they’re going to buy a one page piece of paper.” And every single time [00:31:30] they say, “This is exactly what I wanted.” In fact, I don’t, I can’t remember if this was in the podcast or not. I have very wealthy client who met with me by accident, somehow got referred to me, and he had as much … his nest egg was equal to half of all of the money we manage. [crosstalk 00:31:48]
Neil: What? Okay.
Matthew: It was kind of a fluke, an accident that he came, and he says, “Well, I’m in the wrong place, right? I have almost as much money as half your clients combined. I’m gonna go to the bigger firms. I’m gonna go to the big city and I’m gonna meet with [00:32:00] all the big firms.” And I said, “Well, you’re here. Let me just do this one page financial plan, and you can just take it with you, ’cause you’re already here.” So I sent it to him, thinking I’ll never hear from him again, right? ‘Cause he’s meeting with all these best financial planners and attorneys and lawyers and all accountants and a few weeks later, he calls me back and he says, “Matthew, I met with all the top firms in the state and you were the only person I understood. Everybody else gave me all these reports, all this stuff I couldn’t figure out what they were saying. I understand what you’re saying. So, even though I have as much money as half your clients combined, I wanna work with [00:32:30] you.”
And so that was a real testament to me that clients want simplified advice. They just want to know what to do.
Neil: Yeah.
Matthew: Google can give them an endless supply of paper.
Neil: Yeah, and I guess that leads into the value side. Is still charging the AUM fee, which we do and I know you do.
Matthew: Yep.
Neil: And the, as the clients and such grow, also that number grows with it, and there’s the value conversation. How do you, if you had somebody of [inaudible 00:32:58] into specifics, that [00:33:00] number can get large, with larger clients, in terms of value add and discussion of fee, and I’m just curious to know how you position that.
Matthew: Yeah, that’s a good one. I will mention that I charge an AUM fee. I personally, I cap that at 5 million dollars. Our largest annual fee is 50,000 dollars a year.
Neil: Okay.
Matthew: And that’s more of a confidence issue than it is anything else.
Neil: Mm-hmm (affirmative).
Matthew: Right? Like everything we do. But again, for a client who’s paying us 10, 20, 40, 50,000 dollars a year, [00:33:30] that’s a lot of money, right? So how do we provide value that’s equal to that? And like you, I’m a big fan of Dick Murray, I talk about his value proposition, right? If we can save you time, effort, or worry, that’s worth more than our fees a year. But something I always keep in mind, I always try to imagine that clients can only remember 90 days in the past. So, our fees come out of the client account each quarter. Once a quarter our fee comes out, I’m not sure the timing on yours, but I always imagine the client sees that fee come out and they remember back for the last 90 days and say, “What [00:34:00] has Matthew done for me these last 90 days?” And I wanna make sure there’s something that comes to mind.
So, not something subjective, not something kind of, “Well, I’m sure he’s looking after my money”. I want them to be able to point to something and say, “Hey, Matthew did this for me in the last 90 days, and I’m going to keep paying him to do these things.” So that means every quarter we’re sending something to clients that’s some kind of value add. We’re reviewing their beneficiaries, we’re reviewing their tax returns, we’re talking about their retirement income. Something that we can send out to every client whether they meet with us or not that demonstrates our value. [00:34:30] And something that no one else is doing.
So, all the other big firms, they’re sending them all sorts of market commentary and just sort of junk. But it’s not valuable. It’s not saying, “Hey, here’s where your beneficiaries are and this is where they should be.” It’s not saying, “here’s how you’re currently invested. Here’s how I think you should be invested.” Right? We want to be really proactive with advice, with clients, so they’re getting that every 90 days. And then I have to remind myself, and I think, yeah, Carl Richards talks about this The Imposter Syndrome.
Neil: [00:35:00] Yeah.
Matthew: Where we get good at something and we think, “Well, it’s so easy, I can’t be that valuable.” I have to remind myself that clients are working with me voluntarily. In fact, I tell clients that every time I see them. I say, “Hey, listen, our fee comes out of your account every quarter. And you look at that number, and I look at that number. And we both got to agree that the value that we’re bringing to you is worth more than the fee. And if the value is, then we go another quarter. And if it’s not, then we need to have a heart-to-heart discussion. Something needs to change or we need to part ways as friends.”
And so I’m really up front with them on that discussion. That way I’m not shying away from the discussion on fees. [00:35:30] I’m not hoping they don’t notice that their fee is on this schedule or I’m kinda mumbling their fee. I’m saying, “Hey, our fee is X, right? Last quarter you paid us 10,000 dollars. You saw that number. I saw that number. It’s either worthwhile in your mind and we keep going, or it’s not and we part ways as friends.”
Neil: Yeah. Okay.
Matthew: But I have to remind myself of that as much as I have to remind them. Right? I’m not forcing anybody. No one’s under contract to stay with me. If they didn’t think what I was doing was valuable, then they would leave. Same with your clients.
Neil: Yeah. Yeah. Over here we have an annual meeting.
Matthew: Sure.
Neil: And [00:36:00] what we say to clients is, we have an annual full planning meeting and that’s the minimum and that will typically be a couple of hours…
Matthew: Okay.
Neil: …because we’re going through the plans, it’s quite a long meeting, but it’s going through the goals, objectives, the financial plan, the investments, and just tidying everything up. [inaudible 00:36:16] new client today, and what we say that’s the minimum contact. Some years you might need us three or four times, in which case you come in as many times as you need. Some years it will just be annual.
Matthew: Yeah.
Neil: Our client fees are taken from the cash account on the platform [00:36:30] and it’s paid monthly.
Matthew: Okay.
Neil: To us. The client will get a statement every year. It’s like a bank statement: “Here’s what you paid over the last 12 months.” So we’re really clear, “This is what you paid us.” And we, facing to you, we [inaudible 00:36:44] that this is every 12 months. There’s no contract here. If you’d like to continue first 12 months, then please sign our client agreement accepting that you can leave any time.
Matthew: Nice.
Neil: It’s more so that we’ve, we enforced it with a signature [00:37:00] from the client and they see the number in pounds [inaudible 00:37:02] what they paid us.
Matthew: Oh, good for you. That’s really, that’s great. So they re-up every year then? You have them sign again every year?
Neil: Yeah. Yeah, absolutely. And yeah, most interesting reflecting back is no one’s ever, we’ve not lost anybody. And we—and then I start—this is the imposter syndrome. Then I start saying, “Well, markets have been rising for several years…”
Matthew: That’s right That’s right.
Neil: ” … Who’s gonna leave in a rising tide anyway?”
Matthew: That’s right. There has to be ten clients that are thinking about leaving. They just haven’t done [00:37:30] it yet. Yeah.
Neil: Yeah. [crosstalk 00:37:32]
Matthew: … rabbit hole.
Neil: Absolutely. Yeah. It’s just thought. It hasn’t actually happened, really. So, yeah.
Matthew: And that’s part of the reason why I have that regular schedule of value add. I want to make sure I’m doing something every quarter, just, it’s almost for my own peace of mind, right? So I can look and say, “Hey, I’m doing something proactive for these clients every quarter. I’m showing them my value.” I think nine times out of ten they don’t even look at it, but it makes me feel better, right? I have something I can point to that I’m doing.
Neil: Is that something where you would say, ” [00:38:00] Okay, this quarter we’re gonna do the beneficiaries across the client bank.” Rather than doing it bespoke for each client each time? How do you systematize that?
Matthew: Yeah, we would do it across the client bank, so we would have the custodian give us a report of all of the beneficiaries. Now, the custodian sends a letter to the clients every year, or at least ours does, saying, “Here’s your beneficiaries.” But it’s just with percentages.
Neil: Right.
Matthew: And I always remind people that you and I can think about percentages, clients can’t. Clients don’t know what 10 percent means. They don’t know what 50 percent means. [00:38:30] They think in dollars or pounds, in your case. And so what we’ll do is get the report from the custodian and then we’ll use their account balances and say, “Well, all right. Heaven forbid something happens to you today, here’s how your money would get divided up. Your million dollars would go to your two kids, so each of your kids would get 500,000 dollars or 500,000 pounds. Is that what you want?” And they would say, “Yeah, that’s what I want” or they would, they might say, “Wow. $500,000. I can’t just leave Johnny $500,000 all at once. He would blow the money.”
“Okay, great. Let’s have a discussion about that.”
So [00:39:00] I’m creating awareness for them that no one else has created for them.
Neil: Okay.
Matthew: Or we’ll do one, let’s … long-term care. Nursing home care is a big issue in the States. All right, so what if you get Dementia and you need nursing home care? What happens then? And we’ll sort of pencil out that scenario. Or, what if you get dementia and you can’t make your own financial decisions? Who are we supposed to talk to about your financial decisions. And so we’ll run, we’ll run through that.
Every year we do a tax planning one. We say, “Hey, here’s your tax return from the United States, and [00:39:30] here’s how much you paid in taxes, and here’s what we recommend that you do next year.” And a lot of times there’s nothing we can change, because their life is kinda set, but at least they know we’ve looked at it.
Now, I don’t know how tax planning works in the UK. I’m not familiar with that. But again, we have sort of a, what is it, a six quarter rotation, so every six quarters we’re going back through the same rotation of value adds.
Neil: Okay, so you say that these are the categories of what we’re going to look at and [crosstalk 00:39:54] quarter three is long-term care, and quarter four is tax planning, and…
Matthew: That’s right.
Neil: Yeah, okay. Yeah, ours [00:40:00] isn’t so structured in the sense that we go through a financial health check every year at the planning meeting, which will cover off tax, and investment, and risk, and cash flow, and so…
Matthew: Sure.
Neil: …so it’s done, yeah, it’s done per client. It’s done at each meeting, which is why our meetings are longer than [inaudible 00:40:18] an hour. It’s generally a good two hours. Which is a long session.
Matthew: It is a long session. Yeah.
Neil: You know, the clients have to be—you can kind of sense when you’ve got to the point of like [pause] it’s bouncing off now.
Matthew: [00:40:30] Yeah.
Neil: [inaudible 00:40:31] for us really. So.
Matthew: Yeah, and that’s where I would [pause] just personally, I prefer to do two, my ideal is two meetings a year. I like to see them in the springtime and the fall for an hour each meeting. Not all clients do that. Some just want to come in once a year. Some clients only come in every other year. But that’s what I like to do. I sort of feel like after an hour, like you said, we all kinda glaze over and it just doesn’t absorb anymore.
Neil: Yeah, absolutely. So, if you’re [00:41:00] doing long-term care planning and so forth. Do you use financial planning software for that, rather than just a simple spreadsheet? Or how do you, how do you model that?
Matthew: I gotta admit I do simple spreadsheets for everything. So…
Neil: Do you?
Matthew: …I would pull up a report and I would say, “Well, how much does long-term care cost in our area? All right. Let’s say it’s $10,000 a month. Right? How would we come up with $10,000 a month? Well, you have some income already. You have your pension. You have whatever and then it’s gonna go into your nest egg and then it’s gonna go into your house. How much long-term care could we pay for?” And so, it’s really [00:41:30] kind of simple, you know, it’s a pretty simple math equation. Right? $10,000 a month into your portfolio. That gets us however far it gets us.
Neil: Yeah.
Matthew: And if it’s a short number, if we say, “Boy, that wouldn’t get us very far,” then maybe we need to have a discussion about alternatives. And if it’s a long number, if it says, “Boy, that’ll buy you 15 years of care. All right, odds are you’re not going to spend 15 years in a nursing home. I think we’re covered.”
Neil: Yeah, ’cause our cash flow—again it comes back to the power of the software. It’s got all the data in there. We can then produce any illustrations we [00:42:00] like, but whether we choose to, print them out and give them to the client, that’s a whole separate conversation. But if you can just draw up a lifetime cash flow that says, “Look, if you [inaudible 00:42:08] yesterday, your [inaudible 00:42:09] would last you nine years. [inaudible 00:42:11] …four years. I think you’re covered.”
Matthew: Yeah, yeah. If you start generating more reports, you say, “Well, what if it happens in ten years or seven years.” Well, now we’re confusing the client. There’s too many, I would say…
Neil: Yeah.
Matthew: …”Listen, heaven forbid if it happened today, what would happen?” Cause a client can think about today. They can’t think about 15 years from now. [00:42:30] It’s hard enough to think about when we get sick or when we die. That’s a tough discussion in general. All right, if something happened to you today, here’s how your money would get divided up to your beneficiaries. Here’s how your spouse would get taken care of. Here’s how you would pay for long-term care. Just if it happened today. And so, same with when the client says, “Well, how much money can I take from my next egg?”
“Hey, here’s how much you can take this year.”
“Well how much can I take 27 years from now?”
“I don’t know. It’ll depend on what goes on in 27 years.”
Neil: Yeah, and that’s where that whole, in the UK, currently, there’s a dog fight, there’s a [00:43:00] deterministic versus [inaudible 00:43:02] argument on cash flow, and there’s pros and cons to both.
Matthew: Yeah.
Neil: But I usually say, both are just guessing.
Matthew: Yeah, you hit it on the head, Neil. At the end of the day, we’re just guessing. We’re hoping that the future will look something like the past.
Neil: Yeah.
Matthew: I mean, that’s what all of these models are based off of, and so we say, all right, well, I think that this distribution rule, I think this is the safest way to go, whether you’re using a 4 percent rule or the 3 percent rule or whatever kind of guidelines you like to use [00:43:30] for income. We say, all right, this is what we think is gonna work and so that’s what we’re gonna stick to until something better comes out. We’re not gonna pretend we know what’s gonna happen in 30 years. We just, we’re gonna do what we’re gonna do right now.
One of the reasons I really like the dynamic distribution rate is that it tells clients, “Hey, what are we gonna do when the markets go down?” So the dynamic distribution rate has these guardrails in it that says if the market falls to a certain point then we’re gonna adjust your income. And clients really like that it gives them something they can do when the markets go down, right? Like you said, we’ve been on a seven, eight, nine [00:44:00] year run? Markets are gonna go down and clients are gonna want to do something. Their default do is to sell. “We need to sell. We need to sell.” We don’t want to sell. So instead, we say, “All right, we’re not gonna sell, but the markets have gone down to this guardrail, this threshold, and so we’re gonna take less income until the markets come back up.” And clients feel really good about that. They say, “All right. I’m doing something about these markets and it’s something that’s actually healthy to do.”
Neil: Yeah, because the Monte Carlo would say that the point to doing it is that you can continue at the same number of income irrespective, because you’ve got a 95 percent [00:44:30] success rate based on [crosstalk 00:44:32].
Matthew: Yeah, yeah.
Neil: Yeah, yeah. One of the favorite [inaudible 00:44:36] I use for clients is [inaudible 00:44:39] Nick Mowe? I think it was Nick Mowe. So, you know, a car is going 100 miles an hour and there’s a cliff a hundred miles away, how long does it drive till it gets to the cliff. I ask all the clients, and they all go, “An hour.”
Matthew: An hour, yeah.
Neil: Yeah, well, no. Because you wouldn’t drive off a cliff, you’d course correct when you’d got there. And all we’re saying is that we’ve hit [inaudible 00:44:56] situation extrapolate it forward. There might be a cliff edge there, [00:45:00] but we’re gonna be ahead of time, slowing down, changing the steering or something to avoid that catastrophe happening, and that’s really where the value of that is. It’s trying to be proactive as it’s coming towards you. We’re not reacting, when often it’s too late.
Matthew: Yeah, and then trying to streamline that across clients helps. That saves a lot of time. Part of the reason I’m able to take so much time out of the office is instead of doing, you now, today I’m going to do this for one client and I’m gonna do this for another client, we decide this quarter we’re doing this for all our clients and next quarter we’re doing this for all our clients, so my whole team gets focused [00:45:30] on one thing and it lets us, we get better at that thing, right? The more you do one thing the better you get at it. And so if we’re doing beneficiary review for all of our clients, we’re getting very good at looking for issues of beneficiaries. Whereas, if I look at beneficiaries today for this client and then in six months for another client, my thinking is not as organized as it would be.
Neil: Yeah. And [inaudible 00:45:58] back to clients, if you’ve [inaudible 00:45:58] electronically or do you send something in the post, or both?
Matthew: You know, I send a lot in the post [00:46:00] still, because we all get so much electronic that I, I think it just sort of blends in, right? You get a thousand emails. I like to send a couple things tangible to a client that they can hold in their hand and a lot of times I’ll judge the success of it, if they bring it back in a meeting. So, if we’ve mailed something in to them in the post and they bring it in, then I think, “All right. Well this was actually valuable to them.” I have never had a client print an email and bring that in to discuss, but I have had a lot of clients say, “You sent me this about beneficiaries and I want to look at this.” Great. Let’s [00:46:30] look at it.
They are retirement income guardrails. I have clients bring that in all the time. “Hey, Matthew, say that the market falls to here, we have to do that. Where are we at right now?” And we look and we say, “All right. Here you are.” So it does cost to use the post, obviously, but it’s nice to have something in hand.
Neil: Yeah. It’s funny that you’re saying that because our clients at the end of each planning meeting will electronically send them a copy of the report and [inaudible 00:46:53] the fees just talked about.
Matthew: Yeah. Yeah.
Neil: And but [inaudible 00:46:58] over six months and we communicate the outcome [00:47:00] of that to our clients. And that gets posted with evaluation. And it’s a very simple evaluation. This is the accounts, the value. Whereas the one that goes with the annual planning meeting is 10, 11, 12, 13, 14 pages, because it rates per fund and annual turn, rate of return, classification, you know. And it’s good, but it’s detailed. Often, when they come in, they’ll bring in that single sheet with just evaluations on.
Matthew: Yeah.
Neil: Because I guess to them, their [00:47:30] world, their eyes, it’s what’s it worth?
Matthew: Yeah. That’s what they can understand, right? And that’s something as advisors where we get stuck. Like I mentioned earlier, our brains are, there are so many numbers in our brain, right? It’s just, we’re just drawn to numbers. Clients aren’t.
Neil: Yeah.
Matthew: And the more numbers we send them, the more confused they get. So it’s not a surprise to me that they say, “I just want to know what’s the bottom line? What’s that—how much money do I have?”
Neil: Yeah. Yeah. And I think that comes in two places. For me, as an individual, it’s conscious of are we showing value and there’s a tendency [00:48:00] to think more stuff equals more value. But also, I said to you, I said [inaudible 00:48:06] podcast, I enjoy this stuff. I enjoy reading articles and studying and therefore, if you like something, you end up talking about it.
Matthew: Yeah.
Neil: And if you’re not careful, you talk too much, because you’re enjoying it, not because you’re trying to baffle, but you are, probably, if you’re not careful.
Matthew: Yeah.
Neil: The [inaudible 00:48:24] was right. The implementation is perhaps not surplus.
Matthew: Yeah, and let clients guide that for you, Neil. Just like [00:48:30] they’re bringing back that one evaluation, when you meet with them, when you do your annual meeting, just ask them, “Which of this information would you like to keep, take home, and which would you like me to just put in your file?” And see what they say. And if they say, “oh, I want to keep all of it.” Then keep doing all of it. If they say, “You know what, I’ll just keep this one page.” Then maybe you need to dial it down.
Neil: Yeah.
Matthew: Let them be the guide for that.
Neil: Moderation in terms of you have an ongoing, as do we. Our upfront fee is a combination of a [00:49:00] percentage sum from an assets and a [inaudible 00:49:03] planning works. And, I don’t know, I mean, I’m not sure how well this translates to the U.S., but how does, how does your model work? Without going into specifics?
Matthew: Yeah, well, I’ll be glad to go, I mean, you could, pull my—in the United States, our regulatory disclosures have all of our fees on them, so it’s not like it’s, I can’t keep it hidden anyway. So, I, until recently, very recently, until this year, I didn’t charge any planning fees, because a lot of people in, a lot of advisors in the states don’t charge [00:49:30] planning fees. And so what would happen is a client would go and they would see me and I would say, “It’s 5,000 dollars to do a plan,” and they would go down the road to somebody selling some insurance product and they would say, “Oh, well I’ll do a plan for free.” And the client didn’t know that quality difference. They didn’t know the difference between a BMW and Chevrolet. They just thought, “Oh. A car is a car.”
And so I’d stopped charging to remove that barrier of entry. And I just put it all in the AUM fee. So, our AUM fee right now, for clients that are less than a million dollars, it’s [00:50:00] 1.5 percent a year. Million dollars and more it’s 1 percent a year.
Neil: And does that include the custodian fee? Do you pay that yourself? [inaudible 00:50:08]
Matthew: Yeah, we pay that ourselves. So that covers everything, and then we’re using index funds, so there’s very little expense inside of those.
Neil: Yeah.
Matthew: Yeah, but that, the custodian fee, we cover that. Right now.
Neil: Yeah.
Matthew: The custodian fees are changing in the states. Right now, it’s a very small dollar amount, but that’s changing.
Neil: Yeah, over here, I think it’s pretty rare that advisors pay a custodian [00:50:30] fee. It’s an explicit cost the client would pay. But we would charge at 1 percent AUM and then the portfolio would be the custodian fee and the fund fee. So probably not the same number that you’re talking. But it’s just paid in a slight, different way. So.
Matthew: Yeah.
Neil: [inaudible 00:50:48] in planning fees now, you said that you didn’t used to.
Matthew: I charged, so now, because I’m not, I’d rather start my time doing my podcast and talking with other advisors, I’m not looking to take a lot of clients on, and so [00:51:00] I’m now charging for my initial meeting. So I’ll still do the phone appointment. Then if you want to do an initial meeting, it’s 500 dollars to meet with me. So it’s, if you want to meet with me, you have to pay to meet with me. I just … I don’t have time to give away anymore.
Neil: Yeah.
Matthew: But that’s because I’m not in a growth mode. If I was in a growth mode, I wouldn’t charge still, because I would want, I would want to play the long game. I’m really not interested in upfront finance fee. I’m interested in a lifetime relationship.
Neil: Yeah.
Matthew: So, I’m okay foregoing a few thousand dollars in planning fees if I get a client that has a million dollars. Now, to have that approach, you have to be [00:51:30] very diligent in your screening. Right? If I was letting anybody in the door for a free financial plan, I would go out of business promptly. Right? So, I would only do that free process for people that met my requirements, which previously were they had to have at least $500,000 of investible assets. Now it’s a million. But that’s part of the reason I wouldn’t charge. ‘Cause I would only meet with people like the heart surgeon. I’m only gonna meet with people who that are eligible for heart surgery. If you’re looking for brain surgery, we’re not even gonna have a meeting together.
Neil: Yeah, which is being very clear on the, [00:52:00] you say niche, we say niche, yeah, your niche, you’re gonna work with it. And the [inaudible 00:52:06] you put on your product, I suppose, isn’t it, to know that. Yeah, we have, I think we’ve had one client disengage in about 8 years.
Matthew: Perfect.
Neil: And that was really early on, due to a difference of opinion on investment philosophy. And that’s gonna happen. [crosstalk 00:52:24] large numbers. And so we’re confident that once client’s on board. That’s my other point, [00:52:30] that part of you that goes, “Well, don’t forget everything’s been going up, so who’s gonna leave in rising when the markets are rising, ’cause they’re not.” You gotta test when the tide goes out.
Matthew: Yeah.
Neil: Isn’t it.
Matthew: Which it will.
Neil: For a period. But I’d like to think that we’ve done a lot of education around using [inaudible 00:52:48] the wording of it [inaudible 00:52:50] not correction.
Matthew: Yeah.
Neil: You know, and then we have lots of, try not to use too many glossy charts because I think if you’re not careful, they become the message then, not you, as [00:53:00] in this will pass. So I was trying to combine those two together, isn’t it really?
Matthew: Yeah, it really is. It really is. Well, Neil, we’ve got just a few minutes left [crosstalk 00:53:10] are there any other questions or yeah the time has just flown by.
Neil: It has, hasn’t it?
Matthew: Any other questions or things I can answer for you? It’s been a real pleasure talking to you today, hopefully this was useful for you.
Neil: It was. It was. Yeah. No, I don’t think so. It was more, yeah, it was the fact that your posts seem very simple. How do you simplify what seems quite complex to deliver it, so you can, [00:53:30] you can work with a good number of clients, but also have that balance of time out of the office and time in the office.
Matthew: Just, Neil, kind of in conclusion. I would definitely recommend pick a time in your calendar each month, maybe a week each month where you don’t see any clients. And what that will do…
Neil: Okay.
Matthew: …is it will force you to become more streamlined in the other three or four weeks of the month. So, my friend Micha and I, we call that a forcing mechanism.
Neil: Yes.
Matthew: You may be familiar with Parkinson’s Law.
Neil: Yeah, yeah.
Matthew: Parkinson’s Law, right? It works in reverse, too. So, just pick [00:54:00] one week a month and say, “I’m not gonna do any client meetings this week,” outside of emergencies, right? If it’s an emergency, we’ll be with a client whenever they need. But maybe the last week of the month. And if you need to be in the office working, then great. And if you don’t, then be out with your family. And then to make that work, you need to get your clients conditioned that you won’t pick up their phone call right away. Not out of disrespect, but because you’re busy helping other clients and you want to be prepared for their call when it comes in.
Those will be your two biggest ones. And then, like I said, streamline. How do you find your niche? How do you [00:54:30] streamline for your group so it’s less customized, it’s less bespoke work, and it’s more streamlined work. While still delivering that ultimate client experience. We always feel as advisors that everything has to be perfectly customized, and it doesn’t.
You know, imagine if we got on the airplane and the pilot says, “You know, hey, I’m not gonna follow the checklist and we’re just gonna arrive wherever we’re gonna arrive.” You would be terrified, right? We want systems in place. We need to have them in our practice wherever we can.
Neil: So, in conclusion, if it becomes a system in our head, which we do [inaudible 00:54:59] outcome. [00:55:00] The concern is that it looks like it is a system. Of course, each client is only experiencing it once.
Matthew: Exactly.
Neil: To them it’s not systematized. To them it’s personalized ’cause it’s their plan with their numbers.
Matthew: That’s right.
Neil: How we choose to deliver that. Yeah. Okay. Yeah. That’s good.
Matthew: And so much of our life is systematized. Even if we think of the highest quality products, right? When I buy a Mercedes, right? That’s a systematized process, right? When I fly first class on an airplane, that’s a systematized process. When I go to see my heart surgeon, [00:55:30] that’s a systematized process. So, we’re systematized everywhere. We just need to do it in a way that’s high touch.
Neil: Yeah, yeah. I like that. That’s good. Thank you.
Matthew: Neil, it was great talking with you. And if you have any follow up questions, shoot me an email, I’d be glad to reply back to that.
Neil: Yeah. Thank you for that. That’s really kind. Thank you for your time today.
Matthew: Yeah, my pleasure. Have a great afternoon.
Neil: You too. Yeah. Have a great day.
Matthew: Thank you, take care.
Neil: Cheers. Bye for now.
Matthew: Well, I hope you enjoyed this discussion with Neil. We covered a lot of ground very quickly as we [00:56:00] always do. I hope like me, you enjoyed Neil’s accent. It’s always fun to speak with people outside of the United States to see how planning works outside of the country. And, as much as I hope that you got a few ideas from this podcast, remember that ideas are worth nothing unless you implement them, right? We have to implement. We all know how to get six pack abs and become billionaires, but knowing isn’t enough. Doing is what counts.
So, if I may, let me recommend two action items from this podcast. [00:56:30] Number 1: Never ever, ever again take an incoming phone call, unless it’s an emergency. Anyone who wants to speak with you must have an appointment. Now that appointment could be for later today, it could be for tomorrow morning, but people must have an appointment to speak with you. This is for two reasons. Number 1 is it will dramatically improve your productivity by not being interrupted, but a far more important having a client or a prospect or anyone scheduled means that you [00:57:00] can be prepared for that call and you can deliver massive value in a way that you simply cannot do if you’re being caught off guard, if you’re being asked to respond to all these questions without any time to prep yourself.
The second recommendations is to put your toe in the water of the one-page financial plan. As I mentioned in the podcast, Carl Richards has written a great book on the one-page financial plan. Tom Gowe has talked about the one-page financial plan. He calls it a financial action checklist for many [00:57:30] years.
But here’s how you can test it. Go ahead and draw up your normal hundred page financial plan or however god awful long it is and with that do a one page executive summary. And when the client comes in or the prospect comes in present both: the stack of papers and the one pager and say, “Mr. And Mrs. Prospect I have created an elaborate financial plan that has an immense number of detail in it and I would be glad to review this with you, page by page by page. Or, [00:58:00] if you prefer, we can look at the executive summary of action steps.”
And again, just present this to the prospect. Let them decide. I will be willing to bet that ninety-nine prospects out of hundred, ninety-nine clients out of a hundred will say, “You know what, let’s just go with the executive summary.” But just try it out. Just try it out. If they say they want the details, then go with the details. An as always, thank you for listening. If you would like an opportunity to be a guest on the Perfect RIA podcast with Micha and/or myself, [00:58:30] please send us a message at ThePerfectRIA.com. Until next time, keep working on your own version of the perfect RIA.
