When Clients Don’t Transfer Assets [Episode 92]

Sometimes we get wrapped up in wanting to compromise, wanting to negotiate, and wanting to make deals in order to help clients—but what you’re really doing is compromising your values. So today, Matt and Micah are discussing why you cannot get caught up in compromising certain things that are actually bringing value to your clients. You will hear them discuss the importance of managing all assets together, as well as how to navigate these tricky conversations with your clients.

It’s one thing to hold the line, and it’s another to communicate your reasons and the massive value behind your policies. Listen in as the guys share tips and ideas on how to handle the various issues you may face when enforcing your policies on transferring assets. They run through the situations that commonly come up with clients when discussing this topic and how you can communicate effectively—and deliver massive value through the process.

Listen to the Full Episode:

What You’ll Learn In Today’s Episode:

  • Why it’s important to manage all of your clients’ money.
  • The slippery slope of negotiation.
  • How to respond to common pushback from clients when transferring money.
  • Ideas on how to empower your client to make the best decisions.
  • Why you cannot make exceptions and how to set expectations.
  • How to prepare and be ready for these conversations now.

Ideas Worth Sharing:

I insist on only doing my best work, and I can only do my best work when I manage all the money. - @ThePerfectRIA Click To Tweet I won’t negotiate because then it’s a slippery slope. - @ThePerfectRIA Click To Tweet They’re going to make their own decisions anyways, so empower them to make those decisions, and they know that you’re not trying to hold anything back. - @ThePerfectRIA Click To Tweet

Resources In Today’s Episode:

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Read the Transcript Below:

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

Micah Shilanski:  Well, welcome back to The Perfect RIA podcast. I am your co-host and co-founder and co-not-as-egotistical-to-quote-myself-in-the-opening-episode, Micah Shilanski. And with me is the opposite end of that, as usual, the legendary Matthew Jarvis. What’s going on Jarvis?

Matthew Jarvis:   I’m doing good, buddy. I’m doing good. I have to confess, I didn’t feel like looking up a good fee quote. And this is really one of my favorite lines. Actually this line came… One of our listeners, one of the members of the TPR Nation, messaged me and said, “Hey, I have a couple who signed with my firm and they said they would transfer all the money.”

                           I’m truncating this message.

                           “And they became a client and they’ve now refusing to transfer half of their assets.”

                           And that quote, the opening quote of this, was actually my answer back. Actually my answer back was, “Fire them.” And then I thought to elaborate a little bit more and gave them that, “I only do my best work and I can only do my best work if I manage all the money.”

Micah Shilanski:  This brings up so many things that we should be chatting about, right? But this is really all focused about… And this isn’t an aspect of saying, “Do it my way or the highway,” per se; it kind of is, but it’s what you specialize in and do you really deliver massive value in everything you do? And if you do, then why would you do any less than that, and I think that is a lot of the confusion that really comes up with other advisors out there.

                           But sometimes, we think or we get trapped up in wanting to compromise, wanting to negotiate, wanting to make deals in order to help the clients; and, really all you’re doing is you’re compromising your value. Now you don’t believe so. You’re making justifications across the board about why you’re not, or this and that, or the trees just turned yellow, or the sky is purple today, or these other things that are completely irrelevant in our conversation. But anytime you negotiate, by lowering prices, by not doing the … you are discounting your value you give to your client, not the cost in which they pay, and that is at your own peril and your client’s peril.

Matthew Jarvis:   It totally is. And it’s also, it erodes your own confidence. If you’re saying, “Hey, I’m not really worth that. Maybe they’re making a good point,” all you have as an advisor, at the end of the day, is your knowledge, is your confidence. So, when you let people erode… this is why it’s so important we talk about graduating clients that are OPEDAS, graduating people that question your judgment, you just can’t have that toxicity. And I’m always hesitant to say that because it feels kind of ‘woo’ to me. And I’m not really into that kind of kumbaya stuff, but that’s really the fact at the end of the day.

                           I want to throw out a couple more details because to give this advisor some credit, she’s a great advisor; this particular client had already transferred over $2.3 million. So, they transferred $2.3 million, but they had another account with an additional million dollars in it and the client’s saying, “Hey, we’re already paying you on $2.3 million and we’re worried about putting all our eggs in one basket. And it’s okay if we have this other million, cause we’re already paying you probably $20,000 or $30,000 a year in fees.”

                           The client says, “It’s not a big deal that we keep this other account there,” and, depending on this advisor’s value proposition, it may not be a big deal, right? It depends on what your value proposition is. For Micah and I, it’s an absolute deal-breaker. And Micah why is that? Why are we so insistent that they transfer all the money? Is it just cause we’re trying to squeeze the last couple of drops of fees out of them? Why is this such a big deal?

Micah Shilanski:  Not at all. And it becomes a big deal because there are so many mistakes that we have seen happen, not only that could theoretically happen, but we can see happen, when we don’t help with control. So one of the things that I tell my clients is, “I only do my best work. And in order to do my best work, we help with everything.” That’s what I say, right? We help with everything. That means your estate planning, your risk management, your retirement income, your investments, and your taxes. We’re going to put our all … the whole thing, and if you decide that’s not what you want, awesome. I totally understand. We’re going to help you transition to somebody else. But if you come in and say, I just want A, I just want B, I don’t want C and D.

                           The answer is ‘no’, absolutely not. There is no possible way I’m doing this whatsoever because it jeopardizes the value I deliver to the client. And it does it in two ways, right? One way that we don’t really think about, when we violate our systems, we don’t do everything we’re supposed to do for the client. When we violate our own processes, when we follow our process of … retirement profits, and I’m not just trying to brag, but it is damn good. We have spent a lot of time, energy and effort outlining exactly what needs to happen to get people retired and get them to stay retired. And when we annihilate that and we do something different, all of a sudden the wheels start coming off the cart and we start having more and more issues. So, that’s what I’d say is the biggest issue, is you’re breaking your process.

                           Number two, you don’t know what you don’t know. So, what’s going to happen? What is that client going to do with that account, with those assets, et cetera? I can tell you a story that a client made a $1 million tax mistake. I kid you not, a $1 million tax mistake. And had they talked to me in advance, we could have avoided $1 million in tax liability, but they didn’t. I fired that client. This is an example that I will share with prospects about why we do everything or nothing is because you don’t know what you don’t know and what we know, we know very, very well.

Matthew Jarvis:   Yep. And for advisors like Micah and I that have been doing this for a few years, we have a litany of these stories. Micah, I mentioned this example of the client that lost a million dollars in taxes, not a million dollars someday, not a million dollars because the Roth conversion; no, that year, million dollars, big problems with the IRS because they didn’t call Micah first.

                           I’ve seen someone… matter of fact, I dealt with one just this month. I had a client who had a 401k account that we couldn’t get rolled over because he was still working. Turns out, there was a misunderstanding when he left our office and he moved it to cash in… well, I’m not going to throw dates in here because this could still become an ugly thing. But, I had no way of seeing that because I didn’t have access to that. So, it was an example of, “Hey, you have this outside account. Oh, I promise I won’t change it. Nothing will happen there. I’ll give you updates.”

                           But now, I’ve got this huge liability. I’m saying, “Hey, the guardrails are X and Y, using these assumptions, and I can’t see and verify these assumptions.” I’m creating a huge liability for myself. But most importantly, I’m creating this huge liability for the client that they could derail their whole process, their whole plan without me even knowing

Micah Shilanski:  That’s correct. And again, this isn’t theory, this is reality. Now Jarvis, before we get too far down, let’s just separate out a couple of things real quick. So, are we saying no matter what, absolutely everyone has to transfer over every single asset right away when they come to hire us? No.

                           We’re still applying the normal standard. Let’s say someone had a TIA crap… I’m not picking on them negative, but just as an example, they had a lot of two-tier annuities, or high penalty assets. We’re not going to say all the sudden, you’ve got to cash that in and move things.

                           Or, if someone’s not eligible to retire, I work with pre-retirees; we cannot move retirement accounts. We’re going to work in those confines because there’s a confine we need to work within. As soon as those confines become removed, and now it makes sense for the clients to transfer assets, that’s the line in the sand. Now we’re saying, “Nope. Now we need to transfer because of A, B and C,” because the rules have changed. It’s the same questions, but our answers have changed because now they’re in a different situation. Now a transfer is allowed and they’re close to retirement distributions, any of those types of things.

Matthew Jarvis:   Yeah. And I think this falls into two groups, I think you’ve got, of course, new clients and prospects who are hesitant to bring over all of their money. And then you’ve got existing or legacy clients who, at some point in your career, you said, “Hey, it’s okay that you have outside assets. I had those for a lot of years.” We need to tackle both groups, and we’ll kind of go after each of them, but they both share a couple of core issues.

                           One core issue is of course, and this is extreme ownership, if the client is hesitant to transfer over assets, it’s because you or me, if it were my client, I did not demonstrate massive value. I did not communicate massive value to the prospect or to the client. They’re not seeing the value of transferring the account over. And this is both a mindset, but it’s just the reality, like, “Hey, why would I pay you in this example of another million? Why would I pay another $10,000 or $15,000 in fees? I’m already paying you $20,000. What else are you going to do?” Which then of course if you follow that down, it’s like, “Well, why don’t I just keep $100,000 with you, and you provide me with all your financial planning advice and I’ll just not pay the fee on all the money?”

Micah Shilanski:  Have you ever had somebody ask you that?

Matthew Jarvis:   I have not had it directly, I’ve read about it in scenarios, which is part of the reason why I won’t negotiate. I feel like it’s a slippery slope. As soon as I say it’s okay that you have some assets we’re not charging on, suddenly, why not all the assets? Why not just a flat fee? Why don’t I just charge an hourly fee that far into that?

Micah Shilanski:  Yeah, exactly. So again, this goes back to, what do you do well? Now, in this message, and I’m going to pick on the advisor… I’m not doing it to be mean, and this is something that Jarvis calls me out on very frequently. It is so easy when something’s wrong to play the victim card and to blame somebody else, and that’s exactly what’s happening. The client won’t do it because this, it violates our original agreement, it’s not because of blah, blah, blah. It’s not what we talked about 17 years ago and three months. And all of this other stuff, that’s there, is really just going back to that extreme ownership, that you need to take ownership in these situations.

                           Either you failed and brought on the wrong type of individual as a client, okay, alright, that absolutely could be the case. Guilty, right here, brought on someone and yet they weren’t that ideal fit, but you thought you could make it work and you really liked them and you were going to do the value and it just didn’t work out even though the alarm bells were going off. Okay. Been there. So you failed and brought on the wrong type of client hoping they’ll deliver massive value that made it so plain and clear they cannot possibly misunderstand why they should transfer the money. I think that’s the only two options, right?

Matthew Jarvis:   Yeah. I think it is. Let’s tackle a couple of these, more specifically how you would address… Because I know you’ve run into this, I’ve run into this… So, a prospect client, whichever the scenario is they say, “Hey, Micah…” Let’s use this, let’s figure this advisor that we gave. You’re in this gal’s example, so they’ve got $2.3 million with you. Let’s say they retire. They’ve got the other million available. They’re saying, “Hey Micah, I don’t think we need to move that million over because we don’t want to pay you another $15,000 in fees. We’re already paying you $25,000 a year, Micah, that should be enough.” How do you respond to that?

Micah Shilanski:  Boy, that is such a great one. It’s just so loaded with… and I don’t run into this now because I have set so many expectations, but it’s such a great question that’s there. The first thing is I’d want to know, “Why?” This is a great thing. Tell me more about that. You want to ask some open-ended questions. What’s the real issue? If the real issue is pure dollar amount, we’re done. But is there another issue that’s going to be there? They had a friend that transferred all their money with financial advisor, they got ripped off and they lost their entire retirement. What is that ‘why’ that’s really there? And nine times out of 10, it is not the money. It is not the cost that’s going to be there. So the first thing I’d want to know, “Well, tell me more about that. What’s your concern, or have you thought about this?”

                           I want to know a little bit more as to where that’s going on, but then I’d want to explain where they’re at and why it makes sense to change. And I’ll say, “Jarvis, you can keep your money there. You absolutely can, just to be clear, it’s your money. It’s your decision. If you want to take this $2 million and go put it over there, you absolutely can. Let’s look at what that would look like.”

                           I would go through an example of how their plan works and how it works in that, in that particular case, what are the pros? What are the cons? Then I would say, “If you moved over here, this is how it would work, and this is why it is better for you to make the move.” Because again, I’m not going to recommend something that’s worse for the client. It’s now better for the client in order to make the transfer. Yep, you’re going to pay more, but you’re going to be able to get these benefits that you don’t have over here. Is that something that you would like, just simple yes or no? And if they don’t like it then, okay, great. Well, you know what? It just appears that it’s not a great idea for us working together and graduate them off and let them go to their greater good.

Matthew Jarvis:   I really like that. I want to pull out one or two things that you said in there, Micah. First, I want to ask, is this a conversation you’re going to have via email or either in person or over the phone, Zoom in COVID world? Is this is an email exchange?

Micah Shilanski:  I am not to Jarvis-level of sending them a random blotter and on it, have to do all the stuff. I would have a conversation. I’m just teasing with you. I would tell them this face-to-face, whether it’s a phone call, a video or a face-to-face.

Matthew Jarvis:   Yeah. I just really want to stress that because you can’t get it in an email exchange. If this was an email, I would respond with, “Hey, you’ve brought up some really good points. I’d really like to discuss this with you in person or on the phone, or Zoom, whatever the case may be. The other one I want to pull out is when you said, Hey, could you tell me a little bit more about that?

                           We are so used to as consumers. If we bring up an objection, we’re going to get nailed over the head with the counter objection. And we don’t feel like we’ve been heard. We’re feeling like we’re just getting sold back. So, when Micah says, “Hey, could you tell me a little bit more about that?” They say “I’m concerned about cybersecurity. I’m super concerned about having all my eggs in one basket. I’m concerned about paying too much.”

                           Perfect. Could you tell me just a little bit more about that? That shows that I’m really learning, listening, which by the way, this is not a sales tactic. I am really listening. I really want to hear what the issue is behind the issue. Maybe they just read in whatever magazine, “Hey, you should push on your financial advisor about fees.” Perfect. So they say, “Matthew, my friend told me I should push on this.” Perfect. Why do you think they said that?

                           And then Micah, I love what you said, I’ve used this before,” a client will say, or prospect will say, “Hey, I can move all my money to Vanguard and pay it next to nothing in fees.” I say, “Great news. You can. And that’s a really great option for a lot of people. How will you handle…”

                           Then, I very carefully because I don’t want to back them in a corner, very carefully say, “Hey, I’ve seen some people do that. And they struggle with deciding how much to withhold in taxes. They struggle with how to invest. They struggle with how to pull the money out.” I want to be very careful not to say, ‘What will you do?’ because that puts them in a corner. This goes to Micah’s example of he didn’t say, “Hey, I think you’re going to lose a million dollars in making this mistake.”

                           I had a client who… I’ve seen people who have, I’ve seen people who have struggled with, so I’m being very careful to not make it confrontational.

Micah Shilanski:  Yeah. And if we’ve gone to… Now again, we do, it’s just kind of the neat part, right? Jarvis does this a little bit differently than I do my onboarding process with investments. Clients are not onboarding investments when we’re pretty much almost through our financial plan. We designed it a little bit differently, so we’re months into this system. And one of the reasons I do it this way is I’ve delivered so much massive value by the time we get there, it’s basically a no-brainer that they see how everything is going to bound together.

                           Jarvis, you kind of lead out of the gate with you’re going to do the transfer. So there’s no wrong way to do this, but the key is what is that massive value that you’re going to deliver? And it’s the only thing that I would do a little different of saying, “Hey, if Vanguard has this, or leave my money in PSP or wherever…”

                           I love that point you brought up, “How would you handle A, B and C?”

                           “They do a really great job.” I’m going to say nothing bad about Vanguard or TSP. And they’re there to provide a low cost on the investment options. Our decision is to treat every client unique and create a customized financial plan that’s just for you, whatever scenario you want. If you feel better in the Vanguard scenario, I wish you the best of luck and let’s absolutely get things transferred over.

Matthew Jarvis:   Totally.

Micah Shilanski:  Empower them to make a decision, and Jarvis, you did that in what you were talking about. It’s their decision to make anyways. Empower them to make those decisions, and they know that you’re not trying to hold anything back. And by the way, if in that call or conversation with a client, they said, yep, I’m still going to transfer things back to Vanguard. And they followed up and asked me a tax question, I’m still going to answer it because my job is to deliver massive value. I’m not going to keep meeting with them on point, we’re going to wrap everything up, but this isn’t a personal vendetta against me. It’s not that they think, “Micah sucks, and his family’s horrible, and I’m going to transfer all my assets because he’s mean.” This is, it just wasn’t a good fit. And that’s okay.

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                           I like them again. We talked about this before on the podcast that when somebody leaves mid-quarter, I don’t try to calculate it down to the number of days in the quarter. Just refund the fee for the quarter, right? You want to leave… do everything you can to facilitate that transfer. Don’t ignore them. Don’t treat them rudely.

                           Again, selfishly as well, I don’t need a complaint to follow up on this. I want them to think Matt, wasn’t a good fit for us, but he’s a great guy.

                           A couple of tools I’ve used in this situation, and I’ve mentioned… it’s the opening quote. We kind of joked about it, but I just tell people, “Hey, it’s just non-negotiable.” I insist on only doing my best work for clients. We don’t have multiple tiers. I don’t have a halfway and not a discount option. I insist on only doing my best work and I can only do my best work if I manage all the money. And what that does is it eliminates a lot of other arguments.

                           “Well, Matthew, will you do two-thirds of our money?”

                           Nope, because I insist on only doing my best work and I can only do my best work if I manage all the money. And that way, the client just has to say, “Well, do I want Matthew for his best work, or do I not want him at all?”

Micah Shilanski:  You know, and let’s take this and I’m going to come up with a theoretical question. I have never been faced with this, so it’s almost like what’s the point of asking it? But, let’s take this example. Let’s say that they’re paying only 1% on the $2.3 million. They’re going to transfer over that other extra million dollars in change. So, they’re going to pay an extra $10,000 in fees. Matthew, what are you going to do for an extra $10,000 a year? I’m already paying you $20,000. So you’re going to get an extra million dollars, extra $10,000 in fees that you’re going to get. What are you going to do that’s worth another 50% more a fee increase?

Matthew Jarvis:   I love this one, Micah, and I’m not sure if I’ve got it directly like that, but let’s say it comes up. I’ve had variations of it. I go back to my original value proposition because if I start segmenting my value proposition, like this is worth $7,000, this is where $2,000, and this is worth $80. I just don’t like to be in those arguments. So, I just go back to my, “Hey, listen, it only makes sense to hire a planner or any professional, if the value they deliver is worth the sum of all their fees.

                           So, with all your assets combined, our fee is whatever it is, right? So in this example, it’s now $33,000. It’s going to be a line item each quarter. And the first calendar quarter, you don’t think it’s worth the money, then we part ways as friends.

                           “Well, but again, Matthew, I want to pay you this. I don’t want to pay this extra $10,000.”

                           Well, then I go back to this again; I can only do my best work if I’m managing all the money. And so you’ll just have to look at that total price, not 23 versus 30, the total price and say, “Hey, is there value what’s worth the fee?” And as soon as there’s not, great, you’re not under contract. We can part ways as friends. So I won’t ever dissect into the pricing.

Micah Shilanski:  I love it. And I knew I set you up for that. And I knew you wouldn’t… we didn’t pre-game this at all by the way, so it’s really kind of fun that way, but with Jarvis and really what he did and we’ll do the same thing at our meetings, don’t go line item stuff. What you do at theoretical value, now you’re just going to get into a discussion on what something’s worth or not worth. The only question is, this is what we’re going to do, and it’s up to you, the client, to see if it’s worth the fee. And if you feel we’ve delivered that value, awesome, we’re going to keep working. But the minute you don’t, we’re going to refund your last quarter fees. We’re going to part ways as friends. That’s it. And that’s where you need to do it.

                           And this comes to the point, Jarvis, about drawing the line in the sand. About where you draw the line in the sand, what’s going to be there. So, let’s just start off with talking about the exceptions to the line in the sand. This would be… and I don’t think you come across this very often because you work mainly only with retirees, correct?

Matthew Jarvis:   Correct.

Micah Shilanski:  So, this would be like someone who’s still employed that can’t do an in-service plan transfer. So, what would you do if someone came to you at 58 or 59, but not 59 and a half yet, they couldn’t do an in-service transfer and most of their money was in a (k) plan, what would you tell them?

Matthew Jarvis:   I have two ways I tackle this. Let’s say they have no money available outside of their (k) plan. It’s all 100%, right? They have $2 million in their (k) plan, none of it is accessible. What I will do, and I’m not convinced this is the best solution, but it’s the best one for me, so I guess I am convinced, I would say, listen, we need to meet together once a year. And I’m just going to charge you $500 an hour. And then, because you’re in the accumulation phase, and when you’re ready to retire, the whole game is going to change because in fact it will. So, I say the whole game will change. At that point, we’ll move your 401(k) account over to fidelity, into an account we can manage, and then we’ll start working on our advisory fee at that point.

                           So, that would be my one… If they have some money that we can manage, let’s say they have a Roth account and they’re really close to retirement, I’m talking two years or less, then I’ll bring that over and every time we meet, I’ll say, “Hey, when you retire, we’ll bring over the rest of the money.”

                           Anything other than that, I’m going to say, “Call me when you’re ready to retire.” If they’re 45, and they say, “Hey, I have a half million, this or that…” Great. Call me when you’re 59. Call me the year before you’re going to retire. I only do this. I don’t do other things. And so you can see some evolution there. You need to put some firm lines on that for your practice and decide where does this make the most sense for you? But to Micah’s point, these have to be lines in the sand. They can’t be things where, “I’ll figure out each one. Maybe I’ll make an exception.” As soon as you start with exceptions, it just keeps going from there.

Micah Shilanski:  Absolutely. And that really is the key and I love that you brought that up about where is that line? Where are you going to take them or not? And setting up those expectations. Now, I will want to tease Jarvis a little bit. If he’s going to meet with me once a year for $500, maybe I’ll just send him my plans to do it for $500. I think that’s a solid deal for me.

Matthew Jarvis:   Totally. That’s why I’ve got to make sure that they’re a 100% qualified, right? And that’s where the hourly fee… I think that same thing all the time. I see hourly advice and I’m like, “I should just hire them to do my work and I’ll take all of the money.”

Micah Shilanski:  So, what we’re going to do is slightly different. We’re going to be in that same camp that you are. We’re going to charge your entire financial planning fee and we’re going to onboard a new financial planning fee, we’ll open up those outside accounts, or those other accounts like Roth accounts, those are not funding it or anything else that can transfer over.

                           But again, we’re getting clients that are on that retirement path and we’re setting the expectations. Now, the expectation, let’s be clear about this Jarvis, is not ‘because I’ve worked with you for two years and I’ve only charged you $500, you owe me your account transfer.’

Matthew Jarvis:   Nope.

Micah Shilanski:  Oh man, that just irritates me. No, the client doesn’t owe you squat. They pay you for the services in which you render. So the question is, what value are you going to deliver? And setting that stage that entire time is really important as you’re getting up to retirement time saying, “Hey, this is going to be our plan.”

                           There will be several times I will leave my money invested in TSP because it’s better for the client, right? Maybe they’re under 59 and a half and we want to take distributions out and I don’t want it to … Sweet, can’t give grief for that. Maybe I’m going to use it as a cash bucket because it has almost a 2% money market account. Wonderful.

                           There’s many ways that we can do it, but we’re going to design it where it’s the best way for the client and illustrate the value that they’re going to have by making an asset transfer and empowering them to know their decisions and to make any decision they feel comfortable. The more you empower them, the more they’re going to feel comfortable following what you recommend.

Matthew Jarvis:   All this ties back to lines in the sand, right? So if you say, “Hey, my target market’s not retirees. My target market are people in their 40s that have outside assets all over the place. Perfect. That’s fine. You just need to have lines in the sand that work for that. So you say, “Great! My fee is $10,000 a year. It’s just a flat fee. And that’s just how it works.” And that’s it. That’s fine. But that way, when somebody comes in and says, “Well, you know this, that…” Nope. This is how I work. I only do my best work. And I do my best work when I charge a $10,000 a year flat fee and we don’t do this AUM baloney, we just charge you a fee so you know what it is. Perfect. That’s great. But you can’t be all over the place. You can’t say, “Well, for this guy, I’ll do…” “Well, maybe today it’s $4,318…” No.

                           Because the client, by the way, they’re trusting you with their life savings. Half of the questions they’re asking you are testing your conviction because you’re not selling them a Ford truck where you can say, “Hey, look at this truck. Let’s bang on the door panels and see that it’s a real thing.” They’re trusting you with their life savings. And all they have is to look you in the eye and think I trust this man, I trust this woman with my life savings. And that’s really what we’re doing at the end of the day. And anytime you waiver on your conviction, they then think, “Will Micah waiver on all his convictions? Is he really convinced we shouldn’t sell? Is he really convinced on this tax strategy?” If he’ll negotiate on fees, what else will he negotiate on?

Micah Shilanski:  Right. Where else is he willing to compromise? These may not be conscious thoughts, but they are absolutely subconscious thoughts that will just ruin your credibility.

Matthew Jarvis:   Totally. And this goes back to things like calling them on time, right? And Micah, you and I, we harp on this all the time and this is kind of a side rent. If I said I’m going to call you at 10:00, then I have to call you at 10:00 because if I don’t have integrity on when I’m going to call you, where else is my integrity lacking?

Micah Shilanski:  I had a return call just the other day with a client. It was scheduled as a return call, so that way we can connect and 10:00 AM, on the dot, my time, 2:00 PM his time, and he answered the phone and he’s like, “Man, this is the most on-time person in Alaska there is. Period.” Because it was when the clock turns that phone is ringing because it goes back to an integrity thing. I love it. Alright, this is getting a little long-winded Jarvis. What do you think about transitioning to some action items?

Matthew Jarvis:   Yeah, let’s do that, because I say again, this podcast is always about taking action and I would say action item number one is put this stuff… we said a line in the sand, I could say etch it in stone, laminate it. You need to just have written down, not in your mind, not in your head, you need to have it written down.

                           Here are the requirements for working with me. You transfer all your assets. You’re at this age, you pay this fee. They’re all non-negotiable. Now, after days or weeks or months, you can revisit that, but not when you’re sitting face-to-face with a client or a prospect. Absolutely non-negotiable.

Micah Shilanski:  Yes. Never pending a negotiation. You never revisit the tools while you’re deciding whether you’re going to onboard a client or not. Absolutely. Totally agree.

                           Number two, be ready for the conversation. When a client says, “Why should I transfer my funds? Why did I hire you? Why don’t I leave it over here? Be ready for that conversation. What stories do you have, what tools in your toolbox and again, use ours, you’re part of the backstage back, you want more information on the million dollar tax mistake, I’ll share it with you.

                           It’s a crucial example of how a client hired an attorney, who is an estate planning attorney, to advise on the state taxes and did not advise them on ordinary income tax and cost a million dollars in taxes that they could have avoided entirely.

                           So, these are things you need to have ready for that conversation. Give examples and empower your clients to make decisions, even if it’s not to hire you, that’s okay.

Matthew Jarvis:   Yeah. That’s perfectly fine. Actually, I remember three. Go back through your existing clients, no matter how large or small your book is, any outside assets that can transfer must transfer. I did this a few years ago. I had one straggler client, one of my favorite clients, really just my favorite people in the world to meet with. They had another account with another million dollars with another advisor, and they saw all the things about fees and diversification and all of this.

                           And I said, “Hey, Mark, you have to transfer this account or I have to resign.” And they said, “Well, Matthew, we’ve talked about this before.” I said, “I know we have and I apologize that I didn’t hold the line before. What was okay then is not okay now. Either transfer or leave. If you decide to leave, I wish you all the best and I hope we can go out to dinner another day.”

                           Now that story, ultimately, they became clients. They moved all their money over, excuse me, but that was not a bluff. It was not some kind of guise, I was ready to walk away from the accounts, I had signed the resignation paperwork. You have to do this and you can’t hold on to them.

Micah Shilanski:  And this brings up another one to make sure that you don’t have any client that generates more than 5% of your revenue because you don’t want to be dependent upon one client that generates 20%. I’ve seen clients that generate 50% of someone’s revenue, which is just scary. They’re living under a constant fear that if that client dies, moves, transfers, et cetera, if they lost, their businesses is now in peril, that’s going to be there. So always make sure whatever you’re doing, and that means raising fees, bringing in new clients, et cetera, what you need to do, no client is generating more than 5% of your gross revenue and this gives you the freedom to make that decision.

Matthew Jarvis:   Related to that, this is going to be a long action item list. Related to that, if you know, you’re going into negotiations like that, look at and really fear-set, I do a Tim Ferriss fear-set, if I don’t get this prospect, if I lose this client, what will actually happen? I know in your mind, in my mind, I think this client will leave and then every other client will leave behind them. That’s not what will actually happen, but when this client leaves and they take their $10,000 a year in fees, what exactly does that mean, so that I can go in there and not be afraid to lose that account. As soon as you’re afraid to lose that account, you’ve already lost it. It’s just a matter of time.

Micah Shilanski:  And this is the power of prospecting by the way, Jarvis, right in the power of prospecting and having constant set of new people coming in the door, it really empowers you to make sure you’re making the best decisions for all of your clients. Because if you have one client that’s a stickler, but they’re generating 5-6% of your revenue that’s going to be there. And you know, if you lose that $20,000, $30,000, $40,000 a year in revenue, I got six more prospects coming in next week and that’s not diminishing that client relationship, just to be clear. That’s empowering you to let you know it’s okay that they go onto their greater good.

Matthew Jarvis:   Yeah. 100% agree. Alright, last action item. If you did not attend the assistants webinar, you go back and attend that. That was an amazing… we had hundreds of assistants from all across the world on that call. It’s available both for backstage pass members, of course, but for the entire nation, you can go on the TPR website and find that assistants webinar have your team watch it. We talked about some great… excuse me, we didn’t Coleen and Victoria, talked about some great stuff on surge meetings and on responding to emails, really quality stuff there. So, again, highly recommended that your team go back and watch that.

Micah Shilanski:  Absolutely. Well like always until next time, happy planning.

Matthew Jarvis:   Happy planning.

Hold on before we go. Something that you need to know. This isn’t tax, legal, or investment advice. That isn’t our intent. Information designed to change lives. Financial planning can make you thrive. Start today. Don’t think twice. Be a better husband, father, mother, and wife. The Perfect RIA. The Perfect RIA.

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