Ron Bullis is the Co-Founder and CEO of Lifeworks Advisors, a modern Registered Investment Advisor (RIA) and technology firm striving to push the boundaries of wealth management. Lifeworks Advisors disrupts outdated business models and delivers personalized solutions to clients and advisors through their modern software platform. After working as a Wealth Management Advisor for almost a decade with Northwestern Mutual, Ron co-founded Lifeworks to help people simplify their financial lives, live “above the grind,” and focus on what matters most. In addition to his work with Lifeworks, Ron is also the President and Founder of The Ella Bullis Foundation, an organization dedicated to supporting families impacted by premature birth and infant loss.
Ron joins me today to discuss the keys to RIA growth through a solid client acquisition process. He shares his principles for building a team and explains why leaders shouldn’t only choose team players based on the revenue they can deliver for the business. He underscores the importance of cultivating relationships with clients based on trust and emphasizes why advisors need to deliver value beyond their clients’ assets. He also highlights how social media and digital platforms can bridge the most challenging gaps financial advisors face.
“One of the keys to building a business is creating a scalable and predictable client acquisition system.” – Ron Bullis
This week on The Model FA Podcast:
● How Ron’s business model and mindset have evolved after coming into the RIA industry
● Ron’s insurance philosophy and how it has shifted over time
● Ron’s success principles and how he and his team grew Lifeworks Advisors
● Building a scalable and predictable client acquisition system
● Growing and scaling a business in the new normal
● Leveraging social media platforms to grow an RIA in uncertain times
● Designing a client acquisition system based on trust and why Ron is passionate about client experience
● Cultivating an enterprise value that serves clients across generations
● Leading a world-class team that adds value beyond revenue
● The Feedback Marketing Method and the difference between fee compression and margin compression
● How financial advisors can communicate their organization’s exceptional value
● The importance of focusing on a specific demographic
● The role of a digital marketing platform in a sustainable client acquisition system
● Book: Delivering Happiness by Tony Hsieh
● Book: Essentialism: The Disciplined Pursuit of Less by Greg McKeown
● Book: The Council of Dads: My Daughters, My Illness, and the Men Who Could Be Me by Bruce Feiler
Our Favorite Quotes:
● “There’s something about meeting an advisor for the first time that has some level of intimidation. If you can soften that by exposing them to who you are, it’s only going to help.” – David DeCelle
● “Advisors who don’t focus on a specific group of people get stuck on making different types of promises upfront and later realize they can’t scale it.” – David DeCelle
● “The work advisors do is noble. We have an important role to play, whether we envision ourselves as a life coach, accountability partner, or co-pilot.” – Ron Bullis
Connect with Ron Bullis:
● Email: [email protected]
About the Model FA Podcast
The Model FA podcast is a show for fiduciary financial advisors. In each episode, our host David DeCelle sits down with industry experts, strategic thinkers, and advisors to explore what it takes to build a successful practice — and have an abundant life in the process. We believe in continuous learning, tactical advice, and strategies that work — no “gotchas” or BS. Join us to hear stories from successful financial advisors, get actionable ideas from experts, and re-discover your drive to build the practice of your dreams.
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President of Model FA, David DeCelle
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Ron Bullis 00:07
Our job is to bring it back up. And we use, right now, a quarterly planning cadence. So each quarter has a focus, inside of each quarter is two topics, so we're digesting these chunks, and we have worksheets and workbooks and checklists. They're not digitized yet, it’s part of the software we're trying to do, but you can relax. Like if you forget about tax planning, my job as your advisor, is to make sure we're having the conversation at the appropriate time. That's what you're paying me for.
David DeCelle 00:41
Welcome Model FAs. David DeCelle here, president of Model FA and very excited to bring our guest, Ron Bullis, on the show. And also excited to have some great quality video as well. So I'll give a plug for that in a second. With that being said, Ron is the co-founder and CEO of Lifeworks Advisors, which is a modern RIA and a technology firm that is solving some of the biggest challenges advisors face today. And we're going to be diving deep into what those challenges are, and what he's doing that's out of the box thinking in regards to solving those problems. They are pushing the boundaries of wealth management, disrupting outdated business models, and delivering personalized solutions to clients and advisors through their modern software platform. Ron, welcome to the show.
David, super excited to be here.
So, Ron, and a member of his team, Skylar, actually were kind enough to fly down to St. Petersburg where I live, brought all the cameras, all the audio, and whatnot. So, for that, I'm grateful. Skyler, if you can hear us, I'm grateful for that as well. So with that being said, part of the reason why I have taken a liking to Ron, since we first met, is we actually come from the same alma mater. So we both started at Northwestern Mutual, and have both been able to experience the independent space. So Ron, if you would be so kind, I'd love to know, how long were you at Northwestern, I guess would be my first question.
Okay. Yeah. So I started, I signed my contract February of 2008. And then we exited November 2, the day after my fourth child was born, we exited November 2, 2016. So I was there for eight years.
Awesome. How did your wife take the move right after she came out of the hospital?
Let's just say that transitioning a financial services practice, in the best of times is, you know, it's work, right? We laugh about it to this day because my daughter was born, and literally a couple hours later, I was back on the phone at my desk in our home office working. And I was joking with her. I was like, well, it's our fourth kid, we've got this figured out. It'll go down in history as one of the things that if I was to rewind and do again, I would try and not have those things happen at the same time.
That’s funny. Now, as you and I both know, and as I'm sure a number of other people assume who maybe had never been a part of the Northwestern, Mass Mutual, Morgan Stanley sort of setup compared to the independent space, tell us a little bit about how your business model and, I guess, also business mindset has changed coming from that environment over to the RIA space.
Ron Bullis 03:13
Yeah, it was a massive shift. So in 2015, I met a guy by the name of Ray Sclafani, who runs a coaching company you are familiar with called ClientWise. And I heard him speak. And he asked a question, he had a series of questions that were instrumental in just reframing, to use his words, how we saw ourselves. So one of the questions he asked is, he has a process where he teaches advisors to go out there and take their top 25 clients and ask five questions. He calls it the ClientWise conversation, and the questions, I'm not going to list all of them, but one of the ones is if you were to go to your best client, or handful of your best clients, and if you were to say, if you were to describe me and the services my team provides to your friends and family and appears in your network, how would you describe me? And what do you value most about the work that I do? And what I would have wanted my description to have been was like trusted advisor, a strategic thinker, financial advisor. And what happened was, and this is not a knock on Northwestern Mutual, but we were viewed as the guys who sold our clients so much life insurance that they never wanted to buy any more life insurance from us ever again. So to talk about the business model, this was the shift. When he asked that question, then the next question or series of questions that was coming through his talk was, does your business model and pricing strategy aligned with the value that you're bringing to your clients. And what I instantly realized was myself and 96% of the advisors in the market have a massive problem here. We give away the one thing that's not replicate-able, which is our ability to think strategically and give guidance. We give that away and then we upcharge for the thing that people can do for free, which is asset management. So we live in a world that's had a couple of trends that have been massive in our space for a while. One, passive investing. I wouldn't want to hang the value of my future business on whether or not I outperform a benchmark over time. But yet that's still a way clients, if you haven't reframed and changed your business model with them, are looking at you. If I'm paying you, oh, one point on my assets under management, and I know I can go to Vanguard or I can go to a robo and do it for 90% less, let's say, how are you making up for that? So what we realized right away was, aside from just the challenges of being an entrepreneurial team inside of a large, very old, very traditional business. Aside from that obvious kind of conflict that happened, clients were seeing us as life insurance salespeople. And there's nothing wrong with that. But we wanted to have a practice where we were getting compensated for the value of our advice and guidance. And so when we left Northwestern, one of the biggest things that we wanted to do was start charging a fee for our planning services. And this shouldn't be a novel concept, because CPAs, doctors, attorneys, pick a profession that does this, we might be the only profession that gives away our intellectual property, and then tries to make it up on the back end. It would be maybe the equivalent of a doctor just making commission on your prescriptions. Think about that a moment. How much would you trust that doctor when he's like, you need to have heart surgery and take these prescriptions. If you knew like, well, that guy makes 50% of, right? I mean, it would just be ridiculous. So what we wanted to do with our business model is to be able to truly say to a client, we are an independent fiduciary, meaning we are going to charge you for our professional advice and guidance. You don't have to invest any assets with our firm. In the independent space, the conflict that exists right now is a lot of independent advisors still give away planning advice and guidance, because they're trying to gather assets. So they're still in a sales business model, they're just not honest about it. They're selling an investment strategy and giving away the intellectual property. We wanted to like flip it.
David DeCelle 06:45
Right. And one of our partners at Model FA, Dan Allison and I, we always kind of riff back and forth, where a lot of advisors in the independent space say something to the effect of oh, no, we're fee only. So we don't make any commissions or anything like that. But commissions and fees are kind of synonyms of one another, just taking a rip off different products and services.
Ron Bullis 07:07
Correct. I did a talk for financial advisor, for a group of advisers through another large insurance company. And I said, how many of you in here would consider yourselves to be financial advisors? And everybody's hand went up. Okay, great. How many of in here would also say that you charge a fee for advising? How many of you would say you're a fee based advisor? Like 90% of hands were up. How many of you in here collected a check, within the last 90 days, for a financial plan or for strategic advice? Every hand went back down. And this is, let's just be really clear. You might be charging a fee for investment advisory services, but you are not a fee only advisor. Because if you're charging for an investment model, that then you, maybe, slightly customized for a client, but more than likely not, it's a model. And part of the beauty of the industry is you can scale a model. And it's a nuance, but I think it's an important one for being able to rapidly build trust with clients. We're in a space, and I'm going to brag about our business model a little bit because I feel passionate. I don't think that the assets under management fee should ever go to zero. So I don't want anybody listening to me talking thinking like Ron thinks AUM fee models are bad. Wrong. We charge 80 basis points, we just have this open architecture now with our clients where we could say something like, Look, if you're a young next gen wealth builder, and you're—I'm 39, let's even roll with somebody younger than me—that's like a 30 year old starting to knock the cover off the ball. And they have no investments, or their investments are in their 401k plan at work, but they want tax work and some help setting up a state plan and thinking about an insurance from a fiduciary perspective.
David DeCelle 08:39
A lot of advisors wouldn't even find them to be attractive.
Ron Bullis 08:42
They'd say, well, we have a minimum of 500,000. I'll give you an example. A couple years back, we brought a client on, a doctor; wife is also a PhD. And they went to their dad's broker. This sounds like a Schwab commercial. And their dad's broker basically said, look, when you get to like a million bucks, go open an account at Vanguard, and when you get to a million bucks, come back and see me and we'll handle your assets.
David DeCelle 09:01
Such a missed opportunity for it, not just to take them on as your client, but overall client experience for their folks.
Ron Bullis 09:06
So we said to them, the things you need with like tax planning and business services, etc. You're in our $600 a month model, $7,000 a year, we handle all that. And they're like, do you have an account minimum? And we're like, no, my advice has nothing to with that.
David DeCelle 09:19
You can build a farm system, but you have to do so in a scalable way so you're not bogging down the system, which we'll get to in a little bit. I do want to ask, being exposed to the independent space when I first made the shift over to consulting from Northwestern, I was like, wow, these folks are barely selling any life insurance. Or if they are, it's as cheap as it can get as opposed to potentially using insurance strategically for tax purposes. Do you find that your, in your transition, that your insurance philosophy changed much? Is it the same thing with just different insurance companies that you're implementing their products? Obviously, Northwestern is exclusive, but how did that shift? If it shifted.
Ron Bullis 10:00
So, it did shift a little bit. I think one of the things we realized was even when we were trying to really not have, let's say, a pushy sales process when we were there, the reality was we had sales quotas, and bonuses. And even if we were managing assets, our payout on our managed assets would be higher if we sold a certain amount of insurance. So there was just this really strong structural incentive to always be selling insurance. And my team was very—I have a business partner—and we were heavily into the family business base and using cash value life insurance, and that was really our main work of what we would do, right. And so when we shifted to the independent space, one of the things that it took us a little while is probably like six of us kind of looking at each other and feeling like there's a compliance officer coming. Oh, wait, no, there's not, we're not doing anything wrong. It took us a little while to shift our thinking, and then we realized how biased we were. Everything essentially was a nail, because we were at the hammer at the time, right? It was like insurance was always the solution. And then the ancillary was, let's manage some assets and grow that over time. So our insurance production has dropped a bit, mostly because we've realized that the solution isn't always hit it with a hammer. Now, where I think we have a unique pedigree in this is because we saw the value of strategic use of life insurance, for instance, and the value could play for long term like business planning or executive benefit planning, we still recommend those strategies when appropriate. But we're not out there hunting for it every day. What we're out there hunting for now is that young, next gen, knocking the cover off the ball person that wants to have a trusted partner, wants to have a subscription based model. And they might be growing into somebody that could use cash value life insurance in the future. So we've just, I still think it's a valid tool, our production of insurance has dropped, but not because we've necessarily changed philosophy on it. Just because we've realized that the business we want to build to win the future is one where we're focusing more on helping people navigate in real time and meeting them where they're at, as opposed to, well, that young professional would have been a term insurance sale, and a disability insurance sale, and then all sort of Roth IRA, and like I'm moving on. And now it's like, those are all things we may or may not do, depending on what you want, but that's not how I'm getting paid. And so a really important thing that I would say to the advisors listening is something my coach has said to me over and over and over again. You measure what matters, and then you monetize what you're measuring. So if you're measuring your business based off of a sales quota for insurance, you monetize it, that's just how it works. So when we shifted how we were measuring the success of our firm, and the success of our efforts, we started monetizing our business model differently; we started measuring things differently. Now it's truly about the number of clients that we're servicing, the number of clients in our subscription model, and then even things like our assets under management. Not that it's not a focus for us, because we're growing that side of the business really rapidly. But that's not the first metric that matters. The first metric that matters is, are we finding people that value having a trusted partner, that want to pay for planning, and then the other things kind of follow from there.
David DeCelle 13:05
So if I remember correctly from our conversation, we spoke a little while ago, so these numbers may have changed slightly, so don't quote me on them. But you guys are at about 120 million, if I'm not mistaken right now. And about 400,000 in planning fees, subscription fees on the annual basis. And a few years ago, when you started, both of those numbers were zero?
Zero and zero.
So I think, obviously, there's success principles along the way, and there's some methods that you use to scale to that level so quickly. Help unpack that journey a little bit.
Ron Bullis 13:39
Yeah. So when we left Northwestern, we didn't have a non-solicit or a non-compete, but my business partner had been there a couple more years than me. So he had just completed 10 years, I was at eight years, but we were so insurance centric that there really wasn't anything of value. And that was a really important first takeaway. And so when we started Lifeworks, we said, we need to build a business. And one of the key components of building a business is creating a scalable and predictable client acquisition system. Asking for referrals is fantastic. Getting referrals is even better. But you could ask nine out of ten people and have them say I'll think about it, or maybe, or well, here's three names, and they don't pan out. It's not scalable, and it's not predictable. Advisors, don't misunderstand me, referrals are amazing, especially from your best clients.
David DeCelle 14:26
Sorry to interject, but I know at Northwestern when I was there, part of the reason why I was able to build a practice over there is because I literally asked everyone for referrals. I find a lot of times in the independent space, it’s the opposite.
They don't ask at all
At all. So did you dial back at all? Did you have kind of that same push for introductions? Did you change anything about that? I'm curious to know about your strategy.
Ron Bullis 14:49
Yeah. So we never, we rarely ever, asked for referrals at Northwestern. And we should have. We would have done 10x production from where we were at, and we were a really hyper producing team. Part of it was both of us—I speak for my business partner too—we always just had a little sense of this isn't about us. And we always felt like, oh, and the way the language was cracked at the time was that we were violating our clients trust by saying, I'm here because of your needs. But then as soon as I flipped the conversation to start asking them for help for me, and so this is not a knock on anybody or the language, but I never came to a position where that I was at peace with that. And so what we did, though, is we said, but we're really okay asking for referrals from centers of influence in the professional space. So CPAs, bankers, property casualty insurance agents became one of our best source of referrals, and attorneys. And so we would ask them for referrals all the time, network with them, and that's how we got into the business space, the family business space. But both him and I were always really reticent. One of our mentors at Northwestern had said, the challenge of asking for referrals is that it very quickly shifts from being about the client to being about you. There are people I know that do this masterfully, and I never, I really never got there. But I do agree most of the people in the independent RIA space probably swung the pendulum too far to the other side and don't ask. We're probably closer to that space right now than we should be. But to the point I was going to about how we grew so fast, we put a lot of time, energy, and effort and money into building a digital marketing platform that we can scale. And so part of it then is when we're investing time, energy, and money in something, and once we got it working, could we be doing both at the same time? Have a structured process for asking for referrals and growing that? We should; it's on our list of things to do. It's one of the things we could do a lot better at doing. But when we also have built something where you're like, I know if I spent $10,000 this month, we're going to generate eight new clients. And we have some pretty good data on what those clients look like now. I can start to actually build a business model around cost of client acquisition, breakeven points, how fast we can scale, things like that. So I would say we should do better over here. But we've kind of got a little bit myopically focused on using a tool or tools, when we were part of a large organization as well, that were really restricted from a compliance perspective. So part of our unique strategy for growth was, if we know that, let's say 90%, I'll just pick a high number, of advisors can't run a unique digital marketing platform; meaning they might be able to send out a newsletter or some kind of pre-canned jargon or put a LinkedIn article up. But we're talking about like an actual sales funnel with landing pages and conversion metrics and drip email campaign.
David DeCelle 17:22
Ron Bullis 17:24
The stuff every other industry is using to generate clients. If we can do that and others can't, that becomes a differentiating point. I actually think that if somebody's listening to this, and they're inside of a large organization, that in of itself is a reason to potentially go independent.
David DeCelle 17:39
Well, when you have David DeCelle shared this article, as well as twelve other people, it kind of—I mean, if I was on the receiving end of that, I probably wouldn't read it, because it's clearly just something that's canned that's sent out and things like that.
Ron Bullis 17:52
Now, that being said, I talk to advisors all over the country. You probably are talking to the same number. There's still a massive gap that exists out there, right? Whether it's because the average age of an advisor is 60 and they didn't build their practice in a digital way, or whether it's because the younger, next gen advisors are still inside of large firms and starting to exit, they didn't build their practice that way. There's still a large gap. It's shifting, but I feel lucky to be in a space right now where we've got a couple of years under our belt of learning digital marketing platforms and landing pages. And we're by no means doing it optimal efficiency; we've got so much to learn. But it is really nice being able to say, here's my budget for client acquisition and growth this year. And is that enough capital investment to get us to our growth number? I couldn't do that a few years back. And that's just a shift of thinking; that's part of what's driven growth. I mean, I've got an awesome team, we can talk about other areas. But one of the biggest challenges I think advisors have today is how do you grow your business in a scalable and predictable way, and I hate this term, but in the new normal? So let's say that whether we agree with our governments, state/local/federal approach to the COVID pandemic, set that aside, how it happened might become the model playbook for the future. Meaning, close the industries, everybody works remote, there's a breakout. Let's just fast forward to flu season next year. And let's say unfortunately, COVID comes back and has variants. If the reaction initially is to kind of close everything down, work remotely, well, what are you going to do then? You're gonna have rubber chicken dinners with retirees? No. You're gonna have networking events with our professionals? Probably not.
You need to be more visible.
You have to build the brand. You have to build tribes. And what's the best way to do that? Well, there's this thing called social media. Everything from, well, I was talking my business coach. He has an advisor that's growing by like a massive number. It’s not even costing him anything. You know what he's using for his networking?
David DeCelle 19:49
Peloton? Tell me more because I haven't come across this.
Ron Bullis 19:53
That’s what I said too, and he was talking about this in the frame of like this person started using it and started hosting Peloton group sessions and inviting friends of friends of friends, until a couple of his clients got Pelotons and they started riding. And then they invited some friends, and the next thing you know, like college buddies from around the country. And next thing you know, he's now built a tribe.
David DeCelle 20:13
Well, it's good to be innovative in time to change like this. And one thing you were talking about in terms of making sure that you have the proper sales funnels in place, you're building your brand, things like that. Even, I was talking to a client today, I'll give him a shout out, John Evans. And one thing that we're working on with him that I have all my clients do, which is at the beginning of every single meeting, every single first meeting, I should say, at Northwestern we called it our approach. So it's who we are, what our philosophy is, what our planning strategy is, how we're compensated, all that type of stuff. And you can even tell with my demeanor that I've said that so many times that I've lost excitement.
Hang you by the bottom of your toes, and you're still gonna say the same language.
Exactly. So, it's one of those things where when you say that over and over and over and over again, it's tough to bring that same amount of energy. So you're naturally going to be a little bit more blah, after repeating yourself all the time. That’s no way to start a meeting. Number two is you're spending 10 to 15 minutes at the beginning of the meeting just talking at them. I don't think that's the appropriate way to start a meeting. So, what I have my clients do, I don't know if you guys do this already, but why don't you capture that in a video that you shoot once, and then you send it to the prospect. And you say, hey, really looking forward to our appointment later on this week. In anticipation, I have a quick six minute video for you, goes through who we are, what our philosophy is, what our process looks like, and what to expect in the first meeting. And if you have any questions, feel free to let me know. And that solves a few different things. Number one, it saves time at the beginning of the meeting so you can actually build a relationship with people. Number two is, it gives them exposure to you from afar, so that they're building a relationship with you, having yet to meet you. And number three is, if they don't like your philosophy or your process,
They're opting out.
they’re going to cancel the meeting. And so rather than wasting an hour with them, or more, you find that out before you even have them in the office or have them on the Zoom meeting or something like that. So integrating video in multiple different steps of the process, even when you send the financial plan to them, why not, let's say one of the spouses wasn't able to attend, do a quick screen share, walk through the financial plan, give that other person a voice and the opportunity to chime in, but walk them through it with your voice as opposed to just sending a 20, 30, 50 page document to them. So that kind of segues well into client experience. Have you ever read the book, by chance, Delivering Happiness by Tony Hsieh?
Based on your passion around client experience, which we'll talk about in a second, I would highly recommend that. It's probably my most recommended book that I've read. It’s, to sum it up in one sentence is, making sure that every time a customer/client/prospect interacts with you, it feels like it's their birthday. Think about how you feel on your birthday. So, one thing about client experience that we talked about when we had our intro call before we met today was that it's kind of fragmented a little bit, or it’s not scalable in most advisors’ businesses, and it's not something where, or I should say it's something that they always have to think about, like, what do I do, as opposed to being built as a part of the process. Help me understand how you think about client experience, and why you put so much importance into that in your business?
Ron Bullis 23:37
Yeah, so a couple of things. And I'm gonna unpack it by coming back to the idea of sales process, and then I'll get to the client experience one. So I'll give it a two part answer to this. So when we started marketing online, and when we hit the accelerator to grow, the marketing ended up working really well. But we ended up failing very quickly. Because what works as a sales process when you're one to one in person—and when it's you, you can overcompensate for a terrible sales process when you're in person with somebody because you can build a relationship and rapport and body language, all these things. It doesn't scale. It's very difficult to train other people how to be you. In fact, I think that’s one of the biggest reasons why people fail out of the industry is because they're trying to emulate somebody who they're not, as opposed to being taught how to actually, in a very natural way, express the why this is important to them. So we turned our digital marketing loose. I was actually in London at the time with my wife for our anniversary. I come back from being gone a week and one of my partners, and he's laughing, he's like, you have thirty appointments on your book for next week. And I was like, from where? And he’s like, well, we turned on the market platform. And I'm like, just in Michigan? He's like, no, we decided to go nationally. I'm like, can we do that? Look at my other partner, I'm like, can we market nationally? He’s like, oh, yeah; I’m like, we’re good, we’re good. And what happened was we started approaching those initial conversations with old way of thinking. We got on, we bullshitted for fifteen, twenty minutes, and we were losing opportunity after opportunity. We weren't getting them through. And so I stepped back and I call my business coach. And I said, what do you think is maybe happening here? And he goes, you don't have a defined sales process. And I went, well, yeah, we do. We’ve got a first call, we've got a second call, we've got—he's like, no, no, no. He's like, you need to think about every step of the way, and map it out.
From email confirmations to…
And that's also what really turbocharged our thinking around client experience. So this would have been late summer of 2018, when we just started having an explosion of prospects on our marketing platform, and we realized that we didn't have a sales pipeline management process and a sales process in place that would actually allow us to grow like that. We were used to picking up one client a month or two clients a month. And now we were trying to onboard twenty. It broke. So we had to step back, and I brought somebody into our team who's now been with us since then, whose background was in process improvement and pipeline management. And we've done this twice. We're doing another revision exercise on it right now, which is, how do you make sure that everything from the moment you're presenting who you are to that prospect to leading up to your sales call. You mentioned sending video; we send leading videos like this, we send emails, we want them to have four, five, six, eight pictures of us and interactions with our brand before we get in our first call.
David DeCelle 26:24
Yeah, I mean, whether someone's male or female, rich or poor, old or young, there's something about meeting an advisor for the first time that has some level of intimidation. So if you can soften that a little bit more by exposing them to who you are, it's only going to help.
Ron Bullis 26:42
I couldn't agree with you more. In fact, Tim Ferriss had one of the founders of Airbnb, I think Joe Gebbia, on his podcast couple years ago. I think it was him, there’s two founders. And he mentioned something that was also a catalyst for this thinking. So maybe it was three years ago, now that I listened to this one. I would definitely go back and try and find it; I’ll send you the notes if I can. And he said, imagine trying to design a system to get two strangers from maybe the opposite ends of the world to trust each other enough to share their house. And it was the first one we did failed, because we didn't design our system for trust. And so I started asking my team, the question, what do we have to do to design our new client acquisition process, our sales process, to build trust rapidly? And we're a long ways from having all these things answered, but this is now a repetitive process. How can we make this a more engaging, more trustworthy process? So the sales process is one that I wanted to piggyback on kind of that last segment. So let's get to the client experience. Why am I passionate about it? Our industry, I think, has adopted this DMV, Social Security Administration-like acceptance of the client experience. A couple of things. One, the industry, let’s say it's 100 plus years old, is mostly rooted in a sales process tradition. So early stockbrokers after World War II, kind of the idea of retirement came along, mutual funds were created, financial products were then created to sell to people. Fast forward to today, and really, it's been maybe a decade and a half or two, depending on who you talk to, of this idea of charging a fee, advisory business, financial planning, AUM. But when we still look at the system, structures, and compliance that sits around that, it's approached as if we have to treat it like health care. They've got to check all these forms, we've got to make sure all the KYC is done, everything's designed at the firm level. And this is my opinion, I could be wrong. So people can throw rocks at this. This stuff is designed and our pedigree is designed to make sure we don't get sued or have an issue at audit with say the SEC or our compliance person. And there's nothing wrong with being compliant. In fact, I think having a really highly compliant practice is the key to being able to push the edges and other areas, but when you follow your client experience from a process of how do I make sure that I don't get the compliance officer mad or that, what ends up happening is we adopt this, like, you have to sign all these forms first. So we started looking at it saying what industries have been massively disrupted by a shift in client experience. And so we've used three as examples. The first is Netflix versus cable TV. Okay, that shift that happened when Netflix came out as originally a subscription, right? They would mail you DVDs, mail the envelope, you mail them back. They put Blockbuster out of business. Then they eventually made—I mean, cable companies are still around, but there's more subscribers on Netflix now than there are people who have cable. What's the difference in the client experience? Well, it's immediate. I want to watch 24 hours of whatever the show is, I can just—it's personalized. I now get to decide what I want to watch. So it's client driven. It's the consumer driven. What does that look like in our industry? Is our industry immediate? Like at the advisor level? Well, for advisors listening, here's a simple test. If I was to go to your website right now, can I become a client right now? Or do I have to fill out a form and you are going to call me back on your time? This is a big one. We live in a world now that next gen wealth creators are digital natives, which is kind of a term that gets thrown all the time. We are used to downloading anything and everything we want in the immediacy and binge watching it if we want to do it, or interacting with it like this. People don't put down their preferences for how they want to engage with something just because they're engaging with a different industry. Our industry has just kind of said, well, you need us. Well then the robo advisors came along and we went, no, they don't. And consumers still said, yeah, we want advisors, but the process is terrible. So there's a report from Ernst and Young, their 2019 Global Wealth Management report. If people are listening to us and they haven't read it, just Google 2019, Ernst and Young Global Wealth Manager report; read it. In fact, I really hope they do another one in 2021. It's a survey of like 4500 Wealth Management clients globally. Here's a couple of key takeaways: 80% of clients said they wanted more personal advice and planning, but half of them are sitting on the sidelines. Why? Because they didn't trust the structure of the fees they're being charged were fair, and the technology and experience was lacking. That's the summation of like forty pages of really, really good reading. So from a client experience perspective, why we're passionate about this is, I think the work advisors do and the work that my team does is noble work. And I'm taking this a little bit from Ray Sclafani and from other leaders in the industry, but we have a really important role to play. Whether we envision ourselves as more of a life coach or an accountability partner, or a decision maker copilot kind of role. When people get ready to make the biggest decisions of their life, or when they face some of the worst events in their life, like the loss of family member, or the loss of a business partner, we are wired to have human interaction. We want somebody sitting there helping us think through and making wise decisions; and our focus then on our client experience is, how do we start to remove these points of friction and these DMV-like experiences? So the first thing we said is, we have to figure out how to make our system be immediate. And by that, you have to be able to become a client of mine at your time and your choosing.
David DeCelle 31:47
So tell me more about that. Because one thing that you'd mentioned on our call is that a lot of what advisors actually do is, or their team does, is input data. And in order for the various software programs to work, it needs to be manually entered. And you have a different philosophy where you say no, actually have the client do that work. I feel like the majority of systems and processes that I've seen, do have some level of functionality to where the client can input something, but it's clunky, or it's web based, whereas everything's on our phones, so what are you doing now to solve that?
Ron Bullis 32:29
Yeah. So as we started to dive into this client experience thing, we went out there and did 200 plus software demos. That was part of starting the RIA as well. We were like, we're finally free of this big company that has kind of “okay” software, and we get to just build our own tech stack. That was the first—I hear this all the time, like, well, I get to build the tech stack. It's one of the challenges that a firm has to solve is this idea of a tech stack, meaning when you and I were talking about this, I said just think about the average life of an advisor right now; the average day of an advisor. They take data from you in whatever form, whether you've emailed them or text them or phone call or something like this, and it goes into our CRM. We then have our CRM, maybe, using some API's or connected to our document generating software. And that might be connected in some way to our custodian, and then back to our CRM. And then that might be connected to eMoney or RightCapital, or whatever our planning software is, that might be. And so when I talk about this immediacy thing, the clunkiness comes in, is that it's actually, it's advisor centric, advisor driven; meaning the advisors have to run the software platforms, and the advisor is the one that has to drive the timeline. Clients outside of our world are saying, well, I'd like to just put in my data and upload my documents at two in the morning when I get off work, or on the weekend, right? So they're in a world right now—and we are to—we want it when we want it. Right. So what we started to do to fix this is we said, what do the robo advisors do? And what are they doing really, really well? Because I think the traditional wealth management industry and advising space has kind of said, well, that's just for people who really don't want advisors, or you know what, they're never going to financially make it because you can't scale it at 15 basis points or 25 basis points. Now that argument’s been like settled; they're here. And there's thousands of them. And maybe they're all having their own issue now of how do they actually add value because there's thousands of them. But what do they do really well? Go to Betterment, go to—
David DeCelle 34:22
I would say onboarding. I have a Betterment account, but I could—
Ron Bullis 34:24
You click a button. It's three minutes.
Yeah, I could do it right now.
—you’re a client, you link your bank account, you transfer assets, your ACATS processed, and you're moving.
Hey, Model FAs. I know you're enjoying this conversation. But I wanted to take a quick break to talk to you about the Model FA accelerator. This is a unique collaboration between us and you, where we help you build a financial advising practice that you can be proud of. We focus on the foundational concepts around how to pick a niche or a specialization, how to price your services, how to construct an offer that people are going to buy, and then how to market it and sell it in a way that will get people to sign on the dotted line and become clients of your firm. All while giving you the information to scale and set up workflows and operational processes that will allow you to reclaim your time and build a practice that doesn't run you. So if you'd like to hear more about that, go to www.ModelFA.com/accelerator, or www.ModelFA.com. Hover over Work With Us and click on Accelerator. Hope to see in the program.
We said, does that software exist for a financial advisor? And there might be people watching that's like, oh, yeah, there's ten of them. Okay, maybe there are. But when we did 200 plus software demos, and we looked at the best software platforms out there, most of them solved one problem. And then we had to connect six or eight other ones to do the whole process. And it was me doing it. In our business, the most expensive thing on a firm's P&L is human capital. The biggest challenge our industry faces right now, when you talk to leaders and CEOs in the space, is attracting and retaining amazing talent. So we said, we have to build a software platform that allows our clients to onboard 24/7, and it has to be collaborative. So if they want me to type in the data from gathering it from their spouse, their partner, a document, great, I can do that. But if they want to type it all in, they're gonna do it way faster than I am anyway, and they're going to catch all the errors. So we built a digital onboarding tool. That's the first thing we set out to build, which is like, you want to become a client, great, I'm on the phone with you, I send you a link, you create it using a password. And you digitally sign or ADD our financial planning agreement, and you start onboarding. And then we went into like, well, we charge a fee for planning. So we have to figure out how to get the credit card or the bank account information. So we had to build a credit card processing. So we're on this journey right now, and I'm happy to talk more about our software platform of basically taking all of the manual processes that we were doing as advisors and looking at the best in the robo advising space, and even outside of our industry from a digital client experience and speed and saying, what can we learn from that? How can we bring that into our platform? And then we're going to digitize the entire client experience, from onboarding to billing to opening investment accounts to delivering financial planning advice and guidance; all that stuff has to be rethought and has to be built from the ground up. Because if you build a tech stack, you will find yourself as we found ourselves in 2018 and early 2019, with twelve different software platforms, constantly trying to make sure that my eMoney records were consistent with what's in my CRM and matching the custodian, and it's not scalable.
David DeCelle 37:30
Throughout that description, you were dropping a couple clues, or hints, I should say, in terms of your team makeup. So as I work with various RIAs throughout the country, their staff is somewhat predictable. They'll have a CIO, maybe a CMO, they'll have their client service folks, obviously their advisors; your staff makeup is totally different. So the last number that I have here is that after three years, you have nineteen people at the firm. And maybe that's higher since we chatted, but; and five of those at the moment, I know you got big aspirations moving forward in terms of additional advisors, but five of them are client facing advisors. So that means that there's fourteen folks that don't work face to face with clients. But not all of them are client service folks, they're just a different makeup. So tell me about your team makeup and why you're investing your dollars into those.
Ron Bullis 38:32
Yeah, and I love this question. And I'm going to pick up where you just left off. I'm investing in the future of my business. And for Marty Bicknell, who's an investor in our company, and Marty is the CEO of Behringer Wealth Advisors. When you walk into his office in Kansas, he's got a monster statement on the wall, and it's simply: clients first, associates second, shareholders last. And when we're in an industry that rewards people for being really good salespeople, what happens is you go from a starting advisor to maybe you're really good at sales, and you start making money, and then you hire a staff person to do some of the stuff you don't want to do. And you grow some more and you hire another staff person, and then another, and then maybe you hire somebody to manage your staff people. And that's not investing in the growth; that's investing in what's already there. It either becomes a flat organizational structure where you've got like one person, and like twenty across like this, or it becomes very hierarchical. And you've probably seen this even more than I have, because you consult with advisors, is they'll say things to me like, yeah, but Ron, you're giving up so much of your income. You guys manage 120 million of assets. And then I'll openly tell people what my salary is, and they're like, well, yeah, but I'm making five times that managing 100 million of assets. I'm like, yeah, what's your enterprise value? And what are you building to in ten years? And do your clients view the value of being a client of your firm and your team? Or do they view the value of being a client of you? Because if it's you, you’ve got a problem. Now, you could have a great lifestyle practice, get really clear on that. I'm going to basically make as much money as I can and be profitable on a self-employed basis. For those of us that wanted to build enterprise value and build a firm and serve our clients differently across multiple generations, if you want to build something with enduring value, enterprise value, you want to serve clients and their kids and their kids, you have to invest for the future. So a great example is Skyler, our business director and videographer. We believe that we needed to do video really, really well to win the future. Okay, so I said, we're going to have to lay down the cash to hire somebody. Because I could contract with somebody, but if this is a commitment to doing communication—
David DeCelle 40:32
So one foot in, one foot out, if you take that approach.
Ron Bullis 40:36
So we've kind of been taking it this way. So we started by hiring people that were really good in creative space; we expanded our investment team to be able to serve the client. So we've taken an approach with growing our team that we're not just hiring somebody because they can generate revenue. That's a massive mistake I see firms making. They look at like the revenue per headcount number as one of their key metrics. And don’t get me wrong, we have to be profitable to keep running. But we also have to think about the investments were making in our firm and to grow something of enterprise value, to build a team that clients want to interact with, not just you, you have to invest. And so we've got an interesting amalgamation of talents. We've got two guys in our team from MIT. One of them is our Chief Data Science, one is our VP of investment strategy. We've got a professional futures and options trader from the Chicago Board of Exchange. We've got a guy to the institutional investment space, who is our VP of investment operations. We've got a UX UI designer; we've got a creative director; we've got a videographer slash Business Development Officer; we've got five software engineers. So what we're doing is we're also building the technology side out for our business plan of bringing advisors onto our platform. But even before that, I was just looking out there and saying, who do I need to have on my team to win? And what is the world gonna look like in five years? Because I want our clients of Lifeworks to love interacting with me. But I had to set my ego aside and say whether I get hit by a bus, I die, I have to evolve my role in the company, I can't always be there for the clients I'm serving unless I build a world class team. And then the question is, what does that team need to look like? And that's always going to be a little bit of a different answer for every advisor. But I would say don't fall into the trap of hiring essentially a glorified secretary. Hire ridiculously smart people that are way more talented than you are, pay them insanely well, figure out how to give them a share of the ownership, which I'll happily talk about our partnership model, and then let them run. Let them go and do amazing work for your clients, and you will build enterprise value faster than any way of just in a traditional model.
David DeCelle 42:38
Well, it’s cool to see someone in our industry, who is really embracing the fact that you're a software company and a media company that happens to provide financial advice, whereas everyone else provides financial advice and tries to put the pieces of the puzzle together with everything else. So it's cool to see you flip that around, and do your best to be loud in the industry, so that people are aware of who you are. And then also, after doing 200 some odd demos with tech platforms being like, alright, screw it, we're just gonna do it ourselves.
Ron Bullis 43:10
Yeah. And you know, there's a lot of great software out there. In fact, the one challenge we're facing now is we started at zero and just built everything from scratch up. There are other software pieces that we're still using that solve a problem really well. And so our biggest challenge now is eventually going to be saying, okay, which one of these ones do we think it's the most important for our clients’ benefit integrate to. Because if you go back to the powerful idea of always framing it’s client first, it’s advisors and associates in the firm second, and it's me as a shareholder partner last, that doesn't mean I should ignore enterprise value. But what it means is, well, if our clients are really telling us they want to have estate planning, like we just started working, and this is a plug, I get no money for this. Vanilla. You run across Steve Lockshin’s platform for digitizing estate planning. So for advisors listening to this, go check out justvanilla.com. It is a really beautiful way of offering estate planning services to your clients in a digital environment. It's genius. I mean, he's taking one of the most boring industries that exists out there and trying to figure out how to help us live it. So if our clients tell us like, hey, that's the next most important thing, then we're gonna build to the things that our clients tell us are the most important things to them. But all the rest of it in getting started was just a matter of saying, we need this to actually just work at scale. And we need this to be client driven. And so we started at zero and went from there.
David DeCelle 44:38
So one thing that just made me think of it when you brought up estate planning is, so one of our partners, as I mentioned earlier, Dan Allison, he has a process called, or a methodology I should say, called feedback marketing; essentially a comfortable approach to getting referrals. And actually, we got two videos that outline the exact process. I'll send you a link as a thank you for—
As somebody who also needs it.
Yeah. So it's really three main components. So it's gathering feedback on the front end with pinpointing questions that can be recycled, depending on the stage of the client relationship, or we had folks who recycled the questions to be more towards their response to COVID in the market volatility last year. So the whole idea is getting feedback. If you stop there, that's valuable in and of itself, because you're either gonna understand what you did for them that you didn't realize that you did, so that you can do that with everyone else, or hopefully, they'll give you some sort of constructive criticism so you can continue to evolve. So you get feedback from them, making sure that you follow back up with them, let them know that you're working on whatever the constructive thing is. Don't just say, hey, thanks, and don't do anything with it. So, come full circle. The second component is, similar to what you said at the beginning, which is reminding them of the various services that you offer. And the reason why I said based on what you said at the beginning, where when you're at Northwestern people viewed you as the life insurance person, even though you may have helped them in other areas, you're kind of pigeon holed into that. So for example, if they had someone in their world who just got an inheritance for a few million bucks, they may not think of you because they didn't necessarily have that same experience with you. So making sure that you're reminding them of the various services that you provide. And the third component is actually going in and asking for introductions. So that's his methodology. So I'll give that to you as a thank you. But I guess the topic that I want to discuss now is I have the stat here that you had mentioned. Did I take this note right? TDFA…
TD Ameritrade FA Insights study.
Insights study where 96% of advisors’ revenue is generated off of AUM fees. However, that list of services that, that step two that I just mentioned, has 10, 15, 20 different things. So essentially, a lot of advisors out there are saying how important all these things are, and yet all their revenue is coming from one spot, and they're giving this other stuff away. So that's just me tossing that topic out there. Feel free to take that in whatever direction that you want.
Ron Bullis 47:00
This is a really important one that—there's a couple of things here. One, there's been conversation a lot in the industry for the last couple of years, and it still exists, about fee compression. I don't think it's necessarily fee compression. And I've talked to some CEOs of some really well run large RIAs, and they're like, yeah, it's not fee compression; what we're actually seeing is margin compression, because our clients are wanting us to deliver more and more value for the same revenue. And when value is not an issue, price is never in question. So when your clients only know that you're monetizing, or that your value is tied to the value of their assets, you might not be thought about as the person that they want to bring in to help them run a multi-generational family meeting. You might not be the person that they think about having a first seat at the table when it comes to exiting their business. When I was at Northwestern, certainly if somebody had a relative or even they came into a lot of money, I probably wasn't the first person they thought of like, oh, we should go talk to Ron about how do we invest this? So it's a really, really important thing. And one of the things that's mentioned in that study is that firms that don't align their business model with the actual value they provide, are handicapping themselves from growth. And so here's the question that I give that I would give advisors, and I'm just doing this challenge for myself. Right now, there's a book called Essentialism by Greg McKeown, it's an awesome book. In it, there's a quote, and it goes something like this. So I'll just paraphrase it, say it's a rough quote. We live in a world where the reality is that very few things are exceptionally valuable. And then he goes on to say, John Maxwell has even stated something like, we cannot overestimate the unimportance of practically everything. Here's the question, what is the one thing—or what are the top one, two, three things—that you do for your clients that are exceptionally valuable? And if you think about a blank piece of paper, and then you think, okay, what is the one thing that I do for my clients that’s most exceptionally valuable? Write it down. So think fast exercise. Your second question and to follow that up is, is how I price my services in line with that?
David DeCelle 49:04
I imagine a lot of people will say strategic thinking, will help envision it out for them…
Ron Bullis 49:10
There for them, I help them make decisions around all their life events. I don't think the average advisor, because I do believe most advisors really, truly want to do what's right for their clients, I think we sometimes get painted as like a used car salesman-esque type of role, no offense to use car salesmen. But I think that we get framed, to use another on of Ray Sclafani’s terms, or kind of painted into a box, right? And part of that's because we as an industry haven't done a really great job communicating what the exceptional value is that we provide. And I don't think the average advisor is going to say the exceptional value they provide is their investment model. If they do, I would tell them then stop being a financial advisor, open your own fund and be a money manager. Let's not kid ourselves. So this is a challenge that I take my team through. And when we started becoming a digital content creating entity, and now a software company, we have to step back and say, and we're in this frame right now doing it, what is the thing that's most exceptionally valuable that we can do or deliver? And that's just a good exercise to constantly be in. So with that in mind, when we looked at all the things we were doing, we said, okay, we need to build a services and deliverables matrix and then align our pricing strategy to it. So if you go on my website, this doesn't mean I think it's right or wrong, this is just what we've adopted, we have four pricing levels. And each pricing level is a monthly subscription that starts at $100 a month, $300 a month, $600, and then we have a custom, we call it our family office.
David DeCelle 50:34
So there's everyone who comes into your business, they pay a fee, no matter what, and then maybe they bring the assets on the platform if they have any, but to work with you, pay a fee. No questions asked.
Ron Bullis 50:47
Correct. Yeah. I mean, they ask questions because it’s still new, but I know what you mean. Yeah, no, we took the position that for us to actually do the work we need to do, even just with helping them make an investment decision. If there's not a really well thought through, clear written, financial plan or strategy, how are we actually making an investment decision? By having you take a risk tolerance questionnaire? And maybe today you don't feel great about risk because something bad happened in your life?
David DeCelle 51:10
Now, at what stage of the process are you charging them the fee? Before they meet with you? After the first meeting? When is it that they're actually forking over the money?
Ron Bullis 51:18
Yeah. So, I mean, we might have two or three, what we would say, prospecting calls. Somebody attends one of our live webinars online, somebody meets us, somebody gets referred to us. We absolutely will have a call and say things like this: what are the most important things or challenges that you're trying to solve right now? And then we let them talk. And then we say, and if you don't solve these challenges and issues, what does it mean to you and your family? And then we let them talk. And then we say, based on what you're saying, I think we could actually help. And here's how we operate with our clients: we charge a fee for planning, and the idea is that we bring the strategy first. And then we bring products and systems and investments second. It allows you, Mr. Prospect, to understand how our team works, and to probably solve what your biggest challenge actually is, which is you don't have a plan. They show up thinking that they're worried about the market, or not having enough money for retirement, but what that means is they don't have a plan. But if I just told them right away, well, you don't have a plan, they'd be like, well, I have a plan. It’s like, okay. So we have to frame it this way. So we might have two or three prospecting calls. The biggest difference though, is we're not delivering any planning and advice until they acknowledge the ADV and sign up for financial planning, and we bill them on the spot. We bill in advance.
David DeCelle 52:33
So you're just asking questions, essentially, the first few meetings.
Ron Bullis 52:37
We're letting them ask a couple of questions, but generally speaking, we'll tell them, look, we're happy to have calls and emails and swap questions. But our goal is to understand really clearly, as fast as humanly possible, what are the biggest challenges and obstacles that you're facing or that you're worrying about? Do we actually think that we can help with those things? So this is another maybe key, a free takeaway here for advisors listening: you're not going to solve every one. Get really, really damn clear on where you add value, and go as deep as you can there. What that means initially, is advisors are like, well, I'm going to alienate a bunch of people. If I'm really good at working with CPAs, or business owners, then what about the executive that comes in that has money? Our biggest flaw we make in the industry is we try and take on everybody and we become everything to everybody.
David DeCelle 53:20
I was saying to Skyler before you got here, and advisors who don't focus on a specific group of people, essentially, what they get stuck doing is they make all different types of promises to a bunch of different people on the front end, and then they realize that, okay, I can't actually scale this because all the practice management involved, and the delivery of those promises are all different. So you can't have the systems and processes in place to actually scale to the proper level.
Ron Bullis 53:46
And this is where back to my point about having a digital marketing platform or some kind of sustainable client acquisition system comes in, because in my little network in Grand Rapids, Michigan, maybe it's a 300,000 person town. I might say, well, there's 1000 of my perfect clients there. But I've got to fight with the 5000 advisors in town for them. But there's 3 million of them nationally. My pool for clients that are perfect, ideal clients increases significantly when I expand my vision of where those clients can come from. But it does mean you have to have defined processes, you have to have the ability to replicate this in a digital environment. I mean, there's things there. So getting really clear on that is important. We're guilty sometimes of getting, you know, bringing on a client and being like, yeah, they're really great person, but I don't know if this is going to be a great long term fit. So for us, the charging a fee before we provide any advice and planning helps in this regard, because we're asking the client to do an assessment of do I think these guys are worth it? Do I think that what they're saying is actually what I'm looking for? And even though it's like a baby step, if they sign up for the $100 a month plan and we're doing like cash flow and taxes and retirement planning, it's not a massive commitment on our side. It's not a massive commitment on their side. Oftentimes, they end up accelerating—
David DeCelle 55:01
—you guys get to date each other for a bit. Now, do they, I guess to get somewhat technical, technical is probably too strong of a word. But, do you require folks to pay monthly? Or do you provide any volume discount for quarterly or annual payments?
Ron Bullis 55:16
So no volume discount; I feel like our pricing structure already has chewed just about all the fat off the bone. I mean, if I'm delivering a financial plan and a family strategic document, which has their values and vision in it, if I'm delivering that to somebody, say, four to six weeks into the relationship, which is about the time when we target having the drafts of those done, and they paid me $150, there's not like anywhere for me to discount to because I'm still way underwater. Now, if they stay a client at that $100 a month level for a year, 18 months, and there's a long term relationship that does turn and we can be profitable on that. But part of this is we just said, you know, we had an opportunity and lost it today because the guy wanted to pay annually. And we're like, we built our system to do monthly billing in advance, and it's automated. And as much as I'd love to have you as a client, I really just need you to pay your monthly on your credit card or your bank account.
David DeCelle 56:04
So to play devil's advocate, earlier we talked about client experience. So let's say they were at the $600 a month level, wouldn't it behoove you to accept 7200 bucks to please them?
Ron Bullis 56:17
Are you working on that?
Yeah. So here's the dichotomy that exists. In building the software out, we have to take an MVP type of approach, which means we have to say something like, how do we build the tool that solves like 80% of what we need? And so yes, what's coming in end of Q2 is an automated billing platform for our clients where they'll get to pick how they want to pay and the frequency. As we were doing it manually over the last 18 months, and we were using our software to facilitate onboarding. But we just realized, we can't have like every possible mode and frequency of payment built in there day one. So we took monthly down, because we felt like it aligned with how more people pay subscriptions. The quarterly thing is a historical relic of the quarterly dividends and things like this. So anyway, so you're absolutely right. In a perfect world, a client should say, I see the fee, I want to just write a check and pay for it. The other side of it, though, is there's some SEC compliance around getting paid for services that you don't deliver for six months or more in advance; you actually then become a custodial RIA or you are deemed to have custody. This is where you've got like regulation and the software and a few things that kind of hit. So yeah, in a perfect world, clients would get to pick and if a client wanted to pay me day one, I might look at cost of capital right now and tell them you're probably not going to like this. But my cost of capital’s virtually zero because of the low interest rate environment. So if I'm discounting based off of a cost of capital, it may be three to five percent.
David DeCelle 57:46
So let's assume that someone engages you for planning, and they don't have assets or they want to do it on their own. Is your service model built in such a way to where of course they're going to go into the 13th and 14th month, and the 40th month, and the 50th month, in terms of the value you're providing beyond the initial upfront work?
Ron Bullis 58:08
Yeah, so part of what we had to build, so the client experience piece back to this, we also realized that we had to have a way of scaling the delivery of planning and advice. Because delivering a 30, 40, 50 page document to a client is really a flawed process. And I'll give you an example. If I generate a report, and it doesn't matter whether it's out of MoneyGuidePro, RightCapital, eMoney, don't care, pick one, and I generate a 30 page set of charts, spreadsheets and graphs. And then I was to come back to it a week later and pick it up, or the client was to come back to it a week later and pick it up, are they actually truly going to be able to go through that whole thing and remember the nuances of well, this one's tied to a Roth conversion, but no early social security, or this one's max funding college funding, but not retirement? No, they’re absolutely not. In fact, if you were to try to tell somebody in a business setting, I'm going to come in, and I'm going to change everything about your business all at once, you as a business owner be like, whoa, whoa, whoa, timeout. That's a recipe for failure. In fact, even in marketing, what other marketing people have told me, like you change one thing at a time and you test it, and you change another thing at a time and you test it. So we built a modularized approach to delivering financial advice and guidance. We call it the family strategic planning system. There are eight areas: family strategy, financial planning, risk management, taxes, business planning, investment in savings, estate and legacy planning, and philanthropy. Those are the areas. If in our discovery process and your onboarding, the conversations with you and our team are like you really need help in budgeting, taxes, and life insurance, we're going to ask a lay that in our written document, and we write things out, and then we say we will jump through, we will get through all these as fast as you want. But generally the cadence is we start implementing things and then as we implement stuff, new things come up. So we've designed it in such a way that we're also trying to tell our clients like take a breath, we'll solve any current issues. We’ll solve the trauma, to use a medical term, and then we'll look at the emergent issues that come after that in a logical way. But you also can get to them and tell us what's most important to you. And then know that if you forget about it, our job is to bring it back up. And we use right now a quarterly planning cadence. So each quarter has a focus; inside of each quarter is two topics. So we're digesting these chunks, and we have worksheets and workbooks and checklists. They're not digitized yet, so part of the software we're trying to do, but you can relax. If you forget about tax planning, my job as your advisor is to make sure we're having the conversation at the appropriate time. That's what you're paying me for. If you decide you don't want somebody that's piloting the plane while you're taking a nap in the back, and you want to be responsible for it, then you shouldn't be paying an advisor of any sort. Because you can go online as an individual right now and watch YouTube videos and digest stuff for free and go on Nerd Wallet, and God bless people that do that. So part of it for us was just saying, what's harder, initially solving a problem that anybody could probably see, or continually improving something that's already really good? Year two’s work is harder, and we actually should get paid more for year two’s work. The mistake, I think, here is that all the value is created in the planning on the front side, and that's the easy part. Like that's the one anybody and everybody should be able to spot the big problems and fix them. The hard part then is to say, okay, Mr. and Mrs. Advisor, what's the smallest change you can make to your client’s plan next year, or when that year comes, that's going to have the biggest impact down the road?
David DeCelle 1:01:34
So that then forces the advisor to continue to be strategic and earn the money.
Ron Bullis 1:01:38
Bingo; and we use that language with our clients. The burden is on us and my team to deliver value to you. And if you feel like we're not delivering value, go back to when value is in question, price is the issue. That I think, and again, I could be wrong, I don’t have everything figured out. But I think it helps right size the trust issue between clients and advisors, because they know if any point in time I'm not delivering value, they just stop the subscription.
David DeCelle 1:02:12
Well, if and of course, the advisor because I feel like a lot of advisors, once they bring on a new client, it's immediately, exaggerating slightly in terms of the word immediate, but it very quickly gets into maintenance mode, as opposed to proactive mode, and relying mostly on the client to bring up problems—
Ron Bullis 1:02:21
I would agree with that. And we still sometimes fall prey to that, where we're like, oh man, we've kind of been a little lacks on getting out new content about estate planning. We've got to lead this conversation. Peter Sheehan, who’s a—I heard him at a Barron’s conference—a consultant, based out of, I think, Australia or New Zealand, he had a lot of great things in this conference that I was at, he was a keynote speaker. But one of the things he essentially, he asked the question, he said, are you leading your clients into the future? Or are they dragging you there kicking and screaming? So if we're truly trying to help our clients manage their wealth for today into some time in the future, are we doing the proactive work to lead them there? So are we looking at technology? Are we looking at legal changes? Are we making sure that we're asking them every year, hey, did you open any new accounts that I don't know about so we can make sure your beneficiaries are done? There's lots of boring work, but let's be honest, really good financial planning might actually be the sum of 100 different little small things done really, really well to create a big outcome.
David DeCelle 1:03:18
So I feel like we could talk for a while. And we will be, because we have a happy hour after this. With that being said, I do want to pivot slightly based on time. So one of the things that I'm really trying to do with the podcast is promote learning within the industry. And with that being said, I find if advisors are learning, oftentimes, they're doing so within the confines of our industry, as opposed to reading books or listening to books or listening to podcasts from other industries, and taking those principles and applying them here. Almost like when you brought Skylar on the team. His expertise is outside of our industry. So he's taking all that and bringing it in. So one of the books that you had mentioned that you've really enjoyed is The Council of Dads. I have not read that one yet. I want to know a little bit more about that book, why that's the one that you chose to chat about today.
Ron Bullis 1:04:12
So yeah, so real quick, The Council of Dads is written by an author named Bruce Feiler. I've probably given this book away more than any other book and I am an avid reader. The story is this: the guy is a famous photo journalist and author. One of his first works he did was called Walking the Bible. He walked the entire Middle East, chronicling everywhere that was in the Bible, taking photos, gathering people’s stories. It's not a religious book, but that was the premise. Awesome work. Fast forward a few years, got married, had twin daughters, was getting ready to do a book essentially on walking America and went for a routine physical. Doctor said something's not quite right, go see a specialist; went and saw a specialist and within a couple of days they found out he had a rare form of bone cancer in his femur that was literally massive. And they basically said go home and put your affairs in order, because it's a good probability you're going to die. And at best you survive, you'll never walk again. Okay, so he's got a couple of twin two year olds. So the book starts with this: it's him journaling his emotional outpouring of thinking about all the things he's going to miss in his daughters’ life. And it's a rough chapter read. I mean, I have four kids. But then the second chapter starts by him asking the question, what are my daughters gonna miss about not having a dad? So the premise of the book is this: he first does the work to say what are the things that matter most, and then who can teach those to my kids. So he writes six letters to six different men, I think it's six, six or eight, to different men, not people who are necessarily best friends, or his longest time friends, but people who he believed shaped who he was. And he asks them to step in and be his council of dads for his daughters. So there's a book to one of his friends who's a fighter pilot, and he's like, I want you to teach my daughters to hug the monster, which is like, when you're super afraid and you're pushing it to the wall, you got to get through it. One of his friends was into travel, he's like, I want you to teach my daughters to pack their sandals, to love traveling. One of my daughters passed away. And so part of this for me is a little bit of a passion project, because I have a really, like, deeply rooted grasp personally, for me right now, on making sure that I'm living every moment as fully as I can. My sign off on my email is live above the grind. And I know I don't always do it, so this is like, I need the reminder. What he did and the reason I refer this book, and I think it's a beautiful book for advisors, is because if you actually ask your clients in a very meaningful way, write a list of the things that matter most to you. And I dare say, your clients won't say it's their 401k plan, or the money in their account of their stock investments. They're gonna say, it's their health, it's their kids, it's their faith, it's their family, it's community, right? But we spend all of our time trying to prove our worth by how much taxes I can save you, how better the investment performance I can give you, how I can fix your 401k contributions. And those are good things. But we have to connect those to what matters most. So for me the book The Council of Dads is a really great reminder of saying anybody can have a will or a trust to pass on assets, that's table stakes. Now, a lot of people don't, but everybody can. What if you asked your clients to engage in a conversation with you about how do you actually transfer what matters most to your kids; because if you leave kids money or family money, without values, Scott Fithian wrote a book called Values-Based Estate Planning, because it's something like, if you leave money to your kids and not values, they'll probably destroy themselves. And everybody can think of scenarios of the person that won the lotto, or that trust fund baby, right? If you leave your children values and education and no money, they'll probably be fine as well, or your heirs, right? They'll work hard, they'll be good people. But if you can leave them both a little higher up the ladder, let's say, in both of those aspects, good values and ethics, and maybe a financial head start, now they just might change the world. And so for me, it's a step away from the leadership development books and the financial planning books, and a lot of those are the things that we read. But I think it's a really great frame to come into the 21st century, especially as technology is taking over a lot of investing and automating stuff, to really just invite ourselves as advisors and our clients to say, all that's good stuff, but when we get rid of it all, what's the one thing that matters most to today? And if I was to ask an advisor to answer that question for their top ten clients, and then to actually go and ask their clients, what's the one thing that matters most to you today? What's the possibility that they would have the right answer for their top 10 clients? I know I have times that I wouldn't. So this isn't me pointing the finger at anybody. This is a reminder that we're here to serve them. It's not our life. We're here to help them maximize theirs, make wise decisions, avoid bad mistakes, think about the future strategically, not live in the past. So it's an invitation for me, and I love sharing the book. Because whether somebody has kids or doesn't have kids, I think that you can think about community, you can think about family, you can think about transferring what matters most, you can think about impact. And those are all things that I encourage advisors in our space to hold near and dear and don't forget about when we start making lots of money or don't forget about when the money's still tight, and you're that advisor grinding it out and you're like, I can't barely afford my rent but I'm pushing. Stay focused on what matters most; serve clients, and this business is an amazing noble profession, that you will get out of it, what you put into it into other people's lives.
David DeCelle 1:09:17
That's probably the best book description that we've had on the show, while also tying it to how it can be applicable to an advisor’s process and relationship building with their prospects and clients. So I appreciate that. So I definitely do want to have you back on the show. I’d imagine it would be exciting to do so, which we're going to stay in touch, exciting to do so over the next like year and a half, two years because I know that all the work that you're doing now with your platform, things that will be finished by the end of this year; you're really positioning yourself to really explode. So I'd like to be able to highlight that growth that I would assume is going to happen based on the work that you guys are putting in. So I'm not gonna forget about that. And, who knows, if you're spending more time in St. Pete, it'll be easy to shoot that. So with that being said, before I close out the show, if folks want to connect with you, or they want to learn more about what you have going on, where do you want to direct them?
Ron Bullis 1:10:15
Yeah. So LinkedIn, you can type in Ron Bullis, easily find me. We have a website for advisors called The Future of Advice. We also have a YouTube channel under the same name, The Future of Advice, that's where we're doing our podcast. Some stuff, and this is so much fun to have this conversation with you, because we're doing some of the same things coming at it from different angles and trying to really drive transformational change in the industry. So I would say, our website, TheFutureOfAdvice.com, certainly my LinkedIn profile, my email is super easy. It's my first name at lifeworks advisors. But I love this dialogue. I love helping advisors, and even just to share a different business model, a different way of coming at it, and it might not be right for them. But I hope it gives them the opportunity to think big, and to say I want to build a business or a practice that looks like this, and it can be done. So I'm just really grateful you have me on and I mean, St. Pete's beautiful; it snowed in Michigan a couple days ago. I happily will fly back down to do another one of these.
David DeCelle 1:11:08
Well, I appreciate the time, and for those of you who are listening, and I feel weird saying listening to our show, because the whole setup that we have here today is courtesy of Ron and his team. So we'll call this our combined show for today. But for those of you who found value, we'd love for you to share it. I think this was a nice mix of both inspirational as well as tactical advice. It also, to me anyways, was kind of a glimpse into the future of how the industry can deliver its value and the advice that we give to the communities around us. So if you didn't take notes during this, I'd suggest that you go back and do so; figure out what nuggets that you're going to implement. With that being said, one ask that we do have is, if you are so kind as to leave a review for us on iTunes, it would really help with visibility in the industry. So if you go ahead and screenshot that review and shoot me a text with that at 978-228-2338. And just include Ron with that so I know what episode it's in regards to. What will happen is you'll get an automated response that will have a link; input your name. That way it gets added to my contacts. And then beyond that, it's actually me texting you. It's not like an automated service or anything like that. And as a thank you for doing so, I had mentioned one of the things I'm going to share with Ron, which is Dan Allison's methodology around a comfortable approach to getting referrals, go ahead and send you that same link as well as a thank you. So with that being said, I know we typically go into our after-hours portion right now. However, we're actually going to a real life happy hour right now. So we’re going to go enjoy our time outside of the office. So appreciate you all listening, and we will see you on the next episode. Ron, thank you very much.
Ron Bullis 1:12:55
David, this was awesome. Thank you.