Episode 6: Michael Kitces (pt 2)

07.01.19 | 0 Market Transform

In this Part 2 of our conversation with Michael Kitces,  we discuss the evolving methods and strategies for marketing your firm. Michael is a financial planner, commentator, speaker, blogger at Nerd’s Eye View, and educator.

You will find Part 1 of our conversation with Michael here.

In this episode, we discuss how this business is a human to human business, that “you can take your personal self out of the brand if you really want to, because you’re concerned about being too personal brand centric, but you can’t take the human out of the brand.” We need to understand that in the current marketplace clients are looking for “real stuff” and  how  your firm having a niche can help you better build and scale a business that is authentic and successful.

Don’t miss one of our favorite moments, when Michael challenges you, the listener, to introduce targeted campaigns and strategies to reach your clients. We hope you will find some practical ideas to try — and walk away inspired. 

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Patrick: 01:03 I actually think that the new tamp is essentially a marketing tamp. It's a turnkey marketing agency inside of an RA. That's really what we're building inside of ours. Because I see the value in marketing and I see the value of pulling the lever and just producing more clients and equipping advisors to serve them. I mean, how does an advisory firm get, how do they have that shift to see the value of marketing? Do you see that happen at 3 billion? And they're just like, "Alright, we've had the shift, we've got enough money, you might as well try it." Is there something that happens more formally? It is a decision that's made? What causes that shift?

Michael: 01:38 I think there are a few different factors that can cause that shift and it happens up and down the scale. It seems to happen with some frequency as firm's clear about $3 billion. Let me start with why it tends to happen at $3 billion firms and then we'll sort of work backwards as to who else gets there and how and why. Let me actually take one step back. If you look at how most large RAs, the billion plus firms and the multi billion dollar firms have grown over the past sort of 15 to 20 years of the RA movement. Most of them were founded in maybe late '80s into the '90s maybe the really early 2000s. They've been doing this about 20ish years. And the way it happened for most of them was adviser starts firm, often in a loose partnership with maybe two or three others and they go out there and they get clients.

And if you're doing this back in the '90s you didn't have a lot of competition. Most people were still selling commission stuff or just were literally mutual fund salespeople. They weren't even doing SL allocated portfolios. They were mutual fund sales people. I started my career 20 years ago next to a guy whose whole business was made selling the Munder net net fund, which was all Internet startups funded in 1999. It blew up catastrophically 12, 24 months later. They were fund sales people. You went out and did this advisory thing. You just started gathering clients. It was really lean in the early years because Munder net net paid you 5.75% of first year revenue immediately because that was the commission. Gathering an AUM fee was like you got 0.25% three months from now with your first quarterly billing. It was really rough early on but you start accumulating clients and then recurring revenue.

And so what would happen for most of these firms is after a couple of years there'll be two or three advisors. They would get one or $200 million of revenue and they hit a wall. And the wall is, "I don't have any time to do any more of the marketing because I'm spending all my time servicing the one or $200 million worth of clients I've got." And so the leading practice management advice in the early 2000s when, for, the leading firms started hitting this wall was, "You've got to hire associate advisors and hand your clients off to them so that you can free up your capacity to be the awesome business development founder, owner you are. Hand the clients off, go get more and fill up your associate advisors booking. If you fill up that associate advisor book completely, go get another associate advisor. Get more clients handed it off to them and just wash, rinse, repeat."

And that was the formula that most firms used to get to $1 billion under management, but just two or three advisors doing that, bringing in 10, 20, $30 million a year across each adviser repeated for 10, 15, 20 years. [crosstalk 00:04:21] Got you to $1 billion with a little bit of market growth. That was the billion dollar firm formula.

Now, the challenge that would hit for a lot of those firms is by the time you've done that, you get to a billion. Cool job. Put a feather in your hat. [crosstalk 00:04:38] But by then you're 20 years older, this stuff is getting a little bit tiring. It used to be cool to work your butt off for the year and get $20 million of new client assets, right? Because back at 100 million that was 20% growth, but then at 500 million that was only 4% growth. Now it's only 2% growth and you've got eight or 10 advisors and 20 or 30 staff, all of whom are looking and staring at you saying, "So you're going to keep growing so I can get job opportunities, right?"

And the founder looks in the mirror and is like, "Holy crap. I have to get 50 to $100 million across each of those partners just to sustain the growth that we were doing before because that denominator got so big and I don't know if I've got it in me to keep doing this after I'd been working my backside off for 20 years." And so the growth rates would start to slow a little. That tyranny of the denominator gets hard. Not just because the denominator is bigger so the rate gets lower, but just the founders by then are not in the same state of mind in growth orientation as they were before. Not the least of which, because you're now running a firm with $10 million of revenue and probably one and a half to $3 million of profits. You're making pretty good money.

You have a lot of incentive to keep working your butt off that way. Firms would try to rotate and they say, "You know what? We've gotten all these associate advisors. They've got all these clients. We now have hundreds of clients. These clients should be giving referrals. We're going to teach our advisors to ask for referrals and try to grow internally by having the advisers who weren't originally hired to do business development, they were just supposed to take the clients from the business developers and now we're going to try and turn them into business developers." Firms tend to try that. That's usually the path from 1 billion to 2 billion. It usually doesn't go very well because the founders keep bringing some business. Some client referrals come in, just apples fall off trees periodically. But most of these advisors weren't hired to be business developers.

Frankly, if they wanted to do business development and they were good at it, they probably would've gone and made their own from the first place. They took the job with you because they didn't want to do that and now it's across a billion dollars, you tell them they need to do that. They do a little of it, but it's not really how they're wired. They don't tend to be great at it. The firm's growth rate gets slower and slower. And the good news is by the time you got into a billion, heck, if you just sit tight and don't screw anything up, market growth will turn you into 2 billion in another 10 years. And that's usually the path from 1 billion to 2 billion. You kind of grind it out, founders are still doing some, next generation advisors are doing some, markets caring more and more of the weight. The growth rate gets slower and slower.

And so a lot of firms then essentially die in the 2 billion range. Well, they don't die, but the growth rate flat lines. You get to a point where, look, if clients are pulling out two, three, 4% a year in spending and you lose 2% for just, they die of old age because you're working with retirees, then you're looking at four or 5% of outflows between spending and just client death. Even if you're awesome and you do a great job for your clients and you're high valued, well, God. Four or 5% outflows on $2 billion. That's $100 million going out the door every year and that's a really hard threshold to clear, to keep growing. And so firms tend to flat line in the two to 3 billion range because all these factors and the tyranny of the denominator adds up.

And so they tend to hit a crossroads. Some firms say, "Dammit, we're going to figure out how to change the culture around here to be more business development and growth oriented." And they try to solve it internally. A whole bunch of them say, "Well, can't figure out how to grow from clients and advisors. We're just going to go buy some." And they go full scale into the inorganic realm. And then some firms look at this and start getting focused on, "Well, we like, we are $2 billion. It's 20 million of revenue. If we just spend a couple percent of our dollars on marketing, it would be hundreds of thousands of dollars. We never thought about this way before, but what would happen if we spent half a million dollars on marketing? Even though we've hardly ever spent anything on marketing in the past? It feels like a big number in dollar amounts, but relative to our revenue, this is still only two or 3% of our revenue.

We can manage this. And they put in two or 3% of the revenue but hundreds of thousands of dollars and some results start showing up. Usually not great, but it's enough, right? This was free cashflow profits anyways, so we're just trying to take in a lark here and trying it out. But it starts working. You'd look at the math, you're like, "Well, I'll be damned. We spent a half a million dollars and we actually got 50 clients off of this." That's $10,000 per client. It's not great, but our average client's a millionaire. So we'll actually make that back on the first year. And then every year thereafter is profit. We should do a little more of this. This is sorta working. And then they start reinvesting more dollars into marketing, find some efficiencies, find some economies to go, just find some strategies that work, right?

The whole thing around marketing is you try a bunch of stuff, you try to find a thing that works. Then once you find the thing that works, you just back up the cash and pour as much cash into that strategy as you can until it peters out and then you got to go find the next thing. And so the firms start finding something that works, they pour more money into it, they get more efficient at it, they start scaling that marketing process. And that's why suddenly a subset of firms sort of slingshot out of the 3 billion realm and very quickly go three, four, 5 billion and start climbing towards 10 heavily from organic growth because they figure this out.

It's not unique to large advisory firms. Anybody in theory can do this, but their, marketing has both the hard dollar cost, right? You've got to spend some of the dollars to get the word out and do your thing and there's some staff overhead costs, right? You don't just have to spend the money on the advertising. You have to spend the money on the person who's going to do the advertising, whether it's digital ads or in person ads or event market, whatever it is. If you're going to do marketing, there's both the spend on the marketing thing and there's the spend on the marketing people to do the thing. You have to spend money to spend money. Very frustrating. [crosstalk 00:10:51]

Patrick: 10:52 I feel like a lot of advisers at that level, the mistakes that they make is they go out and they say, "Okay, I know we need to do marketing." It's usually the founders talking, so they go out and they find a marketing director. Someone who has broad experience being a marketing manager. They pay that person 80 to $150,000. That person then goes to an agency and the agency woos the marketing director with a really nice pitch deck on why they need to have this amazing branded website and experience in the videos of the founders.

But there's never a distribution strategy. Very rarely do I see an advisory firm that understands content creation all the way through distribution in a way that's going to get somebody's attention. I feel like for most firms at that level, what I've seen is like, hey, and I deal with this cause I spend $100,000 a month in advertising in the financial services space and I have these conversations with the billion or $2 billion firm and it's always the founder who initiates, hands me off to the marketing director and the marketing director's like, "Hey, we're working with JO Rawson out in Atlanta and JO Rawson has quoted us 120 grand for a fancy UI on our homepage and that's going to produce X, Y, and Z."

And I'm like, "Cool. Have fun. You just wasted 120 K." How are these firms in your mind, how many of these firms are effectively making the shift and spending money in a way that's actually producing ROI versus just tossing money into the fire and hiring staff and pretending?

Michael: 12:18 I think very few are spending effectively at least until and unless they get to that larger size. And the reason really is it's not that the marketing spend is ineffective or that they're not putting enough towards it. I mean, there is some minimum critical mass. Expect it's going to cost you a couple thousand dollars per client to get a client and that should be a good thing because they spend more than that and your lifetime client value is way more than that, but it's going to cost you some money even if you're working with less affluent clients in a year, you're only getting paid one or $2,000 per client at the lower end where there's a little bit less competition. You're still going to spend hundreds of dollars per client just to get one person in the door.

Mark's just a relatively efficient marketing person. You can make some money but it's not super low hanging fruit so you can kind of scale the marketing spends. If I got 10 or 20 grand to spend, I can get a couple of clients. I've got 100 grand to spend, I can get more. If I got a million to spend, I can get more. But the challenge is fully executing a marketing process from end to end. Frankly, it usually isn't a part time person's job. Rarely even as an the full time person's job. It often takes a marketing team unless you find just a particular hyper-focused strategy that you're really good at and you can do lean and some advisors do that well. It could be a digital marketing strategy. They could just have a seminar marketing thing they're really good at. They know how to get butts in the seats and do their thing and they can do it lean. More power to them.

Fully integrated marketing processes where you got to look at all the pieces of the funnel. How do we build awareness? How do we get a, we'll call it the top of funnel leads, people who are checking out our stuff. Then how do we engage them in the middle to move them through to a sale? And then how do we actually get them to do the sale and convert them into a client? That's often a multi-person team to execute fully. And so the $3 billion firms get there because they're like, "Well, geez, even if I just put a couple percent of my revenue towards marketing, I literally have half a million to $1 million. I can hire three to five people and give them a couple of 100 thousand dollars to work with." And the math works. And that's frankly why they see some of the fast rising growth.

The smaller firms, sort of all of us mere mortals. The other 98% of advisory firms. This is challenging because you don't just have to spend the money on marketing, The actual spend. You got to spend the money on the people to build and create and manage it. And often that's a more than one person job unless you figure out a really awesome hyper-targeted marketing strategy, which maybe you can do if you've got a niche. But if you don't even have a niche, you're not going to find [crosstalk 00:15:02] marketing strategy. And this gets hard. And so I think for most other firms they struggle. It's either they don't spend the money, they literally don't spend the money on the marketing cash, right? They do soft dollar, time-based marketing, client acquisition instead of hard dollar or they do the hard dollar spend but they underspend on the staffing.

Particularly smaller firms, because the human beings are expensive. You might spend more on the staffing than you actually do on the marketing dollars just to make the marketing dollars you do spend efficient and that to me is why I've always been fascinated by models like yours and just the folks that are starting to come into the table that say, "Hey, we're an outsourced full service marketing agency that can do this end to end and you don't have to hire your two, three, five staff members. You're going to hire fractional time from ours."

And other industries, outsourced marketing agencies that have the people to do the work and manage the dollar spend is fairly standard. It's a new thing in our advisor world to have outsourced full service marketing agencies, but I think there's actually a lot of opportunity for it in our industry because most of us are small businesses that just do not remotely have the resources possibly even know, hire a marketing person, nevermind to hire a whole slew of them all the way across the marketing spectrum to do all the pieces integrated and then give them money to actually spend on marketing things.

We suffer from those, ... the cash constraints, the capital constraints, the resource constraints for which classically outsource agencies are kind of the pathway forward and the solution. The challenge always is then you also actually got to find the one that delivers and the marketing world is littered with agencies that are big on hype and weak on delivery. [crosstalk 00:16:53] And I'm sure we've got a couple of those in our advisor world as well. But to me, it is the most natural model and path to get there because marketing done well takes, doesn't just take dollars in the marketing, it takes people to run the marketing. And in a world where we don't just sell $29 widgets, we sell holistic financial planning for thousands of dollars a year with clients that stick around for 10, 20, 30, 40, 50 years.

The metrics for doing marketing and spending on marketing in our industry are crazy good. That was Ken Fisher's secret in Path to 100 Billion. But most of us are cashflow and capital constrained. Just finding the most efficient ways to deploy that which might be buying a piece of an agency as opposed to being all in on your own marketing staff, realistically I think is where a lot of advisors end out. Either you make the investment commitment to hire the staff because you want to really build and grow in scale. You get really targeted around the niche because the great thing around the niche is you can find creative, innovative, lower cost marketing strategies. Because you can go really deep into what matters in the niche and not have to compete with everybody else buying the same Google keywords for Roth IRA conversion in generic terms. Or you work with an outsourced agency that can do that full stack thing for you and ideally try to find one that delivers the results.

Patrick: 18:18 It's so tough, especially depending on kind of where you're at in your, in the life cycle of your business. I mean, younger advisors, I would say if you're not well capitalized and you talk about this a lot, I agree with you. I think you have to focus your message. Otherwise you're going to get priced out of every single platform. You put an ad up on Google. $50 a click. You put an ad up on Facebook. You're trying to talk to too many pain points and your messages is going to fall on deaf ears.

Michael: 18:42 Good luck if you're trying to compete against, literally national firms that, if they can spend $5 million on a Superbowl commercial, they're going to outbid you on all the generic keyword Google ads.

And you know writing generic content, you are now going head to head ... seven reasons why Roth conversions are great. Congratulations. Your article is now competing head to head with CNBC and MarketWatch and Kiplinger and all the other personal finance publications that give this stuff away for free because they're trying to get advertising dollars attached to the eyeballs that viewed the articles.

I mean it's always been true in the marketing world. The more targeted you can get, the more efficient you can get with your dollars, the lower the client acquisition costs come out to be. Now the the flip side is if you get too targeted, you have a really awesome find acquisition cost until you get 100% of the clients in that target and then you have to go make a new thing because you oversaturated the market that you're going after. [crosstalk 00:19:43]

Marketers at scale, that's always the problem. You find the thing that's targeted, you bring down the client acquisition costs, you do as much as you can, but then eventually you exhaust that market and you've got to go find the next one. The opportunity for me in an advisor world though, we're kind of unique. Most of us can have wildly successful practices with 50 great clients. It's really all it takes. 50 A level clients.

We can get hyper-targeted and stay hyper-targeted because we don't have to worry about, well, what happens if the results start petering off after the first five or 10,000 clients? Are you kidding? I need 50. And you can go after underwater basket weavers and own that niche. Because you only need a couple of dozen to be wildly successful.

Patrick: 20:31 Hey, Model FAs. This podcast is all about helping you grow your business. I wanted to share a new tool that we created to help you do just that. It's a webinar and it's going to show you how to add two to three plus new clients to your practice with consistency and in some cases without even spending any money. You can check it out at get.brewerconsulting.co/webinar. Again, it's get.brewerconsulting.co/webinar. We'll look forward to seeing you there.

Yeah, and just from a marketer's perspective, someone who spends a lot of money in advertising and a lot of the stuff that we're talking about, you also want to be careful about get rich quick schemes because marketers, what I've noticed, they will get you on a call. They'll get you to admit all these things and they'll say, "Well, you just need $1 million account, right? To break even."

The funny thing is there's so much that gets wrapped up into getting that million dollar account with paid advertising because if you don't have your focus set up at the foundational level or you don't know what your, who your ideal prospect is, what niche they fall into, what message is going to resonate with them, that your brand actually supports that message in that strategy and that you have the appropriate platforms behind, that you're targeting in order to get that person's attention, it doesn't matter how many millions of account, millions of dollars you could get, it's never going to materialize.

I think the big thing for a lot of, and you guys have done a great job of this at the XY Planning now, the big thing is just helping people understand where they should start in the first place before they even begin to think about spending money or time, really, going after clients. Because if you don't have that figured out, you're just wasting your money and your time because your message is going to fall on deaf ears.

Maybe switching gears here a little bit, what are your thoughts on the growth trajectory for, let's say, these smaller tech enabled more modern firms, because I know there's a lot of them within XY Planning network, they price monthly or flat fee or what have you. How do you view the competitiveness of the landscape and how well they've positioned themselves relative to some of these larger RAs who may adopt digital marketing and those types of things to create leverage in the future? I mean, what type of outlook do you have for the industry in that regard?

Michael: 22:55 Again, the challenge to me for most firms is marketing is competitive. Most firms don't spend anything on marketing, but as you do start spending money on marketing, what you will discover is that there are actually other firms out there that spend money on marketing. It's a smaller number that's been larger dollar amounts as opposed to a huge number of firms that they spend a little, but the spending is out there. It is a competitive space and there's always someone who can spend more than you on whatever you're targeting. If you're targeting the same thing they're targeting. What we already see, certainly, within XY Planning network and just across the industry more broadly, for people who have heard our Financial Advisor Success podcast, you know kind of the running joke is we're always talking about niches and specializations.

But this is why. I mean, this very directly is why because when you start targeting in some kind of niche or specialization, you're just going after those people and usually no one else is. They may be going after them generically, but if you're, if you specialize in doctors and they were working and they're going for everyone, yeah, they might put their ads in front of the same doctors that you're going to try to be in front of. But if I'm a doctor and firm A says, "Come to us. We do good financial planning." And firm B says, "Come to us. We do good financial planning for doctors." And I'm a doctor, my brain naturally goes to the second one because it said it's for me. I one things for me, right? We all want stuff that's targeted and meant special for us.

The way you compete against these firms is about getting targeted because if I'm a huge national firm, I can't just go after doctors or young professional doctors or mature doctor selling your practices or I mean, even doctors could have 10, 20, 30, 40, 50 different sub niches within it. Any one of which can be a fantastic business for an adviser for their 50 great clients. But if I'm a national firm at scale, I'm trying to figure out where my next 10,000 clients are going to come from. I will completely skip over and completely ignore ... 200 advisor niches that are 50 clients each because I can't hit all 10,000 at once. It's not cost effective for me to do when I'm large and at scale.

And so if you want to be the small adviser, if you go after your 50 great clients, you can often do it really inexpensively. If you try to get 50 of the next 10,000 clients, you're competing against the large firm that wants 10,000 of the next 10,000 clients and they are going to outbid you, outspend you, out market you, out resource you on everything because they can and they have the depth and resources and you've now put yourself directly in there competitive sites.

Patrick: 25:51 The other thing though, I think the advantage that the advisor has that let's say specializes in physicians in one of the sub specialties, that they need to realize that their differentiator is them as a person and not their firm. And this is a big mistake I've seen a lot of advisors make that have stood up their own firms and tried to specialize. They're trying to specialize in market as their firm and be a brand a company first, but really they need to pull away the company and just be themselves and communicate their own value proposition. Because that is really the only thing that's going to differentiate them because they are the one. They are the person that is going to be positioned and put in front of the physician or one of those sub specialties as the product and they need to be evaluated as the product.

And I just see too many firms that are like, "Here's my company. It's First State Doctor Wealth Management." No one cares about that. You need to be available. You need to have your perspective on display and that can make a lot of people uncomfortable. Would you say that you agree with that? Disagree with that? Have you coached people through that that are, have ... what are your thoughts?

Michael: 27:01 I agree with sort of the asterisks. It's a strategy and a way to do it. If I want to build a big firm that's bigger than myself and goes beyond myself, frankly you can get yourself caught in a trap where if you build the marketing too centralized around the founder and the personality of the founder and kind of build up personality brand based business, you may have trouble later trying to pivot and extend that business beyond yourself.

We even see that at firms at size and scale. Edelman Financial still trying to figure out how do we move beyond where Kettlemans brands? It's done pretty well. It got them $20 billion under management. But now as they try to figure out how do we go from 20 to 50 or 20 to 100, they're anchored heavily around a particular persona of a guy who at some point is going to retire. And that becomes a challenge for the firm. Low and behold they got a package together with financial engines because that'll give them millions of 401K plan participants. They got a place to get clients without relying as much on a [inaudible 00:28:08] necessarily.

You can have some challenges of that. You can also get pretty stinking big anyways, right? Edelman got to 20 billion, Kim Fisher got to $100 billion. They're still largely individual persona based businesses, but for a lot of advisors, it gets really hard for them to scale the marketing anywhere beyond themselves and their own personal capacity if they do that kind of personal brand approach marketing. Now, the the flip side is for a whole lot of advisors, who cares? Get your 50 great clients, they pay a couple thousand dollars each, you make 60 to 80% net take home pay as a solo efficient adviser. You could make hundreds of thousands of dollars a year and then you've got all your clients and you just have to service them well and have a lot of spare time and amazing work life balance while you make hundreds of thousand dollars. For probably be awesome. You can fully check all the boxes that you need to check. Making a wonderfully successful business built entirely around your personal brand.

The the space that I do think firms get in trouble with that you're highlighting and I fully agree with is they ...

Patrick: 29:13 Middle ground.

Michael: 29:14 They try to split the difference. Look, I don't want it to be too focused on me because I might want to grow it beyond me. I try to make it about the firm but they don't take the traditional steps ready to really make the firm a distinct brand. They just sort of make it a generic insert name, insert generic name here. Financial Planning and wealth management. Because they don't want to make it about themselves and then it's just not a brand that connects with anyone. And it's not interesting from a marketing perspective. You're just another generic named firm that no one's heard of and no one knows why they should work with and it's not very compelling.

I think the thing that does come through when people tend to make personal brand businesses is they tend to be willing to make stronger branding statements and take stronger positions because they just tend to do it around themselves and it's a little bit more natural. And I find firms sometimes have trouble distinguishing themselves when they're trying to stay generic and not founder centric. And that's what gets them in trouble. You can decide to make the, you know, the marketing about the firm and not about you, but you still have to make it interesting and unique and distinct. And that means standing up and saying some things and not everyone else is saying because otherwise you're just going to get lost in the wash of, frankly, very large firms that say very generic things, but do it with millions and millions of dollars in marketing. And you're not going to win against them in their brands. They are just going to outspend you.

Patrick: 30:39 It's funny, I actually ran a test on this on Facebook. We haven't tested on Linkedin or any of the other platforms yet, but we marketed, same marketing spend, same ad as a brand, as a company brand versus a public figure, just the face and it was about 45% reduced engagement click through and conversion costs on the public figure, the personal brand versus the company brand. Facebook obviously is going to be a little bit more of a personal interaction type of platform. But I think what I'm seeing in the marketplace is just people want real stuff. They don't want the brand, unless you can spend a lot of money to reinforce it and you have a really strong persona driven brand. I think that helps in the buying cycle when people become more solution driven. If you can be authentic and you can be yourself to a degree in our business, people are searching for that information. I agree with you 100%.

Michael: 31:32 You can take your personal self out of the brand if you really want to. Because you're concerned about being too personal brand centric, but you can't take the human out of the brand.

Patrick: 31:42 Agreed.

Michael: 31:43 This is a human to human business, right? If I just wanted a generic nameless firm where I can be a generic number that calls in, there's plenty of Collins centers and large scale national firms and banks and all that other stuff where I can be one of the numbers. If you want to hang your hat on customized, individualized, personal financial advice that has a deep relationship with those clients, clients have relationships with human beings, not with nameless firms. You can market your firm, but you still have to figure out how to humanize the brand because humans want humans.

Patrick: 32:18 I agree. Michael, as a just parting advice, is there any words of wisdom that you could give to the listeners on, let's say they want to grow their firm, they want a market, but they're not sure where to start. What advice do you generally give to two firms that are thinking about marketing but haven't really started turning the engine on yet?

Michael: 32:38 The two take aways I'll give to this. One, kind of repeating the earlier point, if you have gotten any clients at all, sit down and figure out what your client acquisition cost was. It should be a key metric of your firm that you track every year. How much dollars did you spend? How much money did you spend on staff? How much of your time did you spend? And assign a dollar value to your time. And get an understanding of what your client acquisition costs is. You can make the resource decision about how much you're going to do with your time and how much you can do with cash. And you may or may not have more of one resource than another to do that, but this is a key metric to know and once you know it, you start thinking about how do I reduce it, right?

I can get a better ROI on my marketing spend and dollars and efforts. And that, already, will start to lead you down a more constructive road of thinking productively about your marketing and how to do it better and more efficient. You need a better metric than just I got a client or I didn't get a client. How you build is focusing on the acquisition cost of a client and then try to figure out how to do more of it at a sustained acquisition costs or ideally do more of it for less. And just once you measure it, your brain starts thinking about how to do better at it.

The second thing that I would add to this, once you think at a client acquisition costs realm and recognizing that most of us only need 50 great clients to be wildly successful, it starts becoming really clear why niches and specialization and getting more targeted works so well. Because if you start thinking about how to spend on marketing and you start actually looking at where you could spend on marketing and what you might do and who you will be competing against, right? Look at what other ads are already there for the same thing and see how you stack up against them. What you will quickly notice is the more generic you are, the harder it is going to be standing out against all the other people that are spending marketing dollars on the same thing with, frankly, usually bigger and better brands or just more marketing spend than you have the resources for.

And the more targeted you get and the more willing you are to have a niche or a specialization, yet most advisors I find are just terrified. "Oh my God, if I get really specialized, what about the 99% of people I meet who aren't in my niche? Do I have to turn them away?" I'm like, "Don't kid yourself. They weren't calling you anyways." The only issue is right now you see 100 people and get none of them. If you stand up with a billboard that says, "The best financial planner for 27 year old doctors." And stand on a corner and you get 100% of the 27 year old doctors who walk by, heck, you might only get one, but that's one more than the zero you were going to get by standing on the street corner saying, "I'm a financial planner. Want to work with me?" The more targeted you get, the more you start grabbing one or two or three at a time and look. If you want to figure out how to scale to 10,000 clients and a million clients, you're going to have to go a different direction.

But if what you want to get as your 50 great clients and a great income and living in, then maybe someday you'll take the 50 to 100 and grow a little further from there, it's all about how get targeted and focused and what you'll find once you measure your client acquisition costs, you'll find that the more targeted you get, the lower your client acquisition costs and the more efficiently you can get clients and reign them in.

Patrick: 35:48 Straight truth straight from the mouth of Michael Kitces the man. Michael, thanks so much for coming on the podcast. I really appreciate your time and enjoyed the discussion and hope to have you on again soon.

Michael: 35:57 My pleasure. Thank you Patrick, and thanks everyone for hanging out, listening in.