Taylor Schulte realized he had an entrepreneurial spirit when he was introduced to and started working with a hybrid-RIA. He started to recognize that there are two clear paths: one of an entrepreneur and one of an employee. Personally, he likes both roles. He enjoys being a business owner and making high-level decisions, but also appreciates being in the weeds with financial plans.

As Taylor has grown his practice, Define Financial, he has slowly become more comfortable letting go of some financial planning focused tasks in favor of committing to the business owner mindset.

This episode is a must-listen for any young financial planner looking for advice on starting their own RIA, or are considering making the transition from investment-focused planning to comprehensive financial planning.

Hannah's signature

[tweet_box design=”box_10″ url=”https://buff.ly/2IYE8ku” float=”none” inject=”@DefineFinancial on #YAFPNW”] At our heart, we’re all a bunch of finance nerds. We love financial planning, but at some point you have to realize you can’t do it all. – Taylor Schulte, CFP® [/tweet_box]


What You’ll Learn:

  • Why delegating is so important as a business owner (and what you need to know if you are working for a business owners!)
  • How to connect with other financial planners to improve your skills and gain confidence as a new planner
  • How to transition from investment management to holistic financial planning (even when it’s scary)
  • What “client ownership” means – and what it means to you
  • How to use your age to your advantage in this profession (even if you’re young)
  • Why committing to taking risks is crucial in your financial planning career







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Ep91 Transcript

Hannah: Well, thanks for joining us today, Taylor.

Taylor: Hannah, thanks for having me.

Hannah: So you started your career in the wirehouse world. Is that correct?

Taylor: That is correct.

Hannah: So how did you end up there, and can you just give the listeners an idea of what your experience is like?

Taylor: Yeah, absolutely. I started in the wirehouse world, worked for one of the big firms that everyone knows by name. I started at 22 years old, day one out of school had the job lined up. I won’t go too much into my personal story, but just kind of early on in high school I just had this passion for money and finance. It’s weird. I look back at some of the papers I wrote even in college and it’s like I mapped out my career before I even knew what it was, and I had some instrumental mentors in my life who were in the wealth management industry.

Anyways, that led to, yeah, taking a job at, I worked for Morgan Stanley, taking a job at Morgan Stanley, 22 years old. And what’s funny is my ignorance was so helpful back then. I didn’t really know what being a financial advisor was, what it entailed. I have this very vivid memory of my boss at that time handing me a piece of paper with my sales goals on it, and the goal was that you needed to bring in $15 million in assets in two years or you’re fired. I remember I didn’t even think twice about it. I’m like, “Sure, yeah, whatever. Give me that, let’s go,” and I was just so happy to have a job I didn’t even think twice about it.

Like if somebody handed me that today, I feel like I’d have a panic attack. That’s a lot of money in a short period of time. I think my ignorance was just really helpful back then. I was just so happy to have a job at a good company, and that was in 2007, so we all know what happened shortly after that. It was an interesting ride. I was there for about five years, and then the rest of my career kind of started from there.

Hannah: So you hit that $15 million in two year goal?

Taylor: I don’t think that I hit 15 million in two years. Again, that was ’07. The recession obviously was right around the corner. I don’t remember exactly, but I think that they obviously adjusted a lot of our goals and quotas. I did leave Morgan Stanley in 2012, so five years. I did leave there with $15 million in assets, so I hit my goal, but it took me a little bit longer.

Hannah: You said that you had mapped out your career before you started. What did you mean by that?

Taylor: I thought I had this bright idea when I was an undergrad that I was going to go get a master’s in finance, and you have to write a paper as part of the application process, and the paper talks about: What are you looking for in a career? What do you want to do for a living? And I found that paper a few years ago, and it maps out exactly what I’m doing today as a financial planner helping people, and I’m like, “How did I know that that’s what a financial planner did at 16, 17?” Or no, no. Sorry, I was 19 years old, 20 years old. Yeah, jeez. I lost track of time. Yeah, but it’s just interesting that like I wrote all of that out and for the most part it’s what I’m doing today, which is pretty cool.

Hannah: That is really cool. So you started at Morgan Stanley and you got the sales, like you’re supposed to reach these targets. How did you go about finding those clients?

Taylor: Yeah. You’ve probably heard this before, but my philosophy was meet as many people as possible, do things that I enjoy doing anyways, right? If I go to an event that I want to go to anyways and maybe I don’t meet somebody, no big deal. I had fun at that event. So meet as many people as possible, go and do things that I enjoy doing anyways, and my philosophy was the more people I meet, the more people that like me and trust me, the more people will do business with me.

The hard part about that is that it’s a long play, right? Some of these people that I met early on in my career it took, jeez, seven, eight years for them to come around as a client or come around with a quality referral for me. So some of these relationships take a really long time. That was kind of my long play, and a lot of those relationships that I built way back then are really helping out my business today.

Outside of that, we did a lot of the traditional wirehouse-type marketing. We had some pretty hardcore sales training, and so we did door knocking, we did cold calling, we did seminars, we did a lot of events with COIs. It was kind of try everything and see what sticks, but, yeah. In summary, I did the traditional start with your friends and family and work through their Rolodex and try all these other marketing things and take anyone who has money. It’s just interesting to reflect back on that’s what we did then and what we do today. It’s just it’s so much different.

Hannah: As you went through the Morgan Stanley, as you’re going through all of the sales exercises and things like that, did you see yourself staying there long term, or kind of how did you respond to that internally?

Taylor: Yeah. No, that is a really good question. Again, I just had this kind of this feeling, this desire to go out and do my own thing, and I didn’t know what that looked like, but I just knew that I wasn’t going to be at Morgan Stanley forever. It was a great place to start. It was a great firm. I had great people around me. There is no chance in hell that I’d be where I’m at today without that, but I just knew that there … I started to feel just kind of complacent, like I just needed something more. Yeah, so I just kind of targeted the independent world and took that next step. I always kind of tell myself whenever I just start to, yeah, feel that complacency, I’m not feeling that personal growth, it always just kind of tells me, “Okay, it’s time to take that next step,” whatever that next step is.

Yeah, that next step then was the independent world, and I joined a hybrid RIA firm, and that was kind of my first experience with the RIA world and fee-only and fee-based and all these different things and having a custodian. This is all something different that I wasn’t used to working at a wirehouse.

Hannah: One more question about the wirehouse. You talked a lot about the sales training. Did they also give you training on like how to do investments and the financial planning side of the business?

Taylor: Yeah, they did definitely. But, I mean, it’s funny. It’s like when you get hired there, and I’m sure it’s changed today, but it was take your test, your Series 7, your 66, your insurance license, and it was like, “Just go out and sell.” There wasn’t a lot of upfront training on investments and financial planning. It was like, “You’ll just figure that out as you go.” There was a lot of resources around us, a lot of mentors, a lot of people to help, and eventually, yeah, I’ve become really well-versed in investments and financial planning.

But as a lot of people listening to this probably know, the strategy was to lead with the investment conversation first and then talk about financial planning second. So it was get the money in the door, talk about how great our investment strategy is and how we’re going to outperform the market and beat everybody else, get that money in the door, and then it was like, “Oh, by the way, we’ll do some financial planning too,” and I know we’ll get to where I’m at today, but we’ve completely flipped that on our head and we lead with financial planning first and investments second. I guess in summary, yes, they provided us training, but probably not as much as they should have looking back on it.

Hannah: So you start working at this hybrid RIA. What did you learn through that experience and through that job?

Taylor: I mean, I learned a ton because this was 2012, and I just had zero experience with fee-only, fiduciary, if that was even a thing back then. That term was just kind of coming to the surface. Having a custodian like a Fidelity or a Schwab instead of the firm you’re working, you know, Morgan Stanley was the custodian, and piecing together all the different technology and performance report. It was just like, I don’t know, like for the first time in my life I’m like, “Oh, this is how it all works. This makes sense.” Yeah, I mean, no one taught me that. I wish like day one out of school someone was like, “You need to go work for a fee-only firm that adheres to the fiduciary standard,” but those words were never taught to me. Yeah, it was just a really eye-opening experience, and I started to just learn more about who I was as a person, what was important to me, my morals and values and how I want to run a practice. I just started to just question a lot of things.

It was also then when I realized like I have this entrepreneurial blood inside me. I want to own my own business and I want to make my own decisions. I’m tired of asking other people, “Can I do this?” and, “Can I do that?” And I just had this creativity inside of me that I didn’t really know about. I was just so used to people saying no to me all the time, you know, “No, you can’t have a LinkedIn page,” and, “No, you can’t have a blog.” Yeah, I think through that experience with that hybrid RIA I’m like, “You know what? This is really important to me. Having that creative side and doing things different is really important to me.”

Hannah: One of my mentors, one of her big things was people are kind of wired two different ways, like you’re an employee or you’re an entrepreneur, and obviously there’s gray in the middle, but knowing who you are is really half the battle.

Taylor: Yeah. No, it really is. And, again, like no one teaches you this stuff when you first get started, and it was just something I didn’t know about myself. Some people were entrepreneurs in high school and they knew that that’s what they wanted to do, but, yeah, I didn’t really understand that you could be a business owner and own a financial planning practice or you could be a financial planner and you could work for a financial planning practice. I just didn’t really clearly understand that those were two different paths.

I mean, I’ve battled with that too because I love to do both. I love being a financial planner. There’s a lot of aspects of that that I really enjoy and I’m really, really good at, but I also really love owning a business and making a lot of the high-level decisions and putting a lot of the operations that we have in place, putting out fires and tackling challenges. I like all that. The problem is is I can’t do both. I can’t do both really well, and so I’ve started to learn that I have to let go of some of this stuff and really focus on, one, the things that I’m good at, and then, two, the things that I really love to do and start to delegate. That’s been a challenge.

Hannah: Okay, let’s talk about that because I’m curious about that. How do you identify right now? Do you identify more as the business owner or as the financial planner?

Taylor: Yeah. Today, I’m definitely morphing into that business owner. I’ve got help here now from some rockstar financial planners that I trust and I can delegate to, so I’ve definitely taken on that business owner role and business development role, and I’ve let go of a lot of the financial planning tasks that I have been doing for the last 10 years. It’s really a challenge. It really is, and I think a lot of people can relate to that. At heart, we’re all a bunch of finance nerds. We love numbers and we love financial planning, but at some point you just have to realize you can’t do it all, and so, yeah. It’s something that I’m learning every day. We’re taking part in an annual coaching program this year that’s teaching us a lot about how to segment a lot of this stuff out and delegate and outsource and hire internally. Gosh, I’m learning a lot. I’m having a lot of fun, but I’m learning a lot, that’s for sure.

Hannah: So are you still meeting with clients?

Taylor: Oh, yeah. Yeah. I mean, look, we’re a small firm still, so my clients are like family. So I do still meet with clients, although I am getting better. I mean, just the other day we had a client who was coming in for a meeting, and just without even thinking twice I just assumed that I needed to be in this meeting, but that morning it hit me and I’m like, “I don’t really need to be at this meeting. I can spend some extra time with my son this morning. This is John’s department. John is really good at this step in the process. He really enjoys this step in the process. I don’t need to be in that meeting.” And so I pinged him and I said, “Hey, you want to run the meeting this morning on your own?” He’s like, “Yeah. Absolutely. No problem.”

It’s like I was on autopilot and I just had to kind of catch myself and say like, “I don’t really need to be in this meeting.” There are some meetings, or most meetings, that I probably need to be in, but I’m starting to recognize those little things and make better use of my time, even if it’s spending some extra time with my son or being out in the community more and speaking and prospecting or whatever it might be.

Hannah: Even if you’re not going to be a business owner, you’re usually going to work for a business owner.

Taylor: Yeah. No, you definitely will. If it’s not a business owner you’re directly reporting to, it’s one of their managers. So, yeah, you’re correct.

Hannah: Yeah. Even if you’re not planning on being a business owner, it’s still interesting to kind of get in the head of a business owner and kind of get that perspective. So you’re at this RIA. How big was this hybrid RIA that you were working at?

Taylor: Yeah. I think collectively we managed $300 or $400 million. There’s maybe 10 advisors there. It was a new venture for everybody. Again, a bunch of kind of independent financial advisors that just worked under the same umbrella. Yeah, I mean, it was a great experience. Again, I decided to look back on it, I learned a ton. Every step of the way I keep learning more and more, and I take the good and get rid of the bad and kind of move on to the next step. Yeah, great firm, great people, successful. I learned a lot, and most importantly, what I’ll tell people listening to this podcast, especially those new financial planners, is every job that you have in this industry think about the things about what you’re doing every day, think about what you enjoy doing, what you don’t enjoy doing, what you love doing, what you hate doing, and take not of that stuff. Write it down, because then you’ll know what you’re going to be looking for next.

We’re actually interviewing right now looking for a person, and that’s one of my questions to them is: What do you love doing? What are you really good at? And what do you hate doing and you never want to do again? And just listening to their answer and hearing if they’re crystal clear on those things, because if they’re not, they’re not … I don’t want someone who is uncertain taking a job. Don’t complain. You’re going to learn something from every job that you have, but take something from it. What do you love about that? What really excites you about coming to this job every day?

Hannah: So as you’re working with this RIA, was there a moment where you realized that you needed to start your own firm?

Taylor: I don’t think that there was a single moment where I’m like, “That’s it, I’m out of here.” I think just through the months and years I just, again, I realized that, one, I just had this entrepreneurial spirit inside of me. My grandfather, actually both my grandfathers were successful entrepreneurs. One of them came over on a boat from Germany dirt poor, no money in his pockets, and made a tremendous living for himself, and so I just had this … I just didn’t recognize it. I didn’t even think about it, but I learned that it just was just boiling up inside of me.

And then second to that I was tired of being told what I can and can’t do, which is normal. When you work for somebody else, like that’s their job is to tell you what you can and can’t do, so that’s totally fine. I just wanted to make my own decisions. I was young. We didn’t have a family yet, my wife and I, so I had the ability to take on some risks, and I just wanted to try something. It just was one of those things like I would have a regret if I didn’t give this a shot. I can always get a job in financial planning. Those are always out there, but I’m not always going to be able to go out on my own and try to start something.

Hannah: So how long from the point where you decided that you were going to start your own firm, when you made that decision to when you actually started your own firm?

Taylor: Probably about six months. I’d say at least six months, six to nine months. It was a lot of things to put in place. I’m a planner at heart. I don’t wing these things. I’m probably overly prepared for making a major shift like that. I just want to make sure all my ducks are in a row and I really understand everything. That’s just kind of the way my brain works. If I’m going to go buy a new TV for my house, you better believe I’m going to shop every single website, I’m going to know every single TV that’s out there. I’m going to pick like the best TV at the best price. That’s just the way my brain works. So imagine me trying to sift through all the different technology and platforms and trying to pick the best ones. It was a lot of work.

So, yeah, I gave myself a lot of lead time and putting those pieces together. I mean, I wanted to make a really thoughtful move. I wanted to put my clients first too and make sure that this move was going to be good for them, and so that was a really important piece to it. Yeah, so, definitely if it’s something you’re thinking about, definitely start the process earlier than later, that’s for sure.

Hannah: Did you have like a formal business plan put in place that you were working, or what did that look like on the planning for it?

Taylor: I don’t think I had a formal business plan. I think I had like a one-pager, just kind of a summary of what I was doing and how I was doing it, but I never had a formal business plan. I did have a couple of mentors in my life who were guiding me through this process, and then there was also some resources that, you know, the custodian as well that was kind of guiding me through what needs to be done and what step of the process we’re in, but, yeah, I don’t think I had a formal business plan.

Hannah: And were you taking clients with you?

Taylor: I was, yep. So when I left Morgan Stanley, we were part of Broker Protocol, so I followed all the rules. My clients followed me, came with me, and then at this new firm through contract I owned my book of business, so that was not a problem. So when I left, those were my clients. I took my clients with me. It was pretty easy.

Hannah: Now, the clients that you got at the hybrid RIA, were you able to take those clients with you, or just the clients that you started with?

Taylor: Nope. Yeah, all the clients. Any client that I brought with me and then any client that I secured on my own while at that firm. If that firm handed me a client or found a client for me, that would be their client. That never happened, so it wasn’t an issue. But, yeah, if I secured a client or brought a client with me, those were my clients.

Hannah: And was that a point that you needed to negotiate when you started working for that hybrid RIA?

Taylor: Yeah, that’s actually a really good question. I think we did negotiate that. I don’t think it was much of a negotiation. I think it was just something that was brought up and the owner of the firm was like, “Yeah, I’m not in the business of stealing clients from people, so.” It was a really easy conversation, but, yeah, you bring up a good point. It’s definitely something to think about as people are moving around and going to different firms. If you bring a client or secure a client, I’m of the belief that that should be your client, and that’s the same way that we do it today. If something happened here and John departed, I’m not in the business of taking clients from John. So, yeah, that’s definitely an important piece of the conversation that should be had.

Hannah: And so many firms operate so differently, and so it’s, again, that planner side of it. We need to know when we start working at jobs and finding clients who owns those relationships.

Taylor: Yep, 100%.

Hannah: So you started Define Financial. How old were you when you started the firm?

Taylor: Oh, jeez, now you’re going to test me. I started the firm in June of 2014 and I would have been 29. 29, yep.

Hannah: One of the things that I hear from a lot of planners, and I don’t know that this applies to you because you’d already been finding clients, is the challenge of being in your 20s and starting your own firm.

Taylor: Yeah.

Hannah: Did you run into any issues with that?

Taylor: You know, I battled with my age a lot in the beginning of my career, and I think that’s completely normal. Look, I mean, I was 22 years old with a Series 7 out there asking people for money. I mean, that’s insane. I’d love to like have video of some of these meetings that I was leading. Who knows what I was saying back then? So, yeah, it was a real thing.

I’d say that after I left Morgan Stanley after about five years, maybe even a little bit before, like four to five years in the business, I finally just told myself one day to use my youth to my advantage. Don’t hide behind your age. There’s nothing to hide. Use it to your advantage. There is an advantage to the client for working with a younger professional. I always say if you hire a financial advisor who’s been in the business for 30 or 40 years, most of them are stuck in their way of doing things. They’re doing things the same way they’ve always done them, so they’re not as quick to adapt, they’re not using a lot of the more recent technology. They just kind of have an older way of thinking about things.

I just kind of spun that around in my head, and I truly, truly believe it, right? I didn’t just like make this up as a sales pitch. Like I really believe it, and I just owned it, and so going forward, I never hid behind my age, I never put on the fake glasses or anything like that. I just owned it, and it’s like if someone doesn’t want to hire me because of my age, then they’re just not a client, they’re not a good fit.

Again, the advantage too for being 29 years old and married with no kids is like I could take that risk. If I was 38 with two kids and my wife’s not working anymore, gosh, that’s a big risk to go out and start your firm. It’s not cheap, and you’re working more than ever. So there’s a lot of advantages to starting this young, and what’s great is you have organizations like XYPN network that are making it easier than ever to go and start your own firm. Now, that can be dangerous too. You have too many of the wrong people starting a firm and not everyone is going to survive, so you have to be careful.

Hannah: You know, I work with a lot of pre-retirees and retirees, and I’ve had multiple clients tell me that one of the reasons they work with me is because I’m young because they don’t want to be switching advisors when they’re 80.

Taylor: Yeah, exactly. There’s another advantage, right? They know you’re going to be around for the next 30 or 40 years to guide them into and through the end of retirement, so that’s a huge advantage.

Hannah: So you started your own firm, and so you already had clients that you were bringing with you, so you weren’t starting from zero on your revenue.

Taylor: Yep, and that was a really nice benefit. You know, how many people get to say, “I started a business with six figures of existing revenue”? I mean, that just … You think about restaurant, people want to get into the restaurant business, and they start this restaurant and they pour all this money into it, and they don’t even have any customers yet. So, yeah, I had, gosh, I don’t know, 20, 30 paying customers that were providing me with revenue on day one, so it really helped out.

Hannah: So you’ve seen the wirehouses, you said you were in a hybrid RIA situation, and now you’re in a pure RIA situation. Can you give us the business case for being in a pure RIA situation versus being in the hybrid, or even the broker dealer, or not broker dealer, the wirehouse?

Taylor: Yeah. I said this on another podcast recently, I’ve never met somebody that went pure RIA or fee-only, whatever you want to call it, and regretted that decision. I’ve never met that person who’s like, “Man, I really shouldn’t have gone fee-only.” I’ve never witnessed that. I’m sure there’s some people out there, but … For me, it was more, again, I go back to like: What’s important to me? What are my morals and values? What do I feel really good about? What am I confident about in talking to clients?

One of the things I learned at that hybrid RIA, I never realized that there were these two channels, this broker-dealer channel and this investment advisor channel. When I was at that hybrid firm, it hit me. I’m like, “You know, I don’t have any accounts at this broker dealer.” We used this small little broker dealer nobody has heard of, and I’m like, “I have to deal with the compliance people there, I’ve got FINRA breathing down my neck, and I don’t even have any accounts at this broker dealer.” Sure, we sold a couple insurance policies here and there and got some commissions, but 99% of my revenue was coming through my fee-based business on Fidelity’s platform. That was one of my eye-opening experiences is I’m like, “I don’t need this.”

And then of course I started learning more about what fee-only meant and being a fiduciary 100% of the time. That’s probably around the time when I learned about Michael Kitces and XYPN was probably coming up around then. I just really started to educate myself and really become a student of the industry and really just learn from others and then develop who I was as a financial advisor and what was important to me.

Hannah: One of the things that you said earlier was at the wirehouse they kind of led with investments and followed up with financial planning. Can you talk about that transition to really leading with financial planning, and how is it different for you and how is it different for the client?

Taylor: Yeah. For me, it was scary as hell. For anybody who came from the wirehouse world or currently works there, like the thought of pushing the investment conversation to the side and starting with financial planning, at least for me, it was a really scary transition because I was so used to selling the investments, that that’s where the value add is, that we’re a better money manager than anybody else out there. And so to begin to push that to the side and say, “Look, we’re going to manage your portfolio, we’re going to do a really, really good job for you, but here’s what matters most: the financial planning.” It was such a different conversation when we flipped it on its head, but it just makes so much more sense.

We equate it to a doctor. A doctor doesn’t just like aimlessly write you a prescription, right? They put you through a bunch of tests and maybe draw some blood and do an MRI or an X-ray and ask you a bunch of questions, and then he or she will write that prescription for you. So when we put it that way, when we present that analogy to a client, it’s like, “Well, duh. Why wouldn’t you start with the financial plan? That makes so much more sense. That will drive the investment recommendations.”

So once we started to put this process together and come up with some of these analogies to talk to clients about, it just made more sense. It made more sense to us. It makes our job much easier to recommend an investment portfolio after we know everything about the client, right? Maybe they’re in a really good place and maybe they don’t need to take extra risk. Maybe they haven’t saved enough and we need to make some adjustments in other areas, including their portfolio. To start with that conversation just gives us so much more confidence in the recommendations that we’re making.

Hannah: As you made this transition to financial planning, the clients that you brought over from the wirehouse, were they primarily investment-only clients?

Taylor: They were. They were primarily investment-only clients. Well, I shouldn’t say that. Again, it was this like, “Our main job is to manage your investment portfolio and do a really good job, and then we do some financial planning on the side.” So a lot of them got a little taste of financial planning, nothing even remotely close to what we do today, but it was a slow transition.

I mean, in fact, we had a meeting with a legacy client yesterday who when he started with me, it was one of those accounts at the wirehouse that just got like thrown on me, right? An advisor left and this account just got dumped onto me. The account balance for this gentleman was $5,000. That’s how big the account was. It was a $5,000 account, and when I got these types of accounts, what I did is I treated these people like royalty. I remember this guy in particular I would take him to sushi like once a month. Who takes a $5,000 client to sushi once a month? But through those lunches and getting to know him, I learned that there were assets in other places, and so he eventually became a much bigger client and he’s still a client today 10 years later, which is just wild to say that out loud.

But he’s one of those legacy clients that not until yesterday, and that’s crazy to say too, yesterday, did we really introduce to him the full-blown comprehensive financial planning that we do for clients. There’s a lot of reasons for that that we don’t need to go into now. The point is is that it’s taken time to transition those clients. It wasn’t like one day I decided to call them all and say, “Hey, guess what? We’re doing things differently.” It’s definitely been a slow transition, probably slower than it needed to be. Sometimes I definitely take a little too much time. I need someone to like crack the whip and just tell me to take action, but it was a slow transition.

Hannah: And so when you introduce this whole idea of comprehensive financial planning, what are clients’ responses to it?

Taylor: I think some clients are overwhelmed by it, and the point of our conversation yesterday was to overwhelm this client, because if it wasn’t something that he was interested in doing, if he didn’t want to engage in financial planning, if he didn’t want to spend the time getting us all the information that we need, we essentially said that it wasn’t a relationship we were interested in having anymore. So we’re having a lot of those conversations where unless you’re willing to sign up for this comprehensive package, we’re just not in the business of just managing a portfolio anymore.

Yeah, so I think initially some of these clients are very overwhelmed by all the different pieces. It’s not just a performance report anymore and some little chitchat here and there. We’re having some really big money conversations, some really important stuff, and there’s a lot of work on their end as a part of that. Outside of that, I do think that clients see the benefit, just like I see the benefit in going to the gym, but like actually going to the gym is a whole different story. Clients see the benefit in doing this. It’s just a matter of getting them to actually take action and do it, but for the most part their reaction is obviously very good.

Hannah: Right. You’re building your business off of it, so we hope.

Taylor: Yeah.

Hannah: So when you started Define Financial, was one of the reasons of starting Define to really lead with the financial planning instead of the investments?

Taylor: I think initially the idea of starting the firm, again, was just to be able to start to make my own decisions, to try different things, to try some different marketing ideas that other people weren’t doing, to try some different fee schedules, right? Again, that was kind of around the time when XYPN was popping up and these monthly fees and one-time fees. So to be able to try some of this different stuff and just see how it worked, and we’ve tried just about everything that’s out there and we’ve made a ton of mistakes and we’ve failed, but that’s been the fun of it. I enjoy that I part of it. So I think initially starting the firm was just like I just want to explore, I want to figure this out. Who am I as a financial planner? What do I want this to look like? Where do I want to be in 10, 20, 30 years from now? And it evolves almost every day it seems like, but that’s just a big part of the fun for me.

So I think through that process I quickly learned that leading with financial planning was really what I wanted to do and really where I believe the value is for the next 10, 20, 30 years. We’ve since pivoted, and now all we’re doing is just fine-tuning things and finding ways to create more value and provide a better service, and we’re always going to be doing that. I mean, we’ll always be making changes and improvements.

Hannah: And so right now, what services do you offer clients?

Taylor: We offer comprehensive financial planning and investment management. I don’t know how else to summarize it.

Hannah: So like AUM based? Or how do clients pay you?

Taylor: Oh, sure. Yeah, clients either pay us a percentage of AUM or they pay us a monthly fee, and how that works is we have a minimum annual fee of $5,000 per year. So if they have the AUM to support that $5,000 per year revenue, then we will bill as a percentage of AUM. If they don’t have that and they want to work with our firm and we believe that we can help them and provide value, we’ll break that $5,000 up into monthly payments. It works really well. We’ve got some ultra, I know I said ultra, but high-earning young professionals who are in their 30s and 40s and making $300,000, $400,000, $500,000 per year. A lot of their money is wrapped up in pension plans or real estate, but they need help and they want help and they’re willing to pay a fee. I never want to tell somebody that they don’t have enough money to work with us, which is why we set a minimum fee amount instead of a minimum investment amount.

Hannah: For those clients, I mean, $5,000 is the minimum fee for the monthly retainer, so that can go up based on complexity as well.

Taylor: It can, and we do have a couple that it is higher. In a perfect world, it would all be the same to help kind of streamline things, so our monthly clients all pay $5,000 per year, and then what we are doing is when and if their assets get above $500,000, which would support a 1% fee, we would switch them to that percentage of AUM. For that $5,000 annual fee broken up into monthly payments, we do everything that we do for our other clients, right? We’ll manage their $10,000 IRA or whatever it might be, so we’ll manage all their assets still, but when their assets, if their assets cross that half a million dollar mark, we flip the fee schedule, and they’re obviously very aware of this and we set those expectations. Yeah, yeah.

Hannah: You talked earlier about when you started out at the wirehouse kind of the sales techniques that you used or the marketing techniques that you used. What do you do now at Define to help market your business?

Taylor: We do a lot. I shared with you before this phone call we talk about in the practice here individually what do we love to do and what are we good at and how can we spend more time doing those things. For me, one of those things is marketing. I just love it. I really enjoy it. I’m not the best at it. I’m not saying that, but I think I’m pretty good at it. We’ve had a lot of success, and I just really enjoy it, and so I look at our marketing plan is kind of this one machine where we do five or six things really well and really consistently, and they all kind of work together.

You and I were talking before, I started a podcast last year, and you were asking if I had traction with it. And it’s like, have I gotten a client directly from the podcast? No, I can’t trace that back to the podcast, but I’d be willing to bet that somebody landed on the podcast, ended up on our blog, downloaded our free guide, I don’t know, jumped on a webinar, saw me on social media, and eventually reached out. They probably don’t remember all those touches, but in my mind, that’s kind of how these things work. Or, a client heard the podcast and sent it to a friend and it led them to our website. Again, I like to think these five or six things that we do well and consistently all really work together.

If I had to share like a couple specifics, one thing that we worked really hard on is SEO, search engine optimization, and doing it the right way. Our goal wasn’t to like rank on the first page of Google tomorrow. It took years to put some of this stuff into place, but we have some good traction on Google now where people find us just by searching in San Diego for a financial planner, and then when they land on our website, we have some things for them to do in order for them to engage our firm.

Last year alone, just in 2017, we had 100 prospects for the year, and those are people that scheduled introductory phone calls automatically through our auto scheduling system on the website, which just like blew my mind. Never in my career have I had 100 prospects come through my door, you know, warm ones. It’s not like I sat on the phone and cold called all these people. So it was a really successful year in terms of quantity, but not so much in quality. So 2018 for us is the year of quality. I want to have less or fewer prospects but higher quality, so we’ve put some new things into place to make that happen. It’s been hard. We’ve been kind of sitting around and we’re used to the normal flow of two to four prospect phone calls a week, and that’s just not happening right now, and that’s okay because the ones we are talking to are a little higher quality.

SEO, being visible online, has been really, really powerful. You need to have somewhere for that person to go, something for them to do. If you just have a beautiful website that’s just confusing to the user, that’s not going to do you much good. So think about the entire process. You don’t need to have one of these like fancy sales funnel things that you see on, like you don’t need that, but just give the user action and make it really easy for them.

That’s been one thing, and then another thing that people are really surprised by, we actually run some print ads in a local magazine. We spend a pretty penny on these print ads annually, and they always pay for themselves. So we’re really strategic about it. It’s a really unique publication. I don’t know that it works in every city or not, but it was just one of those things where like the demographic for this magazine is great, no other financial advisor in my community would ever dare spend $5,000 on a print ad, and so there’s none in there. So if we put together something creative that looks different than what they’re used to seeing, it works, or it has worked. So those are a couple things that we’ve had a lot of fun with that are different that, again, like our competition just isn’t really paying attention to, and, yeah, we’re having some success.

Hannah: Looking at marketing, marketing can be really overwhelming for a lot of people, and I know you said you’re trying to transition more to that ownership, business owner role, but are you doing a lot of this yourself or in-house? What do you do with that workload?

Taylor: I probably need to get better about delegating. I do delegate a lot, so we do have some people in place. We have some editors on hand and some marketing consultants and podcast editors, but for the most part we do a lot of this stuff ourselves, and a big reason for that is we’re still in the beginning stages of things. It’s not like we’re Fisher Investments here and like we have a marketing plan and machine in place and it’s just on autopilot. We’re still very much in like trial and error phase. It’s hard for me just to like hand off to somebody and say, “Hey, run these programs.”

So I like to have control of things while we’re still in that phase, but there’s a lot of little things that just we shouldn’t be doing. John does a lot of writing for the firm blog. He’s a great writer. He’s got awesome things to say, but he shouldn’t be spending his time editing that article, making sure the grammar is perfect, and inserting some back length. That’s not where his time is well spent, and so he’ll write an awesome draft of blog post, and then we’ll shoot it off to an editor to polish it up and publish it. So there’s a lot of little things like that that are in place to help streamline and automate these things, but unfortunately we’re not completely there yet. That means that sometimes I’m up at 6:00 in the morning on a Saturday working on SEO things or staying up late writing out an ad campaign. It’s fun. That’s the good part. The downside is it just takes too much time.

Hannah: We’ve talked about, I hate the term “ownership of clients” because that sounds maybe not the best, but in terms of when you started your own firm, you brought clients with you, and now you’re working with John and other staff members. How does that ownership piece work? Are you the only owner, or what does that look like?

Taylor: Yeah, really good question. I am the only owner of the firm. John joined me about two and a half years ago, and one of the things that’s really important to me is that everyone shares in the growth of the firm. Let’s just say hypothetically all John does is crank out financial plans and eMoney all day. That’s not the case, but hypothetically that’s what John does all day. Well, if that’s what he does all day, then that frees up some of my time to go and do some business development and get some new clients. John should play a part in that firm growth because he was busy at the office holding down the fort while I got a new client, and I couldn’t have done it without him.

So from day one we created a compensation structure that compensates him kind of like he’s an owner of the firm or a shareholder, but he gets a percentage of gross revenue. So I don’t want him worried about expenses, how money is being spent in the firm, and so it’s a percentage of gross revenue, and if gross revenue is growing, John is growing, and if it’s declining, then we’re all declining. But it’s great because if we bring on a million-dollar client, we’re both happy because we both made some extra money or added some revenue to the firm.

So I won’t go into any more detail than that, but that piece of it is really important to me. I want everyone to feel like we’re all on the same team here working towards the same goal. I’d hate for someone to see me bringing on a million-dollar client and I get 100% of the revenue and they get nothing. That just doesn’t make any sense to me. It’s been a really interesting fee structure, but I’ll say this: John has just become instrumental to this firm. He’s become a really integral part of it, and I think he’ll play a much bigger part in this firm going forward. I don’t know exactly what that’s going to look like yet today, but I’m very, very grateful for him and all of the blood, sweat, and tears that he’s poured into this firm and believing in me really. I mean, when he met me two and a half years ago, I was probably a mess as a business owner, so for him to believe in me and take a chance and put in a lot of time, I’m very thankful for that.

Hannah: I know. I’ve talked to a number of planners where once you start running the numbers, again, I always say follow the numbers when you’re working in a firm.

Taylor: Yep.

Hannah: On many different levels. What is a client paying? Where’s the money going? And just the disparity that happens between owners versus the people who are doing a lot of the work. I mean, sometimes that can be a huge difference.

Taylor: It is a big difference, and I don’t … You know, I’ve worked for other people, I’ve worked in other environments, so has, John’s worked at other places. I’ve just seen how people are treated, and I’m just not into that. I want everybody to be working together. I mean, everybody plays a part in this firm. Just because you’re answering phones all day doesn’t mean you’re not adding value to the firm or helping it grow, so I want to be really conscious of that and find every which way we can to treat people like we’re on the same level. We’re all in this together. I’m not interested in playing big, bad boss here that makes all the money.

Hannah: So we’ve talked a lot about being a business owner and an entrepreneur, and I think for a lot of the listeners if you’re on that track or even if you’re not, many times you’re working for business owners. Is there anything that listeners or new planners need to know about working for business owners?

Taylor: There’s probably a lot you need to know. If you play golf, go play golf with them. I always say you learn a lot about somebody by playing golf with them. If you don’t play golf, that’s probably not going to make any sense to you at all, but you spend five hours on a golf course with somebody. It’s a really frustrating game, and you see how people deal with challenges, whether they deal with them well or not. So if you play golf, that’s one idea.

But outside of that, I mean, on that note, you should really get to know who you’re working for or considering working for. One of the things that John and I did when he first joined was we hired a business coach. We hired a business coach to learn more about each other, our personalities, how we work, our natural traits and abilities, to learn how to work together in the same environment and not get frustrated with each other. So that was a really powerful exercise that we went through, so if you have a business owner that’s open to something like that, I think you’ll learn a lot about yourself and the other person and just how to interact and be a better team.

I think another big piece of this puzzle, and as you, again, maybe think about, maybe you’re thinking, “Am I in the right place?” Or, you’re thinking about joining another firm. I think the philosophy of the business owner is really important and how they run the business, how they think about the business, the goals for the business, and then their philosophy for managing investments and managing clients and financial planning. Like, does that all align with you? Because if it doesn’t, I think you’ll eventually kind of grow frustrated if it doesn’t.

And then there was an episode way back, it’s one of my favorites on Michael Kitces’s podcast, with the owner of Austin Asset Management, and he went from intern to CEO. The title of it is something like that. One of the things that jumped out to me was he was this intern working for this guy that owned the firm, and he makes this comment where he said he just followed him around all day with a clipboard and just wrote down everything that this guy was doing day in and day out, and then just like went back to his desk, was like, “How can I improve whatever process that was, and how can I take this off his plate, and how can I make this more efficient?” I just thought it’s such a cool idea for somebody that’s working for somebody else that wants to play a bigger part in the firm. Follow him around, take notes, find ways to improve.

I always say here at our firm, always ask why. Like, “Why are we doing it this way? Is there a better way to do it? Does somebody know how to do this better?” Yeah, I’ll stop rambling, but those are kind of my ideas that come to mind.

Hannah: No, I love that, and the: How do we make my boss’s life easier or the owner’s life easier?

Taylor: Yeah. It’s true. It really is true.

Hannah: What would be your advice for new planners who are starting out in financial planning today?

Taylor: I love this question. I’ll say a few things. One is just do something. Don’t be paralyzed by all the choices out there and finding the perfect firm to work for, putting together the perfect firm to start. Just do something. Get going, get experience, work for good people, learn, adapt, pivot. You’re not going to be at the same firm forever. Maybe, but probably not.

Second to that I’d say if you’re thinking of starting your own firm or maybe you’re in the beginning phases of starting your own firm, you’ve probably heard this before, but make sure that your spouse, if you have one, is on board 120%, because I promise you there is no way that I get to where I’m at today without my wife and her support. There’s just no way, and I probably won’t get to where I’ll be in 10 years without her either. It is critical in this business that your spouse completely understands what you’re up against, especially when you’re becoming a business owner and starting a firm.

And then lastly, about six years ago I came home with this bright idea. I told my wife that once a week I’m going to go have lunch with another financial advisor in our community, and her jaw was like on the floor. She’s like, “What are you talking about? Why would you go have lunch, spend your precious time with a competitor? Why would you go and do that? You need to be having lunch with clients and prospects.”

But it just hit me that there’s so many smart, talented financial planners here in my community that I can learn a lot from, and so I made that commitment, and I still for the most part pretty much uphold that today, have coffee or lunch or a beer after work with another financial planner, and I’ve been doing that for five or six years now. I mean, I can’t even tell you how much it’s changed my practice. I mean, I can’t even quantify it. John wouldn’t be here if I wasn’t doing that. That’s how I met him. So whether it’s finding a job, finding employees, finding new ways to run your business and new technology, I mean, it’s just … Get to know as many other advisors as you can. It’s super helpful.