Executive Summary
For many financial advisors, the most valuable part of what they offer comes down to the financial advice that they give, whether it be the expert guidance they give to a certain niche or a unique point of view that presents unique insights to an individual client. However, the advice given to clients is not always the only useful offering provided, as the process through which financial advisors deliver their advice can also be an important part of their value proposition. As while most financial planning advice may ultimately be modeled on similar principles, the process by which a client’s situation is analyzed and how the advice is delivered can be vastly different depending on the advisor’s particular areas of expertise, niche, firm size, standards of conduct, and other differentiating factors.
In our 94th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how an advisor’s process can be considered a form of intellectual property, and how advisors can market themselves not only as providers of client-specific financial advice, but also as developers of systematic and effective processes used to deliver their advice.
Marketing a service process as intellectual property can be of great value to an advisor – not just as a business venture itself, but also as a way to articulate a firm’s ethos and brand, and even as a channel for the advisor’s own personal development. While creating blogs, books, podcasts, and other types of creative work can be instrumental in publicly affirming the brand identity of what an advisor is creating, it can even help the advisor grow personally and professionally. Clarifying and formalizing what their process is can help generate leads that are drawn to the unique aspects of the advisor’s process, and thinking through best practices and the reasons for implementation can encourage advisors to understand and articulate their most important personal priorities, helping them to identify their own career goals and trajectories.
Importantly, creating a marketable financial planning process can be intensely time-consuming work and can require substantial creative energy, which means that consistency and perseverance will be key to (eventually!) developing a valuable offering for consumers. In the end, though, advisors who commit to a regular schedule to create their intellectual property offering – regardless of what form it takes – will more likely be successful in creating a relevant and functional tool, and at the same time may come away with a deeper understanding of their own character and values!
Authors:
***Editor’s Note: Can’t get enough of Kitces & Carl? Neither can we, which is why we’ve released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and Stitcher.
Show Notes
Kitces & Carl Podcast Transcript
Michael: Yes. Well, greetings, Mr. Richards.
Carl: Hello, Mr. Kitces. How are you?
Michael: I’m doing well. How are you?
Carl: I’m really good, actually, things are great. It’s summer here, and it rained yesterday. It was 37 degrees, almost snowed, and now it’s 70 degrees and sunny, which is…we love that.
Michael: Wow. That’s normal Utah weather volatility. We don’t really get that in DC. It’s summer, which means it’s offensively unpleasantly hot, and we’ll continue this way for about two and a half months. And then it becomes lovely again. It’s the thing about DC. We have all four seasons, you really know what season you’re in. Each of them lasts about three months, and then they move on. But when you’re in summer heat in DC, it’s a pretty consistent depressive summer heat in DC. We don’t get the temperature fluctuations you get in the mountains there.
Carl: Yeah, no. That’s why we like it. That’s why we like it.
Michael: Well, we like it here, but only in the spring and the fall.
Carl: Exactly. Exactly. What’s on your mind today, Michael?
Financial Planning Business As An Intellectual Property Business [1:13]
Michael: So, what’s on my mind today is actually what seems to be on my mind a lot lately, which is like provocative tweets you send out that get my brain stirring. And…
Carl: Sounds like my work is done here.
Michael: Well, I’d say that’s pretty much why you put them out. So, it’s working, congratulations.
Carl: Thank you. Okay.
Michael: But I…So I wanted to drill into one of them that I thought was a really interesting concept and framework that I’ve been seeing crop up one or two other places lately. And you had said, I’m probably paraphrasing slightly here, what if you stop thinking about it as a financial planning business, and you started thinking about it like an intellectual property business?
Carl: Yeah.
Michael: Which, at least to me…So I internalize that in…I’m sure the number of firms I’ve seen over the years that…and I think a lot of this comes from Dan Sullivan, who loves to talk about naming your process and kind of IP’ing your process, that Smith Financial Planning has the Smith way of doing planning, the Smith planning process, and that we don’t just sell this service of doing financial planning, we sell the Smith financial planning process. And I don’t want to…well…I know there are some firms that do that and say that, and it’s really just the same financial planning process everybody else does. But…
Carl: Right.
Michael: …taking it further for a moment, that there are some advisors that do like just do things a little bit differently. We have a little bit of a different process, we have a little bit of a different style, we have a little bit of a different approach. But we’ve really built it up over the years, and it strikes well with clients, and we’ve really built a great business from it. And so, I’m fascinated by this idea of, what happens when you stop just treating it like a financial planning service business? Where I think the fear for a lot of us is, it’s hard to hire new financial planners who are going to serve clients the way that I serve them. It’s the number one reason I hear that advisors don’t want to hire other advisors. “I don’t know if the person I hire is going to serve my clients the way I serve my clients.” I think it really starts to change in some powerful ways when you say, well, maybe the point is not trying to hire advisors who will service clients the way you service clients.
Maybe the point is, how to turn your service process into intellectual property into, the Smith way of doing planning. And then your job is to find any advisor that’s willing to teach, and train, and learn your system, your process. Because the value of your business now is your ability to institutionalize and teach and train your process about how clients get served. So, I don’t know if that’s the thread of where you were taking it as you’d cued it up, but just your tweets on…he was connecting all these dots of, Dan Sullivan, name your process, firms that are afraid to hire because they don’t know if clients can be served their way. And what happens when you so try to take everything that you’ve done for clients over the years in your head, and literally turn it into a piece of intellectual property, the Smith way of doing planning, and actually make that your business to teach and train people to do that and bring clients in that want to be served by that. So, is that what you mean by intellectual property business, or am I just like completely off the reservation?
Carl: No, it doesn’t…that’s not what I meant at all.
Michael: Fantastic. So, where were you going with this?
Carl: I think that’s actually an important conversation, though, because how…I think…and we can get to what…I think maybe what we’ll do is put a pin in what I was talking about, which…that is actually part of it. Right? What’s the process that you take people through?
Michael: Yep.
Carl: And that is intellectual property. And I think we have seen a lot of that. Right? That’s what I think of when I think of the attempts, or actually what United Capital tried to do, systemize a process it. So it’s more like…
Michael: Turn into a $750 million enterprise value. So apparently, there’s some opportunity there.
Carl: Yeah, for sure. But I remember early on, hearing Joe talk about the idea that if you walk in Milwaukee, we want you to have a very similar experience. And if you walk in San Diego, we want that experience to be consistent. And they wouldn’t use McDonald’s in a derogatory way, they would use it in a good example of you know what you’re going to get when you…
Michael: McDonald’s, Starbucks, you know exactly what you’re getting when you go in.
Carl: Sure. So, I think there’s real value in thinking that way. Right? And if you have…Well, actually, I think just about every financial planner does it different enough, that you can think of it that way. This is the way we do things here, and product…sort of create intellectual property around that. And I’m happy to dive into that because I think that’s an important discussion.
Michael: Oh, we can go further down that, but now I really want to know where you were going with…
Carl: Yeah, yeah, yeah.
Michael: …the tweet in the first place if I have wandered completely off the reservation here. When you talk about, it’s not a planning service business, it’s intellectual property business, where are you going with this?
Carl: Yeah. So, the tweet was, right, think of yourself as an owner? What if you thought of yourself as an owner of an intellectual property business, not the owner of a financial planning business? And it was…really, what I was thinking about was this idea of packaged wisdom. Right? Or…
Michael: Right.
Carl: …knowledge products. And you can use those knowledge products. So let me think about this. I think you…I think real financial advisors get paid for wisdom. And the challenge is, normally, that wisdom is just almost thought of as a byproduct. It’s certainly not directly linked to the compensation structure. In fact, I remember a client telling me…And, look, I do not want to derail this conversation into, how do we bill conversation, because we’ve had that a million times. But I remember I had a client saying, “You know what’s so weird about your business? You give away all the really valuable stuff, and you bill me for the commodity.” Right? And that was 15 years ago, a client said that to me. Right? Because we were billing AUM.
And again, I don’t want to…but that’s when I started thinking about the idea like, “Well wait, if that…if I get paid for wisdom or advice if that’s my…if I get paid for that, what is the product?” Right? And I realized the product didn’t exist in an organized form, it was just a byproduct of the conversations we were having, the stories we told, the analogies we used, the examples we shared, the questions we asked. Those were all just happening. And it was almost like that…I just had been…And yeah, Dan Sullivan pokes his head in a little bit. Right? And you start thinking about the scary markets conversation. Right? That’s a package of wisdom. That’s…
Michael: Right.
Carl:…a package of knowledge. Now, where this shows up…I’m not saying anything new here. Most of the time, we just haven’t made the connection between them. We’ve seen plenty of financial advisors who have written books. What is a book? A book is a wisdom product, a knowledge product. It’s an artifact, where I can say here. Here’s how I think about things. And then that book either becomes on its own, independent of how you… The artifact itself could be a revenue generator or it could just be a lead generator. Right? Or both.
Michael: You can sell the book for book sales, you can sell the book because people read the book and then want you to be their advisor.
Carl: Yeah. I don’t know. From some of the stories I heard about…we both know big, big firms that a lot of their growth have come from a single person writing 17 books or whatever, and handing them out like candy.
Michael: Yep.
Carl: And then multi…
Michael: I worked for a firm that did that very, very effectively.
Carl: Yeah, for sure.
Michael: Shout out to Larry Swedroe. I’ve enjoyed a lot of the books, as well. They’ve driven a lot of business by giving books of wisdom to people and some have them have affluence and would like to become a client on that basis.
Carl: Yeah, I don’t know that they have tracked it, but I’m sure Larry has driven this. And literally, I know, the phone used to ring, and people would say, “Hey, I have been reading this book that…” And if you go read Larry’s books and plenty of other examples, there’s no secret held back. He’s giving away the wisdom. Right? Sharing the wisdom. So, if you start thinking…I just think there’s a massive, massive untapped opportunity. If a normal advisor goes, “Okay, I’m not Larry Swedroe, I don’t know how to write books. Okay, I’m not Carl—” I don’t know what they say— “I don’t know how to use a Sharpie and some cardstock.” Yeah, but you do know…and this has been one of the hardest challenges for me, is to convince financial advisors that they do have something. They do have intellectual property that is worth something. Excuse me. Because they…often, this comes up when we talk about content marketing.
And financial advisors over, and over, and over will say, “I have nothing to say.” And I’ve seen them say lots of things, like, “I heard the story you told in that meeting about the need for insurance.” So that’s what I was thinking, was, look, what if we just start cataloging, recording, capturing the wisdom in a package? And I’m intentionally being sort of artifact or package-agnostic. We use examples of books. And 20 years ago, your only option would have been a book. But it’s not anymore. Right?
Michael: So…
Carl: And then if we start packaging that way, we can start to think, hey, is this a process that I can charge for? Is this an artifact I can sell? Is this a course? And then I think…and then I’ll be quiet. And then I think we start to open up a door where we’re like, “Oh, maybe this is a way for me to have an impact on that group of clients we’ve all been talking about that I want to help but I don’t have an ability to help in my traditional model.” So that’s what I was thinking of when I caused that trouble.
Examples Of Intellectual Property For Financial Planners [12:21]
Michael: So, help me connect, though, just…but what’s the actual intellectual property in this example? You’ve talked about turning into a book. What does that mean? My book is things I say in client meetings that turned out to be witty and useful? I’m saying that tongue-in-cheek but is that where we’re going, book of wise sayings that I’ve kind of figured out and stumbled in my years as an advisor and they seem to work really well, that’s my consolidated wisdom as an intellectual property thing? And I’m going to put it on pages of a book and sell it to people? Is that the essence of what you’re talking about? Just what’s my intellectual property as an advisor in these examples?
Carl: Well, it could be that simple. Right? But let me just give you a couple of…because I’ve had this conversation hundreds of times. Okay. So, here’s a couple of little tricks. Let’s pretend like you just got hired to teach a class, it was…it’s going to be 12 weeks long, it’s 90 minutes. So, 12 weeks in a row, let’s just say 14 weeks. 14 weeks, it’s going to be 90 minutes, and there’s going to be 300 people there that are perfect ideal clients. Not even perfect ideal clients. There’s going to be 300 people there that are in the…who would be your typical client. You’re in your niche, however you want to think about it. You’re going to have to show up for 14 weeks. You get an introductory week, and then you get a week to have pizza, a conclusion week. What would you outline over the 12 weeks? Your goal is to teach them everything you know, the most important things you know about the work that you do. Outline that, go teach that? That’s a trick that I’ve…
Michael: So what’s my…what are my 12 lessons?
Carl: Where do you start? Okay, great. What’s the first thing you need to do? Okay, yeah. What are your 12…what’s the 12 most important things? What are the…Here’s another one that I thought was really interesting. We used this. It was in the UK, a friend of mine…and I’m blanking on which one. It was either Allan or Ruth said they wanted to put together a book of things that…and, again, book don’t get hung up on the artifacts, because you could do this as an audible book, which I’m a huge fan of. Skip the printed book. You could do this as a paid podcast, you could do this as a free podcast, you could do this as a…you know podcasts don’t have to go on forever. You could just have 12 episodes, and then it lives on a podcatcher. It’s on iTunes, and you could send those episodes out anytime you want. So you could…
So, what they did was, I want to record everything…The premise was, I can’t tell you how many times clients have said, “I wish I knew you 10 years earlier.” And they were like, I wanted to capture all the things that they wish they had known 10 years earlier. Right? That’s another example. You could. And especially if you’re new in the…I would do this…man, as a new…if you’re new in the business, or still in the, I’m trying to learn as much as I can phase, which may never end for some of us, if you just learn in public…so essentially, just journal what you’re learning. Well, if you would do that publicly…substack, a blog, Twitter, LinkedIn, whatever. If you do that publicly, like, oh, today, I learned about this, this, this, and this, well, it doesn’t take long before…
Think about for me, I just happen to have the forcing function of a column in a newspaper that some people read. Sorry, 52 times a year for 10 years. Then I woke up, and there was a pile, about 520 big of songs I had played. And let me just make one more little comparison. Right? None of us are Bob Dylan, so look, don’t get too hung up on this. But I remember when Bob Dylan sold his catalog for something…I think the number was like 600 million. And I remember thinking like, “Wait, it’s not worth 600 million.” I’m not Bob Dylan, but I had a catalog of 520 songs. Some of them…most of them are garbage. They were good enough to get in the “New York Times,” but most of them were still not…some of them were good. That’s when I started really thinking of an intellectual property business. So, the stories you tell, there’s all sorts of tricks about how to draw that out. So, if you were to commit to writing something, I don’t know, be crazy. Seth Godin says, “Write something every day.” Do you know how many books he’s produced out of the process of writing every day? Do you know how much those books have driven…
Michael: Writing, not much every day. Right? Just even if you think about…
Carl: Sometimes it’s effective.
Michael: …a good example, yeah, a lot of his blog posts are a sentence or a paragraph. It’s something interesting he observes in the world and…
Carl: Yeah, let me.
Michael: …put out there for the world.
Carl: Totally. Let me tell you a trick. Every single day, every single day, every single financial planner, every day of the week, I bet even weekends. But every workday, every financial advisor listening to this runs across something that they think something valuable. Right? They literally like, “Oh, gosh, right now would be a good time to ignore the news.” Write it down. You know like it’s…there’s something going on every day. And so, what I did was I created a…
Michael: But does anybody really want to read my book of, don’t follow the news so much?
Carl: They don’t want to read 90% of it. But 10% of it’s going to be really good, and you’re going to edit it later, and you’re not worried about it now. You just have to start making it. Right? So, one trick I did was I started a subscription podcast. So “Behavior Gap Radio” is $10 a month, and it’s also $100 a year. I let people sign up for an annual because I’m now on the hook to deliver for at least 12 more months. And I promised I would do it every day but Sunday. I just recorded episode 583.
Michael: You do your daily episode?
Carl: Every day. Today’s episode was nine minutes. They’re two to 12 minutes every day except Sundays. And then that’s creating this giant catalog. Somebody else listens to it on the team, they write down what it’s about, they tag it. At the end of the year, we’ve got 360..whatever, 300. Yeah? Whatever that number would be. Yeah, 300…
Michael: There seems to be 50-ish weeks a year. Yeah.
Carl: Yeah. 300 or so. Most of them are garbage. Like you said, does anybody want to read them? Well, the podcast listeners kind of like them. But if I’m going to turn them into another artifact, most of them aren’t going to make the cut. But are 50? Go read Seth Godin’s “The Practice.” There is a hundred…and I think it’s a hundred…I can’t remember, 127 or something. They’re short snippets, 127 of them. So, all I’m saying is…And by the way, there’s massive value to doing it anyway, even if there’s never a byproduct. But there is. And the massive value is just the metacognition. I’ve recorded 580 whatever episodes. And I’ve got a list of like 200 ideas that I haven’t gotten to yet. So I’m not running out of ideas. Why is this important? Because to me, once you get started with this, you start to see opportunities all the time of like, “Okay, why don’t I take that 12…those 12 things I outlined, why don’t I turn them…geez, what if I just videoed them? What if I taught in front of a whiteboard and turn that into a free course for anesthesiologists?
Oh, man, where is it? Oh, it’s hosted on Kajabi? How much does that cost me? Nothing. You know, basically nothing. You know what, people love this so much. What if I just…I think people would pay more attention if I charge $97 a month. Gosh, what if I made it specifically for residents because I can’t really serve residents in my traditional model? Now I’ve got $97 a month, it’s helping the residents. I do five grand a month in revenue from it. It’s 100% bottom line, zero marginal cost.” That’s the sort of thing we can start thinking in terms of impact that we can make on…I think that might be part of the solution to serving the people that we can’t serve in a traditional model. So that’s where I was going with this whole thing.
How To Easily Create IP For Financial Advisors [21:22]
Michael: So, the irony to me, hearing you describe that, is I actually don’t think it’s that different than what I was describing, as well. The distinction is just you’re packaging the wisdom of the client conversations out to the client, and my version was literally packaging the wisdom of how you’re doing planning for your next hire or your next two hires, your next five hires, your next 10 hires, however big you’re going to grow in your scale your business. It’s the same essence of just taking the experience that we’re accumulating and figuring out certain things that seem to go well when we do it a lot in front of clients, and we’ve done it a lot in front of clients after you’ve gotten to a certain level of experience, and that there’s value in starting to write that down, and then trying to organize the thoughts that you’ve written down. And sometimes that turns into things that a lot of other people would actually be interested in reading or following, whether that’s 127 words of wisdom to my future clients about what they wish they’d known 10 years ago, or the Smith financial planning process, what we’ve learned about how to do financial planning in 17 years of doing financial planning.
Carl: Totally. That’s why I was quite… Listening to where you were going with this. I was quite pleased with the idea that, yeah, totally. And I think what we need to remember is you don’t need to know what you’re going to do with it. You just need to start believing that you have something valuable. If nothing else, just for the mental model exercise of thinking about your thinking and writing it down. And we all know, you learn stuff you didn’t know when you write. And I actually…
Michael: Hey, what’s the famous saying? “I write to figure out what I think.”
Carl: Yeah, yeah. And I actually…I don’t think it works quite as well, but I process audibly a little bit easier. And again, I know there are things I miss out on because I’m not struggling with the writing. But that’s why I started the podcast, was because, literally, my…”Behavior Gap Radio” was just me processing out loud, and saying, “Hey, if you find this interesting, I’d love to have you along for the ride.” So, if nothing else, it’s just a way to force yourself to get clear about the way you think about these things. And I love the idea. We have a version of that here, it’s called The Code. And The Code is all our internal documentation about…a principle in the code is we are nice. And I recorded a long video about what it means to be nice. We’re generous in our assumptions about other people. Those sorts of things are operating manual for The Code. What’s really fascinating is, every time I mention it, I am sure…now that I’ve said it, I’m sure I will. But even if I hadn’t said it, every time I mention The Code, publicly, I get tons of requests for The Code.
Michael: Hearing, I’m like, is there a copy of the code that we can see, Carl?
Carl: Yeah, we have it all really well organized with table of contents and everything. Every new contractor that comes on that does any projects with us, we send them a link to The Code, they go through. It’s a way to quickly get an idea of culture and the way culture actually shows up in our actions really quick. I had no idea that would be valuable to people. So many people have asked, where like…
Michael: So we can literally share? Can we put in the show notes for this podcast episode and give people a link to The Code if they want to see The Code?
Carl: I don’t know. I was going to say I don’t know why not, but I better double-check with my COO before I say that.
Michael: That’s fair.
Carl: I know, for sure, that we could give…we could have like a screenshot of some of it.
Michael: All right.
Carl: I don’t know why we couldn’t. So yeah, but that’s an example. I had no clue. The benefit was for us internally, like you’re pointing to the Smith way. Right? The benefit was for us internally, it sharpened our thinking, it became a shortcut for how we do things. Because The Code also…The Code also has all…and you’ve talked about this before, all the delegation tools. Right? Here’s literally a screenshot of how I would do this thing.
Michael: Right.
Carl: We didn’t know that would be valuable.
Michael: To me, the big takeaway from this…just this whole discussion, realizing like hearing you describing this…I’ve done versions of this in my life, in my career, at least for probably the past 15 years. Probably not the first five to seven, but the past 15 or so, that just…As we live our lives, that we do our work with clients, and we do our work in our firms, every now and then, you get these moments, like, that was a really interesting question. That was just…I really nailed that answer to the client. I just…I explained that thing a certain way, and their eyes lit up just like…that was the right way to explain that thing. It’s with the client, it’s with a team member, it’s an insight you had about your business. And a lot just of us, we have those moments, we think like, “Oh, mental note, I should do that again.” Sometimes you remember to come back to it, sometimes you don’t. Sometimes you come back to it the right way, but you don’t even quite remember because the moment’s gone.
And when you just start creating a system to write it down, just brain-dump it somewhere…and for me, I was an Evernote user…well, was. Still am like an Evernote user, hardcore for a long time. So just, I had Evernote on my desk, I had Evernote on my phone. The reason why I liked Evernote is no matter where I opened it, it was like always the same central database. I just had an Evernote note that was just things I’m thinking about, and I could brain-dump them there. And so those things never flitted away. I would capture them somewhere. And then later, I would come back and decide what to do with it.
A whole bunch of turned into blog posts, some of them turn into favorite quotes I like to come back to. I’ve used them in lots of different ways. But create some repository wherever you’re going to brain-dump them. It doesn’t have to be fancier than a journal if you like to write, or an Evernote, or whatever. And take just those brief moments after you feel like you’ve had those moments of inspiration and write it down, and just capture it somewhere. And you might find when you come back to it later after you’ve accumulated a bunch of it, there’s cool things you could do with it, like turn it into a book, or make it your business process, or something else.
Carl: Totally. Amen. And add to the list of things you’re thinking about, like that amazing story, that I can’t believe that Brad and Denise finally built that pottery studio behind the back…The client note you get every once in a while, you start saving those things, those are your songs. Right? If you were a photographer and I went to your website, and I clicked on Work, I would see pictures you’d taken. Right? What’s your work? It’s the impact you’ve made. And if we start thinking of ourselves as like, look, that’s intellectual property, that story I told, I nailed that question, all of those ideas, all the way down to, here’s how I answer email…I think if we just start thinking that way, who cares if it has any outside benefit? Which it will. The internal benefit’s so powerful for sharpening your thinking, the ability to create processes inside the business, that I just think it’s really valuable. And when I tooted the tweet, I…
Michael: That’s not what they call it. Just saying.
Carl: I like the toot machine. That’s my favorite way to think about Twitter.
Michael: You toot your tweets if you want. All right. When you tooted your tweet…
Carl: When I tooted my tweet…at least I know how to retweet, Michael. Let’s not get…
Michael: All right, don’t open that door now.
Carl: Yeah. So, when I tooted my tweet, I wanted it just to bounce around. So, I hope people just leave this thinking, huh, what does that mean? Let it bounce around. It may take you a year or two to let it bounce around, but let that simmer and see what it does to you because I think it’s really, really powerful.
Michael: Awesome. Thank you, Carl.
Carl: Cheers, Michael. That was super fun.
