Unlocking Growth By Asking For A Referral And Showing Value

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

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Full Transcript:

Michael: Welcome, Terry Parham Jr., to the “Financial Advisor Success Podcast.”

Terry: Thank you, Michael. Happy to be here with you today.

Michael: I’m really looking forward to the discussion in today’s episode. And it’s a high-level talk, talking about transitions, and just all the challenge that come with transitions as we go from one firm to another, one platform to another within the industry, one channel to another, which has a whole other set of challenges that go with it. And I know you…it’s a funny thing that for some advisors I see, they’ll spend 10, 20, 30 years with a particular company, in some cases, it’s like found a good fit, it aligns to them, they get good support, they’re really happy with it. And some because it’s sort of okay or not even that great, but the transition is so darn scary to think about moving away, and the work that’s involved, and the hassle that’s involved, and the risk of what if clients don’t come with you, and all the stresses that go with it, that they kind of satisfice them down to a not terribly happy state of being for sometimes a really, really long time, because the transition is just so scary, even if it might be better on the other end.

And so, I know you’ve lived a transition. You’ve had more than one of these transitions over the years. And so, I’m just excited to talk about, I guess, at the most basic level, how do you get to the point of actually saying, “Okay, I’m willing to take a leap, even if it means I have to remember all my clients’ names off the top of my head because I’m not allowed to bring any information. Because I’m that willing and ready to start over somewhere else in hopes of building something that’s better for me.”

Developing The Right Career Path By Learning From The Experiences Of Colleagues [05:26]

Terry: Yeah, absolutely. I’ve heard many times that life is too short to be unhappy. And I take that seriously. I don’t think that everything in life should be perfect all the time. However, if you can see a situation and diagnose why it’s not the way you want it to be, and if there’s other people, say, your clients that are impacted by you staying in a suboptimal situation, I think it’s a duty you owe to yourself and those you serve to make that hard decision, put in the extra work, and to seek greener pastures. Because sometimes people will scare you by saying the grass isn’t always greener. I’ve found that, depending on the lawn you’re standing in, the grass may in fact be greener elsewhere, so you may want to check it out.

Michael: So, I guess that’s part of the question that I want to ask right there, how do you get comfortable with knowing whether the grass is really greener? I mean, I think our industry in particular, everybody’s got something to sell. So, that recruiter will…or that transition consultant will always explain how the grass is greener on the other side because they want your business to make the transition or get to the other side because it’s their platform on the other side. How do you get comfortable for whether the grass is really going to be greener on the other side or not?

Terry: Yeah, that can sometimes be tough. But I would say you first want to have a good understanding of your situation yourself, the pros and cons of your current location. It’s like building a financial plan. Where are you today? Where do you want to go? So, you understand your current reality, and then you’ve just got to make sure that you’re having your head up, you’re looking around, you’re having conversations, you’re building relationships. And through the lens of others or through the experiences of others, you can now start to put together your own understanding of what it might be like.

It’s like when you’re going to a new restaurant, you look up the reviews, or you ask a friend who maybe has gone to that restaurant. For me, there were people that have done this before me for decades. And some of my personal friends, and colleagues and mentors, they’ve done it. So, your podcasts really helped for me to hear from 100 people who’ve done what I seek to do. But yeah, I hit it lots of different ways from the personal research I did on Google late night, to my friends and colleagues that I’ve seen make transitions before me, and then also just dialing into and tuning into three resources, or even paid resources from reputable sources such as your podcast, and honestly, a ton of other information that I’ve also consumed in various different ways.

Michael: So, out of curiosity, what were some of the other go-to sites or resources that you found helpful as you were trying to figure this out?

Terry: I joke that I should be sponsored by Google because I use it so often. By the way, Google, if you’re listening, I’m open for sponsorship. I probably went to Google and said, “What are the best companies to work for if you’re a financial advisor?” You don’t have to have the perfect thing to type in Google, just type something. And then you’re going to end…

Michael: It’s getting pretty good at all. It’s contextual search. Like, “Did you mean the search for this?”

Terry: Exactly. If you just talk about something at the Thanksgiving table, it might end up on your news feed on Facebook. So, you just have to be willing to click the button. And I probably looked at the most impactful podcasts by people in the financial advisory space, and I came across you. And so, yeah, I went to Google, I found kitces.com, I found the podcast. I came across resources on the CFP page. I went to events in the financial services industry. I would just say the biggest thing to avoid is perhaps only letting your world view of the financial services industry reside within your current company. If you do that, you’re really missing out on a lot of good stuff. So, that’s the number one thing that I learned because when I really just lived full time in that box, I wasn’t understanding how much other life was happening around me.

Michael: Yeah. I sometimes talk on the podcast, I started similarly at a big insurance firm 20 plus years ago, and just remember even then, out of the gate, a very similar effect. The big companies in particular, they’re pretty good at just creating this environment where the mothership provides all, like the home office or the central office provides all. And so, you can get pretty comfortable just reading, consuming, learning from everything that they’re providing you. And often, it can move you pretty far forward in your career. But it’s only one slice of the industry, it’s only one slice of the financial services world and how it works. And you really have to take some time to get out of your four walls just to get broader perspective on all the choices and options that are out there, even if that means you look elsewhere to decide you’re really happy with where you are. But we just don’t have any context within our four walls.

Terry: Yeah, exactly. Imagine living in a small town, and you just go to that one grocery store, and that’s the only place you ever shop. And then you move to LA, and there’s a billion places to shop, and now you’re like Alice in Wonderland. So, that was a bit of the experience that I had. I had only ingested the hand-selected messages from the corporate headquarters, and hadn’t really experienced almost anything else. But then actually one of my colleagues said, “Hey, here’s a podcast that one of our former colleagues was on. Check it out.” And that actually was one of the first entrances that I had to really starting to look for perspective of outside of our own four walls.

Michael: So, help us understand the journey then. We’ll get to a couple of transitions along the way as you live through it. But how did you get started in the financial advisor world? What was your first introduction to, “Hey, I think I might try this financial advising thing.”

Terry: Well, if you were to ask my parents, they would tell you that I was destined to be a financial advisor forever because, as a kid, I was really concerned about, “Hey, Mom and Dad, how much money do you make?” Or, “You said that we can’t keep up with the Jones’, but why can’t I have this car or this toy if you all have these jobs with public salaries online?” I would say goofy things like that. But truly, when I was…

Michael: Really? “Why can’t I buy the toy? Because I looked up your income online, I know what you guys make.”

Terry: Exactly. I’m nine years old and I’m like, “Dad, the Army pay structure is public knowledge. And if I’m doing my computations correctly, we could afford four of those for me. So, what’s the deal?” Joking, of course, but I was that kid who was a little bit interested in money forever. So, it almost was too perfect. When I was in college, I played basketball. And as a fellow alumni, he reached out to me and said, “Hey, I have an internship with Northwestern Mutual. There’s a small salary,” or not salary, but, “There’s a small amount that you’re guaranteed every week or every month. How does that sound?” So, by the time I was 20 years old, I was a financial representative. And I had started to get my insurance and my real introduction to the financial services industry.

I started between my junior and senior year of college. And then upon graduation, I then transitioned to a different company. But Northwestern definitely was where I started. And some of the things I learned during that timeframe were really instrumental in helping me to choose this career and helping to have the confidence to pursue it fully.

Michael: So, I’m sure the program has changed a bunch since then, because this was 10 plus years ago. But can you just describe for us, what was that internship program at the time? And what did you actually do day to day, week to week as an intern in the development program back then?

Terry: Yes. So, back then, things were a little bit different. Maybe it was the materials we were using. So, believe this or not, once upon a time, some people would use a shoe box to take note of their contacts, and their prospects, and their clients. So, I truly learned this shoe box method of managing a database and building prospects.

Michael: Good old one card system. Fantastic.

Terry: Exactly. So, in theory, I learned the process of building a financial services business from the ground up. And I had some great mentors, and they taught us about insurance, and investments, and prospecting. I mean, it was pretty in-depth. So, I just remember during that summer, I’d come home late, and I was just fired up. I had all this energy. And I said, “I’m going to do this the next 40 years.” And that’s what I’ve been doing the last decade or so, continuing down that path. So, it was pretty robust. And the interaction that I had with the training folks, and the leadership in that particular office in Upstate New York, it was in Watertown, of all places, if anyone’s been to New York. That was really my first peek into the financial services industry. And some of my colleagues that I know from back then, they’re still working where they were back then, and they’re doing great things.

Michael: So, what did you do with your time while you were actually there in the internship? Is this mostly like classes teaching stuff? Mostly go along on calls with other advisors? Did you have to do calls yourself? Just what did it look like in actual on site, “I’m in this internship doing things I’m getting paid for.”

Terry: Yeah, it was all of the above. There was real formal learning, there was sitting in on sales meetings, or client reviews with other advisors. And then a portion of that was for you to bring in potential people, and then to just sit there, and look pretty, and take notes, and to observe the interaction. I recall that part of my challenge was when you got started. I think we did the Project 100. So, you have to list 100 people that you know from anywhere. And then one of the challenges was they asked me to get a referral from somebody in my Project 100, and then do an introductory meeting with someone that you don’t know. And I still recall, I actually did it, and I sat down with someone that I didn’t know, and they were in college like me. They had no money. But just going through the process and having that experience was really valuable. And today, we’re still friends on Facebook, so I guess that means we’re still friends. And that was just a byproduct of someone telling me, “Make a Project 100, get a referral, and then go talk to a complete stranger.”

Michael: So, I know for some people, just that prospecting element is unpleasant, some sort of outright terrifying. It sounds like that was not an inhibiting factor for you, though. You were getting energized by, “I’m going to go out and try this. I’m going to get an introduction from someone on my Project 100 list, talk to a stranger I haven’t talked to before, and see if I can introduce them and get them to talk to one of the advisors at the firm here.”

Terry: It’s really interesting because by trait, I’m actually not super social. But yeah, so I’m an introvert. So, I actually felt terrified to talk to a stranger. I’ve always had this approach anxiety where I wasn’t a good salesperson. I was afraid to knock on the door to offer to cut someone’s grass. Although I was willing to do it, I just wasn’t willing to tell them I was willing to do it. So, it was this really weird thing where it’s like, “I don’t want to do this, but once I’m doing it, it’s actually giving me energy.” And I think that was just a precursor to me really feeling that this is the work that I’m called to do, and this is the profession that I can really take pride in, and give it 110%, again, for decades. So, yeah, it’s funny how it all started.

Michael: I like how you frame that around sort of an…the approach anxiety, like, “I wasn’t afraid to cut someone’s grass. I was just afraid to ask them if I could cut their grass.” That sort of phenomenon that makes it, I think, particularly hard for a lot of people to prospect. Right? Because just that’s literally the approach portion of it.

Terry: Yeah, exactly. In hindsight, if I was really smart back then, I would have hired a friend to knock on all the doors, sell the services of me cutting the grass, and then split the compensation with them. We would have made a ton of money. We could have bought a whole lot of Pokémon cards. But hindsight’s 20/20, so I guess I missed out on that opportunity.

Understanding Self-Worth And When It’s Time To Move On To A New Firm [18:57]

Michael: I like that. I like that. It’s a good strategy. I feel like that could hold in a few different contexts. So, you’re doing the Northwestern internship, I think you said while you were finishing senior year of school. And then after graduation, you didn’t stay. You didn’t go with Northwestern, you didn’t stay with Northwestern. So, I guess, where did you go, and why not Northwestern if you’d been there for a year already and gotten familiar?

Terry: So, at that time, my parents were still part of the active-duty Army family. So, my dad transitioned from New York down to Texas. He and my mom. And upon graduating college, I didn’t have a strong thing tying me to New York. So, I decided to move to Texas where they were living. And at that time, the Northwestern Mutual office was an hour plus away. It was huge. I felt like I would just be a number. And there was no one there that cared about me, like the folks that cared about me and cared for me in my infancy up in New York. So, when I got to Texas, I said, “I’m pretty much starting from scratch. Let me look for perhaps a different opportunity.” And that opportunity actually found me. It was a phone call from a recruiter for Prudential. That’s actually who reached out to me upon my arrival in Texas after graduating college.

Michael: So, how did they find you?

Terry: Right? Twenty-one years old, barely any experience. I have a life insurance license. I mean, prime candidate. Know no one in the whole state. And, yeah, I don’t know. I would suppose there’s some type of list of licensed insurance people. Or maybe I had the wherewithal to post a resume back then. But honestly, I don’t recall. I just had a phone call with a recruiter from Prudential, and then I actually ended up joining their advisor development program.

Michael: Okay. So, were you looking at lots of different companies to evaluate and make choices kind of thing? Or just Prudential called, you’re looking for some opportunity, the Northwestern office is too big, too far, you’re not feeling it, Pru seems like a reasonable option, and so, off we go down the road with Prudential?

Terry: I’m glad that this was my professional career where this happened because there truly wasn’t a whole lot of thought. It was, “I just graduated college. I live in Texas. This nice person on the phone is offering me an opportunity. Let’s do it.” I had nothing to compare it to other than my experience with Northwestern, which I had already kind of ruled out for my own reasons. So, yeah, I just went forward with it for a while until I realized that that also wasn’t the right opportunity.

Michael: So, what was the nature of the role when you went in with Prudential? I mean, was that outright like, “You are a financial advisor, go get clients.” Was that another internship or development kind of program? What did you go in with or as when you signed on with Prudential?

Terry: That was really the entrepreneurial situation we’ve probably all heard of, where you’re, no kidding, going to be a real financial advisor, and you’re going to be responsible for drumming up your own business. So, I’ve gotten to the program, I did the licensing, I went to the little classes, and talked to their person from Houston who came to Austin. And through that, I was about to get ready to take off, and just try to build a practice on my own from the ground up. I won’t go into the details too far on this one, but the bottom line is I talked to my district manager back then, and I said, “Hey, I’d like to be really successful at this. Are you willing to mentor me and help me?” And he flat out said, “No.” He said he didn’t have time. He was actually trying to help his wife get her career off the ground. And he flat out told me he wasn’t going to invest the time into me. So, I left.

Michael: That’s a little depressing from the manager end. That doesn’t really get you fired up.

Terry: And I don’t think he was a manager much longer, but myself and another new person named Mike, we both left. And Mike actually slid me the brochure for a different financial firm, and that’s where I ended up working for the first five or so years of my financial planning career.

Michael: So, how long did you stay at Prudential then? I mean, was this a relatively quick, “Just came in, got my licenses, and then as soon as I was ready to get going, had the conversation with the district manager.” He said, “Nope, not really going to help mentor you,” and that was that? And just said, “I’m noping right on out of here.”

Terry: That’s exactly it. I probably started in July of 2012 with Prudential, did the licensing, got up and running, asked that question. He said, “No.” I said, “Well, what am I doing here?” So, then I went and interviewed with First Command. And by the time 2012 ended, I was fully licensed. I was going through their advisor orientation program. And at the beginning of 2013, I then started with First Command with my manager, Samantha, who was a lot more accommodating, and a lot more willing to help mentor someone who doesn’t know anything.

Michael: So, then what led you to First Command, aside from, it sounds like, Mike slid you brochure that said First Command in it, and it looked interesting? By this point, this is the third firm you’re checking out and evaluating. So, what led you to First Command or clicked First Command, or just was this another when someone gives you an opportunity, you don’t say no, you just take the opportunity?

Terry: Exactly. Here I am, 22 years old. And theoretically, I’m working at my third financial firm. And I’m going to blame some of this on my parents. I mentioned that my dad was in the Army. He started in the Army when he was 18 years old. And you basically go where the Army says. And then your family and your spouse comes with you. So, I kind of grew up in this life where it’s like you go where the Army says. So, as I graduated college, these opportunities were shown to me and I said, “Well, I guess I’m supposed to just go that way.” So, I just did. And then I realized pretty quickly that you probably shouldn’t follow that for your whole life in your professional development. So, by the time I got to First Command, I think I was getting a little bit smarter, and I chatted with them. Their plan for how they helped people sounded like it made sense. Their target population was military, which, again, I grew up in a military family.

Michael: Right. So, very familiar space, right? First Command is a super long roots tradition in serving the military.

Terry: Exactly. The office was located less than a mile from where I was living. So, the commute was pretty short. And then during the interview process, I told my parents about it, and they said, “Oh, we’ve been members of them for 30 years.” And I went, “Didn’t you think this would have been important to tell me a long time ago?”

Michael: “Before the first two other companies I was trying out with?”

Terry: Yeah. So, I’m like, “So, that’s secret financial meeting you were doing in the past at other places in the country that I never understood.” So, yeah, it just felt like gravity and all these things were converging. And it was like, “Okay, this sounds like a place where I can get started.” And oh, by the way, there was a $2,000 salary for the first 3 months. So, $2,000 salary sounds better than 0 salary. So, I was like, “Wow, maybe the third time’s the charm.” So, that’s where I got started.

Michael: Okay. So, what did that role look like? Was that another ultimately similar to Prudential? Like, “We’ve gotten you your licenses. Go get some clients now. Good luck.”

Terry: Pretty much. Back then, there was something called the Gateway Program, and the goal was for them to help mentor and grow you up to 12 months until you were a fully independent financial advisor. But really, it was, “You’re licensed, go find some prospects.” And you’re going to get assistance from your district manager, and maybe your other partners in the office. But there was no formalized partnerships, there was no revenue splitting. There was none of that official mentoring that you see at some other companies. So, it was truly like, “Hey, you’re licensed. Go find some people and get some production.” Your salary doesn’t last forever. So, you got to get out there, and you’re going to eat what you kill. So, you got to get out there and work.

Michael: Interesting. And just the First Command environment, at least the time was very individualistic as opposed to a lot of revenue-splitting split cases, which just some companies, there’s a lot of that, some companies, not so much. So, sounds like First Command then was not a lot of splitting, just, “Go do your thing, you’re licensed, go get some clients.”

Terry: Yep, exactly. And to date, I don’t know if they’ve changed that, but when I was a leader at the company, there was still no splitting of any type. If a senior advisor helped you, it was just out of the goodness of their own heart. They didn’t get compensated anything for it. They truly just donated their time. And I did have people in the office that donated their time to help me understand and learn things. And one of them in particular, he kind of grunted and was like, “Hey, if you want to be any good, read this book.” And you know what? I read the book and it actually did help. It was a book about storyselling.

Michael: What was the book?

Terry: It was “Storyselling for Financial Advisors.” And it was all about taking topics, making them simplistic, and perhaps visual to help clients understand what we’re talking about. And to help move them towards doing things that are in their interest financially. So, that ended up actually…that probably made me a living, honestly. So, kudos to you, Chuck. I appreciate you throwing that book my way.

Michael: And I know it is still out there for anyone who’s listening. This is episode 311. So, if you go to kitces.com/311, we’ll have a link out to the book by Scott West and Mitch Anthony. I know that one well. So, you’re in. It’s an eat what you kill environment. There’s not even much case splitting, so really, you’re in, you’re on your own. It’s an eat what you kill environment. So, where do you go first? What did you start doing to try to start getting clients?

Eliminating The Need To Prospect By Asking For Referral Commitments Upfront [30:04]

Terry: It’s really interesting. Now I would consider it the triple-A approach. It’s where you’re going to explore all available avenues, so literally try everything, try anything. So, I have…

Michael: Triple A, all available avenues. Okay, got it.

Terry: Exactly. So, it’s almost like the spaghetti thing you’ve heard of. Just do some stuff. Let’s see what sticks. So, I had a partner named Manny. And Manny was one of the advisors in the office who had more tenure than me, he’d say, “Hey, let’s go to the mall, and let’s just see if we can strike up some conversations and contact prospect.” Or, “Let’s go to Panera Bread or Taco Bell, and let’s just see if we can meet some prospects.” So, no kidding, sometimes I would ride along with Manny, and that’s how we would spend our time. Because when you’re a new advisor, you’re either talking to a client, or prospect, or you’re unemployed. That’s what I was told often. So, either you’re talking to somebody, or you’re going to find someone to talk to. So, we would go to any and all events we could find. We would look on social media, we would walk around Panera Bread and have for lunches to try to meet somebody.

Michael: To literally just strike up a conversation with the person sitting next to you at Panera, while you’re eating your fourth sandwich to have an excuse…

Terry: Exactly.

Michael: …to get… At some point… I just have to ask. At some point, when you go up to the register for the fourth sandwich, do they look at you strange?

Terry: Manny was smart. I think he had some special deals where he would go to the register, but they would give him just half the order, and then half later because they know he’d be there for a while.

Michael: Oh, nice. Okay. So, it’s a good way to pace himself.

Terry: Exactly. And some advisors will do lots of lunch meetings, and they’ll eat smaller lunches. So, they’ll do salads because you don’t want to have a big double cheeseburger every time you’re talking to a client or prospect. So, yeah, no kidding. It was the craziest thing. We literally tried anything and everything to try to make connections. And again, here’s the introvert who has approach anxiety, but here’s Manny, the complete opposite. So, to his credit, and if he ever listens to this, to his credit, Manny is fearless. He’ll talk to anybody. He got a lot of phone numbers. Not all of them worked, but he got a lot of phone numbers, and email addresses, and Facebook and LinkedIn connections. So, again, that’s how we spent a lot of our time, just looking for a breathing person to have a conversation with us.

Michael: So, did any of these work for you? Were there some that gained more traction than others? Did you convert some prospects for Panera, Taco Bell, neighboring table conversations? What actually moved you forward?

Terry: Yeah, very few of those were successful. Now, there was a booth event where I gave away a free $900 value financial plan. And the person that won that raffle, they actually called me today because they’re transitioning from the military February 1. So, they’re a real client. They actually became a client from one of those random things we did. But unfortunately, no, we pretty much struck out at Taco Bell, Panera Bread, the bowling alley, and all of the above.

Michael: So, then what happens? What comes next? Did you eventually find something that works, or did you have to transition to something else?

Terry: So, what happened next was, if you can’t tell already, I was floundering as an advisor. I had no personal connections. I had no natural market. I had no desire to, or skill set when it comes to contact prospecting. So, I was on the verge of getting fired. I was not meeting my metrics. My numbers were terrible. And, you know, I truly should have been fired. What actually ended up happening was my then district manager ended up leaving that position. They brought in a new person named Brandon. He became my district manager, and he had a conversation with me.

He said, “Hey, your numbers suck. I’m about to fire you. Let’s have a conversation.” And the bottom line of the conversation was, he said, “You know what? If you’re going to be a part of this office, you got to have two feet in the boat. Right now, I can tell you have one foot in, one foot out.” So, he said, “Either get both feet in or get off the boat.” And I said, “You know what? You were successful. I will listen to you.” I put both feet in, and then my career kind of took off from there.

But that’s truly what happened. I was failing miserably. I was really embarrassed because I had never really failed at anything in my life up until this point, really. And new leadership came in. We had a heart-to-heart conversation, which was mostly him saying, “Hey, you suck, let’s get committed, and I’ll help you if you give 110%.” And I made the decision to give 110%. And to his credit, he helped me turn it around.

Michael: So, talk to us more about that. I mean, I tend to think of, by the time we’re literally just going to Panera and talking to strangers at the table next to us, we’re going about as all in to try on this as we can. So, what was still only halfway there, one foot in about what you were doing that was going to change once Brandon was calling you out for it?

Terry: Honestly, I think the biggest thing was confidence. Again, I’m 22 years old. I have almost no professional experience in this particular area of my life. I have no background track record of success. I don’t have a close mentor that I can really lean on because the other advisors were experienced folks that were not in my stage of my career. So, honestly, I think the biggest thing was lack of confidence because I was realistic that, “Hey, this isn’t going well. I may need to start looking for the exit. The movie’s almost over. It’s not very good. Might be time to go home.” So, I think that’s the number one thing he probably noticed was the lack of confidence.

And then also, at that stage of my life, I was like many people, I was willing to make up excuses. Even if they were legitimate, I was willing to have a reason why something didn’t work out. And his attitude, which I should have picked up from my life anyways, was there’s no excuse. You do or you don’t. So, that was one of the rules. Don’t tell me why something didn’t work. Tell me what you’re going to do and tell me how you’re going to get it done. That’s it. There’s no other conversation. And that’s just what I needed to hear at that time.

Michael: So, then what changed? What did you suddenly start doing differently once you have that call to action, or getting called out that way?”

Terry: So, there are a few different things. I found out that my ability to give information was really enhanced when I presented to a group or to a person, and especially when I use visual aids. So, I started using the whiteboard for almost my whole client meeting, and my success rate went through the roof. I also started asking for referrals in a different way, and my referrals went through the roof. So, by using the whiteboard to visually connect with people, by having a more proactive, direct referral expectation and process, and then also just eliminating excuses, and making it my life’s goal to be as efficient, and effective, and as professional as I could be, those things together turned my business from terrible to pretty dang good. And about a year and a half after that, I got a bunch of awards, one of them being Salesman of the Year, which nobody saw that coming. So, pretty big turnaround.

Michael: So, help me understand a little bit more, just what exactly you were doing differently? You said you started asking for referrals in a different way. So, what was different, or what did you start doing that was working so well in asking for referrals?

Terry: That’s why I like this podcast, because you get down to, “No, but really, what were you doing?” So, when you read the script that I was given, the script tells you to talk about the value, and say, “I have an important topic. Could we brainstorm?” People that might find value in the types of things we’ve discussed. And my district manager said, “Throw that out the window.” He said, “We’re doing a valuable service for people.” And he did this with one of my clients. He asked the client, he said, “Hey, is Terry doing a good job?” The client says, “Yes.” He says, “What is Terry doing that’s good?” The client tells him what I’m doing.

He says, “Great, I’m glad you’re seeing that value. And I can tell you there’s 1000 other people at the base that need to see Terry and get some of which you just got from him. And I’m going to expect that you introduce two or three people to him in the next week. Can you do that?” Guy says, “Yep, I can do that.” That was Lieutenant Larsen that he said that to. And sure enough, Lieutenant Larsen referred some people. And that’s when I kind of saw, “Wow, you can kind of…depending on your client, and their attitude, and their personality, you can kind of just shoot straight and be honest, and it works.”

So, I was never as directive as my district manager, but I changed my style to where I would say it in a different way. And we created this expectation that you’re going to pay it forward to the next person. If I do a great job, I don’t want to have to ask you for referrals. I’m going to rely on the fact that you’re seeing so much value that you want others to get some of what you just got, so I can make sure they’re squared away as well. And that’s how we did it, and that’s how we rolled. And it ended up compounding on itself pretty quickly.

Michael: Interesting. So, I guess I’m wondering, is that like a military thing in particular? I’m just struck. You give an order? I mean, Brandon give an order to someone in the military, “There’s 1000 others at the base that need what Terry’s doing as well. You’ll refer to two to three in the next week.”

Terry: Yeah. Again…

Michael: You’ve been given an order from Brandon.

Terry: Yeah. I think there’s some truth to that because, as I said, my dad was in the Army 33 years. When the Army gives you an opportunity and says, “Hey, do you want to move to Kaiserslautern, Germany?” You don’t say no. You don’t say, “I’ll think about it.” You say, “Yep, when am I going?” When they ask you to go to combat four times, you don’t make excuses. You get your boots, and you go. So, the population is programmed where if they see value, and if you seem like a person of authority, that they’re likely going to follow your lead. So, a lot of someone following your lead comes down to your confidence. I’m going to hope that there’s some competence behind that confidence. But if you’re confident, and you’re talking to the right person, yeah, especially with that background, they’re probably going to follow the orders, or see the value to the level that they want to share it and empower others.

So, yeah, it was a really interesting thing. My style was never as directive as his, but no kidding, he came into my meeting, told my client what he was going to do. And my client did it phenomenally. And I was just blown away. I was like, “Wow, who would have thought?”

Michael: So, how did you do this in your style? Because I feel like there is also an effect of Brandon’s basically in that meeting as the manager, authority figure, he’s referring to what Terry’s done, and ask the client, “Well, you’re going to refer three more people to get help the way that Terry helped you.” I feel like there’s a power dynamic that would be harder to pull off when it’s you saying it like, “I’m really valuable. You are going to refer me to three people next week.” How did you end out doing it or framing that conversation?

Terry: Yeah, it’s funny. I haven’t thought of this in years because, of course, it works so well, I stopped doing it. But what I would do is, during my introductory meeting, I would pull out the referral sheet and I’d say, “Hey, so this is the sheet I’m supposed to use to ask you for people that you think might benefit from this same type of process. I’m not going to ask you to introduce me to anybody or to even think about that yet. However, at the end of this process, if you found value in our time together, and you think that others would probably benefit from this same type of process, then I’m going to slide this sheet of paper over to you, and hope that you jot down two to three people you think I should talk to next. How does that sound?”

And they would say, “Sounds good.” So, I’d say, “Great. Well, that’s it. I’m going to put this sheet away. But again, at the end of this process, I’m going to show you this sheet, and if you found value, that’s the way we’re going to rock and roll from here.” That was it.

Michael: That’s interesting because I’m just…the pure psychology of it. They’ve made a commitment up front that they’re going to help you get referrals if they find the process valuable, because it’s an easy commitment to make before you go down that route anyways. But then when you take them through the process and it’s valuable, it’s like, “Well, you made a commitment, and I gave you something valuable. So, really, what’s holding you back from referring me now? You said you would refer me if it’s valuable.” And I’m going to assume you probably don’t even have to say it and call them out that way at that point. They probably realize, “I made a commitment to refer if it’s valuable. And it was valuable, so I guess I should be referring Terry at this point.”

Terry: Exactly. And there’s so many layers to that. There’s almost a take-away close, right? So, I would have people say, “Hey, well, I want to give you people today.” And I would say, “While I can appreciate that, I would want to ensure you’re really happy with the process before you recommend other folks. So, keep them in mind, kind of put a pin in it, but I want to make sure I take care of you first. And then we’re going to take care of any and everybody else that you think would be a good fit.” And again, it worked. It worked phenomenally well. My last year, I started over 50 new clients.

And you know how advisor world is. I probably could have worked with more people. I could have worked more hours, I could have been even more efficient and effective in what I was doing. But it worked well enough to take me from, “Hey, you really should fire this guy. He’s a loss leader.” To, “Hey, let’s promote him to the corporate headquarters to teach other people how to do this, and grow our revenue as a company.”

Michael: And so, then what was the whiteboard flow? So, clients are coming in, just instead of trying to explain it, you would draw it to show them, kind of thing?

Terry: Exactly. So, with a lot of companies, they have a script. Or they can’t call it that. They call it whatever compliance tells them to call it. And they want you to walk through this whole thing. Maybe you have collateral you hand them. You point to little pretty pictures and say, “Hey, if I took away one leg of the stool, what happens?” They kind of give you that thing. But with my style, I was energized when I would stand up, and I was energized when I would draw. And I’m really bad at writing. My writing is terrible. My drawings are even worse. So, it gave me an opportunity to make jokes about myself, and for clients to laugh and to feel engaged when I would draw stuff.

I’d say, “You can probably tell I’m so good at drawing. Can you guess what this picture is?” And that’s how I would open conversations about inflation, or about Roth conversions, or about whatever. So, I went from using a checklist for my meetings to, no kidding, starting the meeting at the whiteboard and saying, 80, 20, 65. Have you ever heard of that?” And people always go, “Oh, yeah, I’ve heard of 80, 20, 65.” So, you say, “Well, what does that mean to you?” And they’re like, blank stare, or they make up something really crazy.

And where I would start it was, “By the time you’re 65, you’re probably going to want to retire, and so are a lot of other people. And there’s going to be two groups. One group that can retire, and one group that can’t, according to the financial goals that they have for themselves. So, if you could choose, would you rather be in that group that’s able to retire or not per their own standards?” Of course, everybody says, “Able to retire.” And whatever math we were using or research we were using, we were saying, “Well, approximately 80% of people have a strong financial plan that allows them to reach that level of success…” or excuse me, “20% have that type of financial plan that allows them to reach that level of success. Where 80% may not get there according to their own terms.”

So, again, we use the whiteboard to write things on there. We would put a quote at the bottom. I would, no kidding, explain the financial planning process, the impact of inflation, the rule of 72, investment 101, insurance 101. I had a gazillion things to talk about, and I would talk through my hands, and I would talk through the whiteboard, and it just worked for that demographic.

Michael: Interesting. And so, not to ask the silly question, but what if you’re meeting them at their location where you don’t have your whiteboard? It just feels very, “Come to my office where there’s a whiteboard or I can’t talk to you.”

Terry: Yeah, it became a bit of a joke. I became the whiteboard Jedi, and I would, no kidding, at the training school, turn off all the lights, and have a light saber, even though I never watched “Star Wars” or “Star Trek.” Sorry to any of the fans out there. But again, for us, when we’re doing financial planning, there’s this power dynamic. And I was young. I was in my early 20s. And my manager, he said, “You need to get people in your office. You don’t need to go meet them at their house. You can’t meet them on post. You don’t need to meet them at Ruby Tuesdays. If they’re serious, they’ll come to your office.”

So, you know what? Ninety-nine point nine percent of my meetings were in the office where my whiteboard was. Some advisors, they would take their little whiteboard, and they would do all this stuff. I didn’t do that. I had the biggest whiteboard my wall could accommodate in my office, and that’s where people came, and that’s where business was done, in the office, on the whiteboard.

Michael: Interesting. And so, how did you handle just the broader…the approach anxiety part of this? Just does it go away when you’re getting referrals now that you’ve found a way to ask for referrals, or do you have some other way to cope with it?

Terry: Yeah. So, when you’re building a business, what I learned was you either contact prospect or you get referrals. And by getting enough referrals, you give yourself the permission to not have to contact prospect. You know what? I got really good at getting referrals. I got really good at presenting to a group, and inspiring them to want to come in and be clients of mine. So, I never contact prospected again. I would go with the other advisors, or I would go to the booth events to show support, but I wasn’t there to get business. I was there to be a team player, to encourage the other advisors. But once I got enough referrals, I gave myself permission to not have to do any more contact prospecting, and I pretty much never did it again.

Leveraging Dinner Seminars And Third-Party Marketing Solutions To Rebuild A Client Base [50:11]

Michael: So, then what ultimately changed? I mean, you’re not still at First Command, so what changed that eventually led to a transition?

Terry: So, there were a few different stages there. I was an advisor. I went from zero to hero, literally hero according to some people. I then got promoted to the corporate headquarters, and I worked with some folks there to lead the training department, and to onboard and train every single new advisor in the company. I did that for two and a half years. And then I was promoted again to district manager. So, when I left First Command, I was actually a district manager in Savannah, Georgia. I had just bought a house. And I was in my position for about six months. And I resigned. So, there was a lot of stuff that happened from failing advisor to being super successful, to becoming the company darling that everybody thinks is going to work on the fourth floor someday, to then giving my resignation and saying, “30 days, I’m out of here. Thanks for the fun.” So, there was a lot. Do you want me to just summarize?

Michael: Yeah. I mean, just what brought it to a screeching halt? I mean, just when you had that much momentum.

Terry: So, I haven’t mentioned this to this point yet, but at a certain part of my career, I met my would-be wife at First Command. She was working in a different office. And she ended up working at the corporate headquarters. We started dating. I moved away. So, fast forward, we reached this point where she no longer wanted to work at the corporate headquarters, and she wanted to live closer to where I was. We wanted to both live within a reasonable distance of each other. And they said, “Well, because you’re a district manager, that’s not possible. You have to step down as a district manager, or she has to step down as an advisor.” And really, they were saying she has to step down as an advisor. Me not being a district manager was not ever a part of the plan.

And there were some other things that happened where I was really unimpressed with the leadership of the company, and saying, “We stand on values, and we value people.” And then seeing the exact opposite of that where I said, “You know what? You guys aren’t trying to make it where we can live close to each other. You’ve also violated my trust by treating her terribly.” And truly, I went there and there was a financial penalty they were going to levy on her for leaving her position at the headquarters early. And I said, “It’s this simple. You waive that penalty against her, and we’ll be good. Or you enforce that penalty,” which was, call it, 10,000 bucks, “and we’re not going to be good. We’re going to have a problem.”

And in typical fashion, they wanted to show how tough they were, that they weren’t going to waive a penalty, which was dumb. And once they made that decision, I put in my 30-day notice, and I left. It was that simple.

Michael: Wow. So, you’re on this great trajectory, and now, all of a sudden, you’re not.

Terry: Yeah. My parents thought I was insane. Because I had been Salesman of the Year, top accolades as a producer, Supervisor of the Year, Core Values Award. I mean, I got a plethora of awards, and by all accounts, I was on a meteoric rise to the top. But it came to a screeching halt because, one, they treated my then girlfriend, who would become my wife, poorly. And they gave a lot of talk about values. And when they had an opportunity to do what I felt was the right thing, they chose to not do the right thing. So, without much other consideration, I put in my resignation. I quit. And I literally had no idea what I was going to do. I just knew my life would be better not being there. And that’s a true story. It was months later that I felt…

Michael: I was going to say, did you have a plan of where you were going, or no, you’re just out on principle, “And we’ll figure out what comes next next.”

Terry: The latter. Out on principle. I resigned April 1. We got engaged two weeks later, we got married five months after that. And by the time that came around, I was living in Washington, D.C., and working at Prudential Financial.

Michael: Wow. And so, you ended out back at Prudential?

Terry: Yes. Yep. It was strange. I was with my wife…

Michael: I’m going to assume the fateful district manager was not still there.

Terry: Exactly. Again, out of the blue, I get a phone call from Prudential, and the recruiter, and I was in Washington State meeting my to-be…well, not meeting, but spending time with my to-be in-laws. And I took the phone call from Prudential. Kennah and I went there, and interviewed, and we liked the story that they shared with us. We liked the people there. And we made a decision, “We’re going to work with Prudential,” and that’s where we got started.

Michael: And so, at that point is that you and your wife going in together since you are both in the business? Oh, I guess, did she stay with her job at First Command since she still had this penalty thing looming? Or at this point, you’re both out, and you both jumped in together with Prudential?

Terry: Oh, yeah. Sorry, I kind of skipped that. So, yeah, she was a super successful advisor, top 1% producer, the heir apparent. And then, again, there was some really weird stuff that they did there for whatever reasons. So, yes, she quit effective March 1. And when she gave her notice, shortly thereafter I gave mine. And we both said, “Hey, let’s just be jobless but together.” So, that’s what we did. We went to Hawaii, spent two weeks there, and then we came back ready to…to get ready to make life happen. So, Prudential hired both of us as an engaged couple. And then shortly thereafter, we were a married couple. I already had my CFP, CHFC. She was working on her CFP, and shortly after she got her CFP as well. So, yeah, they hired both of us. Gave us the exact same offer. Brought us in both as full financial planners on their experience advisor track. And then we just started again from ground zero with no clients in a new market that we had no experience.

Michael: So, you didn’t get or have the opportunity to bring any of the prior clients with you that you had had at First Command? New location, clean start?

Terry: Yes, because when I was an advisor and I got promoted to the corporate headquarters, I gave away all my clients.

Michael: Right.

Terry: And then when I got promoted again to district manager, my…what I was taught was the district manager is responsible for overseeing the advisors, and ensuring things are going well for clients. So, the assets I somewhat inherited, I gave away. I gave away all the assets to the advisors, and I focused all my time on being a district manager. I didn’t want to be a player coach. I wanted to be a coach. So, truly, here I am leaving an opportunity with good income, great career trajectory, and started from complete scratch in a completely new part of the country.

Michael: So, how do you…or I guess, you and Kennah get started this time? At least not your first time doing the built-from-scratch at this point.

Terry: Exactly. So, our story has been very…it’s been crazy. I can’t believe it’s been this much before we even get to Innovative Wealth Building, which is the current company that we work with, and that we’re partners in. But we came into Prudential. And we learned about outside marketing. So, through our connection with Prudential, we went into organizations where we gave financial presentations, and people could decide to do meetings with us. We also learned that there’s this thing called direct mail. Did you know you could send thousands of letters to random people and invite them to dinner? I never knew that, although I was a CFP, CHFC, and supposedly one of the wisest people in a whole organization. I didn’t know you could do that.

So, we partnered with some folks at Prudential, and we sent out mailers, and we hosted dinner seminars, and we got clients. So, that’s how we started rebuilding our practice. It was through in-person presentations, either at companies that we were assigned to, or just through direct mail, or word of mouth.

Michael: So, did Prudential create these opportunities, and provide you the mailers and all that? Or did you have to figure that out, or find services that do that for you?

Terry: They had some existing relationships where you could just click the easy button, and use people that were already approved. So, that’s what we did. We just took their advice. We used this provider. And I think our office actually gave us some matching money for marketing. So, we put up some money, they put up some money. We did an event that led to us bringing on some great clients. And then that was a part of our plan, to continue to do that as a part of our business. And that worked well for a while. During that whole progression, we got married. Eventually we got pregnant. Our first son, Everett, was on the way. COVID happened. A lot of stuff would happen after that. But yeah, that’s how we got started, doing seminars, and just showing our knowledge, and then inviting people to have one-on-one conversations with us.

Michael: So, who did you work with for executing on the seminars, and the direct mail?

Terry: I’m having a hard time remembering. I know that LeadJig was one of the tools. Oh, actually, I remember. It was called RME. I don’t remember what that stands for, but RME.

Michael: Oh, yes. Yeah. RME was one of the early…response mail something. And I think RME ultimately became LeadingResponse.

Terry: Yep. That sounds correct.

Michael: Because they went through a bunch of mergers. So, the RME turned LeadingResponse. So, I guess, how did it work? What do you pay? What do they do?

Terry: So, you basically select how many mailers you want to send out. You select the zip code. You select the demographics of who you want to mail to. And we were new to this. So, we basically talked to our point of contact and we said, “Hey, what works?” And he said, “Well, if you do this age, and this level of affluence, and if you do this zip code, blah, blah, blah, pick this steakhouse, it’ll work.” So, we said, “Cool, let’s do that.” I think to send out 5000 mailers was about $3,000 back then, and that’s what we did. And then we also had to reserve a place to do our event. So, one of the places that we used in Bethesda was Seasons 52. So, we chose Seasons 52. We did a Maggiano’s at one point. We were experimenting and trying different ways to do this. And fortunately, it worked out. But that’s how we did it.

Michael: So, I guess just how would it work? $3,000 to send out mailer. How many people come out? What do you actually talk to them about? What was that seminar process?

Terry: So, with the package, the mailers went out, people could then go online to respond, or they could call the call center. And then the software would tell you who the person was, what their personal data was, approximately age, level of assets, etc. So, we pretty much didn’t do anything. We paid the money, and then we gave confirmation calls, and then we just showed up. And we usually had 20 to 30 people in the room every night, and we would do two to three nights per campaign. And we did campaigns just once a quarter, and it worked out well. So, 20, 30 people show up.

And if you’ve ever done direct mail, you probably have three groups of people. You have people that are just there for the free food, you have people that are there that have already decided they’re never going to work with you. And then you have people that are there that are open to perhaps considering working with you. And we were super simple. We talked about Social Security and Medicare. That’s it. We talked about that, there was no sales pitch. There was very little about us. Our intent was to provide information to hopefully give them something that was going to be important and impactful as they think about retirement planning.

And then, again, to just openly invite them to have a follow-up discussion with us. And that was it. So, there was no frills. There was no huge, crazy, complex plan. It was truly, get people in the seats, give them free information that’s hopefully valuable and free of sales pitches, and then just let the cards fall where they may. And that’s exactly how we ran it.

Michael: And so, did you have to create the Social Security, Medicare presentation, and create the Social Security, Medicare mailers to get them to come to the presentation? Or is that all handled by RME, LeadingResponse?

Terry: That was all handled by RME, LeadingResponse. And when you have a big company or a big broker-dealer, they’re involved. Their compliance has to approve everything. So, it was pretty much just plug-and-play. We walked into a situation where we could just do it. The presentation was already created and approved. All we had to do was pay the money, and then show up and do a good job. And then, of course, handle the meetings thereafter.

Michael: And so, what were typical results? You spend $3,000, you get 2 to 3 nights, 20 to 30 people each. So, you’ve got this 60 to 90 prospects by the end. Well, I guess, I’m assuming $3,000 for the mailers, and then a little more for dinner for 60 to 90 people at Seasons 52 and Maggiano’s.

Terry: Exactly. And we had partnership relationships where partners could pay some of the cost for the meals. So, we weren’t really out of pocket on the food quite as much. It was more so just doing the mailers. And again, we got some marketing dollars because the organization wants new clients, new assets. So, sometimes they’re willing to work with you there.

Michael: So, local wholesalers would help cover the cost of the meal. And then the company was helping to cover at least part of the cost of the mailer. So, between the two, your out-of-pocket’s even more limited?

Terry: Exactly. So, if it was $1,500, and you just bring over 1 or 2 clients, you’ve probably made your money back, plus some. And the demographic that we were targeting were people that were closer to retirement. So, I think technically our bracket was age 55 to 70, or late 60s. These are people that are typically thinking about Medicare, Social Security. Or that are getting closer to that retirement red zone. So, yeah, our ROI was great. We were able to bring on some new clients. Again, if you’re thinking 60 or 90 prospects, and if you only convert 20%, and if you just think the average case being $500,000 to $1 million, you can quickly do the math and go, “Well, this makes money.” And it did make money.

Michael: Were those actually typical conversions for you? You do your 3 nights, 60 to 90 prospects, 6 to 12 clients, $500,000 plus each, so $3 million to $5 million that comes out of it at the end of that process?

Terry: Absolutely. I wouldn’t say that every single one was that way. If you’ve done any type of seminar planning like that, you’ll find that, for some reason, some are super profitable, and others maybe not. But it did work out that way. To date, I probably have at least 10 $1 million clients that we met through that type of arrangement. And we didn’t do that for long. We only got to do that for a year or so. And then COVID happened. And then we went away from doing the in-person seminars altogether. And we haven’t done one since. So, yeah, it worked out quite well. And the business that we were doing was multifaceted. Some of it was financial planning for a fee, some of it was, of course, AUM.

And then also, where appropriate, we would utilize annuities as a part of retirement planning typically. So, between those different sources, and those different product lines, if you will, again, there was a…it was pretty easy to see the relationship from money invested to net profit.

Michael: So, then what do you do when COVID hits?

Terry: Panic. Oh, goodness.

Michael: We’ve finally got this webinar system. It’s going great. We’ve done a couple of quarters of it. They’re working. And then there are no more seminars.

Terry: Yeah. It was the craziest thing. So, when COVID happened, this was March of 2020 or so, depending on where you’re counting from, my wife was 6 months pregnant. So, we knew we had a child on the way. And here’s this global pandemic. So, we panicked and bought a house. We moved out of our high-rise nice apartment because I was convinced she would get sick, and the baby would get sick. So, we move, we buy a house. And then now we’re like, “Oh no, one of the main ways we’re meeting clients is going away.” So, it was really interesting. We started pivoting to virtual, but we didn’t pivot to virtual mailers. We just continued to work with our existing relationships doing virtual financial wellness. And that still led to some new clients.

But during COVID, one of the things that I decided to do is I said, “Do you know what? When we started some of these clients, we didn’t ask them to give…to transfer all of their money to us. We started with a portion.” So, during COVID, I actually, through continuing to build the relationship, went back to several clients, and they decided to entrust even more of their assets to us. So, that was a big win for us. I remember I was on the rooftop talking to one of our clients. And during COVID, a lot of things were happening. Her advisor, who was managing the rest of her money, wasn’t returning her phone calls. You know what? She decided to transfer that over to us.

So, that was an interesting twist in the story. Because of necessity, we actually leaned into our clients a little bit more, and what we found was they were willing to entrust us to help them manage even more of their portfolio. So, that was another way we helped make up for that loss of production or new activity.

Michael: Interesting. So, just, “Hey, if we can’t go as outbound in prospect as much, let’s take this time to really go deeper with existing clients because there’s often more opportunity there.”

Terry: Yup. Exactly. We said, “Let’s go back and dig a little deeper instead of digging wider.” And that was able to help us to not see a huge drop off in productivity. And then further, when there’s a lot of volatility, that can sometimes be a reality check for people. So, they’ll start to reconsider life insurance, or perhaps long-term care insurance, or their portfolio. “How am I protected against volatility?” They’ll want to consider new options, new opportunities. So, it was really a lot of things all at once. We had to think strategically about how do we handle this. But one other factor was I knew that I had a little baby on the way. I had a son on the way. And that was another point for me to say, “Time to dig in, time to really get after it.” And that’s what we did.

Why Terry Decided To Go The Independent Route [1:10:44]

Michael: So, what came next, given that you’re not still at Prudential?

Terry: Yep. So, what came next was more of the same, lots of virtual meetings, lots of working with existing clients, lots of professional development. And then by the time our son was born, this was July of 2020, I was starting to have inclinations that when our contract with Prudential was up, it may behoove us to look at a different opportunity. So, we had a three-year commitment. We were two years or so into that commitment. And I was starting to think, “There may need to be an exit strategy.” Before we ever moved to Washington, D.C., my then fiancée and I had a conversation about where we’d like to live. And I said, “Let’s move to D.C. for three to five years. And then after that, you get to pick.”

So, we were getting closer to that three-year mark, and she said, “Remember when you said dot, dot, dot?” And her parents are a little older than mine. So, we decided we were going to move to LA, to California, across the country. And we thought when better than when things are virtual, and we’re coming up on the end of our contract anyways. So, that’s when we really started to think critically about, “What do we want the next phase to look like? And more importantly, how do we build something that’s going to be more like a marriage than dating?” Because, to this point, I’ve worked at several financial firms, again, from age 20 to call it 30.

And I’ve done enough dating to kind of know what I like and what I don’t like. So, it was time to get serious about, “If we could build it the way we want to, what would that look like?” And that’s really what ended up happening. We were very transparent with them. We gave plenty of notice. And to Prudential’s credit, they held up their end of the bargain. They were straightforward. We worked together to help them preserve relationships on the corporate level with the companies that they had introduced us to. And I think we parted somewhat as friends. I have nothing bad to say about them. The leadership we had at Prudential was great. The level of planning that that particular firm did was incredible. The firm was number one in all of Prudential across the country for a reason.

So, we learned a lot there. We made some good relationships. But we felt like it was time for us to graduate to the next level. And for us, the next level was to become independent.

Michael: And so, what did you look at on the independent side? We’ve got independent broker-dealers. We’ve got independent RIA models. What were you evaluating, looking at to figure out what independence would look like?

Terry: Again, this was a bit of a science project. I talked to other friends and colleagues who have made the transition. I did a ton of research for hours and hours and hours. I listened to 100 of Kitces’ podcasts. I did all the research that I could. And what it came down to was we wanted to be in control of our destiny. We wanted to be the authors of the amount of value we’re able to provide for our clients. We wanted a situation where if our clients are unhappy, we can’t deflect and say, “Well, it’s because the home office or because headquarters has these rules.” We wanted to be ultimately accountable for every facet of what we did. And it became overwhelmingly clear that the way to do that was to be fully independent. No broker-dealer, no anything else. Build it from the ground up. And that’s what we decided to do.

Michael: All right. So, how do you then make an RIA transition through this?

Terry: You hope and pray. We did a lot of the research, and we just picked a company. We chose RIA in a Box to help us with the legal filings. We looked at public sources, we looked at your advisor technology map. And we thought about CRM choices, and performance reporting software, and the whole gamut of things that are available. And we just pieced together what we thought was going to be an impressive tech stack. We chatted with the Charles Schwab’s, and the Fidelity’s, and the LPLs, and the aggregator firms within some of those. We really did our due diligence. And then we came to the table with a plan of what we were going to do, and then we executed.

So, the execution was not always perfect. It was not always pretty, but we worked as a team, and we worked our butts off. Again, our ultimate goal was to provide as much value to our clients. And to ultimately be accountable to them, and to let that be our guiding focus for the decisions that we made.

Michael: And so, what platform did you ultimately pick on the RIA side of, I guess, custodial platforms and core systems?

Terry: So, we ended up going with Schwab. We really did like TD Ameritrade, but of course, Schwab has acquired them, and that’s supposed to play out in 2023. So, we said, “If that’s happening, we might as well go with Schwab.” Because Schwab is, of course, one of the big names out there. So, that’s where we went. And through our conversations with Schwab, we picked to start with Wealthbox as a CRM. We utilized several tools we’ve used before. We tested things like PreciseFP. We started with eMoney. We ended up getting AssetMap.

It was almost like this new situation where when you’re a captive advisor at a firm or broker-dealer, you don’t get to pick any of your tools. “They say, “Here’s the toolbox,” or “Here’s the the ingredients. Make a cake.” But now, for the first time, we got to go shop for our own ingredients. Heck, if we didn’t want to make cakes, we could make croissants or anything else. So, it was almost this overwhelming opportunity because there’s so many things you can do. So, again, we cobbled together a tech stack using research that told us, “Here are the essential systems you probably need.” And then we just got started.

And it’s been a process of, “What do we like, what’s valuable, what do our clients like?” And then on a year-to-year basis, sometimes month-to-month basis, we’re adding new tools, we’re taking some away, we’re making longer commitments. So, it’s been this progression of more and more work, digging deeper, and learning more. And just continuing to try to build that ideal practice. And we’re a long way from the end state. We’ll probably never reach the end state. But we’re definitely enjoying the journey to pursue that vision.

Michael: And so, was this another round of new city, new location, clean break, new marketing strategies, starting over again? Or did you have any opportunity to transition, have clients come along?

Terry: So, this was definitely an interesting opportunity. So, with Innovative Wealth Building, it’s myself, Kennah, and then two other partners, so Warren and Jennifer. Warren and Jennifer have worked in their market for a long time. Warren’s been there for 20-plus years. He was actually the perennial number one advisor. He was the highest-ranking advisor for the better part of two decades at First Command. And he and Jennifer decided to partner up with my wife and I to start Innovative Wealth Building.

So, it was this interesting scenario where we were going to help build this RIA, and then move across the country and start over. They were going to come over to the RIA with us, but stay in their local area one mile away from their old office because that’s what the contract says. So, it was this kind of interesting blend of new city, new approach, but also, for them, same city, new approach.

So, the way it all unfolded was really interesting. But for us, it really was another transition, another opportunity. But this time, we did have established relationships. And the vast majority of our clients came with us. And when we talked about our value proposition, or we thought about it, it was better technology. The same and more/better investment choices, more control, and lower fees. We lowered the fees for all of the clients that we worked with at Prudential. And because we now can choose whatever technology that we want, of course, that’s appropriate, there’s no excuse for us not having a scheduling link to pop time on our calendars, etc., etc.

Michael: So, what brought down fees? Just literally once you don’t have to pay a broker-dealer platform off a grid, you cut your fees accordingly? How do you offset that against just the cost of now you have to pay for all this tech, and staff, and the stuff that you have to do when you hang your own shingle as an RIA?

Terry: Yeah. So, with Prudential, we had some ability to choose what we were charging clients, but it was limited. So, as an example, if I built the portfolio, I can only charge 1% as the minimum. There’s an upper range that I can charge, but 1% is as low as I can go as the advisor. Now, that’s 1% gross to the client, but there’s something called a retention where maybe the first 30 or 40 basis points aren’t coming to me at all. That’s going to the house. So, I’m charging the client 1%. Let’s say 30 basis points is going to Prudential. That leaves 70 basis points, which, oh, by the way, I’m not getting a 100% payout on that anyways. So, when it’s all said and done, I was charging 1%, and maybe getting 30 basis points of actual revenue.

So, it was a really easy decision for us. We said, “Hey, instead of 1%, what if we charge you 0.9%? we’ll take your fees down by 10%, we’re going to have better technology, better options, more flexibility, more control.” Everybody said, “Yep, sounds good.” They actually said, “It almost sounds too good to be true. What’s the downside?” And I said, Honestly, the downside is we’re no longer aligned with a big company, a household name like a Prudential. That’s the biggest difference. So, if you’re someone who finds value in that rock, in that logo, then maybe this isn’t the right fit for you.” And the vast majority, that wasn’t a deal breaker.

So, again, 1% was the lowest I could charge. Most clients were paying a little bit higher than that. So, it wasn’t just a 10% or 20% discount. It was whatever it was, but it was at least a 10% discount for any client that came over to us just because of how we chose to set our fees at IWB.

Michael: Interesting. Interesting. And so, I guess just that and at the end of the day, “Okay, now we’re charging our clients 90 basis points, and we have to pay all of our own costs out of it, of staff, and tech, and rent, and the rest.” But 90 bips minus actual costs was still coming out better for you than 100 plus basis points at the old firm, minus all the different cuts that the firms ultimately get between the retention piece, and the grid payouts, and the rest?

Terry: Exactly. It wasn’t even close. And I would suspect that for most people who are considering a transition, it’s not even close.

Michael: So, what does the firm look like today?

Terry: So, yeah, Innovative Wealth Building, we have a total of 12 team members. Four of those are the financial planners. So, myself, Kennah, Warren, and Jennifer. And then we have eight other team members that do a list of many other functions. So, we have someone, of course, at the front desk. That’s Nancy. She’s like our guru at scheduling, and we call her the client concierge. We have Susan who used to sit up front with Nancy, but she handles a lot of the changes that clients might need done, or just miscellaneous things. She also does some internal marketing. Around the ring, we have an investment specialist, and insurance specialist. We have Linda, who does the financial plan building. We have Debbie, which is Warren’s wife, the office manager.

So, again, there’s 12 people, 4 advisors. Eight are non-advisors that do a lot of other types of things. But we couldn’t do what we do without every single person. And I didn’t mention everybody by name, but Barb is our superstar investment person. If a client wants to put money in or take money out, talk to Barb. She’s your go to. If they want life insurance, Lisa Kuno, she decided to get licensed, and increase her skill set to better serve our clients. Talk to her.

So, we’ve really been focused on not just making the advisors the focal point of the value, but really pushing our other team members to the forefront to show the value that they provide to the enterprise until the end client. So, it’s top to bottom, front to back. Ashley does our marketing, digital marketing. Jennifer’s a former federal employee that now is an advisor. It’s a huge family. And that’s in an interesting part of the dynamic. I mentioned before, my wife Kennah and I, we’re husband and wife, Warren and Jennifer, our father-daughter team. And then Jennifer’s mother-in-law is our financial planning person. Her husband is also on our team, Sean. Her mom, Debbie, is the office manager.

So, it’s a lot of family, and it’s a lot of family dynamics. And then there’s also people there that are great long-term friends that all just happen to work for the company as well. Nancy is Jennifer’s aunt. So, again, it’s a very interesting setup, but I think the thing that’s super valuable is our team is so committed. I sometimes look at the team and I’m like, “Why do you work so hard? Nancy, why are you still here?” And they treat it like it’s their business. And I love it. They’re incredible.

Michael: So, what’s the overall size of the firm now of…I don’t know how you measure by, by clients or by assets?

Terry: So, it’s funny, when we submitted…at the beginning of the year, our assets were a little bit different. As of today, we’re around $330 million under management. And that comes down to 900 or so families that we work with. And we use that term loosely because we might have a husband, wife, their children, their parents. We consider each of those to be its own family unit. But there’s a lot of connectivity. The business Warren’s created, which is the vast majority of our business, he’s 100% referral-based, and it’s incredible. Just this last week, we’ve had several people message us on the website and say, “Hey, I’ve been referred by this person. Can I get in for an introductory meeting.” Or, “Hey, I used to work with Warren at his old firm, I want to come back to him. How do I get over to him?”

So, there’s just, again, this gravity in Southern Maryland that’s unlike anything that I’ve ever experienced. And I got to see it firsthand because when IWB launched, Kennah and I and our son, Everett, we moved into Warren’s basement. And we lived there for two months to get the business off the ground. So, we were, no kidding, there together every day, 7 a.m. to 7 p.m., sometimes to midnight, doing whatever was required to make it work.

The Surprises Terry Encountered On His Journey [1:26:37]

Michael: So, what surprised you the most on this journey of building an advisory business?

Terry: The thing that probably surprised me the most was, one, that we did a lot of planning, and things have worked out even better than we expected. I take pride in setting reasonable assumptions and projections, but I was blown away by how quickly we were able to build the business, and the commitment from top to bottom, side to side, that we have to improving things from our clients. Even if it’s just incremental, that incremental improvement day over day over day can compound and become life changing. So, that was really surprising.

And then I guess the other part of that is when you found a company, you almost give yourself a pat on the back. You’re like, “Hey, I founded something. We’re good to go. I’ve arrived.” But I’ve developed this new perspective that it’s more so about being a finder than a founder. To start something is great, but it’s that continual mentorship. It’s that continual hard work. It’s that continual building that’s actually where the value comes from. And for me, it’s almost like raising a child. To have a kid is one thing, but to groom them, and be there for them day in and day out, and to go through all the stages and to watch “Mulan” for them, all these things mean so much. And it’s such a long-term passion project that you put your heart and soul into.

So, it’s been more rewarding than I could have ever expected. And yeah, again, just blown away by the response from the clients, the friends, the family, the team members. It’s been incredible.

Michael: So, what was the low point for you on this journey?

Terry: I guess the low point for me is making mistakes. That’s kind of a double-edged sword. I think you have to make mistakes to grow, but it’s the regret you sometimes feel when you say, “Man, I could have done that a little bit better. If only I’d known, I could have been that much better.” And I think that’s what drives me to seek information, and strategy, and improvement. It’s that I want to limit how many times I have to say, “Oh, I wish I would have known that because I could have served people better.”

So, I guess, for me, the low point is, it’s day to day just the small things that we could have done better. But at the same time, each of those things is an opportunity to build, to improve, and to be better in the future.

The Advice Terry Would Give His Former Self [1:29:07]

Michael: So, what do you know now you wish you could go back and tell you from 10 years ago as you were getting started down the road in the industry?

Terry: Ten years ago, I had no idea that the independent space existed. Ten years ago, I had no notion that you could live in a company for 5, or 10, and 20 years, and just live in that box, and have no idea that that box is so much different than the rest of the world. There’s so many things that I didn’t know 10 years ago that it’s almost impossible to even list those. So, what I would say to anyone who’s either considering this career, or they’re already in this career, I would take a step back, and think about your current situation. Are you happy? And if not, what are the things you would change if you could? And how much happier might you be if you made those changes? How much happier might your clients be if you made those changes?

And for me, it started almost as a whisper like, “Hey, you should probably do something else.” And then it just became so loud I couldn’t ignore it anymore. I was going to explode if we didn’t start IWB and allow ourselves the opportunity to fail with the bigger vision of providing more value, and truly being able to offer to clients the best of the best. Because at one point, I didn’t invest my money at the company I worked at because I knew that their products were inferior. And that’s a really negative feeling to put your money somewhere you know is inferior because you feel like you have to, or to have to recommend people to put their money somewhere that’s inferior because you have to.

I never wanted to be in that situation again. I wanted to be able to truly say, “As a fiduciary, I’m going to scour anything I can find to select the thing that I believe is going to be the best fit for you.” And I think that there’s a lot of value in being able to have that type of authenticity when you when you talk with folks you care about or that you serve.

Michael: It’s a pretty jarring moment when you get to the… “I actually wouldn’t put my own money in my own company’s products that I’m selling to my clients.” That’s hard. That’s painful to reconcile without saying, “I think something probably needs to change then.”

Terry: Exactly. And it was six years ago, a newer advisor told me, he said, “Hey, my money’s not at this bank.” And I said, “Why not? All my money’s there.” He said, “Well, because this bank pays better rates on the savings accounts.” I was like, “Well, who cares? This is where I work. This is where my money should be.” But then years later, I’m like, “You know what? Maybe he was right. Maybe it’s not enough to just stick with good enough because it’s easy, and it’s good enough. Maybe we should push the envelope to try to deliver massive value and strategies and solutions that are the best in class.”

And you know what? I’m in a phase in life where I think that’s what our clients deserve. They deserve the very best we can give them. And if I’m not giving myself the tools to give them the very best, then I’m not living up to the value proposition that I probably made to them. And that’s something that I had to rethink. And I feel much better now that we’re truly able to access so many more things for our clients’ benefit.

The Advice Terry Would Give To Younger, Newer Advisors And His Plans For The Future [1:32:31]

Michael: So, any other advice you would give younger and newer advisors getting started in the industry today, and trying to figure out how they get going in a tough industry?

Terry: Yeah. The number one thing that I would say is, one, you have to be here for the right reason. I’ve talked with people, I’ve talked with my wife about this. And truly, I feel like this is my calling. This is where I’m meant to be. And that’s why I have the designations. And that’s why I’m doing my masters, and that’s why I’m going to sow seeds, and push the envelope, and do my best to push the industry forward, and to help push the value forward that we provide. So, you’ve got to be here for the right reason.

Now, once you’re here for the right reason, you better work your butt off because when I got started, I didn’t know anything. I was young, and there’s all these things that you kind of have against you sometimes. But hard work overcomes a lot of those things. It’s a marathon. And just because you started maybe a few feet or a mile behind somebody else, doesn’t mean they’re going to finish in front of you. So, I would say if this is your passion, if this is your calling, no excuses, figure out how you can get to that next level, leverage your resources, and just work harder than anybody else. And you’re going to get there.

Michael: So, what comes next for you?

Terry: That is a good question. Just last night, I told my wife, Kennah, I said, “Hey, after my masters, I’m going to stop.” And she probably doesn’t believe me. So, what comes next for me? I’m currently a part of the alumni council with the American College. I’d like to continue to sow into that organization to help there. With IWB, we are actively hiring and growing our team, and we’re growing our infrastructure, building leaders, and expanding the capabilities within our organization. We’re partnering with nonprofits. We’re considering launching our own nonprofit so we can hopefully…

Michael: To do what?

Terry: Yeah, we want to give more. I mean, in the financial services industry, there’s such a focus on $500,000 or more, or $250,000 dollars or more. We literally have no minimum on people that we work with. And even with that said, there’s a lot of people in the population who will never talk to me for one reason or another. So, if we can figure out a way to centralize resources, and proactively point them in the areas that we know they’re going to serve people, then that’s something that we’re passionate about. So, one of my aunts asked me, she said, “Terry, what do you want to be known for? What do you want your life’s work to show about you?” And I said, “This is on the spot, but I want to be a generous giver.”

And I think one of the ways we can give is through literacy, through empowerment, through being a conduit of resources, through empowering people, not just financially but holistically with their well-being. So, that’s our big thing that…and my big thing is I don’t want this to just be a wealth management company, or a financial planning company. I want us to be leaders in a lot of different areas, from nutrition to exercise, to whatever we can to serve our clients and the general population. That’s what I think it’s all about at the end of the day.

What Success Means To Terry [1:35:59]

Michael: So, then as we wrap up, this is a podcast about success. And one of the themes that always comes up is just that word success means different things to different people. And so, you’ve gone down this wonderfully successful path for growing the business and navigating a lot of painful transitions along the way. So, the business is in a good place now. How do you define success for yourself at this point?

Terry: For me, success has a lot of different layers to it. One of the layers is continuing to work with our Maryland office to build out the team, and really emphasize the value we provide, and just continue to improve relationships with our clients and the new people we serve. That’s kind of one leg of the stool. In LA, we’re building out a physical location in our epicenter there as well. And I envision us having other IWB offices in Florida, or in Virginia, or in Hawaii, or in other places. So, I would love to play a role in helping other people make that transition to independence, and to being able to expand and improve the value proposition that they have for the people that they serve.

So, it’s that, and then it’s also just personally. It’s being a good husband. It’s being a good father, brother, son, member of the community. I just want to get better every day, learn something every day, become a little bit more generous, do a little more. I just want to be that positive impact as much as I can. So, unfortunately, my definition of success, there’s a lot of things out there that I aspire to do, and to be. I want to be an adjunct professor someday. But it all comes down to I want to make an impact in a positive way, and I want to be known as more of a giver than a taker. I think if I can plus up how much I’m giving relative to how much I’m taking from this world, then I think I’ll have a life well-spent.

Michael: Awesome. Amen. I love it. Well, thank you so much, Terry, for joining us on the “Financial Advisor Success Podcast.”

Terry: Thank you, Michael. I appreciate it. This is truly kind of a dream come true. I never thought we would be having this conversation. I hope at least a couple of things will be helpful for those that listen to this episode.

Michael: I’m sure they will. I’m sure they will. Thank you, Terry.

Terry: All right. Thank you.