Tuesday, September 20, 2022
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Finding The Motivation To Grow Again With Authenticity


Executive Summary

Welcome back to the 299th episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Tim Regan. Tim is the founder of PrairieView Wealth Partners, a hybrid advisory firm based in Orland Park, Illinois, that oversees $100 million in assets under management for 190 client households.

What’s unique about Tim, though, is how he leverages the independence he gained by transitioning from an insurance agency model to becoming a hybrid with Thrivent Advisor Network to focus his firm on faith-based planning and restructure his own back office by shifting it into a separate company that also partners with other financial advisory firms to offer them middle and back-office support as well.

In this episode, we talk in-depth about how, after realizing his firm was too big to be a solo and too small to be big, Tim decided to split his firm into two businesses where PrairieView Wealth Partners remains a financial advisory firm that focuses on the front office aspects and Focus Forward focuses on middle and back-office support so that he could create capacity for his advisory firm to focus more on the client experience, why Tim was inspired to offer middle and back-office support through Focus Forward to other advisory firms (separated by what Tim refers to as an “iron curtain”) in the $75 to $250 million AUM range that were also struggling with having the support and capacity they needed to grow and scale past the founder, and why, since Focus Forward was already knowledgeable in the day-to-day operations of the firms that they support, Tim decided to incorporate continuity agreements with his advisory firm so that advisors can have the peace of mind that if something were to happen to them, PrairieView could ensure their practices would continue their legacies.

We also talk about why, after two decades as a captive agent for Thrivent Financial, Tim decided instead to join their RIA platform, Thrivent Advisor Network, so that he could have more independence to offer his clients a wider range of solutions than just what was available through Thrivent, how Tim got comfortable concentrating on faith-based planning in today’s environment, because as Tim puts it, his faith is simply an authentic part of him and he wants to work with clients who similarly believe in the importance of aligning their faith and values with their money to live up to their God-given potential, and why even though Tim outsourced his middle and back office services he keeps his marketing support in a full-time, in-house role… with a strong focus on not just external marketing so that their story can be told the way they see fit but also internal marketing to work on enhancing their existing client experience (and get more clients talking about them to potential referrals).

And be certain to listen to the end, where Tim shares how, despite being a goal-setting type of person, he ironically struggled with actually achieving the significant growth goals he set for himself (as once they were achieved, the motivation to grow was gone) and instead ultimately decided to focus his energy on what he calls “goals that have significance, rather than goals that are only significant at a single point in time”, why Tim believes hiring the right people early is always a good idea (even if there is a fear of spending money) as when the time comes for needed support it’s already too late to have the time it takes to find those right people, and why Tim believes in the importance of daily affirmations as a way to set ‘mini-goals’ that help him focus on being a better husband and father, to pray, and to make time to take care of himself, too.

So, whether you’re interested in learning about why Tim split his firm so that he can offer back-office support to other advisory firms that are similar in size, how and why Tim implements faith-based planning to his clients, or why Tim also offers continuity planning for the advisory firms that his business supports, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Tim Regan.

Michael Kitces

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.

Looking for sample client service calendars, marketing plans, and more? Check out our FAS resource page!

Full Transcript:

Michael: Welcome, Tim Regan, to the “Financial Advisor Success Podcast.”

Tim: Thanks for having me, Michael. I’m really excited to be here.

Michael: I really appreciate you joining us today and looking forward to a conversation around what, to me, is just this sort of ongoing evolution for us as advisors of, just for lack of a better term, just being more authentic and getting more comfortable in our own skin. I was sort of fascinated and really appreciative in just looking at your advisory firm website, and you have this wonderful mission statement that’s just kind of posted right out there on the website, “We partner with Christian families to provide trusted and faith-based advice delivered through personal conversations.”

And I feel like we’re in an environment these days, where it’s particularly challenging to talk a lot about a lot of issues, about a lot of both political issues and as well as religious issues. And so I was really struck that just, in a world where a lot of advisors have this focus of, whatever you do, don’t bring up religion and politics, don’t bring up religion and politics, don’t bring up religion and politics, it seems to be a mantra for a lot of advisors in a lot of parts of the world. And then here’s this mission statement that you put out to the clients that you serve of, we partner with Christian families to provide trust and faith-based financial advice.

And so, I guess to start, I just really wanted to hear more from you of just how you think about or get comfortable in putting out a mission statement like that in an environment where a lot of advisors are very uncomfortable to talk about things like religion and politics these days.

Focusing On Faith-Based Planning To Provide Authenticity And Client Significance [05:17]

Tim: Yeah, for sure. So, it probably goes to just being who we are. It’s how we live our life. It’s our point of view on the world. And I think from my way of thinking about it, is it’s really hard for me to connect with my clients, in a way, if they don’t know what that point of view is. And like I said, it’s just kind of who we are. And so, if that’s how we’re going to live, and that’s how we’re going to come to the conversation, then I think our clients should know that. And I think that especially from our perspective, faith tends to be a bigger, “who am I” type of thing than political affiliation or some of those things. And those things can change over time, and your faith can as well, obviously, but to us, it’s just a way for us to be authentic in, how are we approaching the conversation? And where do we come from as we have that conversation?

Michael: And so just do you worry about clients who will say, “Well, I’m not a Christian, so I’m not a good fit,” or “I just I don’t think my advisor should be talking about faith. I’m outta here.”? Do you worry about that kind of flack or negative feedback or prospects who are going to march out the door from the fact that that’s how you’re approaching planning and relationships with clients?

Tim: Yeah, it’s funny that you say that, because, first, it’s never really crossed my mind. I think that it’s meant to be more of an inclusive rather than exclusive kind of point of view. Ironically, we have had one client that was almost offended when she came in, one prospective client, I should say, was offended when she came in and that was our point of view, even though we’re that overt in saying, “Kind of this is where we come to the conversation at.”

And so, I think, from my perspective, there’s enough business out here. If as an industry, we were serving everybody the way that we could be and should be, we’d be in a much better place as a country financially. And so, I think there’s plenty of opportunity out there. If somebody can look and say, “Yeah, I absolutely subscribe to that, and I want to go there,” then that’s all the better. And it’s better if they realize where we’re coming from. If they would choose to opt out of that, that’s even better for both of us as well, because I’m sure there’s another advisor that can give them just as good as advice.

Michael: And so, how does this show up in practice and in conversations for you? Obviously, I can see it on the website. You mentioned a prospect who was offended when she came in and found that was your point of view. So is that literally part of the prospecting process or kind of the prospective client approach talk that this is part of what you talk about when you explain your services?

Tim: Yeah, a really good question. No, it really isn’t. There are firms out there that do a really good job of Bible-based financial planning and that kind of stuff. And that’s not us. And so, in our conversations, it’s not something where we even really purposefully question into or dig into what their faith life is like. It really is something, though, that is just who we are. And so, the way I like to think about it is that you can’t separate me from being half-German and half-Irish. It’s just who I am. And because I am, that gives me certain physical characteristics, it gives me certain, probably, ways that I think and emotional characteristics. There’s just that genetic code in me, and I carry that with me everywhere I go.

And I tend to view my faith the same way. It’s just a part of who I am. It’s a part of who our company is. And so many times as we sit down and talk with somebody, it’s not that we’re being very deliberate or overt in having the faith conversation. But if we talk for long enough, my faith will come up and I will talk about my point of view around my faith, just sharing with who I am. And so, I think that sometimes…in this particular case, that’s what kind of caught her off guard, and she was a little bit offended at. So that’s how we approach it.

Michael: So, you made a distinction that you try to deliver faith-based advice, but you’re not necessarily doing, the way you said it, Bible-based planning, right, for the segment advisors that build portfolios, following biblically responsible investing principles, right? There’s a segment of the advisory community that’s very focused there. And I guess I’m wondering, how do you distinguish what you do and how you approach faith-based financial planning advice and advisors that are implementing that sort of Bible-based planning?

Tim: Sure. And I don’t profess to be the expert on biblically-based financial advice. I know that there are people that do a really good job with it. And so, I don’t know necessarily 100% what their approach is, but I can tell you from our approach. Our point of view is that everything we have is a gift from God. It’s something that he has given to us, and it is our job to be as good of a steward with that as possible. And so, that even goes to how we approach our clients. There’s a lot of firms that…a lot of conversation around, do you charge fee for advice, and that kind of stuff. And our approach has mostly been if somebody comes to us, and can’t afford to pay for our services, they will still be a client of ours. Because I believe that God has given me the gifts to be in this business. I think that this business blesses me far more than I deserve.

And so, if I have those gifts, then it is just my obligation and my duty to share those the best way that I can. And that’s the same thing we have with our clients. The money that you have, in our viewpoint, isn’t money that is…yes, it’s yours while it’s here, but it’s ultimately money that God has allowed you to earn, He’s given you the gifts to go earn it. You’ve been a good steward with those things, you’ve saved them, you’ve been diligent, you’ve been wise with it. But we don’t approach it from a, hey, this is my type of perspective. We approach it from a, how should I be using this, and what should I be doing with it so that I can be as good of a steward as possible?

Why Tim Separated Back-Office Operations Into Its Own Business [11:16]

Michael: So now, help us understand the advisory firm, overall, the business just as it exists today. What is your firm, and what do you do, and who do you do it for?

Tim: Sure. The way I like to think about it, so our firm is a small firm. We have $100 million in assets that we’re actively managing and approximately $80 million in assets that we’re advising on. Those would be primarily, you know, things that are inside of maybe an annuity contract or some retail mutual funds, something like that. Who we do business with, I like to describe as mom-and-pop America. The place that we sing the most are people that have made and saved their money themselves. A lot of times, they are people that are pretty, I don’t know, diligent, fairly conservative, have just done a good job of stashing some money away.

And so, it’s funny, we make a joke in the office, if anybody’s name is Bob, we would do really good with them because about half our clients I think are named Bob. So, I don’t think we can market it that way necessarily, but when we find beyond the name, Bob, we find that a lot of times it’s people that are pretty detail-oriented too. We do really well with engineers, middle managers, pharmacists, those types of people, but we also do well with the local person that’s been a plumber and electrician his entire life too. So, we’re really kind of, like I said, mom-and-pop America.

Michael: And how many clients does the firm serve overall?

Tim: 190 houses, about.

Michael: And what does the staff structure look like for you? What team is there for serving them?

Tim: So, we’ve got internal to PrairieView, we have five team members. But what happened is about a year ago, we split PrairieView in half, if you will, roughly. And we said we’re going to have PrairieView that is going to be the financial advising firm. And so, inside of PrairieView is where we house all of our advisors, which is me and another 20-year veteran in the industry. We also have a head of marketing, somebody that has a contract, a person that does marketing work. We have an apprentice, who was going to learn to become an advisor here in the next couple of years we hope and then a front office person.

And all PrairieView does is focuses on what we call the front office. Front office is anything that is client-facing, client advising, helping clients make decisions, those types of things. We took the other part of our team and created a different company that does all of the middle and back-office work for financial advisory firms. And so, that company is Focus Forward. And so, through Focus Forward, what we do is they handle all of our new business support, all of our investment management operations, our service work, and all of our financial planning operations. And so, if you look at the two, PrairieView is much larger than our assets under management would make it seem because we have six employees inside of that Focus Forward model.

But we only have them because of the ability for them to serve other financial advisory firms. So, if you look at our total team, it looks much bigger than maybe a $100-million-AUM firm would look like. But that’s why, Michael.

Michael: So just help me understand this split. Why are we splitting the firm into two sub-firms, one for the PrairieView for the front portion of marketing and serving clients and Focus Forward for the back end of the firm? Why this split? Why this structure?

Tim: So, the biggest reason was, if I can tell the story, be honest with it, I was sitting… My wife and I will go to Mexico a couple of times a year just for a few days to get away and kind of clear heads. She usually sleeps in, and I like to get up early and sit on the beach and write. And it was during one of those trips that I was thinking around all of our financial advisory firms. Basically, once you get past the front office, you really do the same things. And in that capacity, we’re not really offering any… My secret sauce isn’t how we place trades. My secret sauce isn’t even in how I put together a financial planning folder. My secret sauce is how I sit down and talk to my clients.

And so, as we were sitting there, we just thought, for us, we were in a position where we’re too small or too big, really to be a solo but to be too small to be big. And so, I’m faced with, I have one full-time employee that I have to hire, I don’t have enough work for that person to do only new business work or only investment management work. And so instead, I hire this person, and I ask them to do all of these things and to really not be a specialist in anything. And so, then the thought was, if we started to separate the middle and back office out, the part of the business that really is not my core competency, and it’s not my secret sauce, then potentially we could have other firms that would have the same need that we did.

They could subscribe to that service or hire those people to help them as well and now, come to us and say, “Hey, I need a full-time employee, but I need them to do these different functions. Well, you’ll get you 25% of our new business support person and 25% of the investment management or whatever that percentage needs to be.” And there’s no way, and so then as I thought about that, we could have done that inside of PrairieView. However, it would be really hard for me to go to Awaken Financial Advisors and say, “Hey, Awaken, why don’t you give me all of your client lists? We’ll serve all of your clients. And by the way, we’re in a competing business.” That’s really hard to do.

And so, that’s why we decided it could really make sense to kind of separate this off, create a separate company that PrairieView, yes, participates in, it’s a company that we have some ownership in and all that kind of stuff, but it’s not a company that we are actively managing, running. We’ve got iron curtains, if you will, between PrairieView side and the Focus Forward side, so we can’t see anybody else’s clients. And it’s a way then for advisors to come together really in, lack of a better term, kind of a co-op type of a concept and, hopefully, raise the service level to all of our clients and, hopefully, raise the client experience across the board for everybody.

Michael: So, the idea here is Focus Forward, ultimately, is meant to be a firm that provides that back-office support, new business, client onboarding, investments, planning, those operational components for both PrairieView, the firm you happen to jointly own, and other independent advisors that want that back-office support as well.

Tim: Absolutely. Yeah, that’s the whole concept. The whole idea is that if… I like to think about it, even from a… So, we use a couple of CRMs within that Focus Forward realm, but we use both Salesforce as well as Redtail depending on what firms use in their practice. But if we use Salesforce as an example, inside of a financial advisor’s firm, they may use Salesforce to do some task management, manage phone calls, some of the client experience stuff. But to get into program workflows to make sure that everything from A to Z in a new business application gets done, that assets are transferred, the clients get a phone call when they’re supposed to let them know where things are at in the process, to make sure that all of the assets actually come in, and just to go down this litany of things that it takes when you set up that new account, most advisory firms, even if they’re using a tool like Salesforce, don’t have the resources or the people that they can make that a process and a system that is automated. And not automated like a computer is doing it or a machine’s doing it, but automated so that none of the steps are missed.

And so instead, it becomes something that they want to have happen, and it’s intuitive. And they go through this whole rigmarole of trying to find really good people, and they get somebody, and then that person leaves, and they have to go through four others before they get the next right person in the seat because they don’t have the resources in order to focus on that. And so, by multiple firms coming together, all of a sudden, now it looks like a firm that is a billion-dollar firm, even though we’re a bunch of 100 million-dollar people walking around, but we can provide the professional services of a billion-dollar firm, or a 10-billion or whatever the number is because we’re able to pull those resources, if you will, or pull the need for those people.

Michael: And so, does PrairieView literally pay Focus Forward? Does company A pay company B for its current services?

Tim: Yeah. So, any planning from the signs or scope of work and kind of a letter of authorization, that kind of with Focus Forward. There’s a scope of work that goes with it that says, “Here’s what we’re going to provide for that company, whether it’s us or some other financial planning firm. Here’s the services that we’ll provide. Here’s what our estimated…what we think that we’re going to have to do for a firm your size. And here’s what the cost is going to be.” If a firm has something major happen during the course of a year, we have the agreements, we’ll ratchet up or down if those capacities are much different. If a firm goes up and doubles in size because they acquired another firm, that looks different than the size with it originally signed on. And so, it’s a fixed flat monthly fee that says, “Here’s what you’ll get, and here’s what it cost you monthly moving forward.”

Michael: And so, can you give us an understanding, what are typical fees? Just like what is it come out to be in practice for firms you often work with?

Tim: Yes. So, under that model, the commitment is that it will cost you what it would cost you to hire a person or less in order to do with Focus Forward. So, for example, if we’re working with a firm, say PrairieView size, PrairieView, probably based on the size that we are needs, I’m guessing somewhere between two and a half and maybe three full-time support people to do the stuff that Focus Forward does for us.

Well, if I look at what it would take for me to hire those, let’s call it three full-time people, if I’m hiring licensed staff, if I make sure that they’ve got access to the technology, if I go through what my total cost is to have that employee, the commitment from Focus Forward is that you will not pay more than if you were hiring that person for yourself to come into your firm. But you don’t have to find them, you don’t have to train them, you don’t have to manage them. And by the way, you can hire the specific service that you need with a product and an expert, subject matter expert in that field, rather than, like we said, hiring somebody that’s a mile wide and an inch deep.

Michael: Right. I guess unlike, at least, some firms that I see that work in this space that are such like TAMP, turnkey asset management structures that wrap this kind of operational support around it, it sounds like they don’t necessarily have to outsource investments to you and be part of your overall portfolio management and then also get staffing services. They can literally just hire you for whatever staffing services they need and pay a flat fee for staff members, for staff support.

Tim: Yeah, that’s 100% correct. And I’m glad you made that distinction because in the investment management piece of this, each firm continues their own investment style. We are not a TAMP. We’re not saying that we will pick investments for you. So, for example, PrairieView happens to outsource some of our investment research and stuff to a firm called Helios. And Helios provides us with a lot of the research that we use in designing our portfolios. We also then will do some of the due diligence into which specific investments are we picking. So, what Focus Forward is doing for us is they’re taking the Helios research, they’re also combining that with other outside firms so that they’re doing some due diligence and saying, “Hey, here’s what Helios is saying, here’s what these other firms, whether it be BlackRock, or somebody else is saying from either a macro level or even very specific into a sector level.”

They’ll organize our monthly investment committee meetings. They’ll make sure that we’re going through that due diligence. They also share with us the research on making sure that our due diligence file is complete with what specific funds we’re using. But PrairieView is responsible for, here’s what our portfolios look like, here’s the trades we want to place. And then Focus Forward goes about… We happen to use Black Diamond. And so, Focus Forward will go into Black Diamond, and they will help to then create that portfolio for us. We’re giving them the instruction. They’re just doing it on our behalf. And then make sure that things like cash is raised when it’s appropriate, the maintenance stuff and saving inside an account, making sure that clients never get shorted on a monthly distribution or RMDs come out or all that kind of stuff. But Focus Forward is doing none of the investment management piece. It’s the investment operation side of that, that they’re performing.

Michael: And so how many advisors is Focus Forward supporting at this point?

Tim: I don’t know how many advisors, but I know that we have four advisory firms that are being supported.

Michael: Okay. And then what is the internal team structure look like at Focus Forward?

Tim: So internally, we have six employees. There’s one that is kind of head of the customer service piece of our business, who also happens to be a team lead. And then we have…in new business support, there are two people that are working there. And the investment management side, we have two people. One is primarily responsible, we have somebody else that’s just cross-trained in order to step in should something happen there. Inside of financial planning, we have one dedicated person. And then we have somebody that helps with kind of the ongoing business management, as well as kind of being back cross-trained individuals should something come up and need to step in.

Michael: Interesting. And then, obviously, just the opportunities as growth comes, as more advisors come, you just get to hire more full-time people into specialized roles in service, in investment trading, in financial planning, and just keep expanding that framework.

Tim: Absolutely. Yeah. And really, like all firms, I’m sure every advisor that’s listening to the podcast is going through the same thing we are where it’s like you better be looking for people to hire all the time, because when you need them, they’re not going to be there, and it’s such a tight labor market. And so, yeah, that is an active full-time job of trying to find the right people.

Michael: So, can you help us understand more, what are the typical advisory firms that you’re working with it at Focus Forward, just who is engaging this in practice?

Tim: Yeah. So, my perspective is that there’s this whole middle…I call it middle. It’s probably most…a lot of people might think of it as the small end of the spectrum, but I consider it the middle part of the advisory firms where you have advisors that have built their business, again, they’re too large to be a solo, too small to be big. So, we’re usually somewhere in that 75 million, up to maybe 250 million in AUM. And that’s a part of the business where it gets really tough and frustrating. And I’m not saying that it’s not tough and frustrating for people outside of that, because I know that they have challenges in their businesses as well. But in this middle, it gets really tough and frustrating, because I have a lot of things that need to get done, I don’t know, a lot of question marks that maybe I don’t have in a bigger firm, that all of a sudden, I’m like, “How do I do this?”

And there’s not a lot of focus there. There’s a lot of focus on the bigger firms. A lot of people want to aggregate them. A lot of people want to offer a lot of really good services, but it only makes sense if you’re a billion-dollar firm or so. And so, really, we’re focused on that 75 million to 250 million AUM practice.

Michael: Interesting. And just where do they come from? How do they find you? How do they find Focus Forward?

Tim: So, most of it is through our network, people that we’ve known for years. Personally, I’ve been in the business 26 years this year. And so, you just get to know people. And so, it’s through that network. And really, it’s through the PrairieView website. We’ve done a lot of work within PrairieView to help our clients to understand as well, that this is a team. And so, as people hear about how the PrairieView team, which is a small, little firm, is able to do some of these things, and then they start nosing around and say, “Well, what’s going on?” And so, we just created a page on the website that said, “Click here if you want to learn about it.” And it’s kind of word of mouth at this point in time.

Why Focus Forward Offers Continuity Support To Advisory Firms [28:28]

Michael: So, help us understand how you’re thinking about the growth process, overall, now that you kind of have these two things running in parallel. There’s PrairieView growing and doing the end financial planning work with clients, and then Focus Forward is growing in this outsourced offering for other advisory firms. So, where’s your growth focus from here or how do you think about balancing managing the growth between them?

Tim: Yeah, that’s an evolving conversation in my own head. So, I’ll see if I can separate some of the voices. For me, this has been a really good business. I love meeting with my clients. But I’m questioning, is my time best spent sitting down in front of a client, or is my time best spent looking at helping other firms that have gone through all the…they’re in the middle of going through the stuff that we go through? When we sit down, or when I sit down on the beach in Mexico, and think through that stuff and then start writing, there are a couple of things that always come to my mind. One is, how do I grow? How do I get people? How do I end so the Focus Forward piece, hopefully, is going to support the PrairieView growth?

It’s meant to be a model that as PrairieView scales, they should be able to scale right along with us and help to alleviate that pinch point of when do I hire, how do I hire, type of thing. But then the other one that has always been on my mind is this continuity of ownership, or what happens if I don’t show up at the firm tomorrow? And I’ve done a pretty good job with our team. And it’s all our team. They do great work, where they make me look like a star or the star of the show, but I’ve not done a really good job of bringing co-stars along with us all the time. And so, I start thinking about if something happens to me…

My wife isn’t involved in the business. She knows all of our employees. She has a key to the office, but she really wouldn’t know what to do. There’s nobody in the practice that my clients would say, “Hey, I would love for that person to become my advisor today and they could grow into that.” And so it’s really what happens to my business if something happens to me? And I find that… I think that there are a lot of advisors that are in our spot, they’re in that same position. And so part of that growth really looks at, what does that continuity look like? And that’s where kind of this idea around, if I’ve got a firm that’s already kind of running my middle and back office, then that continuity can look really similar, and now, I can have a relationship with another advisor that I trust, that I can say, “Hey, will you take over the practice and help my clients, if something happens to me?” And, by the way, everything else can kind of flow pretty smoothly. And I think…

Michael: So, meaning, if something happens to you, another firm that’s on the Focus Forward platform can potentially buy out or step in and take over clients. And because the back office is already shared, and the systems and structure is there, it should be relatively straightforward for them to step in and support those clients. They literally just have to show up and start talking to clients and having meetings because all the rest of the back-office stuff is already done and set.

Tim: Absolutely. And even a step beyond that. We’ve created a process by which, let’s say that me and John up the street, he’s another financial advisor using Focus Forward. And he and I are talking, we get along fairly well. Why don’t we just put that in writing now? Why am I going to wait until I don’t show up tomorrow for my wife to figure out, “Wait, who’s going to write paychecks? Who’s going to pay the bills? How’s all this stuff going to work? And, by the way, at that point in time, she’s supposed to negotiate what my business should be worth, or what we’re going to do here, and what the terms are. That’s not her background. That’s not the world that she lives in. And so, really, what we’ve done is we’ve put together a way for us to say, “Okay, let’s just put this down on paper.”

Think about it as a beneficiary almost for your practice that says, “Here’s what the terms will look like.” Now, in order to do that, you’ve got to be pretty transparent and open and say, “Hey, by the way, here’s what my business looks like today,” so that you can come up with some of those terms. But I see no reason why we can’t do that. And then if you have a place like a Focus Forward that’s doing the middle and back office, then it really does become a very seamless transition. As I looked at, in all transparency, the part where I feel really vulnerable, it’s not even the value of my company. Yeah, that’s important to me, but I think my family with my life insurance, my family will be okay. So, it’s not like I’m worried about my family getting this huge check, necessarily, but it’s even more, who are my clients going to see? How’s this not going to be chaos for them?

And then take that one step further. This isn’t the world that my family lives. And so, who are they going to have as an advisor? Right now, I handle all that stuff, but if something happens to me, who are they going to go to, to have an advisor? And so, this ownership continuity concept really was born out of me feeling really vulnerable for my own stuff and saying, “There’s got to be a better way for us to do this. Let’s start seeing how we can come together and make that a little easier for everybody.”

Michael: So how are you actually structuring these continuity agreements? How would this actually work?

Tim: Yes, so the concept is that we can come to an agreement of some sort… And we will… But the way that we do it is we say, “Okay, here’s what we’re going to use as a multiplier on the business. So that you know…”

Michael: For the valuation.

Tim: “…for the valuation, so that you know anything that’s a recurring asset is going to be valued at X.” And so, you don’t have to worry about negotiating at the time after you’ve passed away. You don’t have to worry about a fire sale. We’re going to put that into the agreement right away. The payment obviously isn’t going to be a lump sum. It’ll be based on…typically, we look at 50%, the first year, 25% in year two, 25% in year three. And in years two and three, there’s a revaluation that takes place just to make sure that the assets actually stick and we don’t know what attrition is going to look like and those types of things. And it’s really kind of as straightforward as that.

We don’t have to get really particular with a bunch of stuff. It really is, listen, you’re in a spot where you’re going to need to transition your business. I’m in a spot where I’m looking to grow my business. And so, how do we just put this agreement together between the two of us? And as we do that, there’s an annual kind of re-up where we sit down and we’ll actually kind of talk about the business and say, “Okay, well, about how big is your business now? How many clients do you have? How much in assets? How are you running your financial planning practice?” Because we have to make sure that there’s consistency there as well. Otherwise, it’s not going… It’s almost like, if we go out and buy a firm, you’ve got to have a lot of alignment if that’s going to work. And so, annually we get together, we relook at it and just say, “Does this still make sense?” And make any adjustments we need to the agreement.

Michael: And how do you think about what reasonable valuation multiples are with a deal like this? It’s one thing when I’m going to buy your practice, or you’re going to buy my practice. I’m here, I’m involved, I’m going to help support the transition, because I want to maximize the value for all involved. It’s another if you just got a call from my now widow, spouse, who’s like, “Michael’s gone. Apparently, I’m supposed to call you and you’re supposed to come in and get all these clients,” and I’m not necessarily here to facilitate this transition, which for me it’s going to be at least a little bit bumpier for clients who are going to say like, “Who’s Tim, and why are you calling me?” “Well, Michael died. Let me explain what’s going on.” And so, I guess, I’m just wondering, how do you think about valuation and setting a multiple in that kind of environment?

Tim: Yeah, so the way that we approach it is, we start with what we think fair market value is today. And it’s pretty straightforward. The firm’s that we’re dealing with, again, we’re looking at that $75 to $250 million firm. So we’re looking at some multiple of gross revenue. We’re not looking at multiple on EBITDA or those types of things. And so, we just look and say, what do we think fair market value is today? And we’re just looking ballpark. It’s different in this arrangement than when you’re actually buying the firm because this is something that nobody thinks is ever going to happen. And so you can do a fairly good agreement on here’s what we think the market value is of the firm. And then we take a risk premium.

And depending on what factors are going on inside of the business, we’ll increase or decrease that risk premium. So, for example, if we’re both utilizing Focus Forward, and it really will be the middle and back office is kind of handled, that’s going to reduce the amount that we’re going to add to that risk premium, if you will, or the risk reduction, because that’s one piece that’s less risky. If you have a really good advisor in your practice, who is a farmer, and not a hunter, and that farmer wants to stay in the practice, that, again, reduces that risk reduction because there’s some additional continuity there. If we’re going to have…we haven’t done this yet, we’re in the process, kind of kicking it around, if you’ve had the conversation with all of your clients around, this is my continuity plan, and here’s what’s going to happen, that’s another risk reduction. And from a client’s perspective, all of our clients maybe don’t want to admit it, but all of our clients are thinking the same thing. What happens when Tim is hit by the beer truck?

Michael: Oh, yeah, it’s out there on their minds, at least many of them, a little bit less if we’re young, got long-time horizons. But when any client can look across and say, “You’re going to retire before I die. You’re working with me in retirement, but I can see you’re going to retire before I die,” I kind of want to know what’s going to happen.

Tim: What’s the plan? Yeah. And so, what ultimately happens is, what would be good for your business is to tell all of your clients, “This is my ownership continuity plan.” We even talked about it with transition planning. We have advisors that we’re talking to now that are maybe 55 to 58 years old, and they’re saying, “I’m not ready to retire yet, but I sure would love to start phasing out of the business, maybe I’d love to only see clients, or maybe I’d only love to see my top 10%.” And so, it’s all part of a well-planned transition plan. And one of those eventualities is I might die, or I might get hurt, and can’t show up to work. And so, to broadcast that to your clients and say, “Hey, I’ve got a plan that’s put together here,” in our opinion, grows client loyalty, grows the likelihood that they’re going to look to you for all of their assets instead of maybe holding some back because of that concern. And then not only does it do good for your business now but also it reduces the risk should we have to step in and buy in that kind of emergency situation. So that lowers that risk reduction as well.

Michael: And so, in essence, you’ll start with some going rate multiple. I guess…I don’t even know, is there a typical benchmark multiple that you tend to look at for firms in this size in this market? Is it two times revenue or a higher number, or a lower number? What’s a typical starting point for you?

Tim: Yeah, so it depends on a number of factors. But for us, we’re going to look somewhere between 2.25 and 3.25 in a recurring revenue multiple. That just seems to make sense to us right now. If we’re looking at non-recurring revenue, then we’re going to look somewhere between a 0.75 and a 1.15 multiple on the non-recurring revenue side.

Michael: Okay. And so, we’ll start with some number there, right? We apply our…take X multiple of recurring revenue, column one, take Y multiple of non-recurring revenue, column two, right? I can pull that off my P&L. And so then, I guess a risk premium for you essentially equates to a discount off of this multiple or off of whatever valuation you get at the end of these multiples that says your practice might be worth whatever it is…$700,000 based on these multiples of revenue, but we’re only paying 560 [thousand dollars], 20% less because you’ve got a fairly high-risk premium because you’re using your own services, you never explained this to your clients, and you have no other team members who are going to hang around.

Tim: Yep. That’s the concept.

Michael: So, how large do risk premiums get for you in practice? How much of a risk premium do you typically apply? Are these…maybe it’s 10 or 20% lower? Are these…it could be 30 to 50% lower?

Tim: Yeah. So, if it’s 50% lower, we probably don’t want to do that. That is just too much.

Michael: At some point where the risk is that high, then maybe that’s just not a good one at all.

Tim: That’s right, it just doesn’t make sense. And so, ideally, what we would look at is somewhere in that 20% to 35% of a risk premium, because the other factor that comes in here is that all of the transition cost is borne by the continuity partner. And so, if you’re still here, and you’re transitioning your business, but to your point, earlier, you’re meeting with clients, you’re helping with the repapering, if there’s any repapering that needs to be done, you’re helping if there’s a custodial change, you’re helping with any custodial changes, all of those things are part of that.

Michael: So, this isn’t solely a sort of pure continuity, hit by a bus, had a heart attack, whatever it is, just not there tomorrow, okay, someone’s got to step in and trigger this. This could also simply be, “Hey, Tim, I’ve decided that I really want to dial back. I’m ready to pull the trigger and have you buy me out.”

Tim: Yep, absolutely. And it could be phased in, in that regard. And that’s where I think these… If I’ve kind of put my 15-year hat on, I think that over the course of the next 15 years, we’re going to have a lot of firms that are the size that we’re talking about, that start out with this ownership continuity, kind of emergency planning, what happens when I get hit by the bus, but then as they get closer to retirement, it’s not going to be something…if I think about even my own retirement, I don’t want to just flip the switch, today I’m full bore, and tomorrow I’m out of the business. I’m going to want to kind of phase out. And so, the picture here is that it starts out with an ownership continuity conversation and will be your emergency backup. But, ultimately, in the next 10 or 15 years, as you want to phase out, it’s really a transition plan, and transition plan not being, “Here’s a big check, don’t ever show up here again.” It really is, what does that legacy that you want to have look like? And so, kind of under all of this, that’s kind of what our mantra is, how can people control their legacy? What does controlling your legacy look like, and how can we help you to do it?

Michael: And I guess from the flip side, so, you sign an agreement, which says, here’s the terms, we are committing to this valuation, these terms. And you reevaluate it every year. But, functionally, I guess, I’m just sort of processing that out. So, if something happens, just there it is, that’s the deal. I know I’ve got terms. I know what they’re set at. If retention is really bad, then the revaluation in subsequent years may haircut this, but otherwise, I kind of know where it’s going to come out. If you’re just, I’m ready to…we do this for a couple of years and I’m ready to retire, you can say, I can always still just go back out to the open market then if I really want to see, well, I want to be a more proactive sale. Maybe I want to look at other partners. I’m not necessarily bound to the agreement if I voluntarily want to go look somewhere else, but I can bind…PrairieView gets bound the agreement that says if something happens or I want to pull the trigger, you will be committed to following through on it. Am I thinking about that the right way?

Tim: Yep. I just want to clarify, because I think you’re 100% there, but just to make sure. What PrairieView is committing to is that if something happens to you and an emergency happens, here’s your continuity plan. If you decide to retire, all bets are off. You can go shopping if you want to, whatever you want to do. But also, PrairieView, it’s not like a put, right? You can’t say, “Hey, now I want you to buy me and it’s a put. I’m retiring, buy my business.” What it really is us saying, “This is the ownership continuity track that we’re on, but because we’ve been in this conversation for the last eight years, what’s the logical place that’s going to make the most sense for everybody?” And so that’s how we view it.

Michael: And so, what comes next is just you look forward for the firm from here, where are you going next with this?

Tim: So, the plan or the hope is that as I try to transition more and more of my time away from that in-person client interaction, we start to look and say, “Well, what does it look like if our clients are advisory firms that are in that $75 to $250 million range that have these problems?” Right? They’ve got the same problems that we’ve had. And so, what does it look like then if we just start reaching out to them and saying, how do we partner, and how do we help take some of the problems that you’ve got and solve them in the way that we think we can?

Joining Thrivent Advisor Network To Gain More Business Independence [46:01]

Michael: So, help us understand a little bit more just your journey through the industry to come to this place in the business? So how did you get started with PrairieView in this journey?

Tim: Yeah. So, for us, I started as a captive agent for a company Thrivent Financial. Back when I started was called Aid Association for Lutherans, and we had a merger and became Thrivent. And so, for 20-plus years, I was a captive agent with them. And then back two years ago is when it officially happened, they probably start the conversation about three or four years ago, Thrivent created what’s called the Thrivent Advisor Network, which allowed advisors to kind of separate from that captive place and become really independent advisors under this platform. And that’s when PrairieView was created.

So, if somebody went out and said, “Hey, where’s PrairieView,” PrairieView is not going to show up, except for the last couple of years, but it’s because of the previous years that we were Thrivent that we got to the place we are now. And really, where we get to this conversation is really all around being the person that is in that spot, recognizing that I’m not solo anymore, I’m too big for that, but I’m also not big enough to really be big. Even as I think about myself, so I’m in my mid-40s. Well, I heard Shawn say it, I’m 44. So, I don’t know if I’m going to say middle yet, 45 is middle. So, I’m in my early 40s. And as I think about my own business and think about when I retire, what do I want to have happen? There’s not a lot of work being done with firms my size. There’s a lot of resources being dumped into the billion-dollar guys and above and guys being generic to the billion-dollar firms and above, not a lot in the people that are sub-250.

And I think that there’s a lot of work that needs to happen there. And there’s a lot of advisors that are going to want to retire. And there should be a good solution for them. Let’s say that I had somebody that was a really large firm that wanted to acquire us, and let’s say…or private equity, or something along those lines. If they came in today, and they could offer me a huge multiple, it doesn’t make sense. That’s not my clients. That’s not the practice that we’ve run. We’ve run a family-oriented kind of firm. And so, I don’t feel great about that. And so, what it seems to me is that there’s this niche of firms that are in that range of people that are going to say, “I just want to keep my firm like I had it. I want it to be my legacy. I want to control my legacy.” And so, it’s that evolution that took place. It’s me recognizing that, “Hey, if I’m in this spot, there are a lot of other firms that are in this spot. I think we could put something together that’s pretty cool.” And that’s how the thinking has kind of transformed from being that captive agent with Thrivent into today.

Michael: So, help me understand more though, just why the change to go independent and move under Thrivent Advisor Network? What was to prevent you from doing this kind of journey just at Thrivent where you’ve been for 20-plus years?

Tim: Yes, the best way that I like to explain that is, I like to compare it…my wife and I had some landscaping work that was done in our yard a couple of years ago, probably five years ago now. And in the backyard, I had a spot and I knew I wanted to put a bald cypress. I don’t know why, but I thought a bald cypress would look good there. And my landscaper told me I couldn’t do it. And so I asked him. I said, “Is it because the soil is not right, too sunny, too wet? Why can’t I put it there?” And he said, “Well, to be honest with you, it’s because I don’t have it in stock.” And I looked, I’m like, “Well, I don’t care if you have it in stock or not. Go to the guy up the street, get it from him, and put it in my backyard.” And in essence, that’s how I felt with the Thrivent captive part to my business.

I felt like Thrivent does great work, they have phenomenal products. I loved the company. However, if they didn’t manufacture a product, or if they didn’t have a product that was quite right for my client, I’m stuck selling my client oak trees instead of bald cypress that they want. And so, that shift into that independent space really allowed me to say I can be focused purely on my client and say if Thrivent has a great program, whatever that program is, phenomenal. But if not, we get to say, “What’s right for you, and how do we go about solving your needs?” Which is really why we’ve chosen to be this hybrid rather than fee only. Because a lot of our work is done helping clients from A to Z.

Too many times we see fee-only advisors who don’t see the whole plan to the finish, they just kind of write the plan. I think a lot of it is very similar to estate planning attorneys who draft the trust, and then don’t make sure that all the assets get into the trust. And so, for us, in that hybrid model, it kind of holds us accountable to say, not only are we going to make sure that the plan is right, make sure that the advice is right but then we’re also going to make sure that the execution happens and provide some service there too because it’s a really confusing place out there. And so hopefully, help with giving some good advice around execution as well.

Michael: And do you have any concerns or ever get any pushback from clients asking about fee-only fiduciary and those conversations?

Tim: We don’t very much… And part of it might be just in how our conversation is. I tell them, even though…if we’re talking about, say, an insurance product, or an annuity product, I’m not necessarily in this fiduciary legally-bound world in that instance. However, the way that I approach our relationship is that I am. I am never going to act outside of my fiduciary responsibilities, regardless of the service that we’re providing or the task that we’re performing. And so really, that’s not ever been an issue for the clients that we serve.

Michael: And so why… Obviously, you had some direct connection already being at Thrivent, why Thrivent Advisor Network? There are a lot of independent advisor platforms out there if you were going to go shop for being independent and no longer being Thrivent captive. Why Thrivent Advisor Network?

Tim: So, I think it really goes into a couple of different categories or a couple of different reasons. One, obviously, as you mentioned, the affinity, familiar with them, know them. They’re in alignment with my faith-based background, those types of things is one piece. Another piece is that, because of that, they tend to be a large enough firm that I wasn’t worried about going out of business. One of the things…and this is completely conjecture on my part, based on no facts or any of that kind of stuff other than just things that I’m saying. But as I look across the landscape, I see a lot of these firms that are trying to be aggregators that are going out and offering really lean payouts for advisors. They’re offering multiples to buy businesses. They’re doing those things.

And a lot of that is being done during times when we have really low-interest rates and markets for the most part of that have just gone up. And so, part of my concern is, as I look out at the landscape, will those models continue for the next 15, 20 years or will there be some issues where if we have markets that are correcting, and you have fee revenue going down, combined with interest rates going up, that all of a sudden, we’re going to be in a much different landscape? And some of those support that you thought that you were subscribing to, some of those places might go out of business. I don’t know that they will. But just in my mind, that was another concern that was going through my mind where the financial background of a Thrivent type just wasn’t…that wasn’t as much of a concern for me.

But probably the biggest piece for us was the transition for our clients. Because I was in that Thrivent world, and being part of the Thrivent Advisor Network, it allows me to continue to be the person of record for all of those client accounts. And that’s a much harder thing to do to say, “Okay, Mr. and Mrs. Client, you’ve got these things that I can no longer help you with, but I still want to be your financial advisor.” There’s not a congruency there. And so, it was really kind of those three things that drove me to that decision.

Michael: And then how does the structure work for you? So, I guess…I’m presuming then that means that PrairieView is an IAR, like a DBA structure under Thrivent Advisor Network. Are you actually technically an IAR of their RIA?

Tim: So right now, that’s the structure. There’s conversation and things to maybe make that look a little bit different, but for right now, that’s our structure.

Michael: Okay. And I guess just how do you think about the services that a platform like Thrivent Advisor Network provides versus the services that you’re building and scaling up through Focus Forward?

Tim: So, completely different. So TAN, Thrivent Advisor Network, TAN for short, what they do is really…really co-op is the best word for it. Kind of bringing together advisors and saying…I’ll use PrairieView example. If I go to Charles Schwab, for example, and say, “Hey, Schwab, do you guys want our business?” They’ll say, “Yeah, we want your business but at your size, here’s an 800 number, or here’s the service level that you’ll get.” When a TAN goes to them and says, “We have 15 PrairieViews, can we do business with you?” You get a much different response. Similarly, I would think, with negotiating our pricing on Salesforce, for example. Or that they also helped with all of our cybersecurity, our compliance stuff, those types of things. And that’s not a world that Focus Forward ever wants to necessarily get into. And so, the TAN model helps us to combine some resources and get a better result than a firm my size could do if I was just doing it on my own.

Michael: And so, it sounds like that’s particularly in the context of platform and service providers like RIA custodians, technology deals like Salesforce, where you’re looking for those platforms like TAN to give you the bulk negotiating discount capabilities that just give you a better deal through them than what you were going to get on your own.

Tim: Absolutely. Combined with, when I think about my compliance issues, the RIA that’s much bigger that I can plug into probably has better compliance opportunities than I can in a firm my size, as well as the technology side. If I look at the entire offering, it’s the technology piece that I think is probably one of the biggest things for me in particular, not from a technology…we’re fairly technologically-savvy in the firm. But when I think about it from the cyber perspective and how are we protecting client data, there’s some comfort there for me. I think that smaller firms can do it. There are tools out there. Every time I talk to the people, I know that are in that world, they say, “Hey, you don’t have to do it. We can do it for you. And it’s really easy.” And I get that, but my fear is that I think that that’s one part of our business where the risk perspective is just going to continue to balloon. And I would rather have some support there than do it on my own.

Michael: And how does it work financially if you’re under TAN or operating as an IAR under their RIA? Is it sort of like a broker-dealer environment, you get a percentage of revenue payout that comes back to you and they get a portion of it for the services that they provide?

Tim: Yeah, pretty much. I take a haircut for them providing those services. And the haircut is only on the RIA-related business. So there’s no haircut since we are a hybrid. If there’s any sort of a commissionable type of a product that we’re offering, there’s no haircut there. But there is a haircut for any of the advisable type of business.

Michael: And what kind of haircut do they charge?

Tim: Yeah, that ranges based on size. I think that the bigger you are, obviously, the lower that haircut gets. That can range anywhere from probably 5% to as high as maybe 15% of advisory revenue.

Michael: And, ideally, at least from your end, that’s absorbing the 5% to 15% you may have otherwise spent on technology, compliance, and the other centralized stuff that they’re trying to bring back to you.

Tim: That’s right. Yeah. So, when I go down that list, and I’m like, okay, so for me to hire it done, whether I outsource it or insource it, and I go down this list of things that are being provided, I’m like, “Okay, well, what are my costs to do that? But then also, what’s my mindshare?” Because if that stuff’s on my mind, I’m not thinking about how I’m going to service a client, or I’m not thinking about how we can put together this ownership continuity plan or whatever those things are because mindshare is occupied by some of those things. And so it’s not just a pure dollar-for-dollar math problem in my mind. That’s a huge part of it, but there’s also something that has to be added to that equation that just says, that’s one thing that I don’t have to have on my mind anymore.

Michael: And I guess, I’m just wondering or trying to process, there’s a percentage of revenue that flows to TAN. There’s a slice then that goes to Focus Forward. And there’s a part of me that says it feels like that’s a lot of different checks that PrairieView as to write for all the different pieces. And then the other half of me says, “Well, advisory firms, at the end of the day, 30% or 40% of revenue goes to some combination of overhead stuff anyways.” It’s just kind of how it breaks out at the end. So, how do you think about these sort of layers of costs that you have to manage with the providers and support structure that you have around you?

Tim: Yeah, that’s a great question. And it really goes back to the things that they’re doing, I have to do anyway. I’m not choosing to have an additional service, right, or I’m not choosing to have them do something that I wouldn’t be doing already. I have to have the middle and back office in my practice. I have to have compliance. I have to have technology. So really, it’s sitting down and saying, “I’m going to write a check here to say Focus Forward, but if I wasn’t writing that check, I’d be writing a different check inside of my practice.” And what would that look like? What would that expense look like? But then also, what would all the other things that go along with it, the hiring, the training, the managing, just go down that list. And like everything else, there’s a value proposition there. For some, it makes sense. And they’re like, “Yeah, I see the value there. And that’s how you choose to do it.” And others will say, “No, I can do it better or cheaper or just more desirous inside of my own practice.” But for us, it makes sense. And both from a financial as well as, I don’t know, from my perspective, the logical or value proposition phase portion of that, it just makes sense for us to do it.

Leveraging Internal Marketing To Enhance The Client Experience [1:01:19]

Michael: So, I am curious, the one part that I heard earlier, I think you said you do still keep in-house as part of that PrairieView team structure is that marketing is still in-house for you?

Tim: Yeah.

Michael: So, I’m curious to hear more about that, right? Of all the different things that can get outsourced versus in-sourced, frankly, I don’t see a lot of firms that have full-time marketing staff internal if there’s any dollars set there at all. Often, we hire a marketing consultant or a person that sells a service, or an offering to support advisors or marketing. So, tell us more about why marketing in-house and what do they do.

Tim: Yeah, so, my picture is… And maybe we define marketing slightly different here than others might. But the reason we keep marketing in-house is I don’t think there’s anybody that can tell our story better than we can. When we talk about a Focus Forward, we’re taking all the things that’s not our secret sauce and we’re shifting it to that company. If I think about anything from a secret sauce perspective, that’s where I want to keep it in-house. And I think that marketing is one of those things. When I look at the PrairieView…consequently, when we have people that say, “Hey, tell me more about that Focus Forward thing,” we actually send them to the PrairieView website because the marketing team is inside of PrairieView, and the PrairieView site will lead you to those things. And so, my picture is that’s the story, right? That’s who tells the story. That’s who gives the story.

And so, marketing for us, though, might look slightly different, because what we put into marketing are all of our customer experience types of things. So, when we talk about our financial planning process, our marketing department is laying out, “In between steps one and two, here’s what the client is going to get. When the client comes into the office, here’s how they’re going to be greeted,” those types of things because we think that the best marketing we can do would be to have our clients give us more referrals. And so, our marketing department is really all about that client experience and, how do we make them so happy that they want to give us more referrals? Which is probably different than what other firms would technically call marketing, but in our picture, that’s part of the marketing department.

Michael: So, is there an external component to the marketing side of things as well, or is it entirely internal?

Tim: No, there’s external as well. So, for example, this is silly, but we’ve got…I shared with you that we have an apprentice that is kind of going through our training program. We also had an intern this summer, a high school senior. He happens to be my son as well. So the apprentice and the intern, one of the things the marketing department had him do was…I call him department, it’s one person and a contractor. But one thing that marketing had him do is they got freeze pops and tied to a cart around it that just says, “Hey, we’re your neighbor. If you need anything, give us a call,” type of a thing. And it was more to that, but just a card that just… And they walked around the neighborhood where our office is and just said, “I don’t think we’ve met before. Here’s some Push Pops. It’s a hot summer day. I just want to give you this and say hi to our neighbors type of thing.” And so that’s one example of some of the external stuff that the marketing department is doing as well.

Michael: So, I guess I’m wondering, how much of the marketing department time is split between the external kinds of things versus the internal client experience, hopefully, that ultimately drives growth with referrals? How do you think about the allocation of time or effort between external marketing versus that internal client experience as marketing structure?

Tim: Seventy-thirty.

Michael: Seventy in which direction?

Tim: Yeah, 70% internal and 30% external. And that’s gone in different degrees at different times throughout our history. There was a time when we were doing lots and lots of workshops. And so, when we were doing the workshop marketing, then the marketing department, obviously, was way more busy, external than they were internal, but really, for the last probably three years or so, it’s 70% internal, 30% external.

Michael: So is that pandemic related, you couldn’t do seminars because a lot of stuff was shutting down or just a shift in your marketing growth preferences?

Tim: Yeah. Ironically, it corresponded a little bit with pandemic timing, but it really was a decision. We had made the decision entering…I don’t know, I get my years confused now. Was it 2020 when the pandemic hit?

Michael: Yes.

Tim: So, it was entering that year, in December that year, we made the decision that we were not going to do workshops like we did previously, entering 2020. And then March the pandemic hit, and it just was fortuitous that that was not part of our plan that year. But really what we saw is, throughout the course of our time, we’ve seen workshops go through a lot of different phases where they’re really, really hot for a while, and you get a bunch of people that come out, and they listen, and you can pick up a lot of new clients that way. And then they go through a time where people kind of went through that phase, and they get cold for a period of time. And so, it was our anticipation that they had just gone cold. And so we were going to shut them off for a while. So, like I said, it’d just fortuitous for us or fortunate for us that it happened at the same time the pandemic hit.

Michael: So, I guess I’m wondering just what else is marketing doing internally-related? You’d said one piece is they’re looking closely when clients are going through the financial planning process of, what communication or experience are they getting between the meetings in the early planning process? So, I get that as one element, what else are they doing or where else are they focusing that you’ve got this internal marketing effort?

Tim: Yeah, so a lot of different places. So, one of the things that they do will also be the overall client experience, yes, through the financial planning processes as an example, but also, what are we going to do at Christmas time? Are we going to have a Christmas party? They’ll look as well at, we’d like to structure some give-back days, so we’ve partnered with a local farm for kids that have some developmental…I shouldn’t say kids, for people that have developmental issues. And so, we partner with them, and we’ll have clients come out and join us for one of those give-back days as another example. The other thing that we look at with marketing is also our internal marketing to our employees. And so, on our team, it’s important, like everybody knows, as we talked earlier, finding talent and keeping talent is a really big deal. And so the marketing department, one of their key constituents is also our internal employees, and making sure that the employee experience is what we want it to be so that they’re happy sticking around for as long as we can.

Michael: So, what does that mean in practice? What are they doing for finding or keeping talent to support?

Tim: So, some of it is, for example, somebody comes on board, what are they going to get at their desk with their first day in the company? Do they have anything that’s sitting at their desk waiting for them? Who’s greeting them? Who’s walking around the office? That kind of stuff. Paying attention to, I’ll give you an example, our front office person. So one of her big tasks, if you will, is to make sure that she’s making phone calls out to all of our existing clients on the schedule to make sure that we’ve got them coming in for their financial planning meetings. And we have a target where we’re looking for 15 appointments scheduled every week. Well, the other week, she got 19 appointments scheduled that week.

And so, the marketing department got a cake and brought it in and surprised her and said, “Hey, you hit 19 instead of 15 and we’re going to celebrate it,” type of thing. So, it’s culture. It is those types of things. But it’s also then making sure that the team gets together on a quarterly basis and talks about, from a business perspective, what are the things that we’re doing for our clients? What are the stories that… So, what are the stories that we can share so that then our employees can go back and say, “Hey, by the way, this place I’m working at does really good work, you should come talk to us.” And so, we get referrals from employees as well, if that gives a little more detail to it, Michael.

Michael: Yeah. Very cool. Very cool. So, I guess then, just more broadly, I’m wondering, how do you guys explain just value of financial planning and what you do to clients?

Tim: Yeah. So, our picture is that…and if you looked at kind of what is our objective as a company, we stated as we like to help people live to their God-given potential. And so, when we talk about financial planning, the concept is that the next, pick a number, five years of your life are going to go by whether we want them to or not. So, what at the end of that five-year period do we want to have happened? And if we’re intentional with what we do, and we’re intentional with how we plan, we can end up in a much different place in five years than if we’re not. And so, when we talk about financial planning, it’s not about that one great idea that you have, or it’s not about this year, man, my investments did so much better because I had a financial planner. It’s all about making the incremental decisions that add up and, over time, you end up where you want to end up, and you end up there intentionally, rather than just letting life kind of happen to you.

Michael: Interesting. I’m struck there, though, that…I feel like a lot of us in the advisory world, we tend to talk about, I’ll call it, the super long-term goals, kids to school in 10 or 20 years, retirement in 20 or 30 years, 30 years in retirement. Why five years? Just I was struck like you, you framed this in terms of a five-year window, that seems like a very specific and not multi-decade time period.

Tim: Well, in my experience, it depends on where somebody’s at in their life. It depends on that time period. But for the most part, if I’m sitting down with somebody, it is really hard to picture 30 years from now. I don’t know where I’m going to be in 30 years. But if I can sit down, I say in five years, what would you think about if the mortgage was paid off in five years? “Holy cow, I couldn’t believe it. That would be amazing,” that kind of stuff. And so, what many times will happen is, as we have the conversation, they will naturally from five years start to expand out. And then once they say, “Oh, here’s what I’d like in the next five,” then you can go, “Oh, well, if that was true, what would it look like in 10? Oh, well, if that was true, what if you could retire at 62, instead of 67 when you thought you were going to.” And now, all of a sudden, their mind can open up and have that conversation in a different way. Where if you sit down and just say, “Where do you want to be in 30 years, ” the clients that we work with, many times, their minds don’t work in 30-year chunks. They work in smaller chunks, and they need to be coaxed or coached into thinking in 30-year chunks.

The Surprises Tim Encountered On His Journey [1:12:35]

Michael: Very cool. So, what surprised you the most about this journey of building your advisory firm?

Tim: The old adage of “whether you think you can or you think you can’t, you’re right” is so true. And so many times, especially when I was early in the career, I would put these goals out there. And I’m a kind of a goal-setter kind of guy. And I put these goals out there and they would seem like really big and scary goals at the time. And thinking about it now, they were limiting goals. They were goals that limited my growth. If I would have put a number out there like a gross revenue number or number of new clients out or whatever, my brain, everybody’s brain works to solve the problem.

And what seemed like pie in the sky, holy cow, if I could ever, really was my self-limiting goals that I was doing. And so that’s, today… There’s a number of books that talk about it. But I know Dan Sullivan from Strategic Coach is one of them that talks about 10X. And the number of times the business has grown 10X in that 26 years is a lot. You think you can or you think you can’t, well, don’t limit yourself with what you think you can.

Michael: Interesting. Yeah, I’m struck by that framing, it’s not the, “Hey, it was great. I set goals and achieved them.” It’s, “Yeah, I set goals and I achieved them.”

Tim: Yeah. Yeah. It was the win at the time. It felt like a win, but you look back on it thinking…yeah.

The Low Point On Tim’s Journey [1:14:06]

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

Tim: I think the low point really happened back in probably 2004-ish. So when I talked about setting those goals, I had set the goal. It was a goal that was super aggressive in my mind, I hit the goal. And then after that, I really didn’t have a whole lot to go off of because that was everything I had put into it was this was the goal. And then, kind of in that time period, it was a business production goal, it was building the house that we wanted goal. It was all these lifestyle or non-…and those are significant things, don’t get me wrong, but things of non-significance that we’re out there and were those goals. And I found myself, for probably longer than I’d want to admit, floating and maintaining, and not really building the business, not really growing the business, wondering kind of what the next step was. And that time period was probably the low point. And then as I came out of that and started realizing, hey, here’s some other things, more significance types of things, it changed the landscape pretty dramatically for me.

Michael: So, what put you into the funk?

Tim: It was achieving the goal, right? So when I was sitting in 2004, the goal was I had a business gross revenue number, at that time, Thrivent had a…they had a reward system where you got to qualify for trips. I always called it chicken dinners. They’d give you a lot of chicken dinners to win. And so I had a certain chicken dinner I wanted to win from Thrivent, I had certain business revenue goals that I wanted to hit, and I had a house that I wanted to build. And all three of those things happened by the beginning of 2006. And so then I found myself at the end of 2006 looking around and saying, “So now what? What’s next,” right? And there were very superficial things. They weren’t big world-changing things. They were important to me at the time, but they weren’t things that I would say of significance.

And so, then I spent probably another five years maintaining that, but it wasn’t a growth period. It wasn’t an exciting period, it was middling at best. And it was all because it’s, “Okay, so where do I go next?” And that’s where this whole concept of we’re here to help people to achieve the fullest potential that God has made them to achieve. And if I look at that every day, there is a lot that we can continue to work on. And that’s empowering to me. And so, it was making that shift to more significance than just, “Hey, these are my three goals that were significant to me at the time, but they’re not goals of significance.” And that’s the difference.

Michael: And so, what turn this around for you? How did you find the new framework?

Tim: I was fortunate. So, if I go back to my dad who was in the business, through Thrivent, he and I were business partners for 18 years. He passed away a number of years ago, eight years ago now. But during that time, he was always one of the people that helped me to work through that, great sounding board. And so that was part of it. But really, I think it was a maturity thing. It was a recognition of when you’re young in the career, young in life, young family, those things, you have certain things that you think are important and significant. And then as you transition a little bit, you realize that there are other things here that are even more important, that have even more significance. So, it was a combination of those two things, I think, Michael.

The Advice Tim Would Give His Former Self [1:17:43]

Michael: So, what else do you know now about building the firm that you wish you could go back and tell you 10, 20 years ago?

Tim: It all has to do around staffing. The minute you think that you need to hire somebody, you’re too late, you’re behind the ball. And the minute you think you should get rid of somebody, you’re too late, you’re behind the ball, on both sides of it. Far too often, for me, personally, I would be in a growth mode, have a sense that we should hire somebody, and be nervous about it. I’d be nervous around, do I have the money to invest? What’s that going to mean to our bottom line? Those types of things. And so then I would hold off and hold off and my conservative nature would not take the leap that we needed to take.

And then on the flip side, you have somebody that you just know in your heart isn’t the right fit, and they’re not the right person in the right seat on the bus in the company, and for a number of factors, whether it is personal concern for the employees well-being, it is concern around who’s going to fill their seat, for whatever reason, you choose to stay in that relationship in the company longer than you should. And it’s bad for you and it’s bad for the employee. And so, those are the things if… And I still struggle with them, so it’s not like I’m checking the box, “Hey, I got it learned.” But those are the two things that if there’s anything that has kept us from growing the way that we could have, it is all around not hiring fast enough and not separating fast enough either.

The Advice Tim Would Give Younger, Newer Advisors [1:19:10]

Michael: So, any other advice you would give younger, newer advisors looking to become an advisor today?

Tim: Yeah. It is a wonderful journey. It is outstanding. And what happens, especially depending on how young or new in the career somebody is, if they’re like me, you start out in the career and you have these moments where you feel, “Man, I’m doing the exact thing that I should be doing.” And then you have moments where you feel like, “What in the world am I doing? I don’t know anything. I’m not the right person for this. Nobody wants to call me back. Nobody wants to…” You have all these self-doubts. When you start out, those self-doubts happen minute to minute. It’s the really, really high and then the really low. And what happens is, over time, all of a sudden, they start to become weekly roller coasters instead of minute by minute or daily, and then it’s every couple of months, and you still have them…

Twenty-six years in the business, you still have those times when you’re down in the valley part of the business. But just stick through those, you will get through it. And if you just continue to push, continue to work, you can make this business an outstanding business. You can really make it whatever business you want it to be, solo practice or multi-advisor firm, you can make it whatever you want it to be.

What Success Means To Tim [1:20:26]

Michael: So, as we wrap up, this is a podcast about success. And just one of the themes that comes up is the word success, it just means different things to different people. And so, you’ve had this wonderful path of success in growing the business in that kind of two in parallel with PrairieView and Focus Forward. So, the businesses are going well. But how do you define success for yourself at this point?

Tim: Yeah. So, I have affirmations that I kind of hold myself to on a daily basis. The first one is I want to be a great dad. Second one is I want to be a devout Christian. The third one is that I want to take care of myself physically. Fourth one is I want to be the best husband that I can be. And then the last one is I’ve got some financial objectives as well. And if I can fire on all five of those, then that’s success. Those aren’t necessarily in order. If I’m being transparent, I probably put my family, wife and kids, so dad and husband, as pretty close to the top. Christian probably should be number one at the top, but if I look at it and being honest with how I do it, that’s probably right after them. And financial is probably number three, and then the last one would be my health. And so that’s kind of how I rank them if I will. But if I could fire on all five of those, that’s a successful life.

Michael: And where did that come from, just that list and having those affirmations? You listed those very quickly. Those are clearly things you really are affirming on a daily basis. So, where did that come from?

Tim: Through several iterations. So, I love to read. I’ll probably read a book or two a week. And there’s a number of people that talk about the morning ritual or ideal morning. Even if you read, “Think and Grow Rich,” there’s a lot of talk about, what are the things that you should be doing kind of on a regular basis? We subscribe to EOS and that model. And so, there are things that, just as you look at this, regardless of the iteration that you have, they talk about what are your things and what are the things you’re going to set goals around? And how do you do that? And so, for me, just over time, I’ve realized that those are my five. And if I can do all five of those, that whether it’s today or it is 50 years from now, I am going to be a very happy person.

Michael: And so, do you actually have a morning routine of how these come into your life as affirmations every day?

Tim: I have a morning target. I have a routine, but wouldn’t say that I do it every single day. But I have a morning target for sure. Absolutely. Yeah, there’s about eight different things that I try to do every morning. And if I do four of them, then I consider it a win. So, yeah, that’s my routine. I don’t mind sharing it. I don’t know if anybody cares for it, but it is…

Michael: Yeah. Just what does it look like, or at least what’s the target? I like morning target a lot more than morning routine, being a not the morning person myself.

Tim: Yeah. Well, I’m not a super morning person. I’m usually a 6:30 a.m. kind of guy. If I can work out, if I can do a devotion, if I can take 10 minutes in quiet time or meditation, followed by journaling, then I try to read my goals that I’ve got for the year, I set goals in each of those categories. And then if I look at what my plan is for the day, which I write the night before, then I try to repeat what those goals are. I just read them to myself. So, I review them, and then I read them, and I repeat them again. And I try to pray. And if I can do those things every day, or at least the majority of those things every day, then I have a very good day.

Michael: So, workout, devotion, quiet time, meditation, journaling, read goals for the year, set plan or review plan for the day, repeat the goals, and then pray.

Tim: Yes.

Michael: That’s a powerful morning routine or powerful morning target.

Tim: Target, that’s right.

Michael: Very cool. Very cool. Thank you, Tim, for joining us and sharing that on the “Financial Advisor Success Podcast.”

Tim: Michael, thank you. It was a pleasure.

Michael: Absolutely. Thank you, Tim.

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