RPF0159-Alan_Moore

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00:00:29.640 | Radical Personal Finance is brought to you today by you, the listener.

00:00:34.640 | If you'd like to help make sure that the show is here with the consistency, the quality, and the unbiased point of view that you've come to expect,

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00:00:50.640 | Have you ever wanted to take on an industry all by yourself and revolutionize an industry?

00:00:59.640 | Well, today's guest is trying to do exactly that. He's trying to revolutionize the financial planning industry.

00:01:07.640 | Welcome to the Radical Personal Finance Podcast.

00:01:25.640 | My name is Joshua Sheets and today is Thursday, February 26, 2015.

00:01:30.640 | On Thursdays, we usually do interviews and today we do an interview with Alan Moore, founder of the XY Planning Network.

00:01:39.640 | After all, financial planning is not just for boomers anymore and Alan's a big reason as to why I can say that statement.

00:01:47.640 | There is today a whole entire cohort of people trying to shake up the financial planning industry and many of those people have gathered underneath the banner of the XY Planning Network.

00:02:06.640 | Now, there are other banners as well in financial planning.

00:02:09.640 | There's the NAPFA banner. All the NAPFA folks are trying to shake up the financial planning industry.

00:02:14.640 | There's the Garrett Planning Network. They're trying to shake up the financial planning industry and who knows who's going to win and who's not and who knows who's going to succeed long term and who's not.

00:02:24.640 | But XY Planning Network has come on the scene in a big way since they launched less than a year ago.

00:02:30.640 | You've heard me mention them a couple of times on the show and today we're going to talk with Alan.

00:02:34.640 | Alan is the co-founder of the organization. I believe it was actually his idea and then he has worked with Michael Kitsis who you previously heard on the show.

00:02:43.640 | They are co-founders of the XY Planning Network and the goal of the XY Planning Network is they're trying to foster a new practice model for reaching and helping generations X and Y, basically anyone who's not a baby boomer with financial planning.

00:03:01.640 | They're bringing together a number of independent financial planners all underneath one umbrella.

00:03:07.640 | I was actually previously a part of the XY Planning Network. When I left the firm I was with previously, I was in the process of establishing my own financial planning firm.

00:03:18.640 | When I heard – as you'll hear in this interview, when I heard about XY and what they were doing, I immediately said yes.

00:03:24.640 | I don't want to go this alone and try to figure this out and just do my ideas.

00:03:27.640 | I'd rather work with people who have already – who are doing this because in the launch of any new business, in the launch of any new industry or new approach, it's just fraught with problems.

00:03:37.640 | Sometimes you need someone that understands the problems that you can sit and talk through and in my mind, this new practice model that the XY Planning Network is offering is similar to that.

00:03:48.640 | So I bring you today this interview with Alan Moore. This was actually recorded in Dallas, Texas a week ago, a week or two ago when I flew out there for the T3 Technology Tools for Today conference for financial advisors.

00:04:02.640 | So I pulled Alan aside and we sat down and we had this conversation. I think you're really going to enjoy it.

00:04:07.640 | This really might be a real resource. I know many of you are looking for financial advisors or interested.

00:04:12.640 | XY Planning Network, as you'll hear, has a search function where you can go and you can search and browse through financial advisors.

00:04:19.640 | Feel free to check that out. I don't currently have any kind of business relationship with XY.

00:04:24.640 | I don't have – I'm not a member anymore simply because I closed my firm.

00:04:28.640 | But I do really want to support and see their model grow in value.

00:04:33.640 | So feel free to check that out if that's something that would be of help to you.

00:04:36.640 | I also know many of you in the audience are interested in becoming advisors and this might be a model that will work for you.

00:04:43.640 | So if you're interested in that, go to their website and check them out as well.

00:04:47.640 | Again, no special links. I think it's xyplanning.com or xy – look in the show notes and there will be the web address for you.

00:04:54.640 | That will be a useful resource for you. So with that, enjoy.

00:04:58.640 | So we're here. What's this conference called?

00:05:03.640 | T3, Technology Tools for Today.

00:05:06.640 | So we're here at the Technology Tools for Today conference with Alan Moore.

00:05:12.640 | And Alan, I've been wanting to have you on the show here for a while, partly to talk with you about your personal story.

00:05:19.640 | But also you have a unique insight into kind of the overview of the financial planning industry.

00:05:25.640 | So let's kick off with your personal story.

00:05:28.640 | How did you wind up going from young, didn't care about the financial planning industry to a leader in the industry?

00:05:36.640 | Oh, isn't it funny how you find your way and sometimes decisions that you had no idea would lead to where they do.

00:05:44.640 | And sometimes you just make decisions on a whim.

00:05:46.640 | So I was actually a pre-pharmacy major. I was going to be a pharmacist when I went to college.

00:05:51.640 | So got in to college, started to take the classes and ended up having to drop out of chemistry one whenever we got to naming compounds because I was so baffled by what was going on.

00:06:03.640 | And come to find out you have to take like six years of chemistry to become a pharmacist.

00:06:08.640 | So I was like, all right, well, apparently I need a new major.

00:06:10.640 | And ended up discovering another major called consumer economics, which is really kind of economics for the household.

00:06:17.640 | And then I saw that we had this budgeting class. I was like, that sounds like fun.

00:06:21.640 | So it was an elective. So I took this intro to financial planning class, which I thought was how to budget.

00:06:26.640 | And my own personal finances come to find out it was the intro to becoming a financial planner.

00:06:32.640 | And so it was like the first CFP course.

00:06:34.640 | Did the college have a financial planning program?

00:06:36.640 | They did. They had an entire degree program.

00:06:38.640 | And I didn't know that's where I was. I just wasn't paying attention, I guess.

00:06:43.640 | And just fell in love with it. And so I ended up getting my undergraduate degree and then my master's in family financial planning from the University of Georgia.

00:06:51.640 | Interesting.

00:06:52.640 | And so I went through, got my degrees, and then decided I wanted to become a practitioner.

00:06:57.640 | And ended up kind of getting launched and worked for a couple of different fee-only registered investment advisory firms, working with clients as a financial planner.

00:07:08.640 | And then after about a year and a half of working for other firms, I ended up launching my own firm, Serenity Financial Consulting.

00:07:15.640 | That was back in 2012. And kind of the rest is history. We can go into detail.

00:07:20.640 | But that was kind of how I became a financial planner and kind of ended up launching my own firm.

00:07:23.640 | How far out of college were you when you launched Serenity?

00:07:26.640 | About 18 months. So I had been out of my master's program for about 18 months.

00:07:30.640 | So how old are you now?

00:07:32.640 | I'm 27. So I was 25 when I launched my firm.

00:07:35.640 | Okay. So you're one of the young guys. We don't see a lot of young people with their own firms in the financial planning industry.

00:07:42.640 | No, we really don't. I mean, and part of that, there's actually more CFPs over the age of 70 than under 30.

00:07:48.640 | So we actually have a real aging population of advisors anyway.

00:07:52.640 | I mean, the average age is like 56, but it's very skewed to the older age.

00:07:57.640 | So there's not a lot of younger financial advisors in general, much less younger firm owners.

00:08:03.640 | For obvious reasons. I mean, people want to get experience or they want to build up money before they launch their own firm.

00:08:08.640 | So there's a lot of barriers of entry that kind of stop people from going out on their own.

00:08:12.640 | But yeah, you don't see it very often these days.

00:08:14.640 | So what type of firm was Serenity Financial?

00:08:18.640 | So when I first launched, I provided financial planning on an hourly basis.

00:08:22.640 | I didn't do any ongoing work. I just did hourly financial planning advice.

00:08:26.640 | So basically, I just got paid for my time. And I also provided some investment management services.

00:08:31.640 | And I focused on working with younger clients.

00:08:33.640 | And at the time, I didn't really have a narrower client base beyond just I wanted to work with people that were my age.

00:08:40.640 | I wanted to work with people in their 20s, 30s, because I was really interested in the type of issues that they had.

00:08:46.640 | I wanted to talk student loans and mortgages and having kids and buying houses and moving and starting businesses.

00:08:52.640 | That's what really excited me. I wasn't as excited to talk retirement planning or complex income tax stuff for retirement or Social Security.

00:09:00.640 | That just wasn't my thing.

00:09:01.640 | And so I went out and really marketed myself as the advisor for young clients.

00:09:06.640 | And I did the hourly work. And then that kind of grew over time to where I had clients saying, "Hey, I'd really like to work with you on an ongoing basis."

00:09:13.640 | So my service model kind of evolved over time into where I was working on a retainer basis with clients.

00:09:19.640 | And when you started, what were you charging for an hourly rate?

00:09:23.640 | So I charged $180 an hour when I first launched, which was a totally made-up number.

00:09:28.640 | I know the struggle of trying to figure out how much are you worth.

00:09:32.640 | And it finally dawned on me one time that I wasn't being paid for my time.

00:09:39.640 | I was being paid for the time that I saved clients.

00:09:42.640 | So anything that I was going to tell them, they could technically go find on Google.

00:09:46.640 | They were just going to spend tens and hundreds of hours trying to find the answer.

00:09:51.640 | So even though I was charging for my time and basing it on an hourly rate, the value I was giving was really based on the time that they were saving and the expertise.

00:10:00.640 | So I basically just made up a number.

00:10:03.640 | And the number came out because I wanted to be able to bill in 15-minute increments.

00:10:07.640 | And you can't divide $175 easily by four.

00:10:12.640 | So I was like, "I guess I'll just start at $180." And I did.

00:10:15.640 | And it worked.

00:10:17.640 | And after about six months, I moved up to $200 an hour, and that's where I'm at now.

00:10:22.640 | Did you like that hourly model?

00:10:24.640 | I really didn't, to be honest.

00:10:26.640 | It accomplished the goal that I had, which was I wanted to make financial planning accessible to the next generation of clients.

00:10:32.640 | I didn't want to say, "Hey, I'm sorry. You don't have a million dollars yet, so I can't work with you because you don't have enough assets."

00:10:37.640 | I wanted to have a model that I was profitable while working with younger clients and that it was a great service that I could provide.

00:10:44.640 | There are some challenges with working hourly.

00:10:47.640 | And my accountant charges me hourly.

00:10:50.640 | And so every time I go to call him, I think, "Is this a $200 an hour question?"

00:10:54.640 | And the answer is usually no.

00:10:56.640 | So I don't call him.

00:10:57.640 | And then I don't call him again.

00:10:58.640 | And this happens time and time again until finally I'm in crisis mode.

00:11:02.640 | And I finally call him, and I'm like, "Okay, I need two or three hours because I have all these questions."

00:11:06.640 | And it ends up just putting me in a really bad spot.

00:11:10.640 | And so I didn't enjoy hourly mode or hourly billing because it really -- everything was in crisis mode.

00:11:16.640 | And I found that it was just a very reactive relationship, which is why I ultimately ended up moving to more of a retainer subscription-style service

00:11:23.640 | because I found that it allowed me to be much more preemptive with clients and kind of stay ahead of the curve instead of constantly feeling like I was chasing clients down.

00:11:31.640 | That's one of the things that I've struggled with is when I was thinking about different practice models and trying to figure out, okay, how do you set things up?

00:11:39.640 | Everyone likes the concept of the hourly planner.

00:11:42.640 | If you listen to mainstream -- well, even not mainstream, mainstream or niche advice, oftentimes someone will say, "Well, go consult an hourly financial planner,"

00:11:50.640 | because the idea is, well, it removes all the conflicts of interest.

00:11:53.640 | But the times that I have billed hourly fees, I had exactly the same scenario that you had where I just simply had to sit down and say, "Listen, ignore the clock,"

00:12:04.640 | because what happens, in my experience, is there's a planner you need some time to understand what's actually going on.

00:12:11.640 | And you can't exactly -- financial planning is not a checklist.

00:12:15.640 | There are checklists involved, but a lot of times you've got to figure out what's actually going on here.

00:12:20.640 | Why do you -- what's the behavior behind it?

00:12:24.640 | What's the history?

00:12:25.640 | What's the situation?

00:12:26.640 | And that stuff takes time.

00:12:28.640 | Half of the skill of financial planning is the practical knowledge.

00:12:32.640 | But the other half, and I would say probably a lot more, is the skill of affecting the client.

00:12:37.640 | It's kind of a strange mix of psychology and coaching, and that takes time to work out.

00:12:45.640 | And I've never -- it's so hard to get good results with the hourly model, and I think it's not in most clients' best interest.

00:12:54.640 | If there's -- where I came, and some time ago I was in the process of launching a firm, which I have since pulled the paperwork,

00:13:03.640 | but I was establishing a registered investment advisory firm, and I wrote my own ADV, and I actually didn't use a template.

00:13:09.640 | I just wrote it from scratch, kind of with some templates as comparison, and it forced me to walk through what I was doing.

00:13:17.640 | And for those who don't know, there's a form when you start what's called a registered investment advisory firm.

00:13:22.640 | We call it a form ADV.

00:13:24.640 | It stands for like an advisory disclosure.

00:13:26.640 | It's a standardized form.

00:13:28.640 | But it costs -- it forces you to lay out your model.

00:13:32.640 | And one of the things I laid out in that model was I said, "I do believe there's a place for hourly planning if there is a specific,

00:13:39.640 | clearly defined planning need."

00:13:42.640 | But for just general financial planning, that's not the case.

00:13:46.640 | One of the real challenges is that when we look at what's the value that a financial planner brings,

00:13:52.640 | what's the service and the real value that they bring their clients, and truth be told, more often than not,

00:13:59.640 | the value of hiring a financial advisor is because they help clients do nothing.

00:14:06.640 | It's really hard to pay someone by the hour to do nothing, and yet that's what we really provide.

00:14:13.640 | There's this great artist, Carl Richards, author of "The Behavior Gap."

00:14:17.640 | He has a weekly column in the New York Times, and he has this beautiful drawing that on the left side it says, "Me,"

00:14:23.640 | and in the middle is a big pillar, and it says, "My advisor."

00:14:25.640 | And on the other side of the pillar it says, "Stupid."

00:14:28.640 | It's my advisors between me and stupid.

00:14:30.640 | And ultimately, I help clients by keeping them from making a big move at the bottom of the market and getting out of the market,

00:14:36.640 | from making decisions emotionally, making a bad purchase on a home or something like that,

00:14:43.640 | or just investing in a bad business.

00:14:46.640 | I help them do nothing, and so when you tell me, "Okay, pay me by the hour to help you do nothing," it's a really tough sell.

00:14:51.640 | And so that's why I like being on retainer, or I call it a monthly subscription service.

00:14:56.640 | They pay me by the month, but it's basically a retainer where I'm on call when they need me,

00:15:00.640 | and so they know they're paying for expertise.

00:15:02.640 | They're not necessarily just paying for time, because that's the other part of this,

00:15:05.640 | is that it took me -- I got my undergrad, my master's, I studied for my CFP, I have some other designations.

00:15:10.640 | I have spent years gathering knowledge, and so when somebody asks me a question,

00:15:15.640 | I can respond in five minutes with an answer.

00:15:18.640 | But is that five minutes really representative of the expertise that it took to answer that question?

00:15:23.640 | And so that's why I'm a much bigger proponent of more of a subscription-based model.

00:15:28.640 | There's that famous story -- I don't know if it's true or if it's just an urban legend -- about Picasso,

00:15:33.640 | and a woman asks Picasso to draw a picture, so he grabs a pencil and in five minutes hands her this beautiful pencil sketch,

00:15:39.640 | and she asks the price, and he names some astronomical figure, and she says, "But it took you five minutes,"

00:15:45.640 | and his point was, "No, it took years and years and years and years to do it."

00:15:50.640 | And it's the same thing with financial advice.

00:15:52.640 | So the monthly subscription model, did you come up with that idea?

00:15:56.640 | Were you copying others?

00:15:58.640 | No, I did not come up with it, and I'm actually not sure who to credit with it.

00:16:01.640 | We've seen a couple different companies that have tried it.

00:16:04.640 | Annual subscriptions were really popular for a while, and they got kind of turned into quarterly and became monthly.

00:16:10.640 | So I certainly didn't invent it.

00:16:12.640 | I more just took it and applied it to my client base.

00:16:16.640 | How did you structure -- how do you structure with Serenity?

00:16:20.640 | How do you structure fees and try to figure out a way that's right for the client,

00:16:24.640 | but that also results in your being able to run a viable business?

00:16:27.640 | Absolutely.

00:16:28.640 | So the way that I charge clients is I charge an upfront planning fee,

00:16:31.640 | and that upfront fee is representative of the fact that we do a lot of work upfront that we don't necessarily have to do in subsequent years.

00:16:38.640 | So there is some upfront work, but I'm also looking for buy-in from my clients.

00:16:42.640 | I found that if I don't charge an upfront fee, then sometimes clients aren't quite as proactive in getting me documents

00:16:48.640 | and answering questions and stuff that I have.

00:16:50.640 | So I charge an upfront fee of typically $1,000, and then anywhere from $100 to $200 a month,

00:16:56.640 | depending on the complexity of the client situation.

00:16:58.640 | So if it's a new grad coming out with just some basic student loan issues, debt,

00:17:02.640 | we're talking cash flow, debt management, maybe they're $100 a month.

00:17:05.640 | If they are a client couple that has some rental real estate that we're doing analysis on and monitoring

00:17:10.640 | and a lot of investments and things like that, then we're charging $200 a month.

00:17:14.640 | But usually it ends up being right there in between.

00:17:17.640 | Do you have a model for how frequently you try to connect with clients or an organized way that you try to work on things?

00:17:25.640 | I try to meet with clients quarterly, but one of the pieces that's different from my model is that I do meet with clients virtually.

00:17:32.640 | So I'm not asking them to come into my office four times a year because it's just so difficult.

00:17:37.640 | It's so time-consuming.

00:17:39.640 | So we can just hop on Skype, we can hop on the phone, and at least just touch base.

00:17:42.640 | Even if it's 20, 30 minutes just to chat, I want to at least hear from them, hear what's going on.

00:17:47.640 | But I'm usually emailing them every month or two, or they're emailing me and letting me know things are going on.

00:17:52.640 | I'm usually the first call when they find out they're pregnant or when they finally find that dream home and they're finally ready to buy

00:17:58.640 | or they get a new job offer or they find out they got fired.

00:18:01.640 | I'm usually that first call, and so we're interacting and chatting throughout the year.

00:18:06.640 | So I want to switch because the way that I connected with you, and this is only the second time that we've met in person,

00:18:12.640 | but the way that I connected was when I was considering leaving the firm I was with and starting my own firm.

00:18:19.640 | And I had come up with the idea, and I'm sure it wasn't original, I'm sure it was just me reading some article somewhere and building on it,

00:18:27.640 | but I had come up with the idea of charging a monthly model.

00:18:31.640 | Because when I looked at it and I say, "Okay, look, there are certain things that you can actually do in the technical science of financial planning."

00:18:39.640 | Things like monitoring the investment portfolio, figuring out what's an appropriate amount of insurance, figuring out an appropriate asset allocation.

00:18:46.640 | But that stuff is pretty cut and tried.

00:18:50.640 | You and I can both sit down, we can do a fact-finding appointment, we can find out goals, objectives in a current situation.

00:18:56.640 | You can create a financial plan, it can be five pages or it can be 150 pages depending on how many fancy charts you put in it.

00:19:04.640 | And then there's an action list at the end, do this, this, this, this.

00:19:07.640 | My problem is the science of financial planning doesn't seem to cover a lot of the stuff that actually makes a difference in the client's life.

00:19:15.640 | It doesn't cover the fact of are you building your career?

00:19:18.640 | It doesn't cover the fact of are you planning ahead and saving for the vacation?

00:19:22.640 | It doesn't cover usually even debt management beyond just the advice to pay off your debt.

00:19:29.640 | And so I looked at it and I said, "How could we design something?"

00:19:32.640 | And the only thing I could do was basically bring together the idea of coaching with the idea of formal financial advice.

00:19:38.640 | And I came up with a monthly model.

00:19:40.640 | And then how I met you was right about that same time.

00:19:43.640 | When did you last launch XY?

00:19:45.640 | We launched in April of 2014.

00:19:47.640 | Okay, so that would have been I left my firm in July of 2014, but I made the decision in January.

00:19:55.640 | So from January to June, it was the end of June I left.

00:19:58.640 | So from January to June 2014, I was trying to figure things out.

00:20:02.640 | And I designed this model as kind of like a transition plan for me.

00:20:05.640 | And then I found out about XY Planning Network, and it was like, "Wow, someone else has this idea.

00:20:12.640 | Here are some other people doing it. I don't have to be all alone."

00:20:15.640 | So tell me the story of XY Planning Network.

00:20:19.640 | So, you know, as we were kind of talking about earlier, I launched my firm at 25 years old.

00:20:23.640 | And I looked around and there was just no--there really weren't a lot of--there really weren't any advisors that were younger,

00:20:29.640 | that were really passionate about working with younger clients and doing so without it being all about insurance sales.

00:20:35.640 | And so I was really passionate about doing it on a fee-only basis and not selling insurance, not selling investments,

00:20:40.640 | not trying to hawk annuities.

00:20:41.640 | Like I wanted to do it the right way.

00:20:43.640 | And I looked around the marketplace and there just really weren't very many other people.

00:20:46.640 | And so, you know, I had to figure it out on my own.

00:20:48.640 | I had to figure out compliance, which if you're not a financial advisor, you know,

00:20:51.640 | the regulation and compliance that we fall under is insane.

00:20:54.640 | And so it's amazing what all we have to do there.

00:20:57.640 | And so, you know, I had to figure out marketing.

00:20:59.640 | I had to figure out how does a young planner go out and find clients.

00:21:02.640 | How do you work with younger clients because no one seemed to be able to answer that question.

00:21:05.640 | What's the fee model?

00:21:07.640 | You know, that's why I started hourly and ended up on a monthly retainer because I was kind of the guinea pig.

00:21:11.640 | And so I ended up getting call after call after call of other advisors saying, "Hey, I really want to do what you're doing.

00:21:17.640 | I really want to work with younger clients.

00:21:19.640 | You know, how did you do compliance?

00:21:21.640 | How did you market?

00:21:22.640 | What technology did you use?

00:21:24.640 | You know, do you have an office space?"

00:21:25.640 | And so my co-founder, Michael Kitsis, who is probably the most, I would say,

00:21:30.640 | the most well-known blogger, content creator in the independent advisor space,

00:21:35.640 | said he was getting all these same questions too.

00:21:37.640 | And so we teamed up and ended up launching the XY Planning Network.

00:21:40.640 | And the entire, you know, we kind of have, I like to say we serve two masters.

00:21:44.640 | We have advisors that we serve, but we also serve consumers.

00:21:47.640 | And so from an advisor standpoint, we help advisors start and run their firm.

00:21:50.640 | So we give them business coaching.

00:21:51.640 | We give them compliance resources, technology, marketing.

00:21:54.640 | So we provide everything that they need to be able to start and run their firm.

00:21:58.640 | But from a consumer standpoint, I want to help connect consumers with great advisors.

00:22:04.640 | And the way that we do that is we require all of our advisors to sign a fiduciary oath

00:22:09.640 | whenever they join the XY Planning Network, saying that they will always work in their client's best interest.

00:22:13.640 | There's no question about whether or not they are fiduciaries, whether or not they are serving their client's best needs.

00:22:19.640 | And all of our advisors are fee only.

00:22:21.640 | They're all CFPs.

00:22:22.640 | They all work virtually.

00:22:23.640 | They all use this monthly subscription model.

00:22:25.640 | So it's really what we believe is what makes an advisor ideal to work with Generation X, Generation Y clients,

00:22:31.640 | so that when a consumer is looking for an advisor, they know they can trust the list of advisors that we have out there

00:22:39.640 | in terms of being able to find one that's going to be a really good fit for them.

00:22:42.640 | Why the focus on Gen X, Gen Y?

00:22:45.640 | Because they've ultimately been completely ignored by the traditional fee only advisors.

00:22:53.640 | I mean, if you look at the typical fee only advisor, they have very high asset minimums.

00:22:56.640 | They really only work with people that have accumulated money.

00:22:59.640 | But also, I'm 27 years old.

00:23:02.640 | I want to work.

00:23:03.640 | I want to help clients that are in similar life stages to me.

00:23:05.640 | I've got a five and a half month old baby.

00:23:08.640 | I bought a house.

00:23:09.640 | We're starting a business.

00:23:11.640 | I want to help people that are going through those life stages with me.

00:23:14.640 | I don't just want to talk to folks that are retiring.

00:23:17.640 | Those aren't the clients that really excite me.

00:23:20.640 | Why do you put such a big focus on fee only and explain what that means?

00:23:24.640 | So fee only basically just means that we only charge our clients fees.

00:23:28.640 | The only way that I get paid is from checks that clients write me.

00:23:31.640 | I don't get paid to transact insurance.

00:23:33.640 | I don't get paid to transact investments or to sell annuities or anything else.

00:23:37.640 | And the reason -- I don't say that commissions are bad.

00:23:41.640 | I don't want to put a moral statement on commissions.

00:23:45.640 | I just believe that there are a lot of conflicts of interest that exist within the commission world.

00:23:49.640 | Now, to all the critics out there, there are certainly conflicts of interest with all businesses.

00:23:55.640 | And fee only is not immune.

00:23:57.640 | But there is a certain level of conflict of interest, particularly in the insurance world, that I prefer to avoid.

00:24:03.640 | And that one is I prefer to separate the giving of advice from how I get paid.

00:24:10.640 | And what I mean by that is if I want a client to pay me to recommend what insurance they should purchase,

00:24:16.640 | I do not want to get paid when they buy it.

00:24:18.640 | Because when I get paid when they buy it, then inherently in the back of my mind I'm thinking,

00:24:22.640 | "Well, insurance product A may be better than B, but B pays me four times as much.

00:24:28.640 | And so should I recommend B?

00:24:30.640 | Because it's a good product, but it's not the best product."

00:24:33.640 | And I just don't want to deal with that conflict.

00:24:35.640 | So clients come to me, they pay me, and they pay our advisors to tell them what type of insurance they need,

00:24:40.640 | how to get it, how much to get.

00:24:42.640 | But the advisor doesn't get paid whenever they actually buy it.

00:24:45.640 | They get paid for their advice.

00:24:46.640 | And I just personally like that model.

00:24:48.640 | So what about the problem with that model of two things?

00:24:52.640 | So let's use insurance as an example.

00:24:54.640 | I'm not aware of any insurance company that will sell an insurance policy without a commission attached.

00:24:58.640 | Absolutely.

00:24:59.640 | Right. So there's always going to be a commission involved.

00:25:01.640 | What about those people that simply either don't have the money or don't see the value because they're not of the--

00:25:10.640 | they're not accustomed to going and saying, "Oh, I'm just going to sit down and hire people for $200 an hour."

00:25:16.640 | Because I've sold--here's the challenge that I struggled through when I was making the decision.

00:25:22.640 | Because I did when I joined XY.

00:25:24.640 | I was never listed on the website publicly because I didn't finish my RIA registration.

00:25:28.640 | But I was a member for, I think, five months.

00:25:31.640 | And when I decided not to launch my firm, I dropped my membership.

00:25:35.640 | But the concern I had was if I go fee only, that means I can't sell insurance.

00:25:42.640 | And I have helped hundreds of people who I don't believe ever would have been willing to pay $200 an hour to me.

00:25:51.640 | But they needed term life insurance and they needed a disability income insurance policy.

00:25:56.640 | And I was able to, because I helped them with those things and because there were enough commissions there,

00:26:01.640 | I could afford to go and meet with them.

00:26:03.640 | What do you say about that objection?

00:26:06.640 | Yeah, I mean, I would say that basically the argument there is that it's targeting a lower income, lower asset client

00:26:15.640 | that really just can't afford to meet with an advisor.

00:26:17.640 | And to be fair, people that are looking for financial advice generally can afford $100 to $200.

00:26:23.640 | Now whether or not they're willing to pay for it's a different story.

00:26:25.640 | But the issue with commissions is that they're still paying you.

00:26:29.640 | That fee just gets buried in the commissioned product and it comes out as a commission.

00:26:35.640 | And so the clients don't really see it because they're not writing a check.

00:26:38.640 | But ultimately it's coming out of their pocket.

00:26:39.640 | It just comes out in a different way.

00:26:41.640 | I mean, ultimately we're not running charities.

00:26:45.640 | I mean, people are getting paid to do work.

00:26:47.640 | Absolutely.

00:26:48.640 | So is there possibly a subset of the community that just has to -- can only afford the commission split in part?

00:26:55.640 | That's absolutely possible.

00:26:56.640 | And if that's the case, then I'd really like to hear why insurance companies won't let us transact insurance without a commission.

00:27:03.640 | That's what I want to know.

00:27:05.640 | Like why can't I sell a term life insurance policy and not take a commission?

00:27:10.640 | It's actually illegal to give that commission back to the client.

00:27:14.640 | I mean, they've really blocked us.

00:27:15.640 | So that's a whole other argument on insurance reform that I hope happens one day.

00:27:19.640 | But, you know, ultimately I want to be on the right side with my client.

00:27:24.640 | And --

00:27:25.640 | Real quick, I want to explore that because it's something that's interesting.

00:27:27.640 | And since I know it was kind of a leading question because I know you care about it.

00:27:31.640 | Are you aware of people who are arguing and lobbying for that to be changed?

00:27:37.640 | I'm not.

00:27:38.640 | And it really -- it makes me sad.

00:27:40.640 | But it is something -- I guess I could say this.

00:27:43.640 | I'm actually running for the NAPFA National Board this year.

00:27:46.640 | And that's one of the things that I'm kind of putting my stamp on and saying that, you know, as fee-only advisors, we've really carved --

00:27:54.640 | and I'm sorry, I should probably say NAPFA is the National Association of Personal Financial Advisors.

00:27:57.640 | They're the leading organization of fee-only financial advisors that's out there.

00:28:02.640 | And they're the ones who -- I think they're the ones who named it fee-only.

00:28:06.640 | They're the ones that really pushed that messaging.

00:28:08.640 | And I haven't seen anything coming from them, and that's who it's going to come from, on, hey, why can't we transact insurance?

00:28:15.640 | And, you know, it used to be you couldn't transact investments without a commission either.

00:28:19.640 | And we've finally gotten to where, you know, as a fee-only advisor, I can help clients with their investments and not earn a commission.

00:28:25.640 | And so I'd love to see that come from the insurance industry.

00:28:27.640 | But, you know, that's an uphill battle that the fee-only advisor community is very small.

00:28:32.640 | The insurance lobby is very large.

00:28:34.640 | I mean, they always have the tallest building in every city.

00:28:36.640 | So, you know, they have bigger lobbying dollars than we do.

00:28:39.640 | Who is it here in Dallas that I saw flying in?

00:28:42.640 | It was -- oh, I don't know who Dallas would be.

00:28:46.640 | There's a big one.

00:28:47.640 | But, yeah, you're right.

00:28:49.640 | So I've thought about this one, and I think it's interesting to talk through.

00:28:52.640 | I've thought about it, just said, okay, let's assume that I'm Joshua Sheets.

00:28:56.640 | I'm CEO of an insurance company.

00:28:58.640 | What's my incentive to offer insurance with no commissions?

00:29:03.640 | Because the reason that -- from the insurance company's perspective, they have to offer the commission -- well, excuse me, let me not say they have to.

00:29:13.640 | They offer the commission to incentivize agents to sell their product.

00:29:16.640 | And so this is where we wind up in a problem because some companies want to compensate.

00:29:22.640 | If an agent is looking at product A and looking at product B, and A is inferior, well, how is A going to make up the difference?

00:29:30.640 | Well, they could make the product better, but a lot of times in insurance that takes a tremendous amount of time.

00:29:35.640 | Maybe you've got a bad risk pool.

00:29:37.640 | You did poor underwriting 20 years ago, and you've got incredibly -- let's stick with life insurance, a good example.

00:29:41.640 | So you did bad underwriting 20 years ago, and now there's a new CEO that comes in, and you've got this risky pool that has a higher than it should be mortality rate.

00:29:51.640 | And so now you as a life insurance company president are sitting there looking and saying, well, I can't recover from this.

00:29:57.640 | It's going to take 20 or 30 or 40 years for me to clean up this risk pool.

00:30:01.640 | But what I can do is juice the commissions a little bit.

00:30:04.640 | And if I juice the commissions, then it offers -- it opens up the marketplace, and some agents will look at that and say, you know what, I will go ahead and sell company A.

00:30:11.640 | So I love the theory of it, but I don't know what could actually start the market force going other than a consumer outcry for it.

00:30:21.640 | So -- and what's interesting is we actually have some companies that are mimicking this concept without actually -- without being 100%.

00:30:29.640 | So one example is there's a company that I use called Low Load Insurance Services.

00:30:34.640 | They're an insurance brokerage firm.

00:30:36.640 | And what brokerage means is that they just represent a lot of different companies instead of a single company.

00:30:41.640 | So the way that they operate is all of their agents are salaried.

00:30:44.640 | No one in their firm is paid a commission.

00:30:47.640 | They're not paid bonuses based on sales or anything like that.

00:30:51.640 | They're paid a salary just like, you know, many employees out there in America.

00:30:54.640 | Now, when that product is transacted, the company certainly earns a commission because that's the only way that they can get paid.

00:31:00.640 | But all their agents are salaried.

00:31:02.640 | And so we look at that and think, well, all their agents are doing a great job.

00:31:05.640 | They're rewarded based on customer service.

00:31:07.640 | They're -- you know, if they're not doing a good job, they'll be fired.

00:31:10.640 | And yet all of them are salaried.

00:31:12.640 | They're not relying on commissions.

00:31:13.640 | And so, you know, is that the perfect model?

00:31:15.640 | No.

00:31:16.640 | But it is a kind of a step in that direction.

00:31:18.640 | And that's the way they serve fee-only advisors.

00:31:20.640 | They don't work with retail clients.

00:31:21.640 | They only work with the clients that are fee-only advisors.

00:31:23.640 | And so, you know, when I go to them and say, hey, I want this client to have a million-dollar term life insurance policy, they don't look at it and go, yeah, but we could sell them whole life.

00:31:31.640 | That's not their role.

00:31:32.640 | Now, again, they're shopping a lot of different insurance companies.

00:31:35.640 | They are not an insurance company themselves.

00:31:37.640 | But it is an interesting model to see that it certainly works from a business perspective.

00:31:41.640 | They are growing like gangbusters in terms of bringing on new agents and serving more advisors.

00:31:45.640 | You know, could it work from the point of an insurance company?

00:31:48.640 | You know, was it A.G. Edwards?

00:31:52.640 | Who was the company back in the day that was like, you know, buy term, invest the rest?

00:31:56.640 | That was Al Williams.

00:31:57.640 | Al Williams.

00:31:58.640 | And people said they were crazy.

00:32:00.640 | No one will buy this product.

00:32:01.640 | Why would you sell this product?

00:32:02.640 | And here we are that finally, you know, term life insurance has taken off in terms of being recognized as the right product for some clients.

00:32:09.640 | You know, certainly not all clients and whole life may still make sense or different forms of, you know, life insurance.

00:32:14.640 | But I think it will happen.

00:32:16.640 | It just takes time.

00:32:17.640 | So that's a good example because here's the problem.

00:32:20.640 | What kind of reputation do -- because now Al Williams, he sold his company and now it's been sold again.

00:32:26.640 | And I think Citigroup still owns it or did they divest of it?

00:32:29.640 | I couldn't even tell you.

00:32:30.640 | Anyway, it's called Primerica now.

00:32:32.640 | What kind of grand reputation do they have?

00:32:34.640 | Is it -- and you've got to answer the question.

00:32:37.640 | Well, to be fair, I don't know of any insurance company with a grand reputation.

00:32:42.640 | Okay, too shabby.

00:32:43.640 | Have you ever seen an insurance agent walk into a group of people and be like, oh, yay?

00:32:49.640 | But, I mean, to take a step back, and this is -- I finally came up with this metaphor and I may have stolen it from somebody, but I'm not sure.

00:32:56.640 | When I try to explain fee only and why I do fee only and why I operate this way, why I encourage folks to do it is I know nothing about cars.

00:33:05.640 | Okay, I know how to crank it and I know how to put it to drive.

00:33:08.640 | And maybe I could jump it off if the battery doesn't -- other than that, I know nothing about cars.

00:33:12.640 | So every time I take it to get the oil changed at its 5,000-mile mark, which is when they tell me I need to do it, I guess that's right,

00:33:19.640 | I show up and they always bring me my air filter and it's covered in leaves.

00:33:23.640 | And I'm like -- and I'm thinking to myself, you probably went out back and got a bunch of leaves and crushed them up and poured them on this air filter,

00:33:29.640 | and now you're telling me I need to pay you like 60 bucks to change the air filter, which is baffling because you already have it out.

00:33:34.640 | So it obviously wasn't a big deal to put in.

00:33:36.640 | And I don't know.

00:33:37.640 | So what do I do?

00:33:39.640 | Do I take it to another mechanic and they tell me, oh, no, those first mechanics were idiots.

00:33:42.640 | You actually -- you need to get your brake pads changed.

00:33:45.640 | What if there was a guy down the road that all he did was diagnostics?

00:33:50.640 | You take your car in, he tells you you need your air filter changed, you need your brake pads changed, and that's it.

00:33:55.640 | And he checks everything out, and that's all he does.

00:33:58.640 | You pay him for his time, pay him 100 bucks, and he gives you that.

00:34:01.640 | And then you can go shop around for who does the best job or who is the cheapest for brake pads.

00:34:06.640 | But he's not incentivized because he doesn't care if you actually get your brake pads changed.

00:34:11.640 | He got paid to tell you your brake pads were bad.

00:34:14.640 | That's what we're trying to build.

00:34:16.640 | We're trying to separate these conflicts of interest that have haunted --

00:34:19.640 | I mean, who trusts their mechanic?

00:34:21.640 | No one trusts a mechanic because you don't know and you get taken advantage of or you could -- or you think you're getting taken advantage of.

00:34:27.640 | And so what if we created a community of financial advisors that all they did was give advice

00:34:32.640 | and let the people that transact do their thing, they can keep doing what they're doing,

00:34:36.640 | but that way you just know that you're getting good advice.

00:34:39.640 | Right.

00:34:40.640 | So it's a good -- that's a perfect metaphor.

00:34:43.640 | And because the most difficult question I get asked on this show, and I've said this many times, is,

00:34:51.640 | "Joshua, how do you find a great financial advisor?"

00:34:54.640 | And the struggle is -- so previously when I was with Northwestern Mutual,

00:34:59.640 | I believe I was -- I started as a good financial advisor, and I believe I became a great financial advisor.

00:35:05.640 | But I dealt with all of the conflicts of interest.

00:35:08.640 | I sold commissioned insurance products.

00:35:11.640 | I sold some commissioned investment products.

00:35:14.640 | And I charged fees on investment products.

00:35:17.640 | And so I was in that hybrid fee and commission model.

00:35:21.640 | Like, that's where things were.

00:35:23.640 | So -- and I have tons of conflicts of interest.

00:35:27.640 | Every one of us does.

00:35:29.640 | And although I look back and I have a few financial planning scenarios that I'm not happy with how they turned out,

00:35:39.640 | they didn't turn out well not because of a breach of ethical practice on my behalf,

00:35:45.640 | but rather because I didn't see far enough down the road.

00:35:48.640 | Specifically, most of them were young people who I motivated to save a lot of money and to invest a lot of money.

00:35:56.640 | And they put too much money into their IRAs.

00:35:59.640 | They put too much money into insurance products.

00:36:01.640 | And I motivated them too much without having the foresight to know that, wait a second,

00:36:07.640 | things can change and they may not be established yet.

00:36:10.640 | So when I look at that, it makes me very slow to want to endorse and say, well, you just have to go find a fee-only advisor.

00:36:18.640 | Because then I say, well, what about me?

00:36:20.640 | What would I have been when I was an advisor?

00:36:23.640 | And I was a good advisor, but I wasn't a fee-only advisor.

00:36:26.640 | And I know a lot of advisors who would say the same thing.

00:36:28.640 | I'm a good advisor, but I'm not fee-only, and I'm not willing to be fee-only.

00:36:32.640 | I totally understand.

00:36:33.640 | And that's why I say I don't pass moral judgment on commissioned sales.

00:36:36.640 | But when somebody asks you, how do I find a good advisor, they're actually asking a couple of questions.

00:36:41.640 | How do I find an advisor that's going to work in my best interest?

00:36:44.640 | Who's going to give me really good advice?

00:36:46.640 | But just because you're fee-only or because you're a fiduciary doesn't make you competent.

00:36:51.640 | It doesn't make you smart.

00:36:52.640 | It doesn't mean you know what you're doing.

00:36:54.640 | And then so we kind of have these different areas is that you're looking for an advisor, in my opinion, that's a fiduciary,

00:36:59.640 | that's always working in your best interest, that you never have to question their motives.

00:37:03.640 | And I don't know how to separate the great advisor working for Northwestern Mutual, occasionally selling products,

00:37:09.640 | and the guy that's working for Northwestern Mutual that uses financial planning as a con to sell deferred variable annuities to old people.

00:37:15.640 | And those exist, and I don't know how to separate the good apples and the bad apples.

00:37:19.640 | I'm not sure of a method.

00:37:21.640 | Now, are there bad apples in the fee-only world?

00:37:23.640 | Absolutely.

00:37:24.640 | But fee-only at least separates out a huge segment of those bad apples.

00:37:29.640 | So it's not to say that fee-only advisors are the only good ones.

00:37:31.640 | It just means that it really helps to define who we're talking about.

00:37:34.640 | We're talking about advice givers.

00:37:36.640 | So once we start talking about the advice givers and the people that just get paid for advice, then we can start saying, "Are they competent?

00:37:41.640 | Do they have the certified financial planner designation or a similar designation to show competency?

00:37:48.640 | How long have they been working?

00:37:50.640 | Who do they normally work with?"

00:37:51.640 | I can go to an advisor with 30 years of work experience that specializes or that only works with baby boomers.

00:37:57.640 | But if I'm a gin wire that has student loans and I'm in my 20s, then he's probably not a very good advisor for me.

00:38:03.640 | So finding an advisor that specializes in working with clients like me, there's kind of a couple facets.

00:38:08.640 | So I never want to say that just because you sell commission products that makes you a bad person or a bad advisor or anything else.

00:38:13.640 | It's simply that I don't know how to separate the good apples from the bad apples inside of that kind of this dual role where you're advisor, then you're salesman, then you're back to advisor.

00:38:24.640 | Right.

00:38:25.640 | Yeah.

00:38:26.640 | The other thing that I'm very leery of is I don't want more regulation.

00:38:30.640 | I want the market to speak.

00:38:31.640 | In fact, that's the reason I wanted to have you on was to give you some free publicity for what you're doing.

00:38:37.640 | And we don't have any business relationship other than being friends now.

00:38:43.640 | And I'm not sending you checks every month like I was for a while.

00:38:46.640 | Sorry about that, by the way.

00:38:47.640 | It's true.

00:38:48.640 | I'm a little bitter about it, but I'll be okay.

00:38:50.640 | But what I'd love to do is I'd love to just simply get everything out in the open and get everything there and let people choose.

00:38:58.640 | Absolutely.

00:38:59.640 | And in the six years that I was a practicing financial advisor, I can't say the exact number, but I would say that if I had to put an estimate on it, the number of times that people asked me how I got paid was less than a dozen.

00:39:14.640 | It's just never asked.

00:39:16.640 | And I always tried to say, "Let me tell you how I'm going to get paid."

00:39:20.640 | And I just think, you know, I try to live my life according to biblical teaching.

00:39:30.640 | And there's a scripture verse that says, "Men love the darkness because their deeds are evil."

00:39:36.640 | And if you look at those, I can't quote it correctly off the top, but that is a direct quote.

00:39:40.640 | But it basically says, "If you're righteous, walk in the light."

00:39:43.640 | And I feel like that.

00:39:44.640 | If I can't, I wouldn't mind, and this one is heresy to almost every advisor I've ever talked to, I would just assume that the commissions for insurance products were printed right on the front of the policy.

00:39:56.640 | Absolutely.

00:39:57.640 | That wouldn't bother me a bit.

00:39:58.640 | Because when I go to my, let's say real estate, okay?

00:40:01.640 | When you sell a house, and let's assume that the standard real estate commission is 6%, the real estate agent has to sell that.

00:40:08.640 | Now, I'd love to get rid of the cartel that exists in that business as well.

00:40:13.640 | I mean, I'm a freedom-loving guy.

00:40:15.640 | Let the market work it out.

00:40:16.640 | But I would have no problem at all of having the commission printed right there and simply explain, "Listen, yeah, you might think that this $700 or this $1,700 or this $17,000 commission is a big number, and it is.

00:40:31.640 | But let me tell you what my business model is like so you understand."

00:40:35.640 | And I've never met a business owner, somebody with a little bit of experience, who hasn't been able to understand.

00:40:39.640 | Yes, absolutely, I get it.

00:40:41.640 | So when I bought my first house, I was working with a real estate agent that I knew is the kid of my boss, actually, or he's a nephew of my boss.

00:40:50.640 | And so we sat down, and one of the forms that he showed me was a -- it was basically a fiduciary form, and it had four options.

00:40:57.640 | And he had to check one of the four boxes, and I had to sign off on it.

00:41:00.640 | It said, "I, as the real estate agent, will always work in your best interest."

00:41:04.640 | It said, "I work in the best interest of the other party, so therefore I don't work for you.

00:41:09.640 | I work for both the buyer and the seller.

00:41:11.640 | I don't work for the buyer or the seller."

00:41:13.640 | So those are four options.

00:41:14.640 | I work for you.

00:41:15.640 | I don't work for you.

00:41:16.640 | I work for both of you.

00:41:17.640 | I work for neither of you.

00:41:18.640 | And that was really clear.

00:41:19.640 | And I was like, "Okay, you work for me."

00:41:21.640 | Imagine if folks that were selling insurance had to say, "I don't work for you.

00:41:26.640 | I work for my company, so I can't sign this first line.

00:41:28.640 | I am not making recommendations that are in your best interest because that's not my job.

00:41:32.640 | My job is to sell you a product, and you're going to sign right here and make it really clear."

00:41:37.640 | Real estate agents were so mad when that form was required.

00:41:42.640 | But it makes sense, right?

00:41:44.640 | Because what ended up happening was my agent actually worked under the same major company that the buyer's agent worked for.

00:41:52.640 | And so there were some conflicts of interest that existed that had to be disclosed, and we had to talk through before he could even represent me,

00:41:58.640 | before he could accept working with me.

00:42:00.640 | We don't do that in financial planning.

00:42:02.640 | We don't talk about conflicts of interest before we hire.

00:42:05.640 | Because what agent really wants to talk about conflicts of interest and how they could not be working in your best interest because you may not hire them?

00:42:13.640 | And so it's certainly not an easy conversation.

00:42:15.640 | But I agree.

00:42:16.640 | I'm all for transparency.

00:42:18.640 | But the problem is whenever we talk transparency, regulators start rolling out disclosures.

00:42:23.640 | And if you've ever seen a disclosure statement, it's like reading the privacy policy for a tech company.

00:42:27.640 | It's buried in some deep, dark, secret corner of the website.

00:42:30.640 | And whenever you do get into it, it's all in legal language.

00:42:32.640 | You can't figure out what it's saying either.

00:42:34.640 | And I agree through disclosures from insurance companies, investment companies.

00:42:36.640 | I can't figure out what's going on.

00:42:38.640 | I'm like, "I've got a master's degree in this topic, and I can't figure it out?"

00:42:40.640 | My parents certainly aren't going to figure it out.

00:42:43.640 | No, it's -- in all the years I've worked with clients, I never once had a client read a prospectus.

00:42:48.640 | Oh, no way.

00:42:49.640 | Those things are like 200 pages.

00:42:51.640 | It's terrible.

00:42:53.640 | And yet here we go.

00:42:54.640 | They get mailed out every single year.

00:42:56.640 | You've got to legally be given them.

00:42:58.640 | You've got to sign off that you've gotten them.

00:43:00.640 | And it's a total waste of time.

00:43:01.640 | And that's why I argued with Kitsis about this, Michael Kitsis, when I had him on the show.

00:43:05.640 | And he's like, "We need more regulation.

00:43:07.640 | I'm sorry.

00:43:08.640 | I'm a free market guy.

00:43:09.640 | We don't need regulation."

00:43:10.640 | Here's what I see, and this is why I love what you're doing, and I want you to talk about the traction that you're getting.

00:43:16.640 | But I see two missing things in the model, in our current model.

00:43:20.640 | Number one is the demand for financial planning services.

00:43:25.640 | I think the demand is pretty low in general across the population.

00:43:29.640 | Everybody wants -- like all of our industry surveys and all of the information says that people want the results of a financial plan.

00:43:35.640 | They want to feel financially secure.

00:43:38.640 | They want to be confident that they have a plan that knows where they're going.

00:43:41.640 | They want to be confident they know how to achieve their goals.

00:43:44.640 | But when it comes down to actually calling a financial advisor, very few do.

00:43:48.640 | It's like nobody -- they get the 401(k) packet, and they get their financial advice from the broke guy in the cubicle next to them instead of picking up the phone and calling a financial advisor.

00:43:58.640 | So one of the things that I see as one of my missions is to increase the demand in the marketplace for financial advice.

00:44:05.640 | Because if we can increase the demand, then the market will respond.

00:44:08.640 | And the second thing is to effectively advertise and effectively communicate.

00:44:14.640 | And then today, in 2015, where all of us are essentially media companies, we can convey the value and let the clients choose.

00:44:24.640 | Just give them the information and let them choose.

00:44:27.640 | So when a client would sit down with me, and somebody says, "What do you do?"

00:44:32.640 | I used to say, "I'm a financial planner."

00:44:34.640 | And so then they would turn and they'd walk away hoping I wouldn't sell them anything.

00:44:38.640 | Or I'd say, "I help people manage their personal finances."

00:44:42.640 | And I finally realized one day what I do.

00:44:45.640 | And so now when people say, "Allen, what do you do for a living?"

00:44:47.640 | I say, "I help my clients live great lives."

00:44:50.640 | Because that's what we do.

00:44:51.640 | I help clients figure out what their great life's going to be, and then I help them live it.

00:44:55.640 | And we use finances to support that great life.

00:44:58.640 | But great life is a really hard service to sell.

00:45:02.640 | What am I selling?

00:45:03.640 | What's tangible?

00:45:04.640 | What are you getting in return for your $2,000 investment or whatever the number is?

00:45:07.640 | It can be a difficult sell.

00:45:09.640 | And so ultimately, we're out there selling ourselves, and we're saying, "I help my clients live great lives, so you should hire me, and I'm going to help you do that."

00:45:15.640 | But it is an issue with value articulation.

00:45:18.640 | Because you say financial planning, and what does that mean?

00:45:22.640 | Is that comprehensive financial planners that help you with everything that touches your financial life, or is that insurance salesmen?

00:45:28.640 | Is it just investment guys?

00:45:29.640 | I mean, the majority of people that call themselves financial advisors are simply investment guys.

00:45:34.640 | They don't do any actual financial planning, what I would call financial planning.

00:45:37.640 | And so how do we articulate the value?

00:45:40.640 | Most advisors don't know what financial planners do.

00:45:43.640 | How are consumers supposed to know?

00:45:45.640 | And so we have this massive gap in terms of knowledge base about what financial planners really do.

00:45:52.640 | Because when people sit down and they really understand it, and when they go through the process, they are amazed at what they get.

00:45:59.640 | I've never had a client go, "Yeah, I don't think that was worth my money."

00:46:02.640 | They always say, "This far and away exceeded what I could have ever expected."

00:46:07.640 | And that just comes because they weren't sure.

00:46:10.640 | I mean, I probably charge four times as much as I do.

00:46:12.640 | I don't because it's hard to sell that service, but it's an incredibly valuable service.

00:46:17.640 | Yeah, I agree with you.

00:46:19.640 | I've never had a client, when you go through a comprehensive financial planning process that starts with goals, and even that has become kind of laughed at by many people.

00:46:29.640 | "Oh, you're asking me about my goals. Who cares about my goals? Just tell me what I do with my money."

00:46:33.640 | As with anything, people can cheapen anything.

00:46:37.640 | But when it starts with goals, and when there's trust and confidence to know that this person cares about my goals and can think about them, and then help me plan out, it is inconceivable.

00:46:50.640 | I think for any financial planner or financial advisor, whatever the title, it should be inconceivable to you how anybody would not want what you have.

00:47:00.640 | Oh, absolutely.

00:47:01.640 | And you should feel like you're just selling it cheap.

00:47:04.640 | And so that's the other piece, too, is you talked about the consumer demand.

00:47:07.640 | And my concern is, I got in this profession late.

00:47:10.640 | I've only been around a few years.

00:47:12.640 | But what I have seen, particularly from my peers, is that they look at financial planning as for rich people because advisors have historically only worked with rich people.

00:47:21.640 | And so the people that did want the service, did want the advice, did want to pay a financial planner, couldn't find someone to do it.

00:47:27.640 | There wasn't anybody out there that would take their money.

00:47:29.640 | I had clients that sat down, and my biggest client now, she sat down across the table from me when she had no assets.

00:47:37.640 | She was an anesthesiologist making over half a million dollars a year and said, "Allen, will you please work with me?

00:47:44.640 | You're the fifth advisor I've talked to, and no one will work with me."

00:47:48.640 | Two and a half years later, she has a net worth over $700,000 because she's saving like crazy and wants to not have to do her job for the rest of her life.

00:47:57.640 | I was amazed that no one would work with her.

00:47:59.640 | Who's going to work with the average American that's making $50,000, $60,000, $70,000 a year as a household?

00:48:05.640 | No one.

00:48:06.640 | And so that's been the other piece is how do we start finding financial advisors to start working with clients that aren't rich?

00:48:14.640 | And that's what the XY Planning Network is all about, is creating a fee model.

00:48:18.640 | It's creating a service model, creating a way of delivering it, doing it virtually, that's a lot cheaper for the advisor to deliver.

00:48:25.640 | So it makes services cheaper to clients.

00:48:27.640 | We're trying to bring this service model of financial advice to a new generation because they have been completely ignored.

00:48:35.640 | And by ignored, I mean they're not rich, so advisors didn't care to work with them.

00:48:40.640 | So go ahead.

00:48:41.640 | This is a good transition.

00:48:43.640 | Go ahead and talk about XY Planning Network both from the consumer side and from the advisor side and sketch it out as to how people would know if it's something that could be helpful to them.

00:48:54.640 | So the XY Planning Network is a group of advisors that specialize in working with Gen X and Gen Y clients.

00:49:00.640 | So you know you're Gen X if you are probably age 50 and under.

00:49:05.640 | And so Gen X is about age 50 to 34, and then Gen Y starts at 34 and goes down from there.

00:49:11.640 | So if you're 50 and under, you're our target market.

00:49:15.640 | And all of our advisors are fee only like we've been talking about.

00:49:17.640 | They don't accept commissions.

00:49:18.640 | They sell financial advice.

00:49:20.640 | They sell financial planning.

00:49:22.640 | They're all certified financial planners, which is a designation that requires seven college level, graduate level courses and a very intense examination and three years of work experience to use it.

00:49:34.640 | So they're all highly -- so they're competent because they passed the CFP exam, and for any of us that took the CFP, it is a very difficult exam.

00:49:41.640 | You have to know your stuff to get through it.

00:49:43.640 | But you also have experience of working directly with clients, at least three years of experience.

00:49:48.640 | And so consumers can go to our website.

00:49:50.640 | It's just xyplanningnetwork.com.

00:49:52.640 | There's a big find an advisor button, and they can search through our advisors.

00:49:56.640 | And one of the things I'm really proud of is that we've kind of not completely eliminated because we do still have a location-based search.

00:50:02.640 | But instead of just looking for an advisor that lives near you, they can look for an advisor that specializes in clients like them.

00:50:09.640 | So if you're a new parent, you can go hire one of the advisors that specializes in working with new parents.

00:50:14.640 | And they're experts in the situation that you're going through and the questions that you're asking.

00:50:18.640 | If you're a health care professional, you can go work with the advisor that specializes in health care professional.

00:50:22.640 | We have somebody that specializes in world-traveling bloggers.

00:50:25.640 | So if you're a world-traveling blogger, we've got the advisor for you.

00:50:28.640 | Who is that?

00:50:29.640 | That's Sophia Barrow with Gen Y Planning.

00:50:31.640 | And so she -- if you have questions about what it means to live abroad, to live in Thailand on $1,200 a month, she's your girl.

00:50:39.640 | And that's going to be the advisor that you connect with that really understands what you're trying to do.

00:50:45.640 | And so I call it an interest-based search because all of our advisors work virtually, so they're able to work with you no matter where you live.

00:50:51.640 | And so you can find the right advisor for you, the best advisor for you, the one that specializes in working with clients like you, not just the one who happens to live down the street.

00:50:59.640 | So that's kind of from a consumer perspective.

00:51:01.640 | It's our goal just to connect the consumers with the best advisor for them.

00:51:06.640 | And I encourage consumers that go to the website, don't just look on the state-based search and see who's in your area.

00:51:12.640 | Really go through that interest-based search engine and just see, is there somebody here who specializes in working with clients like me?

00:51:18.640 | From the advisor perspective, we have -- I like to coin our advisors.

00:51:24.640 | Many of them are the pissed-off junior planners.

00:51:26.640 | And I say that if you're not an advisor, it may not make sense.

00:51:31.640 | But we have a lot of advisors that were hired and told they were going to have a certain job, and then their career path really didn't pan out.

00:51:38.640 | They were sold a bill of goods.

00:51:39.640 | And so we have a lot of advisors say, "I really want to work with younger clients.

00:51:42.640 | I want to work with my own clients.

00:51:44.640 | I want to run the show."

00:51:45.640 | And they really can't do that within the firm that they work for.

00:51:48.640 | And so we help advisors basically start firms and bookkeeping, marketing, technology, compliance, just all the things that go into being a business owner.

00:51:57.640 | We help establish that firm and provide training on these different concepts like we're talking about and how to work with GenX GenY clients, how to do a monthly subscription billing service, how to do your own bookkeeping.

00:52:08.640 | I mean, these are things that they don't train you how to do so that they can go out and instead of focusing on bookkeeping, they can focus on serving clients.

00:52:16.640 | And they can do great work and do it for the clients that they love.

00:52:19.640 | So from an advisor perspective, we're just making it easier to start firms to work with young clients.

00:52:23.640 | So I want to ask you about your entrepreneurship journey.

00:52:28.640 | So you started -- you graduated from college.

00:52:31.640 | You worked for a firm.

00:52:32.640 | Then you started your own firm.

00:52:34.640 | And now you're starting a new business.

00:52:36.640 | What possessed you to become an entrepreneur?

00:52:39.640 | So when I was about five years old, I started my first business.

00:52:43.640 | So I lived in Auburn, Alabama, in the Auburn Tiger Country.

00:52:48.640 | And I used to go out and we had these C rocks or I don't know exactly.

00:52:53.640 | They were big, round, flat, thin rocks that were in our driveway.

00:52:56.640 | And I would take colored glue and I would write -- do the Auburn University logo on them.

00:53:01.640 | And I sold these paperweights for like five bucks a pop.

00:53:04.640 | I made a killing, man.

00:53:06.640 | In Auburn country, people bought those things like hotcakes.

00:53:08.640 | I would take them to church and I would sell 10, 15, 20 a day.

00:53:12.640 | I mean I was rolling in dough for a young guy.

00:53:15.640 | And it took about three months before I sold my first business.

00:53:20.640 | My mom bought me out, cash offer, because she was so sick of me selling these rocks to her friends.

00:53:25.640 | So she bought me out and I took that money and I invested in a candy business.

00:53:29.640 | So then I went to Walmart and I bought a bunch of candy and started selling it to all my friends.

00:53:33.640 | And then again, she bought me out because she got so sick of me lugging around a taco box full of candy.

00:53:38.640 | I have just always as a person been somebody who wants to meet the needs of others.

00:53:44.640 | And so when I see an issue and I see a place in the marketplace where folks need help and they're just not finding good help,

00:53:50.640 | I have this compulsion to help them.

00:53:52.640 | And so that's where starting my own financial planning firm, one of the impetuses for that happening was that at a firm where I had a job,

00:54:01.640 | I was working and a guy came in and said, "Could you just give me a retirement projection?

00:54:06.640 | I don't want all the confidence in financial planning. I can't afford it. Can I pay you $200 an hour, just a couple hours, just give me a retirement projection?"

00:54:13.640 | And we told him no.

00:54:15.640 | I was like, "That guy needs help."

00:54:17.640 | And there's obviously a need. This guy's out offering to pay us good money to give that service.

00:54:22.640 | And so that's kind of what spurred me to end up opening my own firm.

00:54:25.640 | And then with XY Planning Network, really came down to realizing there was a lot of advisors that were out there that wanted to start their own firm.

00:54:30.640 | And I could either continue to answer the same question over and over and over for folks because everyone had the same questions,

00:54:37.640 | or we could just package it together and basically turn it into a business.

00:54:40.640 | And that's what we did.

00:54:42.640 | And what's funny is how one thing leads to another, and that is we have another business coming online this month called Financial Advisor Bean Counters,

00:54:50.640 | which helps our advisors with their bookkeeping and doing tax preparation for the business itself because it's a service that they need.

00:54:58.640 | So it's amazing how when you start a business and you start to see other little holes,

00:55:02.640 | there's just not any really good bookkeeping services out there for advisors.

00:55:05.640 | So we're just going to have to start one.

00:55:07.640 | Yeah. That's the fundamental basis of entrepreneurship is solving people's needs and problems.

00:55:12.640 | That's exactly it.

00:55:14.640 | And then when the problems are solved better by someone else, businesses go out of business.

00:55:18.640 | No, it's so true.

00:55:20.640 | And sometimes just starting a business and kind of beginning to push that envelope forces innovation from other companies.

00:55:26.640 | You know, Google is a really -- I love how Google does this.

00:55:29.640 | So Google relies on the Internet, right?

00:55:32.640 | That's everything that they do relies on people having high-speed Internet.

00:55:35.640 | So these cable companies and DSL, they wouldn't put in high-speed Internet.

00:55:38.640 | So what they do, they launch Google Fiber, which if you're not familiar is like 100-gigabyte Internet.

00:55:43.640 | It's faster than anything we have.

00:55:44.640 | And they started going into a couple cities.

00:55:46.640 | I think they started in Austin, Texas, and they went to Kansas City for some unknown reason because that was number two.

00:55:51.640 | And they put in this 100-gigabyte Internet, and then guess what?

00:55:56.640 | All the other companies started putting in 100-gigabyte Internet.

00:56:00.640 | And now in Bozeman, Montana, I've got 60 gigabytes.

00:56:03.640 | Wow.

00:56:04.640 | Now, Google is going to get out of the Internet business because they don't want to be in the business of providing Internet.

00:56:08.640 | They want to help spur innovation.

00:56:10.640 | And so sometimes that's what you can do as well is as a business owner, there are certain needs that I have for our members and to serve our clients and our customers.

00:56:19.640 | And so sometimes you have to start a business to get other people to get off their lazy tails and do it better so that they can provide the service that your people need.

00:56:27.640 | I get a lot of questions on this show from people who are not financial advisors but who like finance and like helping people and like coaching, in essence.

00:56:37.640 | Over the Christmas holidays, I got two emails within an hour of each other, both of which were from young CPAs working at big four accounting firms who were auditors and saying, "I want to start my own financial planning business."

00:56:52.640 | And I gave them some advice and told them how I would start a firm.

00:56:56.640 | But what background – and I know of several others that are in my Irregulars program. We spend a lot of time talking behind the scenes and talking about starting tax practices and want to give financial advice.

00:57:10.640 | I've gotten some connection from financial bloggers who have reached out to me and asked me for advice.

00:57:15.640 | What experience do you think somebody needs in finance to actually make the transition to running a successful firm of the type that you've outlined?

00:57:25.640 | I don't think they need any. I think they need life experience.

00:57:28.640 | So we've got advisors that were – we have one that was an actress, theater major.

00:57:34.640 | That would also be Sophia Bera. This is why she works with world-traveling bloggers. She's an actress theater kid turned financial planner.

00:57:42.640 | I didn't know that.

00:57:43.640 | We have advisors that have background in real estate sales. We have background in being a service member, being in the military. They have become a financial advisor.

00:57:50.640 | People come from all walks of life, and what you'll find is that when you do have that life experience and you come from that area, you know the needs that those folks have.

00:57:59.640 | I have no idea what it's like to live life as an actor or an actress and to have contracts that come and go and never know where your next paycheck is going to come from and constantly varied income.

00:58:11.640 | I have no idea what that's like, but she does, and that's her life experience, and so she can help those people.

00:58:17.640 | Do you need to learn what it takes to be a financial planner? Absolutely.

00:58:21.640 | But I always say, "You can give me somebody with technical knowledge."

00:58:24.640 | The technical knowledge of being a financial planner and all the different insurance rules and investment rules and tax laws and all that, it doesn't mean I can make them a good financial planner.

00:58:34.640 | Give me somebody with great life experience that can communicate and can connect with clients.

00:58:38.640 | I can teach them to be a financial planner because I can teach them the technical content.

00:58:41.640 | You said earlier, I'd normally characterize 10% of what we do as technical content.

00:58:46.640 | The other 90% is just trying to communicate it to clients.

00:58:49.640 | If you're looking to become a financial planner, you can go through the motions, and those motions are generally you've got to get the CFP.

00:58:56.640 | I highly recommend the CFP just because I think it's a really great base level of education.

00:59:01.640 | Go out, sign up for your local college may have it.

00:59:04.640 | You can go to the CFP board's website.

00:59:07.640 | I think it's just cfpboard.com.

00:59:11.640 | Maybe .net or .org.

00:59:13.640 | Who knows? Google it.

00:59:14.640 | Just do a DuckDuckGo search and find CFP board.

00:59:16.640 | Just Google it.

00:59:17.640 | But you can search for universities in your area that may have an on-site program or you can do it online.

00:59:22.640 | But it's seven courses that really go at the heart of financial planning.

00:59:25.640 | You need that to get the technical expertise.

00:59:27.640 | The seventh course, which they recently added, is called a capstone class.

00:59:30.640 | You learn how to write a comprehensive financial plan.

00:59:33.640 | That's when you're really ready to make the leap is once you're through that education.

00:59:36.640 | So some folks may say that you need a couple years' work experience.

00:59:40.640 | It just depends on your life experience and what you're comfortable with.

00:59:43.640 | If it's your full-time job or your part-time job, if you're an accountant,

00:59:45.640 | it's kind of dabbling in financial planning versus going out and going full-time trying to start a firm.

00:59:50.640 | People kind of come at it from different angles.

00:59:53.640 | I think this is one where obviously each person has to decide what's right for them.

00:59:58.640 | But I can't conceive of how somebody either can or should start without some industry experience for two reasons.

01:00:07.640 | Number one, like it or not, this is entrepreneurship in a very tough business.

01:00:12.640 | There's a lot of competition.

01:00:14.640 | And it seems to me like you've got to know that you like this business and that you like this industry.

01:00:20.640 | And it would be -- if I were going to open a restaurant, I'd go work as a cook or as a waiter or something like that

01:00:27.640 | for at least a little bit of time to get some exposure to it.

01:00:30.640 | Now, the problem is you might just simply make a bad choice and be working at a firm where you get terrible experience.

01:00:36.640 | And so that's kind of a double-edged sword.

01:00:38.640 | But I think before you commit yourself to a multi-year and multi-thousands-of-dollar process to start your own firm,

01:00:44.640 | it would just be wise to get a little bit of industry experience.

01:00:47.640 | Yeah, and I think it all depends on how you learn.

01:00:50.640 | So I'm somebody who learns -- to figure out if I can swim, I dive into the deep end, head first, swim to the bottom,

01:00:56.640 | and then figure out if I come back up.

01:00:58.640 | And that's just the way I learn.

01:00:59.640 | I love diving in head first and hoping that I have the right people around me to save me if it doesn't work out.

01:01:04.640 | Other people like to toe in, to shallow in.

01:01:07.640 | Some people, you know, somewhere in between.

01:01:09.640 | So, you know, one of the things that -- I just started my own firm and had no idea what I was doing.

01:01:13.640 | I mean, I'd never worked with clients directly.

01:01:15.640 | I'd never run a firm.

01:01:16.640 | I'd never done my own compliance.

01:01:17.640 | I'd never done my own marketing.

01:01:18.640 | The only thing I'd ever done was write plans.

01:01:20.640 | Was that useful experience when starting my firm?

01:01:23.640 | I mean, I guess because I'd written a lot of plans.

01:01:25.640 | But ultimately, that was such a small part of what I did that, you know, I could have figured that out too.

01:01:29.640 | And truthfully, the way that I write plans now and the way that I do financial planning is completely different from how I did it before.

01:01:35.640 | So was my experience helpful?

01:01:38.640 | You know, maybe, maybe not.

01:01:39.640 | But the flip side is you just never know where your career is going to lead.

01:01:43.640 | And so, you know, when I got my first job, I thought I was going to stay there forever.

01:01:47.640 | I was going to buy that firm, and I was going to live in Rapid City, South Dakota for the rest of my life because that's where my first job was.

01:01:52.640 | Come to find out, you know, within three years, I had started my own firm, and here I am more on the business-to-business side where I help advisors start firms.

01:02:00.640 | I had no idea this is where I was going to end up, that I was going to end up giving, you know, being more on the consulting, speaking, you know, business coach circuit.

01:02:09.640 | So, you know, I don't know.

01:02:11.640 | If you start your own firm and it doesn't work out, it'll probably lead to something else.

01:02:15.640 | It may have been a door that would have never been opened had you not started your own firm.

01:02:19.640 | So I rarely see people that think it was just a big mistake for them to give it a shot because ultimately you're doing great work for those clients.

01:02:26.640 | You're going to take care of them, and if you end up closing house, you can always pass those clients along to another advisor who's going to do great work.

01:02:32.640 | I don't think anybody's the worst for it, but you never know what opportunities that may lead to.

01:02:37.640 | That is an excellent—that's an excellent rebuttal, and it's a good point.

01:02:43.640 | You know, when I started my—when I started Radical Personal Finance, I took a flying leap off a cliff into the dark.

01:02:48.640 | And what's amazing is you have all this fear, and then once you finally get to the point and you say, "You know what? I got to do it," and then you do it.

01:02:56.640 | And then business opportunities just come flying at you left and right.

01:02:59.640 | Absolutely.

01:03:00.640 | There's something about starting.

01:03:02.640 | And, you know, who knows?

01:03:03.640 | You're going to end up being like the advisor podcasting coach teaching other advisors how to do what you've done,

01:03:10.640 | which is build a community of listeners that respect you and trust you and want great information from you.

01:03:15.640 | And, you know, if you wanted to go out and build your own advisory firm, you certainly could.

01:03:18.640 | You obviously have chosen not to go that route, which I think is going to play well for you.

01:03:22.640 | But, yeah, it's amazing the opportunities that present themselves that, you know, when you're out there and you're on your own and you can actually say yes.

01:03:30.640 | You know, I just got back—so we're sitting in Dallas, Texas today.

01:03:33.640 | I just got back.

01:03:34.640 | Yesterday, I was out in Lubbock, Texas, which is the home of Texas Tech University, which for whatever reason has the premier and oldest financial planning program in the country.

01:03:43.640 | Huge program out there.

01:03:44.640 | And they called me one day and asked if I'd come out and present and speak to their students.

01:03:48.640 | I didn't have to ask anybody.

01:03:50.640 | I said, "Sure, like I can do that.

01:03:51.640 | Who knows what that will lead to?"

01:03:53.640 | And truthfully, the only reason I was there was because I spoke at Texas A&M over a year ago, and one of the Texas Tech professors saw me speak at A&M.

01:04:01.640 | And that's why they brought me out.

01:04:02.640 | So had I turned down the A&M gig, then I wouldn't have gotten the Texas Tech gig.

01:04:06.640 | So you never know where these things will lead and how relationships will build and what you can start.

01:04:12.640 | And so it's just all about being open to that possibility.

01:04:14.640 | But I just don't like social norms.

01:04:16.640 | I don't like shoulds.

01:04:18.640 | I don't like to should myself.

01:04:19.640 | So when somebody says, "Oh, you should get industry experience," I'm like, "Yeah, well, forget you.

01:04:23.640 | I'll give it a shot."

01:04:24.640 | Or when somebody says, "You should start a firm without any experience," that's just as dumb.

01:04:28.640 | So I think people just have to know themselves and know their comfort level.

01:04:31.640 | But once you get over the fear and you make the leap, for the most part, everybody is super excited that they did it.

01:04:36.640 | I don't know anybody that really regrets the decision to go solo.

01:04:39.640 | Three final questions.

01:04:40.640 | Number one, what's the actual process?

01:04:43.640 | Let's say I'm a financial blogger because I've got several listeners that have written to me and asked me this question.

01:04:47.640 | I'm a financial blogger.

01:04:48.640 | What's the actual process and step of the course of action, the steps that you have to actually go through?

01:04:56.640 | To become a financial planner?

01:04:57.640 | Right, to open a firm.

01:04:58.640 | So step one is you've got to go through Series 65.

01:05:01.640 | And it is just an exam that you have to take.

01:05:03.640 | It's super easy.

01:05:04.640 | It takes 20 hours, maybe a study time.

01:05:06.640 | You're the first person who has ever said that an exam is super easy.

01:05:09.640 | The Series 65?

01:05:10.640 | Oh, my goodness.

01:05:11.640 | That exam is a joke.

01:05:13.640 | I wouldn't say it is super hard, but I wouldn't say it's super easy.

01:05:19.640 | After having taken the CFP, it seemed like a cakewalk.

01:05:21.640 | I would agree on that.

01:05:22.640 | I totally agree on that.

01:05:24.640 | I guess I should have characterized things as easy.

01:05:27.640 | That's probably not fair.

01:05:28.640 | It's not fair because what happens is you start off--I remember the first exam I ever took was my insurance exam.

01:05:34.640 | And I was so utterly just petrified of it.

01:05:38.640 | And I passed it, and I did great.

01:05:39.640 | And then you start working your way through the Series exams.

01:05:42.640 | But what happens over time, it becomes old hat to where you can sit down.

01:05:46.640 | You and I could both sit down and pass the CFP exam without cracking a book today.

01:05:50.640 | I don't know about that.

01:05:52.640 | I might.

01:05:53.640 | I was in study mode when I passed that test.

01:05:55.640 | But, yeah, I totally understand your point.

01:05:56.640 | Anyway, keep going.

01:05:57.640 | I got you off track.

01:05:58.640 | So Series 65, take the exam.

01:06:00.640 | Once you get that, then you can give investment advice.

01:06:04.640 | That's what that means.

01:06:05.640 | And so the number one question I get when I say that is, "Oh, so can I get financial planning advice without giving investment advice?"

01:06:11.640 | And the answer is no, you really can't because you basically can't talk about anything that could possibly have to do with actual money.

01:06:17.640 | You can't talk savings.

01:06:19.640 | You can't talk investing.

01:06:20.640 | You can't talk 401(k).

01:06:21.640 | So just go get Series 65.

01:06:22.640 | Get legal.

01:06:23.640 | If you want to start your own firm, then you register an RIA or Registered Investment Advisory firm.

01:06:27.640 | And whenever you register that firm with your state, then you become an investment advisor of that firm.

01:06:33.640 | And that's all it takes.

01:06:35.640 | And that's kind of the kickoff process of just getting legal.

01:06:39.640 | Now, again, I'm a huge proponent of the CFP.

01:06:41.640 | I think it's really important.

01:06:42.640 | If you're not through the CFP courses, you can stick to things like debt and money coaching, life coaching,

01:06:48.640 | maybe not get into Conference of Financial Planning just yet.

01:06:50.640 | You can do group calls.

01:06:51.640 | You can do video series.

01:06:52.640 | There's a lot of educational opportunities somewhere between kind of the blogging, podcasting world and, you know, Conference of Financial Planner world.

01:06:59.640 | I think there's a huge need for slimmed down service offerings that focus on those kind of savings habits and that sort of thing.

01:07:07.640 | But you can kind of transition if you want.

01:07:09.640 | How much money does it cost?

01:07:12.640 | So for bloggers, it's really cheap because one of the biggest expenses of starting a firm is establishing a brand, getting a logo, building a website.

01:07:20.640 | They've already got all that.

01:07:21.640 | They've already got readership, and they've already got clients.

01:07:24.640 | So it's actually a lot cheaper.

01:07:26.640 | If you're coming in off the street like I did and you have nothing in place and you're just trying to get started,

01:07:33.640 | so if you join the XY Planning Network, one of the things that we do is make a lot of the upfront costs cheaper.

01:07:37.640 | So, for instance, compliance will cost you $3,000 to get put in place.

01:07:41.640 | We just include that in our membership fee.

01:07:43.640 | So that's one of my goals is to make the upfront costs lower.

01:07:45.640 | Without us, you're probably looking at $15,000 to $16,000 up front to get a good website, to get a, you know, get your compliance in place,

01:07:54.640 | get your Arizona Missions insurance, get some technology, things like that.

01:07:57.640 | And then you have some, you know, recurring expenses as well.

01:08:01.640 | With XYPN, I think we've got it down in the, you know, $6,000 to $7,000 up front range, less if you already have a website.

01:08:09.640 | Then, so there's, let's call it 15 grand because I think that's a good number.

01:08:14.640 | So 15 grand of straight up cost.

01:08:16.640 | Then you've got expenses for your own personal expenses, however you're going to carry those.

01:08:22.640 | But then to bring clients on board, what's one of the better success stories that you've seen so far?

01:08:28.640 | I know XY is just getting started, but how quickly do you think it's possible to ramp up?

01:08:35.640 | So we generally see folks ramping up, bringing on an average of about two clients a month for the retainer service.

01:08:43.640 | So the most successful advisors that I see are out there.

01:08:46.640 | They're hustling.

01:08:47.640 | They're working to get clients.

01:08:48.640 | You know, they have an online presence.

01:08:49.640 | They're getting, you know, they're interacting with social media.

01:08:52.640 | They're writing a blog.

01:08:53.640 | They're doing all the right things to market, and they're bringing on clients.

01:08:55.640 | But they're also open to other revenue streams.

01:09:00.640 | So that's one of the biggest things.

01:09:01.640 | You know, talking about carrying personal expenses, that's the hard part.

01:09:03.640 | I mean, the business itself is not all that expensive to keep open.

01:09:06.640 | If you don't go out and get a real fancy office and have all these overhead expenses,

01:09:10.640 | then it's actually on a month-to-month basis very cheap to keep your firm open.

01:09:14.640 | So it's more about covering personal expenses.

01:09:16.640 | And so you go out, and you can do other jobs.

01:09:18.640 | I call them side hustles, you know, side gigs and that sort of thing to help out.

01:09:21.640 | But, you know, I think ramp-up-wise, you know, I personally made -- and I've done a presentation on this before --

01:09:28.640 | I made about $45,000 in revenue in my first 12 months, and I came from nothing.

01:09:32.640 | I had no clients.

01:09:33.640 | I had no -- I do no -- I actually didn't know anybody in the county that I opened my firm in.

01:09:39.640 | That's a whole other story on how to do it wrong.

01:09:42.640 | But I didn't know anybody, and so I built that up.

01:09:44.640 | And then it took me about 18 months before I was able to replace my employee's salary that I had at a firm.

01:09:53.640 | And I'm seeing that from a lot of firms in that 18- to 24-month range is when they're getting back up to that, you know,

01:09:58.640 | $60-ish thousand-dollar salary that they had before they went so low.

01:10:02.640 | Right.

01:10:03.640 | That sounds about -- I would say that sounds --

01:10:05.640 | Now, the rule of thumb was, you know, you couldn't take money out of your business for five years.

01:10:09.640 | You remember that?

01:10:10.640 | Like, that's what they always told us.

01:10:11.640 | And that's old school.

01:10:12.640 | I mean, it's easier to market now.

01:10:13.640 | You're not out knocking on doors.

01:10:15.640 | The marketing is much easier.

01:10:16.640 | And the quicker you can build a name for yourself inside of a specific community of clients, the easier it is for them to refer to you,

01:10:23.640 | the easier it is to build that business.

01:10:25.640 | So there's certainly some marketing tactics around having a niche market, having a really clearly defined market.

01:10:30.640 | But it definitely can be done.

01:10:32.640 | And like I say, you just kind of fill in the gaps with other work.

01:10:35.640 | We've got people that wait tables.

01:10:37.640 | We've got a guy that drives a bus, like a city bus, 2 hours in the morning, 2 hours in the evening.

01:10:42.640 | And that's what he does to fill the income gap while he builds his business.

01:10:45.640 | And that's totally fine.

01:10:46.640 | Yeah.

01:10:47.640 | Well, that's what I'm doing with Radical Personal Finance.

01:10:48.640 | It's no different.

01:10:49.640 | Absolutely.

01:10:50.640 | I do consulting and then while I build up the business.

01:10:52.640 | And I think that -- I mean, that's where -- and I'm glad you brought up specialization.

01:10:57.640 | But the financial advice business is no different than anything else.

01:11:02.640 | I personally -- I've had people say, "Well, Joshua, you've got to have a million dollars because you've got to be able to tell people."

01:11:08.640 | No, hang on.

01:11:09.640 | Financial advice is the application of technical skill and knowledge and relationship skill to help people.

01:11:16.640 | Tiger Woods' coach doesn't necessarily have to be able to golf better than Tiger Woods is.

01:11:20.640 | Absolutely.

01:11:21.640 | And so that is -- certainly it helps.

01:11:23.640 | And I think if you -- let's say you've been an advisor for 30 years and you're not doing well, there you've got a bit of a credibility problem.

01:11:30.640 | Yeah, I wouldn't hire a golf coach that's never played golf.

01:11:32.640 | Right.

01:11:33.640 | So I wouldn't hire a financial advisor that's been bankrupt three times.

01:11:35.640 | Right.

01:11:36.640 | Yeah, I mean, I don't have to have a personal jet to tell you it's not a good idea to buy a personal jet.

01:11:42.640 | We all start.

01:11:44.640 | And I'm glad you brought up about specialization because I think that in today's world, there's so much noise.

01:11:50.640 | And we want someone that's kind of like us in some way, or at least that understands us, that speaks our message.

01:11:55.640 | Absolutely.

01:11:56.640 | And that's a big deal.

01:11:57.640 | Anything else that you want to share?

01:11:58.640 | I don't think so.

01:11:59.640 | This has been a blast.

01:12:00.640 | Thanks for having me on.

01:12:01.640 | We've been talking about doing this for months.

01:12:02.640 | We were going to do this when you were at FinCon back in September, the Financial Bloggers Conference.

01:12:06.640 | So this has been fun.

01:12:08.640 | Yeah, XY Planning.

01:12:09.640 | I've wanted to have you on just because, again, I'm a free market guy.

01:12:13.640 | And here's my desire.

01:12:15.640 | I want to see a bunch of new models develop.

01:12:18.640 | I want to see this model develop.

01:12:19.640 | Absolutely.

01:12:20.640 | And I want to see people come up with completely new things that we haven't even dreamed up today.

01:12:24.640 | I am so excited for that.

01:12:25.640 | And I think that we honestly have a community of advisors that will start to invent some of that.

01:12:31.640 | And I hope that we can adopt it.

01:12:32.640 | But, yeah, I see XY Planning Network as the next stage in a very long line of organizations that are just expanding the financial reach that advisors have and bringing more good financial planners to advisors.

01:12:47.640 | Absolutely.

01:12:48.640 | Alan, thanks for making the time.

01:12:49.640 | Thanks so much.

01:12:51.640 | Man, I love entrepreneurs, don't you?

01:12:53.640 | I don't know about you, but I get asked a lot about financial planning industry stuff.

01:12:57.640 | Well, I doubt you do, but I get asked a lot about financial planning industry stuff.

01:13:00.640 | And I'm going to comment on more of it in the future, but I'm convinced that guys like Alan are the solution.

01:13:06.640 | Really, entrepreneurs build their businesses simply by seeing a need, seeing an opportunity, and then matching it.

01:13:13.640 | And the consumer demand for their services has been great.

01:13:16.640 | The advisor demand has been great.

01:13:18.640 | I mean, certainly, they're still in the launch phase and still going.

01:13:20.640 | You can't expect any business to just be massive after a year, but they are making a ton of progress.

01:13:27.640 | And I really believe that as a market, we can solve some of the issues that make people so frustrated with the financial planning industry.

01:13:34.640 | I personally don't want to see any more regulation.

01:13:36.640 | I want to see just the market solve it.

01:13:38.640 | And if consumers educate themselves, and I do my job as educating consumers and advisors, market themselves well and do a good job, I mean, in today's world, we should be able to fix most of these problems.

01:13:53.640 | So I'm excited to see.

01:13:54.640 | I wanted to help Alan out, give him a little bit of free publicity, and I'm excited to see the future of the XY Planning Network.

01:14:00.640 | And I hope, again, for many of you, it can be a resource.

01:14:02.640 | I know I have received various emails from people mentioning, "Joshua, hey, what resources would you have for getting started in financial planning?"

01:14:09.640 | And I've suggested that as a good start, as a good place to go.

01:14:13.640 | So that's it for today.

01:14:15.640 | Thank you so much for listening.

01:14:16.640 | We'll be back tomorrow with a Friday Q&A show for you.

01:14:20.640 | And if you've gained benefit from this, I've got to work on my fanciness with doing ads.

01:14:27.640 | I've never done it before.

01:14:28.640 | I've got to tighten this up.

01:14:30.640 | Doing an ad for the patrons of the show.

01:14:32.640 | So go to radicalpersonalfinance.com/patron if you'd like to support the show.

01:14:37.640 | The crowdfunding campaign there is going well.

01:14:39.640 | We're on excellent track.

01:14:41.640 | Today is actually the first patron-only Google Hangout.

01:14:46.640 | So I'm going to be hanging out with a bunch of the patrons and answering questions, and I'm going to be giving as much time as I possibly can toward that.

01:14:53.640 | And so especially those of you who've gotten in at the beginning, you're getting lots of extra time, lots of extra focus.

01:14:58.640 | I'm not sure I can promise that it's always going to be that way.

01:15:01.640 | I hope the show grows to the point where I can't deliver it.

01:15:03.640 | But at least for now, those of you who've gotten in, you're getting a great deal.

01:15:07.640 | So go to radicalpersonalfinance.com/patron.

01:15:10.640 | Look through the benefits and the offers that I put there for you.

01:15:12.640 | See which one level is right for you.

01:15:14.640 | A buck a month is great.

01:15:15.640 | Two hundred a month is better.

01:15:17.640 | But, hey, a buck a month is awesome.

01:15:19.640 | If every member of the audience supported the show at two bucks a month, we'd be done and I could keep the show ad-free forever, and I think that's in your best interest.

01:15:27.640 | So that's it.

01:15:28.640 | I'm out.

01:15:29.640 | Cheers, y'all.

01:15:30.640 | Thank you for listening to today's show.

01:15:32.640 | If you'd like to contact me personally, my email address is joshua@radicalpersonalfinance.com.

01:15:39.640 | You can also connect with the show on Twitter @radicalpf and at facebook.com/radicalpersonalfinance.

01:15:46.640 | This show is intended to provide entertainment, education, and financial enlightenment.

01:15:53.640 | But your situation is unique, and I cannot deliver any actionable advice without knowing anything about you.

01:16:01.640 | Please, develop a team of professional advisors who you find to be caring, competent, and trustworthy, and consult them because they are the ones who can understand your specific needs, your specific goals, and provide specific answers to your questions.

01:16:22.640 | I've done my absolute best to be clear and accurate in today's show, but I'm one person and I make mistakes.

01:16:29.640 | If you spot a mistake in something I've said, please help me by coming to the show page and commenting so we can all learn together.

01:16:37.640 | Until tomorrow, thanks for being here.

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RPF0159-Alan_Moore_Interview