Ep 11: 11. Rethink: Advisor vs. Entrepreneur featuring Robert Sofia

Episode 11 of Rethink Financial Advice, co-hosted by Derek Notman, CFP® (Founder & CEO, Couplr AI) and H. Adam Holt, CFP® (Founder & CEO, Asset-Map). (38:19)

Episode 11 of Rethink Financial Advice, co-hosted by Derek Notman, CFP® (Founder & CEO, Couplr AI) and H. Adam Holt, CFP® (Founder & CEO, Asset-Map). Listen on Apple Podcasts, Spotify, YouTube, or Acast.

Episode Summary

Robert Sofia joins Adam Holt and Derek Notman to separate two identities that routinely get conflated: being a good advisor and running a good business. Holt describes being recruited into the profession on entrepreneurial terms, no inventory, no cap on income, control of his own time, and then being taught only how to sell. Everything about actually operating a business he had to teach himself. Sofia’s contribution is about where to look for direction, arguing that advisors should watch where large firms are putting their technology and artificial intelligence budgets, because that spending tracks what consumers have already come to expect. The sharpest point in the episode is the distinction between a lifestyle practice and a sellable business. A practice that produces good cash flow but depends entirely on one person carries little capital value to a buyer.

What this episode covers

• Why advisors are recruited on entrepreneurial terms but trained only to sell
• Using large-firm technology spending as a read on consumer expectations
• Differentiation as the alternative to blending in with every other practice
• The difference between a lifestyle practice and a business someone would actually buy
• Delegation, operations hiring, and managing to defined revenue retention targets

Full Transcript

Machine-generated transcript of this episode.

Welcome to Rethink, the financial advisor podcast. My name is Adam Holtz. And this is Derek Notman. We are your hosts, both veteran advisors and FinTech CEOs who challenge the status quo, question everything and have fun doing it. Hear honest commentary on the challenges facing advisors today and be part of a community where we can all rethink the profession. Now on to our episode. Adam, my man, when you started off as an advisor, when you were building your practice, did you think of yourself more as an advisor or as an entrepreneur? See, that’s an interesting question because today as we both know, we both think of ourselves as entrepreneurs, but it was a long haul.

I wanted to just be the best advisor, right? Yeah. Oh yeah. For early years. I mean, I’ve got gray hair. You know, I had gray hair in my thirties for a reason. You have white hair. Dude, it’s, I’ve got, I’ve got stress highlights. Okay. Nice. They’re somehow strangely consistent. So your entire head is white, very consistent. It’s an interesting question. Like what were you like? I’m guessing you, there was like a transition. I don’t know. Like, I mean, we’ve got probably a ton of advisors. I’m hoping there’s more than three of you because I, your mom’s not an advisor listening to this podcast. Although she does listen.

She would argue. Thank you. But like earlier stage advisors, or even like any stage, like there is a difference. There’s a big difference. Yeah. I look, I, the answer to your question for me is I went through different phases. One of the, one of the things that someone early on told me was that this is the only business, remember business, not practice. So it’s business that you could have no inventory, have no cap on the upside, right? Control all your time. And that sounded really like an entrepreneurial gig. That doesn’t, right. They, but they never necessarily told me how to run the business. I was taught how to sell, sell, and, uh, sometimes how to service as long as it meant that there was a cross on it.

Um, yeah. So the actual running of the practice and then ultimately the entrepreneurial aspect of it, um, was really self-taught. I really think it was self-taught and there’s a difference in mindset that I’ve learned becoming an entrepreneur. And I know you did some research on this. What, what have you found so far? Yeah, it’s, it’s interesting. Um, when I started, I was laughing because it is so true. What you’re saying. I remember like, like, wow, that sounds like a hell of a hell of a deal here. Like I don’t have to go get a warehouse and stock it up and hire people. I just go to work and I can make as much as I want.

What was it? Like, um, you’re in business for yourself, but not by yourself. That’s where somewhere told anyways, um, I digress. Um, I did, I was very lonely. Oh, I, I did a, uh, a poll on LinkedIn. I love LinkedIn. Go follow them. And I, if you’re not already, you should, um, about ask, I asked advisors is being a financial advisor, the same thing as being an entrepreneur. And it was, it was, I didn’t expect the response that I got, but only let’s put it this way. Only 44% said no. 25% said yes, a hundred percent. It’s the same thing. 29% said somewhere in the middle.

So I think the, the, what I, what I walked away with this is that the majority of people, again, remember most of the people answering this survey, this poll was almost a thousand people are advisors. Most of them, the majority think that there is, there are entrepreneurial aspects to being an advisor. But then to your point, Adam, we’re not taught those things when we’re building the business, not the practice, the business. Well, that’s interesting because what I just heard you say is that, you know, pretty much half think that there’s some kind of entrepreneur, but, but 44% said no, it’s not the same thing. And I guess the question in all the commentary was what does it mean to be an entrepreneur?

And one of the things that we did decide to do, as you know, Derek, is we’ve chosen certain subject matter experts based upon what they tend to see in the marketplace. And we recently had an opportunity to interview Robert Sophia, who’s a co-founder of Snappy Kraken. And for it’s an award-winning marketing technology firm. They’re getting a lot of attention right now. They focus on marketing automation, online advertising, and they’re really bold. I don’t know if you’ve seen their stuff, very unique for financial advisors, professionals. And they do marketing campaigns. I know he just released the book Blend Out, which we’ll talk about. And I’ve really been watching Snappy, Snappy Kraken, as we call them.

And they’ve just made a splash in the advisor spice. And I wanted to ask Robert this exact question, right? So here’s his response. And I asked him, I said, what’s your unique perspective on the state of advice? Let’s listen to what Robert shared on the rethink tank. Well, I love it. I’m passionate about it. I’ve been in this industry for almost 20 years, and I think it keeps getting better and better. I think financial services, specifically financial planning, it’s something everyone needs. It’s something not enough people get. And I think we’re in a space that’s ripe for consolidation and disruption. And that makes it exciting to me.

That’s true. Well, living in this space, you’ve obviously done a fantastic job living and breathing this for financial advisors. Tell us, what do you think is the missing opportunity out there advisors are not paying attention to? There are a couple of them. It’d be hard for me to just mention one, but I think if you wrap them all into one general theme, it’s customer expectations. People’s expectations are changing around mobile experiences, around being able to do everything on the go. If you look at almost every study that’s done, I mean, there was just a PWC study that was done. At least half of consumers prefer to use their devices for all their transactions rather than going to a bricks and mortar location.

And most firms still operate on a very old school bricks and mortar approach, and their technology is not as advanced or as easy or as accessible. And so if you start looking at where the opportunity is, I think it’s around the customer first experiences and even things like AI. And I know a lot of people use that as a buzzword, and that’s not how I’m using it here. But if you look at all the major financial institutions, 86% of them, at least, I think that was the last 86 or 87% are investing heavily in AI, but how many advisors really are? So when it comes to customer service, portfolio management, recommendations of financial products, sales and marketing, algorithmic trading, fraud detection.

I mean, it’s all AI powered. And so I think these are the opportunities to build a highly scalable, customer centric practice that runs with a lot of artificial intelligence is where the future is for this industry. Gosh, that’s amazing. I mean, there’s so much to think about. I can’t help but think that most advisors would be overwhelmed, right? I mean, for the most part, they’re running their practice. They think they’re starting to integrate maybe a CRM, maybe portfolio management. You’re talking about AI. So help us understand what are some steps? Well, how can we actually turn this into actionable effort? What are some areas that we can start that process?

Yeah. Well, I think it all begins with having more of an entrepreneurial mindset than a sales mindset. So I’ve personally supported over 6,000 advisors just over the course of the last few years in various capacities. And one of the things that I see is the majority. They are thinking about their business like, I need to get leads, I need to get more clients, I need to have more opportunities, I need to grow my assets under management. And those are very surface level performance indicators. What they really need to be thinking about is what drives enterprise value. And that is a lot more encompassing. That is things like, how do you generate more recurring revenue?

How do you incorporate more scalable technology? How do create stronger brand that you can own that has value? And if you start thinking about your business as an enterprise and you start looking at the things that enterprises are valued on, then you start building in your business more strategically. And that’s what I think advisors need to do. And if they do all these other things, I mean, the AI that I mentioned, I’m not saying advisors need to go out and develop their own AI, but they’re going to start thinking about what technology tools are going to empower them to have a more advanced practice that has more enterprise value, and that’s going to lead to better decision making.

Yeah. No, we completely agree. Obviously Derek and I talk about this all the time and thinking like an entrepreneur. So I’m really excited that you’re sharing that. I’m curious, you obviously written a book recently that just came out. I’m really excited to read it myself and it’s getting great traction. What was the thinking behind that? What was the message that you were trying to share? Is it aligned with this entrepreneurship? It is. Yeah, definitely. The concept of blend out is it really comes down to the fact that most advisors, if they have a small practice in a small town and a celebrity were to move in and set up a practice next door to them, that celebrity’s practice would blow up.

And it has nothing to do with their qualifications. It would have everything to do with the fact that they are known. Well, there are amazingly talented, well-qualified advisors, but people are not beating down their doors to do business with them because they are not blending out. They don’t stand out enough. They’re not known enough. They don’t have enough of a presence. And so the whole book is about how to really scale that valuable brand, whether it’s your person or your business brand, and do it in a way that really draws ideal clients to you and a framework for maintaining that and continuing to accelerate it over time.

So you think of the word stand out? Well, blend out. It’s just a little play on that. But it just means you’re going to do the opposite of blending in. You’re going to really get noticed for who you are and what you’re great at, and you’re going to draw people to you as a result. Now, that was interesting. Derek, there was a couple of things that really hit home for me. What did you think about his first comments about how much is being invested in technology and this artificial intelligence? Did that resonate with you at home? Well, dude, I sure as hell hope that advisors are listening to that, if anything else.

You can put Adam and I on mute, but I sure as heck hope you had to hear what Sophia just had to say there because that stuff was brilliant. He made some really excellent points about what’s going on, and we’ll unpack a couple of them here. But yeah, this whole investing in technology and AI and all of that type of stuff, yeah, advisors, you don’t need to go make it up yourself. That’s not what you do. That’s fine. But look at where the big money is being spent. And you know why they’re spending it there? Because the consumer wants it and expects it, right? Like mobile over brick and mortar and all of this stuff.

So it’s just fascinating. He’s just saying what’s happening, what’s out there. And of course, he’s got a pretty good finger on the pulse serving over 6,000 advisors. But it’s so true. As an advisor, when I have my advisor cap on, Adam, I think of that like, dude, if I don’t have these things, if I’m not investing in tech in some way and not doing this stuff, I am going to be obsolete so much faster than like 10, 20, 30 years ago. I don’t know. What were your thoughts? Well, it’s funny because when I first heard this, I was thinking to myself from the entrepreneurial mindset, advisors, if you approach this problem as an advisor, you hear artificial intelligence and you’re thinking, this is a human business, right?

The technology has always been a bane of my existence. I can do just fine with a yellow pad and a calculator. Take all the tech away from me and I’m just fine. And then that’s probably true for a lot of advisors because they know their relationship value, the confidence they give their clients is enough to probably carry them. You give me some basic trading account and I can help people and I’ll help them buy and make good decisions, right? But what’s happening here, the change that’s happening is that technology is infiltrating in so many levels that we have to address this not just from what’s worked for us for the past 20 and 30 and 50 years, but rather how technology is going to force us to act like a business, right?

To behave like a boss and not just like an advisor. And the reason is we’re going to see such pressures from where we’ve typically made a lot of margin, where we’ve had a lot of, we’ll call it inefficiency. Technology is coming in there, even artificial intelligence is coming in. And from a business perspective is going to literally eat your lunch if you’re basically milking the margins. And my point to you is that because the consumer is expecting so much more from this relationship, right? They want more value. They want more interaction. We have to use technology to release our time back to them. And that’s really the key is when you think about AI as a business person, you say, hmm, that means I could do more with less.

That’s what AI is really about. And what is it going to free you up, Derek, to do? It’s going to free my advisor time up to spend more time doing revenue producing activity. That means interacting and adding value to my clients on the human level and offloading the technology so that I can keep my margins in line with where the cost needs to be for the consumer. And if done right, you blend that into your client experience. So it improves the client experience, which, you know, boom, right. There you go. Right. But you have to, but he’s right. You have to think like a business owner, like an entrepreneur, as opposed to a financial advisor, which is usually thinking, how do I do right by my clients?

And I get rewarded with AUM. Now let’s, let’s talk about that for a sec. Cause I thought that was really quite funny. He said what you and I have been saying actually many times before. That people joke that, you know, I saw his eyes were rolling. If you, if you were able to see it at the time, um, when he said, you know, people measure their businesses on AUM. What do you think about that? Is that the metric? Oh man. No, I think it’s a terrible metric. It’s one that was just like, by default, we kind of arrived there as an industry like, well, let’s see here.

How can we compare all of our songs to each other? Oh, this AUM thing was cool. Obviously if you’ve got more, you’re better, right? The bigger the ego, I, that’s, I think that’s about the only correlation you can make with some certainty. So, uh, I can’t stand it. It comes from that, as you said, from that sales mindset instead of from an entrepreneurial mindset, like how many entrepreneurs do talking about AUM, you know, or a comparable like that. They don’t, that, that’s, Oh, I can’t go on. What do they talk about? Well, what do they talk about? What are the KPIs that an entrepreneur looks at?

Well, that’s it. Like recurring revenue and sales and like cost of, you know, uh, acquisition costs and brand value and, and all the stuff that this guy just said, right? Like this is, and this is what I like is because you interesting perspective. Um, that’s the stuff that’s important. And if you focus on those things and do a good job, two things happen. One is you get more sales, you get to grow. And two is you can figure out what works good and what doesn’t work. So if something’s broken, you can go fix it. So sales are a by-product of all of the entrepreneurial stuff where like, when I started, it was literally like, Hey man, you gotta, this is a race to 500 clients.

And once you get there, that’s success. Right now, like, well, that that’s not building a business. That’s just like a, like the sales machine to get as many people on the door to sign on the line. There’s two, you know, it’s funny. There’s two things that were really told to me when I first started my technology practice. I realized that I learned a lot on the job being a technologist because, you know, venture and backers and investors, they all are asking different questions of you when they’re looking at you from an enterprise value. And the reason why this is relevant for practices, because we’re seeing significant number of people that view their practice that as a long-term asset, they plan on selling or creating some succession plan.

And so for those of you that do think about that, I’m going to actually sell my practice at some point. There’s been a couple of things I’d love for you to take away from this. One is when you have a practice mindset, you’re thinking about customer first customer interaction, and that’s great lead with expectations and delivering value. Eventually, if you’re successful doing this, you actually have to think like an entrepreneur in a business, because you’re running a company. There are people dependent upon you, staff, usually there are vendors, there are obligations you make, and there’s, of course, an expectation long-term, you’re going to serve these clients.

That means you need to bring in the next generation and, or think about a succession plan so that there’s continuity for that practice. And so long-term, there has to be almost two mindsets here. One is how do I deliver the best practice aligns with my brand? And number two, how do I run a company? Unfortunately, we just haven’t seen a lot of training there. What I learned is to really focus on KPIs like lifetime value, which is really a measure of how long can I keep the business on the books and how much revenue will it generate as a, let’s call it as an entity relative to the customer acquisition cost, the cost of actually getting a client.

And there’s a ratio there you want to look at. Many acquirers look at that ratio to try to understand how efficient you’re being with your capital. Are you actually, are you investible like the stocks that you help to promote for clients? Does it make sense to do this? And I think there’s a whole bunch of areas we can all grow in to start thinking, are we running this business efficiently? And frankly, would somebody actually want to walk into this business? Is it attractive or is it really just a cashflow business that works because you show up every day? Does it really have true enterprise value beyond yourself as the professional?

And that means you actually have to find ways to actually disconnect all of that value tied to you personally being the main, we’ll call it relationship party. And that’s something I’ve had to learn. Wasn’t it, I just wrote a quote on this Adam, like the greatest, most successful entrepreneurs are the ones that will build a business that they don’t need to be a part of anymore. Like they can be excluded. Like the business can operate without them where like a sales practice doesn’t go anywhere without that main sales person. And there is a huge difference. Just as a little teaser, I think we’re going to, for our next, one of our next episodes, we’re going to talk about more about this, but we’ve, I think the RIAs listening to this get it because they had to physically go out and set up a legal entity and get a corporate bank account and all of the things that come with doing a business, right?

But you’ve got all these BD reps and wirehouse reps that, and I’m not saying those are bad, like, and there’s a ton of them there, but they’re not encouraged or taught about these business things. But, and this is the challenge, because they’re still running a business. They just weren’t told to do these other things because they hooked up to someone who already did some of this infrastructure. Well, isn’t that, and that was the allure, right? Nobody, nobody wanted to run a business and a practice and the compliance engine and the stuff you had to do. You just come in here and do what you do great, which is relationships and communication, right?

So, but it is true, you know, long-term scalable interests where it’s not just about the single advisor and not just a cashflow business that, again, supports, right, a lifestyle business. We all probably got into this business to create a lifestyle business. Now that you have a lifestyle business, that’s not, you know, always sellable, right? That’s not going to be something that someone can purchase. So there’s no capital value in the instrument, if you will, that’s called your practice. You know, we actually asked Robert one more question because it was a great follow-on to this discussion. So spend the next couple of two minutes here, hear what Robert said.

So we asked him, what do you know that many advisors are missing? I mean, what’s coming around the corner? I mean, if you look at all of the M&A activity in our space, all the of the 112 transactions in the last eight months, the ones that had over a billion in client assets made up 48 of those transactions. So what you’re seeing is that the larger, well-branded, scalable regional and national firms, those are the ones that are demanding the valuations. That’s where the M&A activity is happening. So if I think about all these advisors that are making their practice, their retirement, and they are expecting to get a good multiple on their little 50 million or a hundred million dollar book of business.

And by the way, I said little, and that might be really offensive to some because that’s an accomplishment. I don’t want to undermine it. But from an M&A perspective and a multiple perspective, it is the large, well-branded, scalable, regional firms. Those are the ones that are getting the real multiples. So if you really want to build a practice that has enterprise value, it means scalable, repeatable, predictable systems around marketing, around sales, and around operations. And if you don’t have that in a way that allows you to scale to those levels, you’re never going to reach probably the potential you expect. And what you’re going to see is as these other firms that have the resources, they keep investing in technology, and they keep becoming more scalable, they’re just going to be eating the lunch of these smaller advisors, and they’re not even going to be able to have a good exit.

And I think that’s where you’re just going to see the consolidation accelerate, partially from acquisitions, but partially from other firms just not being able to make it because they don’t have that entrepreneurial, that growth, and enterprise-related mindset and focus. So there you go. I think you brought it all home. And I don’t know, I really don’t know that many of us in Advice actually thought about that long-term plan, just like we do retirement planning for clients. Have we done that for ourselves and built this into our long-term, let’s say, financial plan that we’re expecting or what are assuming maybe, an exit of some reasonable value from that practice?

You know, I wonder because I look at, you know, the environment I grew up in as an advisor, you are in the same environment, and I look at what happened there when succession happened, and it was like, hey, I got my pension. I’m good. I found a successor. They’re like, they’re going to take it all and I can just walk away. And maybe that’s fine for you, but like, I think there’s this massive shift. And if you want to be an entrepreneur and build more than just a lifestyle business that kind of just implodes when you leave, and I would hope that you wouldn’t want to do that because you are making long-term promises to your clients, then you have to do what he’s saying right here about, you know, scalable things that are, you know, predictable, repeatable, that if an acquirer comes in, whether that’s a junior advisor that just wants to purchase, but chances are the junior advisors are going to have to finance this somehow, right?

So we’re going to have to know, like, what’s the lifetime value, right? What’s the revenue? And we’re not asking AUM here. We’re asking margin and profitability and all, you know, all that stuff. So I don’t know, Adam, it almost goes back to, do I care? That’s a great point. You know, many people have asked me, even in my own ventures, they said, Adam, what are you trying to build? Are you trying to build a lifestyle business? That’s one that’s going to pay you cash flow, right? Give you a certain kind of lifestyle, or is this an exit opportunity where you’re going to sell it for a bunch of money?

And they’re two different approaches. Very different. We typically run our practices like lifestyle companies, right? We show up the way we want. We work the way we want. We know a lot of people that golf more than work. That’s their work, right? That’s their lifestyle. But it is true. There is a mindset shift that has to happen if, in fact, you plan on having an exit. Now, one of the things that I will tell you that is very real, you just mentioned it. When you’re dealing with internal succession, the question becomes, okay, long-term, do my younger or junior partners have the capacity to actually buy me out with cash?

And if they can’t and haven’t made a fund for it or don’t have the cash flow, they’re going to finance it. Which means once they’re going to finance it, they’re going to look at the metrics for, is this a good investment? One of the things that we addressed actually in our own practice, we looked at the value that was expected and we said to each other, how are we going to cover the financing costs of doing this? If we lose the rainmaker here who’s generating all the value, there’s no scalability here. Why would I pay top dollar for that? And as a result, it created a debate that I would say one side didn’t have really good defense against an analyst who’s coming in, looking at it from a business perspective This doesn’t make sense, guys.

You might have all kinds of relationship value, but it’s not transferable. And that’s because all those years, that part of the business wasn’t really treated like an enterprise, like an entrepreneur. One thing that also comes to mind though is like, okay, let’s say I answer that question. I don’t care. I want my lifestyle business and whatever. Am I interested in really dealing with it? But I want to be around for the next 20 years and grow and have clients coming in, right? I think then that what Robert Safia is saying about like scalability and digital and all of these things is just as important, whether you want to exit from your practice or let it fall apart.

If you want to grow and capture your share of clients and AUM, if that’s your thing, well, then you better start doing this stuff because otherwise you’re going to be struggling more and more to get them, whether you want to exit or not. Yeah, that’s very true. Well, that’s great. So let’s tell everybody who’s listening, do what we always do. This is our action point. So what are two to three things that if you’re listening to this that you can do? Where would you go, Derek, if you were making some recommendations to those that are listening? I’m going to actually start with my last one first.

And just like you mentioned, like an analyst, if I’m looking at my business from the outside in, would I buy it and what would I buy it for? Is it worth something? Does it have all the things that I would want as an investor to purchase something, whether I’m going to buy it just as an investment or buy it as like the new advisor taking over? And be honest with this stuff. That’s a really, really big question. And then also like to Robert’s point, like, do you have documented and scalable processes and tech in place to do the things you want to do? Exit or not doesn’t really matter.

Do you have those things in place? And if you don’t, then that would be a place I would start looking for right away. And, you know, just to get more granular, like, how do you document stuff like break it apart? Like, what’s your first client meeting? Like, what’s your sales process? What is your digital marketing process? Write these things down. And then yes or no, is it scalable? Is it automated? Things of that nature. That’s some stuff that I would ask advisors to look at. Got it. So you’re saying build the recipe from the practice so that it is transferable. That’s what I heard, right?

Take those processes, break it down and then a process and see where you can actually put tech or people or delegates to do this work, right? Whether that’s to enhance your lifestyle or sell or both. Like this is how you do it. No, that makes sense. I mean, any entrepreneur is going to be looking for efficiency. So there’s a couple things that I picked up here. I think there’s a real challenge with financial practitioners slash entrepreneurs in knowing what KPIs or key performance indicators that they can benchmark right now that are not AUM or sales only driven, right? We all know that the top advisor in the company has the highest AUM, right?

Again, the top advisor has the highest premium placed, right? I understand it’s a sales game, but we could always ask them what are they doing to run their practice. We might not actually get the answer we’re looking for if we’re actually thinking about, is it the most efficient? That doesn’t mean it’s the most efficient, and therefore obviously the most highest multiple value there. Or scalable or repeatable. Right. KPIs are recurring revenue. I’m buying recurring revenue if I’m making a capital investment. Are you giving me strong growth? Do I get a good CAGR? Do I look at revenue growth? What is your net margin? What is your gross margin?

These are the questions we should start asking. If you’re not familiar with these terms, you might have to go back to your CFA handbooks or your CFP and say, what does a reasonable investment look like? What’s the ROR or return on investment rather that someone would expect from this practice? And are you running in a way that actually matches, let’s say, the S&P? Would I invest in you versus invest in the S&P and look at that price to earnings ratio and say, gosh, this is something, you know this stuff, right? Let’s just turn the mirror or the glazing glass on us to figure that out.

I would say if you’re running a business, you got to look for inefficiencies, right? So you got to consider delegating. I know for many of us that are really A-type personalities that want to be out there in the field, we want to talk to people. We don’t want to do operations management. One of the reasons why many of us started with, we’ll call it turnkey programs is because we didn’t want to do this. But eventually you get to the point where it doesn’t make sense in some measure to offload everything. Consider adding an operations manager, someone who loves this stuff and hold them to task for managing to specific KPIs that are entrepreneurial minded or capital minded.

I think these are really important with specific goals. Like I want to get us to in the next two years, a net retained revenue of X and an ongoing customer acquisition cost of Y. And you start to work towards these. You figure out then what you have to execute to get there. And it might be tech, it might be human, it might be delegating, it might be offshoring. I don’t know. But the point is that all business owners are really going to have to make this decision going forward. And I think the last piece about this is that everything that Robert talked about is really brand transferability.

Can I take the brand and make it not just about me as the financial advisor and make it about this practice which has long term value? And that’s the question. If you’re still critical to the entire process as the financial advisor, it’s not scalable yet. There’s a lot here, folks. Don’t get overwhelmed. But you’re doing this for your clients already. Step back and do it for yourself. You’re gonna be happy one way or the other. It’s gonna make a huge difference. I mean, Robert said it. We’ve said it before. The world’s changed and it’s changed fast. These are things that help you change with it.

Well, let’s take this opportunity to run to our last section to close out this podcast. As you know, we always ask a question or a question is asked of us. We add one question to the end of our podcast. And this one comes from Sharon, also using LinkedIn. Seems like everybody’s using LinkedIn. So I’ll ask this of you, Derek. So Sharon writes, I built a respectable BD practice under my own name and I continue to get solicitations to consider moving my registrations. How do advisors know what they’re really getting and what they’re leaving behind from their current organizations they’re tied to? This happens a lot.

In fact, I was cold called this morning to go to a different firm. So it happens all the time. Yeah, it’s on a different planet though. So that might work. I don’t know. We’ll see. I don’t know why I even said that. It’s just one of those days, Adam. It’s Monday. It’s okay. So anyways, yeah. Okay, Sharon, thank you. This is an interesting question. I think a lot of advisors think this or get, you know, pitched from other firms like, hey, here’s all the great stuff that we have here. And a lot of advisors have asked me that, Derek, like this firm’s saying this, blah, blah, it depends.

Like I think first you really got to figure out like what are you paying for and what are you getting where you are today? Like get super granular. I think a lot of BD advisors don’t actually realize how much they’re spending each year for all the things that are getting quote unquote. You know, put it into a dollar figure. Would you stroke a check to your current BD for everything that you’re getting currently? And would it be worth it? And then look at the new firm. Do you get all that stuff? Do you get more? What’s it going to cost you? Like just, I mean, if you’re simple, get a yellow pad and write the stuff down side by side.

But it’s tough because there’s not transparency here, unfortunately, on multiple levels. And then if you’re going to consider moving, like, do you have to go to another BD? Why not just go independent? That’s something else that I would add to that, you know, yellow pad, you know, comparison. What do you think? Well, it’s, there’s so many opportunities today, and it’s hard to give specific guidance for anybody’s, you know, situation. So no different to giving investment recommendation, but I would offer this, right? We just went through, you know, 25 so minutes of explaining the mindset. If you’re thinking about this answer from a financial advisor, you’re going to tend to think or sorry, from a practice manager’s perspective, you’re going to think about it from what’s my customer experience?

Do they offer me better tech? Is it simpler to execute trades? Do they offer me better benefits? Or, you know what I’m saying? But if you look at it from an entrepreneurial perspective, you might get stuck more on the financial side and say, well, where am I going to go in the next 10 years? And where am I going to arrive? And do I want to be part of this brand as a backbone? Or do I want to be part of my existing, right? So there’s, I think it’s about what you’re focusing on. If you’re focusing on just, I’m really aggravated where I am and anything would be better, right?

This, right? So that’s, that’s, you know, it’s almost going to be an emotional decision. But if you’re really looking at it from an entrepreneurial and a practice management, I really think the focus has to be, can you still deliver the kind of expectations of what Robert said early on, which is, can I deliver an exceptional customer experience better than I can today, okay, with this new relationship? And then from the end, can it help me get to where I want to be in 10 years faster or better or more efficiently than the current organization I have? And if that can’t be proven for both of those decisions, then I would figure out how to innovate where you are.

And that’s, and that’s really, that’s the key. That’s a challenge, I think, for all of us. You got to have some way to make a decision on this stuff. And I think we’re going to unpack this in our next episode. We’ve got a lot of requests to talk about independence and BD affiliation and so we’re going to actually ask an expert to come in and talk to us about what are those decision points, and then we’ll debate it the way we do. Yeah, I think one thing I would add to this is be careful who you’re, like, especially the firm recruiting, trying to get you to move, be careful who you’re talking to for information, because remember, it’s their job to sell you this new firm, right?

So you have to take that stuff with a little bit of a grain of salt, like some, I’ve heard horror stories where advisors were told everything they wanted to hear and then they did it and they’re like, oh, sorry, you know, I was wrong on that one, my bad, but you’re here now, so whatever. So just be careful on that, like go slowly on this stuff. There’s no, there’s no rush. And test the waters, right? Talk to people. That’s the real key thing is you want to talk to real humans that made that shift if they did so. And then, by the way, I wouldn’t be, today the employment and job market is so insane, right?

And a good way for those looking for jobs. If you’re ever getting recruited to go to another organization, it’s worth it for you if you have a relationship to talk to your existing organizations and say, hey, I’m contemplating this. Why do I want to stay and get resold, right? Tell us, tell me all the stuff you’re doing for me that I don’t know to value because you want to make a, and sometimes by the way, you’d be surprised organizations find ways to keep you in ways that you didn’t think to ask. So that’s no different than any kind of employment structure. Sometimes you need to give your current organization the opportunity to bid for you and show that they really want to keep you.

So that’s something to think about. Everybody’s going to be throwing hate mail at me after that one. Sorry employers, but it’s the truth. It’s happening. I think I’d rather know than see somebody walk out on us that we really wanted to keep. So that’s important. It’s just like an employee looking to go to a different company, right? Like, you know, I mean, if you really want to keep them, you know, sweet anyways. All right. We’ll talk about this later. Yeah, we’ll wrap this up. All right. Well, thank you everybody for being part of this. We hope that you are enjoying the podcast. Please give us feedback.

Please ask questions so that we can have content that just keep coming out our ears. Derek, as always, I appreciate talking to you. Yeah, man. Great seeing you be good. Thanks for listening, everybody. And we’ll see you on the next one. You got it. Thank you for listening to rethink the financial advisor podcast with Holt and Notman. Be sure to subscribe now and join the ongoing conversation. The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of asset map or connector. The content has been made available for informational and educational purposes only.