Ep 007

Michael Kitces on Advisor Marketing, Niches, One Page Plans, Building a Team, and Being a CEO


Michael Kitces

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Inside This Episode

Today, I’m talking to one of the most prolific content creators in financial services, Michael Kitces.  

His website, Kitces.com, serves over 12,000 advisors, and his blog, Nerd’s Eye View, has become a go-to resource for financial advisors, reaching more than 200,000 unique monthly visitors. 

Investopedia named him “one of the most influential financial advisors in the United States.” 

He also runs 2 podcasts, Kitces & Carl (which he co-hosts with Carl Richards, creator of the NYTimes Sketch Guy column) and Financial Advisor Success—one of the most highly rated podcasts for financial advisors.  

3 of the biggest insights from Michael Kitces

  • #1 The digital marketing shift that most advisors are NOT capitalizing on—and why your ideal clients are not choosing the local advisor who’s closest in proximity; they are choosing the advisor that offers the best solution to their high-stakes problem. 

  • #2 The power of “The One-Page Financial Plan” and how to effectively use it so you can eliminate overwhelm for your clients and drive them to take action 

  • #3 Why the happiest advisors are not the ones who earn the most money; they’re the ones who earn the most money on their time. Michael shares his dollars-to-time ratio for maximizing happiness—and advice for buying your time back so you can successfully scale your business.  


  • 00:00 It’s a lot easier to coach entrepreneurs than it is to be one 
  • 05:55 The digital marketing shift that most advisors need to capitalize on. 
  • 17:00 How technology adoption by retirees has changed the game 
  • 23:47 The power of “The One-Page Financial Plan.” 
  • 36:59 More money ≠ more happiness.  
  • 44:11 How to earn more without working more hours. 
  • 54:40 How Michael defines “Do business. Do Life” 





  • If you want to solve low stakes local problems, you can continue to find clients locally. But clients that have high stakes problems are increasingly going online, and as the generations rotate through, they are increasingly more comfortable going online because they’ve had the internet and computers for more and more of their entire lifetimes as well.” – Michael Kitces  

  • The more employees an advisory firm has, the more time that they spend as an advisor in the business.” – Michael Kitces 

Brad Johnson: Welcome to another episode of Do Business Do Life here with special guest, Michael Kitces. Glad to have you back on a podcast, Michael.  


Michael Kitces: Absolutely. Good to be back with you on a podcast, Brad. Congratulations on new podcast, new launch.  


Brad Johnson: Thank you. Yeah, a whole new chapter. So, we all continue to evolve as life goes on and I just want to start out. I know we had some cool conversations as I was stepping away from my prior chapter, and you did much the same just a few years before me, where you stepped away from the firm you worked at to really build your own brand and your own business and really cool to see how that’s played out from my side. So, thanks for the advice you gave me along the way. 


Michael Kitces: Absolutely. My pleasure. I’m glad you’re living the journey. I was going to say living the dream. As we know, the dream had some ups and downs and roller coaster bumps you usually don’t put in dream dreams but it’s a version of living the dream.  


Brad Johnson: You know what? That’s the truth. We were just in Austin and we do a big kickoff event beginning of every year. We call it the launch event. And I shared the biggest lesson, one of the biggest lessons I’ve learned over the last two years of this entrepreneurial journey. And what I learned is it’s a lot easier to coach entrepreneurs than it is to be one. And I coached entrepreneurs for about 13 years, so it’s a lot easier observing. It’s kind of like that professor that was never actually the business owner but teaches business. And you’re spot on. It comes with a lot of ups and downs and waking up at four in the morning with 15 things on your mind but you know what the journey has been worth. It’s been worth it.  


Michael Kitces: Well, now I’m curious, like what was the biggest difference for you between what you saw from the coaching end and then what was different when you lived the journey?  


Brad Johnson: I think a couple of things come to mind, the complexity. I mean, I was running a sales team in my prior life, a team of six. And obviously, as any team, you’ve got different personalities and you’ve got to figure out how to get that team to mesh and work together. We’ve gone from zero to just over 40 team members in two years here and the complexity of more personalities, more divisions within the company, not just focusing on the sales side and just feeling like you’re getting pulled 15 different directions all at the same time. You know, lease the printer, make sure the Internet’s working, and it’s easy to see why a lot of entrepreneurs struggle with their divorce rates, higher drug use, higher alcohol use. It’s like self-medicating the stress that comes along with the job. And so, that’s been one of the biggest ones. And the second one, I’d say, is just the emotions that come along with it. I had a coach tell me the biggest thing with being a leader is navigating your own emotions first before you can help others navigate theirs and just realizing that you need to be calm and confident as you lead a team. And oftentimes that’s you modeling, helping them do that. And I think oftentimes when I was observing in the coaching, I’m like, “Oh, well, that’s easy. This person isn’t doing their job. They’re not a good culture fit. You should just fire them.” Yeah. Easier said than done when you’re in it, you know? So, those are a couple of lessons at least.  


Michael Kitces: Yeah. I still remember like really early financial planning days. And one of the first client situations where I was analyzing a financial plan for a client who had a just young adult child in their twenties that had one of those not launching Failure to Launch scenarios and like, just couldn’t get them off of mom and dad’s dole, and out the door and particularly this was 20 years ago where that was less common than today where there is a lot more boomeranging back home. And I just remember having this like internal conversation with one of the senior advisors was just like, “Why don’t they just cut him off? Like, they just got to cut him off and give him a little tough love and get him out into the world. Like, come on. Let’s go.” And then to your part, it was just like, “Yeah. You don’t have kids yet, do you? You’ve never actually tried having this conversation as a parent to the child that you’ve been invested into for at that point, 20-something years through everything that’s in that parent-child relationship, and then just say like, ‘Oh, yeah, tough love so I’m going to get kick you out of the house and hope you can figure all this stuff out.’” Like, really easy to say when you’re looking at a financial plan. Not so similar when you’re actually living it and practice. There’s a lot of tough conversations that are a lot more straightforward to say what the conversation should be than to actually live in the difficult conversation.  


Brad Johnson: For sure. And I think also the flip side of that coin is the power of our industry and why great coaching. Objectively, that parents in the middle of their emotions and that’s one of the things that a great coach can help navigate that bridge of, “Hey, how do we start to have that conversation?” At the end of the day, I think we all know as parents going to serve them better long term. But, yeah, when you’re living it, that coaching is a little tougher to take action on. Well, as we dive in, there’s so much like every time we get together whether it’s virtual reality in Kansas City like we did that one time. We always have way more to talk about than time. So, I’m just going to dive in here in rapid-fire, if you’re cool with that.  


Michael Kitces: Sure. Absolutely. Let’s talk advisor.  


Brad Johnson: Okay. So, the last time we connected was kind of COVID was going on. This whole kind of upside-down world that most financial advisors were living in at the time was, wow, my normal face-to-face marketing appointments is kind of nonexistent right now. And I know one of the things that’s always been really cool as I followed your platform and everything you put out on the blog is it’s very technology-forward. It’s very like where the world is going. And literally, all of finance was thrust into that. And one of the conversations I remember us having prior was it won’t be the local financial advisor as this world evolves. It will be the best financial advisor. And I feel as if technology and digital and COVID forcing everybody to embrace that has only accelerated that. So, let’s maybe open forum. What are your thoughts? What have you seen change over the last couple of years as all of us were forced to evolve? 


Michael Kitces: So, to me, it’s been an interesting evolution that as I think about it for just the overall impact of COVID, I know a lot of people talked about COVID is like the world changed and a whole bunch of stuff broke and changed. And not that I want to be dismissive of that, but when I look at that relative to our industry, frankly, I don’t see a lot that broke or like made some unexpected hard left turn. What I see overall is trends and things that were already underway that were already happening very slowly that just happened very, very quickly. We had like 5 to 7 years’ worth of industry evolution in the span of about 12 to 18 months. And so, when I look at domains like growth of digital, the way that consumers meet online, most advisors had a little bit of video meeting and online interaction. It’s just now all of a sudden we had to do 100% by Zoom through COVID. And now as we come out the other end, it turns out that a whole lot of clients actually want to do at least a material number of meetings on Zoom and via video. I don’t think video chats didn’t become a thing because of the pandemic. The technology was there. We were already moving in this direction but lo and behold, we got there a whole lot quicker. 


The thing that I think becomes the biggest deal from the marketing perspective, though, that I really think COVID indirectly became such a catalyst of is once you get to the point as a client where you’re comfortable with a virtual meeting and I’ll at least call it a mostly virtual advisor, right? I mean, I’ve seen advisors that even had an entirely local practice for clients like, yeah, I don’t really want to drive in traffic, come across town. We only live 11 miles away but I’d actually still rather meet with you like 80% of the time virtually, and not come to your office. And then obviously the clients who are more geographically distant, where it does even matter whether they’re 11 miles or 1,100 miles away, it’s the same video meeting. Once that geographic barrier breaks down, from the advisor end, we kind of talk about it as well, now I can prospect nationally and I can take advantage of some of these other marketing tactics that work a little bit better online without geographic lines. But to me, like the thing that I think is still under-appreciated from most advisors is we look at how marketing changes, how client acquisition changes from our perspective when the geographic barriers break down like, “Hey, maybe I should do a little more search engine optimization or social media or webinars or something online.” And I don’t think we think enough about how it changes from the client’s perspective. 


So, when I think about clients going in looking for an advisor, like over-generalizing a little, I kind of put it into two camps. The first are local stakes problems, things I’ve just got to deal with that are fairly straightforward and proximal or I just want someone in the area that can solve this problem for me. So, when I bought a house ten years ago, I bought a house about a mile-and-a-half up the street for my folks. They still live in the house that I grew up in. They’ve been in the neighborhood here for 45 years now. So, you want to ask me about tax law like I’ll do Internal Revenue Code sections off the top of my head. You ask me about plumbing, I’m hopeless. I don’t know anything about anything in my house and how it works. So, the first time my toilet breaks, I call my father to say, “What do I do?” And he says like, “I call this plumber. We’ve had them out to the house many times. They do good work. They’ll even come out on Sunday and the rates are reasonable.” It’s like, “Thank you, Dad.” There’s like a certain level of local stakes. I just need something done in a reasonably timely manner. It’s as easy to go local, ask my friends and family for a referral, and off I go. And it works in the plumbing realm. It works well in the financial advisor realm. 


Like, have I had this for 401(k) I’ve been meaning to roll over for a long time or like my business needs to get a profit-sharing plan set up. Who set up your plan? Can he or she come out to my office and set this up for our firm? The interesting shift that’s happening, though. So, it’s one thing when you’re dealing with local stakes problems. It’s another thing when you’re dealing with high-stakes problems. So, if you imagine for a moment like you’re coming back from the doctor, the news is not good. You have a very rare, potentially fatal disease. There may only be like a half a dozen doctors anywhere in the world who even know how to treat this because it’s so rare. Not many people around. Your doctor has no idea where to send you because he’s never seen this before. And so, you have to now figure out in a very high-stakes situation, how are you going to find the doctor who will save your life? And the answer for me is everyone immediately is like, I’m just sitting there on my smartphone on Google like I’m searching around for medical research and who’s published and looking up reviews of the doctors. If my life is on the line, first, I’m not asking friends and family for a referral because they don’t even like the odds that the expert I need is even local is like negligible. There would be no reason why I would be in my friends and family network in the first place. 


And frankly, if the stakes are high enough, like, yeah, I’ll get on a plane and go pretty much anywhere in the world if it’s going to save my life. Geography doesn’t matter anymore. And the higher the stakes of the problem, the less the geography matters. And so, when you now bring that into the financial advisor realm, where maybe it’s not my life is on the line for a big disease, it’s my business is on the line because I’m getting ready to sell it in a liquidity event, the one biggest financial event of my entire lifetime to sell a medical practice that I’ve spent 27 years building as the lead doctor. And I’m trying to figure out how to maximize the value of my medical practice and there is some advisor that’s halfway across the country that can show me how to turn my $3 million medical practice sale to a $3.3 million medical practice sale by getting another 10% on the valuation of a business. I don’t have any problem getting on a plane and going 1,000 miles to see that advisor because I’m going to net another $300,000 out of the sale price of my practice. And of course, when I now sell my practice for $3.3 million, guess who gets the money? 


And so, the fundamental phenomenon to me that’s changing is people with high stakes problems are less and less going to their friends and family with networks for referrals and more and more going online because they can, because the Internet is this amazing finding machine to find like the six people in the world who are an expert in your particular problem. If the stakes are high enough, you’re certainly willing to travel to go see them and the irony is with the rise of Zoom video in the rest of the pandemic, we’ve never been more comfortable at any point working with someone who’s not local, which just means like the threshold of what’s a high enough stakes problem that we move away from local stakes, friends and family referrals, and we go online for virtual solutions. Like that threshold’s getting lower, right? I don’t even just see my life on the line, I can just be fairly sick and feel really bad and just want someone to help me or it might have been like I’ll set up a local profit-sharing plan with a local advisor but I’m going across the country when I’m selling my medical practice. Now, suddenly we’re more and more flexible of like, “Well, maybe I’m just a partner in the practice but I’m still willing to do this,” or, “Maybe I’m making partner and I still want to go and look online for someone who’s then going to work with me and building wealth the next 10, 20, 30 years.” 


Or maybe I’m just a really high-income doctor and I feel like I got a lot of complexity because I got the medical practice. I want to buy in someday. I’ve still got six figures of student loan debt I want to pay down. I’m hoping to start a family soon. I got a whole bunch of other stuff coming at me. I got no problem paying thousands of dollars in the financial planning fee but I want someone who understands like doctor stuff and medical practices and buy-ins and student loan debt and all the stuff that I’m balancing at once. Not just like local advisor that a friend of mine also uses because my friend’s not a doctor in this exact same situation. I want someone for me because I’m feeling the complexity and I got some money to spend on a good advisor to help me through it. So, this phenomenon to me that’s shifting is we go online to find the best advisor in the world. Well, we have a high-stakes problem because, at that point, it’s worth the time to look and search and work with them even at a distance. And the more that we get comfortable with virtual and the better that the Internet gets at just finding things, the lower and lower that threshold is becoming. So, we think from the advisor and like, “Hey, cool, I can work virtually and I can go online and do webinars and social media at the rest.” 


But when you think about from the client perspective like, look, if I just want a generic advisor that can do anything and everything for everyone, I can find that person up the street from a friends and family referral. If I’m looking for someone online, I don’t look online for a financial advisor. I look online for a solution to my high-stakes problem. And that shift to me is kind of the digital marketing shift that most advisors are not capitalizing on yet because we’re thinking about it from our end, “Hey, I’m going to go join social media platforms,” and not from the client’s end. They’re not just following random people on Twitter for what he’s saying to figure out who to give their life savings to, but they might be looking for who is an expert on the particular high-stakes problem that they’ve got. And we’re going to work with you If you bring the answers to that but only if you bring the answers to that. And it’s a very different way of showing up in the digital realm.  


Brad Johnson: Yeah. And this is not a new concept in finance that the riches are in the niches or however a different way you’ve heard that said. But I can think of two real-life examples. There’s an advisor that just specializes in McDonald’s franchise owners. There’s another one I can think of with interest rates spiking, his group just focuses on pensions and those have been very negatively impacted with rising interest rates. And so, they’ve got this what I would call very niche problem that people all across America need help with. And on the flip side of that, prior to COVID, I can speak to both of my parents. Maybe they had just kind of figured out how to use Facetime on their iPhone, but they sure didn’t know anything about Zoom. Now, it’s the technology adoption on that retirement-aged not-as-tech-savvy individual that now, also now everybody has Zoom on their phone, right? So, it’s also the network effect that’s happening where, okay, they maybe had a problem that they were niched that they could solve nationwide but their consumer base or prospect base was not really armed to be able to have that conversation virtually. Now, they are. So, that’s another piece of that as well.  


Michael Kitces: I think there’s an important follow-on to recognize around that as well. And so, this perception that we carried for like 10 or 20 years kind of this idea of like younger people are technology adopters and are willing to do computer stuff and work online but “old people, seniors, i.e., retirees, for all those who work with retirees” aren’t. And the fundamental thing that I think the industry is missing is, like simply put, your retired client of today is not your retired client of 20 years ago. Like, I put this in my context, the retired client 20 years ago was my grandparents. My grandfather was born in Eastern Europe in 1911, and he remembers when his family was emigrating to North America the first time he got to Paris as an eight-year-old right after World War I because it was the first time he saw the electric light. He was not so prepared for online video meetings when the Internet showed up. He grew up in a different world in a different time. My parents, who are baby boomers and are today’s retirees, they are retired in their seventies, my parents were computer scientists. They programmed computers for a living for 20-plus years because baby boomers kind of had computers everywhere for the majority of their working years. Maybe not the very beginning when they started their careers but computers start showing up in offices by the 1980s and if you’re a boomer that was somewhere in your twenties or thirties, so most of your career was in front of computers. 


So, my parents have no problem dealing with computers. My grandparents would have been completely lost. And so, it’s not just a function of older clients may have more trouble with computers and, hey, younger clients can handle it more. I think it’s a more basic thing, which is just, look, where did computers show up in your life? The real challenge for retirees, I find when we were doing this 10, 20 years ago was my retired clients retired mostly after computers came into the scene, or at least if they had retired by the time computers came to the scene, they were already 25, 30 years in their career, which meant if computers showed at that point, they just sound like a young person in the office to do the computer things for them. And they wrote out the last five, ten years before retirement in order to do that. But now we live in a world where today’s retirees, I mean, particularly if you’re marketing, my folks have been retired for ten years. People who are reaching retirement age today are the later-stage boomers. They had computers in their offices when they were 20. They’ve lived computers their entire life for the past, literally, 40-plus years. So, this idea that older clients are going to be tech-averse, I think is going to end up blindsiding a lot of advisors that, yes, there’s always a subset of people, no matter how tech-savvy a generation is that just say like, “I don’t want a screen, I want to sit in front of a person.” 


But the generational effect of this idea that older retired clients just won’t want to be technology adopters, like it wasn’t an age thing. It was a generation thing. And the reality is that generation is largely kind of wound through the process now. And certainly, if you’re marketing to retirees today, which is still where a lot of us are as advisors like these are people who spent 40 years with computers in their lives. The idea that they will suddenly be computer averse when they’re retired I think is going to be a startling misconception for a lot of the industry and to me is why most firms did just fine as the pandemic broke and we all had to go on Zoom. It’s like because these people have been using Zoom in their offices for the past 10, 15 years as well, like it wasn’t new. And when you look at the rotation of the generations from there, like Gen X has been eligible for AARP for five or six years now, like the front end of Gen X is past age 55. So, pretty soon our retiree prospects are Gen Xers. They were playing Nintendo games when they were young children like they’re fine with technology. And so, again, when you bring that back to the advisor world, yes, if you want to solve low-stakes local problems, you can continue to find clients locally but clients that have high-stakes problems are increasingly going online. 


And as the generations rotate through, they are increasingly more comfortable going online because they’ve had the internet and computers for more and more of their entire lifetimes as well. And I really think we’re going to start seeing a fundamental shift in just how clients think about finding an advisor and engaging with an advisor because they have a very different comfort level with technology. It’s not an age thing. It was a generational cohort thing and the non-computer-adopting cohort is mostly wound through the process at this point.  


Brad Johnson: Yeah, 100%. I’m very much aligned with that thought process. So, let’s transition. One of the things with technology and the Internet is it’s become really easy to access data. And there I definitely saw a lot of this happen. You know, I got into business in ‘07 and as the idea of a financial plan has evolved, I remember first off, a lot of advisors way back when they didn’t do the best job at building a financial plan. And part of that was it was dependent on the school of finance that you grew up in but then there became an evolution of this leather-bound binder. I know you know exactly what I’m talking about.  


Michael Kitces: I used to use the binding machine. You would like punch all the pages and then you would layer them onto the little hooks and then close the binding machine. Absolutely.  


Brad Johnson: And it almost became like this race to who could build the thickest most data-dense financial plan with all the charts and graphs and backing up all here you go, hand me this money because I’m doing such amazing planning. And now what I’ve started to see and I know we have a mutual friend in Carl Richards, who wrote a book called The One Page Financial Plan, now we’re almost starting to see it revert back the other way and it’s how can we simplify the complexity? If you’re building on a CFP standard income, investments, taxes, health care, legacy, estate, all the worlds that that encompasses, that’s a lot. But it’s almost reverting back to can I get this complexity onto one page where it’s simple and it makes sense to somebody that’s like a fifth grader? So, that’s a really big topic. Let’s just riff on that. What are your thoughts? What trends do you see? There’s a really cool Twitter thread out there on like the best one-page financial plans. Let’s dive in on that topic.  


Michael Kitces: So, here is how I would think about it from just from that the advisor value proposition level. The big plan, right? The big, beautiful leather-bound plan, to me, was fundamentally about selling this value proposition of I’m smart, I’ve got expertise. Like you don’t know financial things. I know financial things. I’m the expert. You pay me money as the expert. I do the analysis you literally can’t do by yourself and I will bring you the results of this analysis of your very complex situation and provide you a series of recommendations. And that’s fundamentally an expert transaction. I think like a pretty good solid one from that perspective, right? Not to mean be silly like the better the advisor, the thicker the plan, or more direct like the better the advisor, the longer the list of financial planning recommendations I can give you. We’re like a good financial advisor can analyze this client and find eight recommendations. A great financial advisor can analyze the same client and find 13 recommendations. And then a fantastic leading financial advisor can take the same client’s information and find 19 different financial planning recommendations that would add value in this client’s life. It was all built around the depth of expertise and our ability to show the expertise. 


The fundamental thing that I think is shifting now is that the value equation is beginning to shift a little. We do still need to have the expertise, right? I’ll just say that out of the gate like you do really to have the expertise. Otherwise, you’re just giving recommendations that could be actually factually wrong and then people just get hurt out of ignorance. So, the relevance of expertise doesn’t go away but we can’t just be dispensers of expert information anymore because if you really just want expert information, if you want to ask a complex question and get an answer to it, the Internet’s good at that. Apparently, pretty soon ChatGPT is going to be good at that. Like, computers are good at spitting out the answers to questions. And the fundamental shift I think that’s happening now is we’re not just going to get paid based on having the answer. We’re going to get paid to help clients implement the answer. Now, a lot of us historically have said, “Well, yeah, I do implementation.” In fact, the roots of our industry was all about implementation because it was the insurance and investment product that we implemented that we got paid for to make the financial plan economically viable for us to deliver. 


But to me, we kind of had this breakdown that when planning went towards expertise complexity and the plans got longer, the difference between an okay planner, a great planner, and an amazing planner was whether you found like 8 or 13 or 19 financial planning recommendations for the client. But if you think about that from the client’s perspective, like, you know what you do as a client when someone comes at you with 19 financial planning recommendations to add value in your financial life, you don’t look at them and think, “Wow, that person is brilliant. Look at all the recommendations they came up with.” The script in most clients has something more along the lines of, “Wow, I didn’t realize my life was that screwed up.” Like, I didn’t even know. I mean, I came to an advisor because I was not confident in my financial planning decisions in life. That’s why I sought an advisor but I actually didn’t know I could make 19 different mistakes at once. Like, apparently, I’m so bad at this, I may as well just give up on financial life now. Like, 19 recommendations basically means I get an F in life at this point and it’s just depressing. I mean, it’s outright depressing for clients to come at them with that many recommendations.  

It’s demotivating and can be outright destructive because people just look at that and say, “Wow, like I’m basically a lost cause. I didn’t even know I could do that many things wrong.” But like, why even bother at this point?  


Brad Johnson: And overwhelmed.  


Michael Kitces: Utterly, completely overwhelmed. Like, where do I even start? This is like three years’ worth of work and I was just hoping to feel a little bit less pain. I actually feel worse about my financial life now than before I came into your office thinking I need help because I’m leaving your office realizing I’m far more gone than I even realized when I walked into your office. And so, at the most basic level, if you want to think about how that translates, it’s like imagine a world where the primary way that an advisor is evaluated is the percentage of the financial planning recommendations that their clients actually implement. The percentage of financial planning recommendations that your clients actually implement. So, you don’t get credit for giving them a list of 19 and then having them be so overwhelmed that they even walk out the door. Giving them three that are meaningful and having to actually implement three is way better because frankly if they want the list of 19, they can probably at some point give their situation artificial intelligence and you’ll list out 19 things that they could be doing differently. But again, that’s just demotivating. If I want to get to what do I actually do to implement this, how do I get to a decision I’m comfortable with, have buy and feel motivation of follow through on the recommendation and actually take action to implement it, it’s an entirely different skill set. And to say the least, what it starts with is not coming to the table with 19 financial planning recommendations and a 172-page financial plan because that’s just setting up the overwhelm, “I’m just so far gone. I may as well give up on this.” 


And that to me is really the essence of what’s coming forth in these one-page financial plans. It’s not just about simplifying down and getting it all to one page. The common theme that I see on most of those one-page plans comes down to two or three core elements. There’s something that reminds people about the purpose, the goals, the intention of this. All right. Carl likes to call it the statement of financial purpose. Different advisors do it different ways but it’s that touchdown to come back to that we all go through with clients where you say like why are you doing all this in the first place? They get back to that like because money means safety and money gives me security so that I can live the life I enjoy. Or money allows me to have the generosity to support my family and organizations the way I want like we’ve all got our different things.  


Brad Johnson: It kind of sounds like, Michael, it’d be the like the Simon Sinek’s Start with Why or Covey’s Seven Habits, start with the end in mind. So, it’s like, “Hey, here’s why we’re actually doing this.”  


Michael Kitces: Yeah. It’s like, “Here’s why we’re doing this. Here’s how we’re progressing.” Like, one of the interesting things about most one-page plans that I’ve seen is that they don’t just capture a moment in time. They capture progress over time. Here’s how your network’s progressing. Here’s how your savings are improving. So, a reminder of we’ll call it the why, a sense of progress, and what are we doing next. One of the most interesting things to me about almost every one-page plan that I see, it’s got action items. It’s got next steps, not 19 planning recommendations. The three or fewer that we’re working on right now and then every time we update that one-pager, they change as we check things off the list and bring new things into the picture. And so, that combination of sense of purpose, sense of progress, and what are our next steps, those are the elements that drive action, that drive behavior change. You can do it. Here’s why you’re doing it. You are already succeeding and making progress. Here’s the thing that we’re going to tackle next. And as we checked it off, it feels really good. And then we want to do more and we continue the momentum. 


And so, the essence to me of what you’re seeing like, yes, one-page plan is neat in and of itself and I love some of the beautiful ones that people have put out there but the real thing to me that’s happening underneath is we’re beginning this shift from my value is I give you this expertise, which I demonstrate through the length of the plan and the weight of the plan and the volume of financial planning recommendations. And we’re moving into a realm where we’re judged by action and implementation. And the tools to help people take action are not the same as the tools that are built just to show our expertise. And so, the expertise still has to be there. Even most advisors that I know that are doing one-page financial plans like the rest of the financial plan is still there like it’s still on the software. They may still print it. It’s like a one-page plan with a 50-page technical appendix behind it because we do have to still I think just from the advisor, we have to show our expertise at some point. Otherwise, like I can write all of your financial planning recommendations on a 3×5 index card but if I actually give it to you as a 3×5 index card, you’re going to assume I didn’t even do the work and you’re not going to take the recommendations because they’re not credible, even though they actually really might be the right thing to do. 


So, there is still a need that I think we have to demonstrate credibility and to demonstrate our expertise and to show that when I give you this short list of things to do, it’s because there’s many, many, many pages of work and analysis that went into this. But the essence I think of the shift that you’re seeing is when you start driving towards questions like how do you maximize the number of recommendations that the clients actually implements, you don’t give them a list of 19 action items to implement.  


Brad Johnson: One of our top firms that we work with, they make the analogy very similar to how you are right now. It’s like if you’re the president of the United States of America, you’ve got all of these branches of government, right? You’ve got the war in Ukraine going on, you’ve got the trade deficit with China, you’ve got inflation and how we’re going to tackle that, and you have stacks upon stacks upon stacks of reports. Well, how does the president of the United States of America make decisions? Well, he’s got executive summaries, summarized like the big ideas out of the report so they can make decisions that get stuck in the minutia of all of the data. And that’s kind of what you’re describing there is, hey, all of the financial planning is still backing this up, but we just summarized it to here’s the why, here’s the progress, here’s the next step. And I love that. Well, I’m looking at the clock here. We got a lot to talk about. So, we’re going to transition to another thing as we were kind of preparing for this conversation before we started recording. One of the things this next chapter for me here at Triad, we talk about do business and do life. And I grew up in finance, as you did, and I think it’s safe to say there can be some egos in this space. There can be… 


Michael Kitces: A little bit. 


Brad Johnson: A little bit? 


Michael Kitces: Just a little bit. 


Brad Johnson: Pop up cross paths a time or two. There can be, really, I’ve seen it and it’s unfortunate. I’ve seen a lot of advisors in the pursuit of growing a business, hitting that I brought in 50 million of assets this year. I want to bring in 100 next year, 150, 200, and it gets very like almost laser-focused on production and top producer at whatever they’re in and parade across stage and get recognized. And what oftentimes get sacrificed is health, family, marriage, the stuff that we actually go to work to whatever is important in their life to actually have that time and money and well-being to be able to celebrate it with those that we love and are important to us. And one of the things we talk about is it’s balance and it’s integration here. Grow a business that blesses your life, doesn’t become your life. And so, on that note, doing a little research before we hopped on here, you do a really cool study. It was called the Wellbeing Study, and it’s really a survey for advisors in our space of like, “Hey dude, how are you doing?” So, I would love for you to dive into your findings there, maybe some surprising data, and what that looks like and maybe we can help a few advisors that are hitting that red line burnout that often many advisors, especially top-performing advisors based in our industry.  


Michael Kitces: Yeah. I appreciate the discussion around this. This is something I’ve long been focused on just really, I guess, as you said like from my own perspective, from my own journey of going through the business and this phenomenon that I found is as I became more successful in my business as I worked with other advisors that were more successful and basically saw this phenomenon that like I’m talking to more people who are making more money but I’m not talking to people who seem many like happier in what they’re doing. In fact, in general, I would find that the larger the advisory firm, the more stressed that they tended to be. And it kind of opened this curiosity loop for me around what was going on and why that was. And so, what I found in that domain is a couple of things. One, at the most basic level, we find that the happiest advisors are not the ones who earn the most money. They’re the ones who earn the most money on their time. They are the ones that have the best dollars-to-time ratio, which at the most basic level you can essentially boil down to the happiest advisors we find are the ones who earn the most dollars per hour for the work that they do. And then they work the number of hours they want to work to enjoy their life. 


So, the advisor who can make $300,000 working 30 hours a week is way happier than an advisor who’s making $400,000 working 50 hours a week because the second one is making 25% more but they’re working a lot more and so they’re not happier in this kind of if you do the math, income divided in an hour’s worked like it’s not better. When you boil that down more directly, what we really find in practice is that the happiest advisors are the ones who tend to have the smallest number of clients who write the biggest checks. Because that’s what maximizes that dollars per hour happiness. And there’s a part of it’s like I wish that was entirely the case because you can sort of take this the logical extreme of like the happiest advisors have like two billionaire clients and then don’t do anything else but get paid a ton of money by their bajillionaire clients. And to be fair, I don’t know if it quite goes to that extreme because we can only find so many advisors who work with billionaires. But that phenomenon that when we look at the advisors who have the highest well-being, consistently, what we find is they end up with being advisors who have fewer than 50 clients who pay a really nice fee, might be $5,000, $10,000, $20,000 plus and they’re making really good dollars working relatively few hours. 


And what they get from that is control over their time. At that point, you’re not answering your schedule to an unmanageable number of clients, and you’re always trying to keep up with everything. You’ve got a comfortable client base who pays you well for the work that you do, you’re making more than enough money to achieve your goals, and you’ve got a good amount of time because the reality is if you can get a solid base of clients that pay you well for your time, once you’re kind of established with them in an ongoing client relationship, it’s just not that time intensive on an ongoing basis.  


Brad Johnson: Yeah. That makes a lot of sense. I mean, not rocket science there. I’ll tell you one of our findings on our side. To your point that you kind of kick this off with, we’ve often seen in our world and our world when I really define Triad Partners, as in our space, Michael, we’ve got a lot of what I would call heavy direct response. Our industry grew up a lot of public events, live events, TV, radio, manufacturing appointments. And oftentimes they’re a victim of their own success, where they were so good at that. Now, they’re drowning in appointments and service and we call it the advisor in charge model because it’s actually counterintuitive because the young go-getter financial advisor that has a lot of success and does really well, actually, it’s all on them in most firms where they grew up because they have a support team, right? And now as they transition and try to become a business owner, which might mean training other advisors to do what they do, like 20 or 30 years of knowledge transfer out of their brain, it’s counterintuitive. It’s actually the opposite skill of what got them there at today, and it’s really hard to deconstruct those habits of if you want something done, you got to do it yourself. And so, that’s oftentimes what we see is that gap, too, is you can’t be the financial advisor. You now have to be the CEO. Anything that you’ve seen? You’ve done a lot of podcasts with a lot of…  


Michael Kitces: Well, yeah. 


Brad Johnson: …failed tremendously. What takeaways do you have there? 


Michael Kitces: Yeah. So, we had an interesting version of this that we actually found in the first version of our well-being study that we did around this many years ago. But kind of going directly that phenomenon, we found the unhappiest advisors had $225 million of assets under management. The unhappiest advisors have $225 million of assets under management and it’s not a random number. So, if you draw that from the practice metrics, so advisory firms, at least in the AO model, we tend to talk about the proverbial 1% fee but the truth is most firms don’t actually literally get 1% of their top-line assets. We got break points. We got a bigger client that got a discount. We got some family members we household it in. We got a few clients that we made some compromises on. When you really drill down, the typical revenue yield of an advisory firm so just total fees divided into total assets is not 1%. It usually comes out somewhere between about 70 to 80 basis points. So, a firm with $225 million under management typically has something like $1.7 million of revenue. Now, from a business metrics end, advisory firms are service businesses. And in order to support a service business like every X dollars of revenue, you have to hire another person to do the work to service the revenue. 


Not every single one is necessarily a client-facing advisor but you need so many advisors per client, which means you need so many advisors for every dollar of revenue. Then you need so much support staff per advisor or per client per dollar of revenue. And when you run those metrics across advisory firms, they’re actually remarkably consistent. Most advisory firms in their first million dollars of revenue tend to average about 150,000 to 200,000 of revenue per staff. So, by the time you’re $1 million, you’re typically five people. You get a little bit of economies of scale. Once you start going from there, advisory firms that have a couple of million dollars are usually more like $225,000 to $250,000 of revenue per client. So, by the time you’re at $225 million under management, you’re typically about seven or eight staff members. Now, if you look up any management book about how many direct reports a manager can have and be effective, the answer is usually about 6 to 8 direct reports. Beyond that, just you can’t really say it’s investing involved with the people and it starts to peel out. And so, not coincidentally, advisory firm owners start getting really unhappy at the exact threshold that they’re getting the maximum number of direct reports because as an advisor, not only if I built this firm and I did this, do have 6 to 8 direct reports? I also still have like 172 clients that I’m supposed to be servicing as well. 


So, I’m literally doing a full-time manager’s job for 6 to 8 people and a full-time advisor’s job with 100-plus clients at the same time. And it turns out if you do two jobs in one business, you end up being very unhappy. So, what we find is very much driven by this phenomenon you’re talking about. We hit this capacity wall where we actually, frankly, go past the capacity wall where I need way more team to support all these clients. But then I’ve got to manage the team and I’ve got to manage the clients at the same time. And the only way you get through that is either you have to shift from being advisor to advisor CEO and transition the clients and start building staff and scaling an organization or, well, I guess there’s really three options. You have to do that transition or you have to hire one of those people or like hire a CEO or find a business partner who wants to do that part so you can go do the client stuff. Or you have to, as I put it, right-size your practice, which means find a way to get rid of those clients to let them go so that you can solve this problem for yourself. And the challenge for most advisors is we get so obsessed with I work so hard for that client, I can’t possibly let them go. We refuse to let the client go. We just say, “I’m going to hire a younger junior advisor. I’m going to hand it off to them.” 


It’s like, dude, you got rid of the client but you took on a full-time direct report. Not solving the problem. You just have to manage the person instead of managing the clients and you still hit the exact same wall and bottleneck. We just published separately the latest edition of our Advisor Productivity study that finds like a perfect upward trend. The more employees an advisory firm has, the more time that they spend as an advisor in the business. Just the whole idea of like, well, once I finally get to two or three team members, I can delegate all this stuff and I’ll have more free time. Literally, never happened and I’ll find it anywhere in the data. You go from one to two staff members, your time goes up. You go from 2 to 3, it goes up more. You go to 3 to 4, it goes up more. You go 4 to 5, it goes up more. Like, it just keeps going up. Because every time you try to hand off clients but keep them in the firm, you just send out with more employees to manage. And so, either you make the full-on shift to advisor CEO and say, “I’m going to scale an entire organization with the layers beneath me,” so you get out of that trap or you stay stuck in it and we find advisors just tend to get unhappier and unhappier because the industry to be just in the aggregate, it’s all built around this kind of more and more and more thing, right? 


The only people who ever end out on the podium at the annual conference is the advisors who grew the most and brought in the most. Nobody has a conference that says like, “Let’s put the advisors up on the podium who figure out how to make the most money while also making 100% of their kids’ soccer games.”  


Brad Johnson: Hey, you haven’t been to one of our conferences, my man.  


Michael Kitces: Alright. Well, if you’re running it, I would love to see that.  


Brad Johnson: Actually, just our most prestigious award, we call it the DBDL award. It’s the Do Business Do Life award. And this year, we gave it to an advisor named Tom, who, when we met him 22 appointments a week.  


Michael Kitces: Whew. Yeehaw 


Brad Johnson: And he was falling into that exact same trap that you’re talking about, more and more and more and more appointments, just running himself ragged. His life, literally, when we met him said he’s going to kill himself if he keeps running at this rate. And we helped him build out infrastructure, really divide his business into three businesses with them, one, which is a marketing business, a sales business, an operations business. Empowered his COO. 


Michael Kitces: There you go. 


Brad Johnson: And he went to less than five appointments a week and almost doubled his practice this year. Obviously, I also empowered a couple of other advisors on the team. So, anyway, it is possible. I would just say most in our industry are not focusing on that because… 


Michael Kitces: It’s a transition, right? He went from 22 appointments down to less than five like he’s fundamentally changed the nature and the role of what he does in the business. That’s fine for the folks that do it. I think the challenge for a lot is like I got into this business because I like sitting across from clients doing the client thing. That’s great, more power to you but if that’s your thing, then you got to own that’s your thing, which means there’s a limited capacity. There’s only so many seats on the client bus and at some point, you have to just actually get to the point that you can say no because if you keep saying yes and then you just try to add advisors behind you in order to do that, like the time just gets pulled away and the stress builds up and the rest of the challenge builds up. And just that’s why we find the unhappiest advisors are $225 billion under management. It’s that number in part because if you try to grow past that and you don’t otherwise make this transition, things just start breaking. Like, turnover picks up, advisors leave and then they take clients like, “I got to 275 million and now I’m back to 190 because one of the advisors left and took a whole bunch,” and just other bad stuff starts happening if we don’t get comfortable with what we just really want to do but recognizing that you don’t have to stop growing by acknowledging, “I’m going to have a limited client base.” 


It just means like make a list of all your clients, rank them by the revenue that they pay the firm, draw a line across the middle. And from now on, every time you’re only allowed to add clients above the line, and every time you add a client above the line, you have to subtract one below the line and your business will grow every year and your income will grow every year, and you won’t have to work more hours. And if you’re already buried, every time you add one above the line, you subtract two below the line and you get your time back.  


Brad Johnson: Well, and on that note, we’ve seen officers do that exact thing you’re talking about. They just bumped their minimum, the founding advisor, and then they’re training a junior advisor that basically so they don’t have to fire assuming it makes mathematical sense for that client to be a part of the firm and they’re just handing off, inviting the advisor.  


Michael Kitces: The caveat is you got to be ready to manage people and change your role or you got to be ready to genuinely hire the not inexpensive, not revenue-producing COO and management staff infrastructure to do that. And you can. There are obviously firms that have scaled very, very large doing that but it’s a fundamentally different role for us as the advisor in the lead. And so, kind of getting back to your earlier comment around like Simon Sinek’s Start With Why, you have to get back to what your purpose and goal was in the industry in the first place. Some of us just really are wired to build big old enterprises. If that’s you, more power to you. A lot of us really just got in this because we want to sit across from clients to serve clients, give advice, and feel good when they take our advice and watch them get to a better place. And if that’s you, just be careful who the role model is that you put up on the pedestal because if your role model is only the people that do more and more and more and more and more, that’s not a path to work-life balance. That’s not a path to healthy well-being. That’s not a path to control an autonomy of your time. You’re essentially surrendering all that stuff to say, I’m going to be like the person who’s growing huge numbers and probably has terrible work-life balance. And if you emulate them, that may be what you got.  


Brad Johnson: Yeah. I love your comment on dollars-to-time ratio and tracking it that way. Okay. Well, I know we’re at the end of our time here. Last question for you, Michael. So, we talk a lot about here. It’s the name of the show, Do Business, Do Life, which is kind of the topic we’re on right now. But if you had to say this is Michael Kitces’ definition of do business, do life, what would that be?  


Michael Kitces: Oh, man. At a high level, I would say I’m a big fan of kind of this move in a way from talking about things like work-life balance and starting to talk about work-life integration and just figuring out like where the two blend and come together. So, my world these days I live a mostly work-from-home environment. And so, I do work a lot of hours but I can work through the day and then go and hang out with the kids and play games and do stuff and do bedtime routine. Like, I go to sleep later in the hour because I’m a grown up. It’s like I can come do some email stuff again at nine or ten at night after they’re down or I’ll do a little work while they go off for swim practice Saturday mornings because my wife will grab for some practice and the house is really quiet so I can do a little bit of stuff on Saturday morning and then I just go out and can see games and competitions. So, finding those ways just to integrate and blend them together to me is very powerful but all of it comes down to getting really clear on what the boundaries are like, “This is when I stop working and I’m just stepping out of the office space and I’m not looking at the phone for emails and the rest until I’m back on for a little bit of work time in the evening.” 


Or like I’m going to do a little bit of stuff on Saturday morning but when they get back from swim practice at 10:30, I close the computer and I’m not doing anything else at work for the rest of the day. So, finding those ways to integrate and then setting the boundaries to me I find is much more powerful than trying to find just sort of this mystical balance thing. At least living a life as a business owner just doesn’t work well because business ebbs and flows as we were talking about at the beginning. It’s a little bit of a roller coaster and like it’s not always conducive to tightly defined balance. Just the business is not stable enough to balance against but I can figure out how to integrate it.  


Brad Johnson: Well, thanks for sharing that. And as always, thanks for popping on here and sharing your wisdom. Always enjoy every conversation we have and look forward to the next time we cross paths in person. 


Michael Kitces: Awesome. Likewise. Thank you, Brad, and congratulations again on the podcast.  


Brad Johnson: Thanks, Michael. We’ll see you.  


Michael Kitces: Absolutely.  


Copyright ©️ 2023 Triad Partners, LLC. All rights reserved.   


These conversations are intended to provide financial advisors with ideas, strategies, concepts and tools that could be incorporated into the advisory practice, advisors are responsible for ensuring implementation of anything discussed is in accordance with any and all regulatory and compliance responsibilities and obligations. Copyright ©️ 2023 Triad Partners, LLC. All rights reserved. TP04232712353


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