[00:00:00] Brad Johnson: Welcome to this episode of the Elite Advisor Blueprint. I have a special guest, Michael Kitces, here with us today. Welcome to the show, Michael. 

 

[00:00:08] Michael Kitces: Thank you, Brad. Good to be here. I’m looking forward to the conversation. I have listened to quite a few episodes of the podcast over the years and so it’s always a strange thing to be like, “Oh, now I’m going to be talking and not just listening like this is weird.” I think I’m up to the task but I have enjoyed a lot of the episode so I appreciate the opportunity to be one of them. 

 

[00:00:25] Brad Johnson: Well, thank you. That’s super humbling. And before we dive off into the conversation, it’s being a guy that creates content like yourself and you create a lot of it, that’s an honor to hear somebody that’s at your level, say things like that, that we’re putting out episodes that you’d listen to. 

 

[00:00:47] Michael Kitces: Absolutely. 

 

[00:00:48] Brad Johnson: Which side of the mic is easier for you?

 

[00:00:53] Michael Kitces: Probably I think this one like being on the receiving end, you know, we do a podcast. I mean, I guess I really do three ends like listening for other people that have done stuff being on podcasts and interviewing on podcast because we have our own financial advisor success podcast. Honestly, like I think this ends still easier, right? Like, at the end of the day, podcast interviewing me or being interviewed is like, hey, just people going to ask you questions. You can talk about what you’ve done or learned or experienced in life and like, we all usually are pretty good at talking about ourselves and like, “I can handle this.” Interviewing to me is the stressful end of like, “Is my guest comfortable? Like, are they going to be okay with these questions?” Because, you know, I want to get into some interesting stuff. I don’t want to offend anyone like that at least for me, that always stresses me a little bit as a podcast interview where I’ve gotten used to it now because we’ve done a bunch of episodes. 

 

But that definitely threw me off early on of like I kind of know the industry and how to chitchat about the industry but figuring out like those magical good questions to ask, I’m still trying to figure out how to do that with clients much less in podcasts interviews. 

 

[00:02:02] Brad Johnson: It is crazy to me. It’s funny you say that because I’ve had the opportunity now to get on your side and be interviewed in the podcast created some of that. But I have so much, much higher level of respect for like the Larry King’s, the Oprah’s of the world now because they make it look so easy. And that’s full. It’s hard. 

 

[00:02:20] Michael Kitces: Yeah. And just like all of the various great night show hosts over the years and all the stuff they’ve done, like, oh my god, they make it look so easy. And then you’re actually doing it, it’s like, wow, it’s really hard sometimes. And every now and then you get guests that like just won’t open up and trying to figure out like, how do you get questions going to open them up? I do find that there are some interesting parallels to just what it’s like sitting across from clients, particularly early on with clients where it’s that same phenomenon that you’re just trying to get people to open up and start talking and sharing about themselves and what their concerns are and what brought them to the office. I do find at least some crossover in that regard, but a whole other level of respect for people who are really good at interviewing and do it professionally. I’m just trying to be a not-terrible amateur most of the time. 

 

[00:03:10] Brad Johnson: Well, I’ve listened to enough of your episodes. You’re a not terrible interviewer. So, you’re well on your way. 

 

[00:03:15] Michael Kitces: I appreciate that. I at least know my industry like I know my subject matter. I can cling to it. 

 

[00:03:21] Brad Johnson: All right. Well, let’s dive in. So, I don’t think it’s possible to be in financial services and not have somehow crossed paths with your name, your content, somewhere along the way, but for those that aren’t familiar with Michael Kitces, I did a quick Google search and it’s like pages of results. So, you’ve got Nerd’s Eye View that’s at Kitces.com. You’ve got the Kitces Report that kind of I think was one of the original things that kicked the whole thing off. 

 

[00:03:49] Michael Kitces: Yep. We launched that kind of 11 years ago now as, essentially, like a premium newsletter service for advisors that wanted advanced educational content like for that subset of people that actually are excited about like a 12-page treatise of the latest new tax law that was the kind of stuff that we would write in it, had a great audience for it. And ironically, I eventually found the content was popular enough that it was better for business to put it non-premium, put it outside of the paywall as it were and get it out there. And so, the Kitces Report kind of morphed from a paid premium service into a largely free blog and we still do some research white papers but most of what we do now is just out for the whole advisor community. 

 

[00:04:35] Brad Johnson: And then YouTube, Twitter, planning networks, speaking 50 to 70 times a year, not only one podcast. I mean, I thought I was doing okay putting out one podcast. You’re just like a serial podcaster. 

 

[00:04:48] Michael Kitces: Yes. We just launched the second one. 

 

[00:04:50] Brad Johnson: Is that Kitces & Carl? Is that the newest one?

 

[00:04:52] Michael Kitces: Yes. Kitces & Carl with the great Carl Richards who does – some people know him as the Behavior Gap guy or the guy that draws the really cool drawings with sharpies of just like, yes, that’s exactly the thing I wanted to say. And like you drew in a few sketches with a sharpie. Carl has a fantastic gift with just words and finding and figuring out how to say things and communicate things to people. And so, he and I both love to help advisors get better. You know, he has this group that he calls the Secret Society of Real Financial Advisors of that subset of people who put advisor on their business card that really actually want to be good advisors for people, which is the group I’m passionate about as well. But I come at this as the nerd on the alphabet soup with a bunch of master’s degrees and designations. Carl is the communicator guy and so he’s like, “Hey, we should just like talk about industry things because like we’re working towards the same thing but have really different perspectives.” And it turned out to be very a popular podcast with just the two of us kind of riffing for 20 or 30 minutes on industry topics or challenges that come up with clients. 

 

[00:06:03] Brad Johnson: Well, so it’s funny. I just interviewed Carl. The episode’s not even live yet and then I found your podcast after. So, I’m like what are the odds? Like I interviewed you guys like back-to-back and then you comp it up as a team. 

 

[00:06:15] Michael Kitces: Excellent. 

 

[00:06:16] Brad Johnson: I’ve already listened to two or three episodes. It’s a great show. So, you keep putting those out there. It’s kind of like the yin and the yang. You’ve got both sides of the coin there. 

 

[00:06:26] Michael Kitces: Yeah. Just we hit things from such a different perspective. Like I like my nerdy 50-page plans and he literally wrote a book called One-Page Financial Plan so we riff on that and a lot of other topics as well. 

 

[00:06:39] Brad Johnson: Alright. So, let’s dive in. Like the best way I could come up with to describe you and I mean this on all the positive aspects of this personality because I know sometimes you can get some criticism but you’re like the Gary Vaynerchuk of financial services. You cannot run and hide. You’re on every platform. You put out amazing content. And so, my first question to you is, how do you do that? We’ve got a lot of people, as I’ve started the podcast, I’ve had a lot of financial advisors start to reach out, how do I do a podcast? I create YouTube content. You are the most prolific content creator that I know of in our space. Can you give us a 30,000-foot view of like how do you crank out so much content? What’s the team look like? 

 

[00:07:25] Michael Kitces: So, this has evolved a little bit over time. Just because the business has evolved for me, as I said, to give this a little bit of context I launched. So, as an advisor for my first 10 years or so of my career started like right at the peak of the tech bubble. I transitioned in 2008 unbeknownst to what was coming later that year. I sit in the first half of the year to say, “Hey, look, I’ve enjoyed the stuff. I’m doing the advisory side. I don’t want to leave the firm.” But I’ve been doing a little bit of this writing and speaking thing out to the industry and I’m just finding like it scratches my itch more than the cool things we’re doing for our 500 clients or however many we had back then. So, I want to make a split. I’m going to keep one foot in the firm, but I want to start doing this writing speaking thing. And I’m going to do it with a premium newsletter. So, we called it the Kitces Report, I’m going to write my nerdy stuff, I’ll charge $150 a year, get a couple of hundred people, you can make an okay living and build from there. 

 

I kind of had this vision like I would publish the newsletter and that would help give me visibility to do speaking engagements and when I spoke at a podium that would build my brand so people can sign up for my newsletter and we do this like virtuous circle thing. And over time, that shifted to include the blog. We launched that in 2010. Well, actually, to be fair, and I guess this is sort of part of the context of your question. So, I launched the blog originally in 2008 when I launched the newsletter and because our newsletter was designed to be these like super deep dive topics, sometimes like there was a thing to talk about in the industry that just didn’t mirror it like 12 pages single spaced, small font kind of thing that I was doing for this nerdy newsletter. And so, I needed a place to put it as well as anything that just was industry trends and practice management because the newsletter was designed to be eligible for CE and you can’t get CFPC credit for practice management content. So, it’s like I needed a place to put the other content. So, I started the blog, called it Nerd’s Eye View because I was the nerd and these are my views on the industry and published, I don’t even know what it probably was like 10 or 20 articles, little snippets here and there. 

 

[00:09:28] Michael Kitces: Felt like no one was reading it. Learned about Google Analytics, installed Google Analytics proved no one was reading it. It was like, “Okay, I don’t get this blogging thing,” like I’m just going to go back to my newsletter because people are actually signing up for the newsletter. Bob Veres who publishes a wonderful practice management newsletter called Inside Information, put the word out to his readers when I was launching my thing and helped me get my start. And so, he was growing, he was building, was going by word of mouth. I was getting some signups as I went out and spoke and so I was like I just don’t get this blogging thing. I’m just going to focus on the things that are getting me paid, which was the speaking and the paid newsletter business.

 

[00:10:09] Brad Johnson: Can I dive in there? So, how was that like, what was the genesis

of that? Like were you just like a smart nerdy guy that could speak that just you’d call a couple of people and they’re like, “Yeah, we’ll put you on stage,” like what created the original momentum to keep the ball rolling? 

 

[00:10:24] Michael Kitces: No. So, no, that started much more slowly like I was not naturally inclined as a speaker. I’m actually a very introverted dude, if I’m ever located at a party, I’m whatever the like darkest for this corner is from the music and the crowd just like huddling like wallflower until it’s socially appropriate for me to go back to my hotel room and chill out. So, like speaking in stages was not my thing and it actually started because I was involved with just my local FPA chapter. I was in a study group with some other advisors. This was back in probably like 2003, 2004, right after President Bush did the second big tax cuts, and there were a whole bunch of changes that were rippling through about the alternative minimum tax, which was becoming a thing because of some of the tax law changes. And so, some of the study group said, “Hey, does anybody know about this alternative minimum tax stuff?” And at the time, I was working on a master’s in taxation just for reinvesting in my education. 

 

I was like, “I’ll study up on it,” and like bring something back to the study group. And so, I made this little presentation about the AMT for the study group, and it was well-received. So, someone suggested I do it at a chapter meeting for the whole chapter membership. So, I did and it went I guess reasonably well enough. I was not the best speaker but I did know my content. It’s like I studied the heck out of my content. And then I got referred to another FPA chapter. So, like, “Hey, we heard you did good things down in Maryland, like would you come up to Philly and do this?” So, I was like, “Sure. If you’ll pay my expenses like I’ll drive up to Philly to do it,” and until it grew very slowly by word of mouth and just personal networking for probably two or three years of doing maybe it was probably like five to 10 a year for free or expenses only just like I got to speak and it was a speaker. And it wasn’t until about two or three years in that I remember I even was charging for the first speaking engagement. 

 

[00:12:24] Michael Kitces: I probably have done 20 or 25. I had a couple of chapters that were actually asked me back like, “You did a great thing for us two years ago. Would you come back and speak again?” Like, you know, if they’re asking me to come back again, I feel like I should charge something. And I still remember like the first one I was like, I’m going to charge $250 just so I can say like, “I’m a paid speaker. I’m going to charge them $250.” I was really anxious about it until eventually like after the engagement, I sent the invoice and I realized like I sent them an invoice for probably like $900, like $500 for the flight, $150 for the hotel, $250 for the speaker. I’m like, “Yep, my speaking fee was even half my plane ticket.” I probably got a little bit more anxious about this than I needed to be. And it really just grew organically from there. It was mostly word of mouth, just do a good job, get invited back. 

 

You know, have someone who’s at the event go back to wherever they’re from and tell their friends about it. And every year I just increased my speaking fee very, very slightly and 12 or 13 years’ worth of compounding later, it’s actually a pretty material portion of my business now. 

 

[00:13:41] Brad Johnson: Very cool. Thanks for going into that. I think I’ve never heard that part of the story. 

 

[00:13:450] Michael Kitces: Yeah, it’s really just, I mean, it’s honestly like the same way most businesses get built at the end of the day, like you do stuff for free or really cheap or you build your reputation, establish your credibility, and worked for me because I was doing this as an extension off of working in an advisory firm so I had a base. I didn’t actually need to make money at this early on so I could slow play it and just compounding is an amazing thing when you let it run for long enough. 

 

[00:14:12] Brad Johnson: Yeah. Alright. So, if you were going to describe your business today, I think it’s really even people that know you really well they’re not really sure what your business is. 

 

[00:14:22] Michael Kitces: Yes. Yeah. 

 

[00:14:23] Brad Johnson: We have like a pie chart and you’re saying, okay, here’s what it looks like. What would that… 

 

[00:14:27] Michael Kitces: Yeah. I get a lot of this like some kids actually get paid. How does this work? So, more to explain, like I have to give one more sort of splitter or explanation for the backstory from like from the launch to where we are today. So, I said originally like I was going to do this whole newsletter and speaking thing, tried the blog, no one was reading it, shut down the blog because it wasn’t doing anything for me. Just focus on the newsletter and the speaking business. 

 

[00:14:55] Brad Johnson: You really shut down the blog for a while? 

 

[00:14:58] Michael Kitces: Yeah, like there literally is no content from late 2008 or 2009 for 18 to 24 months. It’s like literally zero articles. I mean, we didn’t delete the site because it was also hosting my newsletter, purchased process, but we just literally stopped writing anything because no one was reading it. Like I had Google Analytics. I can prove no one was reading it. And I was on a study group meeting in the summer of 2010 with a guy named Bill Winterberg, who many people know is kind of an advisor tech guru guy but Bill and I go back, oh God, almost probably 17 years now from when he and I were both like ops admin staff members and entry-level jobs at advisory firms. We both happened s to be in the Baltimore Washington area when we first met and got to know each other. And so, we got involved in the study group together in 2006, as a part of NexGen in the early days of FPA NexGen even before it was with FPA. 

 

And so, I was at a study group meeting with Bill in 2010 and Bill is like the real techie guy who said, “Michael, you should check out this Twitter thing. I think you’d like it.” And Twitter had been around I guess probably two or three years at that point. LinkedIn was getting going a little more. Facebook had just kind of gotten out there. I was, I think I had a LinkedIn page just like everyone was supposed to make a page. I wasn’t even on Facebook. I’d never been on Twitter like I was not particularly social media engaged. But Bill said I got to sign up for Twitter. I’m going to like it. I trust Bill so I signed up for Twitter and I liked it. I was just fascinated. I found myself following people who had like some subject matter expertise thing and I was like, “This is cool. Like this person is really good at just talking about investment stuff and this person just says cool things about like gaming.” Back then I was a pretty hardcore gamer. I was a World of Warcraft raider. So, like I found a feed of…

 

[00:16:54] Brad Johnson: We’ve got so many similarities like I was an IT major in college before I got in financial services, also played World of Warcraft. 

 

[00:17:01] Michael Kitces: Oh, fantastic. 

 

[00:17:02] Brad Johnson: I resonated to the nerd’s idea. I’m like that’s like this hidden aspect of…

 

[00:17:07] Michael Kitces: So, what did you play? 

 

[00:17:09] Brad Johnson: Oh gosh. This is a long time ago. I know I had a barbarian. I don’t remember what other characters. It was really all right. Now, we’re converting this to the Nerd’s Eye View podcast as we’re going there. 

 

[00:17:22] Michael Kitces: Yes. Welcome to my ecosystem. So, like I started just following people on everything from like the latest news from Blizzard on World of Warcraft coming up to the next BlizzCon I was going to all the way to like investment commentary from people that were putting out cool stuff and had this like proverbial light bulb, eureka, like light bulb above head moment of like, “Oh wait. Now I get it. Like if you have an expertise or create content around something, social media is how you get it to people, how you get it out there.” And so, I re-immersed myself back into the blog kind of tied to social media, particularly Twitter at the time, and just said, like, “I’m going to go back into this but I’m going to push all that out social media,” so that like this will be the way that people actually find out about the content. 

 

[00:18:13] Brad Johnson: What year was that? That was 2010?

 

[00:18:14] Michael Kitces: That was the fall of 2010, October of 2010. And it worked. And the blog just started growing 100% or 200% a year. Now, the first year that was on like a base of almost nothing. So, it was really, really easy, but a couple of years of 100% or 200% growth, and suddenly the numbers get really big really quickly. And in the span of about three years, I literally tripled my speaking business, more than doubled the newsletter, started bringing so many clients to the firm that I became a partner while being a part-timer because I had taken one step out to do all this other outside stuff but I was driving material business development. Because even though I was writing for consumers, or excuse me, writing for advisors and writing like fairly long, nerdy technical articles, like, it’s not even stuff all advisors want to read, never mind stuff that consumers want to read. 

 

What we ultimately found is almost no consumer wants to read really long, dense technical articles written by an advisor, unless you’re really affluent and super smart, and the stakes are high enough that you’re trying to educate yourself on how to make a good high stakes big money decision. So, what we found like, you know, we did not get a huge flow of prospective clients off the blog, just a bunch of multi, multi-millionaires, which we’re…

 

[00:19:37] Brad Johnson: Not a bad demographic.

 

[00:19:38] Michael Kitces: Not a bad prospect. And so, that led me to make a shift in 2014, sort of like a big visual strategic shift that I kind of had this multi-stage evolution. First, I was an advisory firm that did a little bit of writing and speaking on the side and then 2008 I sort of shifted and said, “No, I’m going to be a writer and speaker with an advisory firm thing on the side.” And then in 2010, I was like a newsletter writer and speaker, the head advisory firm and a blog on the side. And in 2014, I said, “No, no, I’m shifting,” like the center now is going to be the blog. The blog will be like a big hub and everything else will be basically the spokes of the hub. So, you might want to engage me for speaking, you might want to sign up for my newsletter, maybe you’re a consumer and you want to work with our advisory firm. By that point, I’d also launched a business called New Planner Recruiting, where as the name implies, we help advisory firms hire new planners into associate planner or peer planner roles. 

 

So, like if you’re a firm that’s hiring, you might find your way over to New Planner Recruiting then our advisory firm launched a temp for small advisors at $10 million to $100 million. And so, if you were a small advisor that wanted to outsource to a temp you could find your way over to Pinnacle Advisor Solutions. We just started building these spokes off of the blog as a hub. And the interesting realization that I had that kind of started on the advisory firm side, but really holds for most of what we do now, you know, a lot of people in the content business in general, like in the blogging business in general, they’re low dollar, high volume businesses. It’s like, “Hey, I get a couple of bucks every time someone clicks on this link to do like a credit card affiliate offer,” or like, “I saw my 1995 e-book,” or, “I’m a cupcake shop, and I’m trying to build a list because I’m hoping people will buy my $3.95 cupcakes.” 

 

[00:21:35] Michael Kitces: And you have to do it with crazy volume to make the math work. Like you need a bajillion people. And so, the websites tend to get very aggressively conversion-oriented, like I’ve got to pour everybody I can into my website. I’ll click bait them,  whatever it takes, and then I’ve got to do anything I possibly can to get the click on the thing that makes an action. So you need a bajillion of them to make the business work. It’s very different in the advisory business. You know, our average clients at Pinnacle Advisory Group is about $1.7 million. So, our average client with a graduated fee schedule pays probably about $14,000 a year. And like a lot of RIAs, we have the 97% to 98% retention rates. So, just you do the math, like when your average client pays you $14,000 a year, with a 30-plus year, 10-year on average, like one person that comes in is worth about a half a million dollars of revenue to the business in the long run. Obviously, we have to do a whole lot of work in servicing the next couple of decades to hold on to that client. 

 

Profit number is a little lower, but like one person is hugely, ludicrously valuable and just in general, as the saying goes, there’s a lot of money in the money business, being attached to financial services. So, whether I’m speaking or we’re going to do a recruiting hire or you’re going to work with us as an advisory firm or you’re going to join XY Planning Network, like these are not inexpensive purchases. These are mostly multi-thousand dollar things. Sometimes they’re multi-thousand dollar a year annually recurring. And so, from the business end, there’s still a lot of pressure there to make a good solution and deliver it because you got to justify those fees. But from, call it like the marketing end, what it means is, I need a ridiculously minuscule tiny portion of people who ever come to our blog, to do business with any of our related businesses in order for the math to work. You know, we’re now at a point where there’s a couple of hundred-thousand people who come to the blog every month. 

 

[00:23:32] Michael Kitces: And so, literally, if 0.1% of everyone who comes to our site in a particular month decides to like go down the rabbit trail because they just so like our stuff, they want to learn how to do more business with us and find their way to one of these things that solves one of their problems… We couldn’t handle the growth if 0.1% worked with us in practice in any month it’s a fraction of 0.1%. So, it leads to an interesting phenomenon that still is very much the way I focus the business model and how I even talked to our team about this, which is like, my goal is to give away what we do to more than 99.9% of people for free. Because if we are successful at “just”, like ariir quotes, “just” giving it away to 99.9%, we could even get to 99.95% for free, the remaining fraction of a percent can literally power all of our businesses that are growing all at once. And that’s effectively now what we’ve done. 

 

[00:24:41] Brad Johnson: Alright. So, that was awesome. That was a mouthful too. 

 

[00:24:45] Michael Kitces: Yes. 

 

[00:24:45] Brad Johnson: There’s a lot of different ways I can go there. So, here’s what I think I heard you say and it actually goes back to a quote that’s on your website, my WHY is to continuously learn and then share what I’ve learned as ideas that others can implement. So, what I think I heard you say is you figured out, you’ve got this niche where you can nerd out on different topics in financial services go really, really deep on them where and kind of summarize that for lack of a better term. 

 

[00:25:14] Michael Kitces: Long summary, but yes. Or I’ll say it like… 

 

[00:25:17] Brad Johnson: I mean, hey, you’re summarizing like massive like bills. 

 

[00:25:20] Michael Kitces: Really like I would say like synthesized. 

 

[00:25:23] Brad Johnson: Synthesized. There we go. 

 

[00:25:24] Michael Kitces: Synthesized into something that’s a little more palatable. 

 

[00:25:27] Brad Johnson: So, would you say your role in your chair is really to just be this almost like rainmaker for lack of a better term where you’re out there sharing content on all of these different funnels, whether it’s video on YouTube, audio on podcasting, with the written word on your blog, to pull in as many different people and then you’ve just got different funnels or I should say different almost divisions of your business where it’s like, “Okay, if I’m a financial advisor, I might want one of these three services,” or if I’m a consumer, I might want one of these three services. And so, really, you’re just making it rain and pulling people back. I use like a wagon wheel like you’re the hub, your platform, Kitces.com, is the hub. Now you’ve got YouTube, Twitter, podcasting, all feeding that hub and you’re just making it rain, people that are coming to the blog. Is that essentially what your job is? Is that how you decide? 

 

[00:26:19] Michael Kitces: Yeah. It is with sort of one or two caveats or like interesting points around it. You know, so I started in the business straight out of college as a life insurance agent and I was a nerdy introvert. So, that didn’t last long and I failed pretty miserably. I’m literally the only – so I did a little bit of joint work by trying to mentor myself under someone else. The only policy I personally wrote in my first year as an agent was an annuity to my grandmother, who outlived it. She bought it and lived all the way past 95 and actually outlived it and the darn thing paid out with tax bill. 

 

[00:27:05] Brad Johnson: So, real quick, just out of my own personal curiosity. You’re a smart guy that I think I read on your website you had like three different majors when you were in school. 

 

[00:27:13] Michael Kitces: Yes. 

 

[00:27:15] Brad Johnson: How did that, just for sheer curiosity, how did you go from a smart, intelligent guy then all of a sudden, you’re out going door-to-door selling life insurance like how did that happen? 

 

[00:27:24] Michael Kitces: Well, so two things. One, you know, fell for a good pitch from a sales manager, life insurance company. We want the smart people, great income potential, you know, unlimited opportunity, all that stuff, that sounds great when you’re coming out of college. I was a liberal arts grad. So, I was a psychology major, theater minor, and a premed student. And all I really figured out by the end of college was I didn’t want to go into psychology because it was kind of nuts. I didn’t want to go into theatre like it was a great hobby. I didn’t want to make it my career and be in kind of starving artists world and I wasn’t even a performer type. I was a backstage techie type. So, lighting design, stage management, just hard work in the theater world. And I was very interested in medicine. I wanted to go into emergency medicine. I was an EMT in college, but just decided by the time I was graduating, I didn’t want to disappear for basically the decade of my 20s for med school plus residency and all the things that come in and being trained as a doctor. 

 

So, I essentially graduated as a psychology major, theater minor, pre-med student not wanting to go into psychology, theater, and medicine. So, I needed a job and I got pulled into the industry from a sales manager of even a random family connection. My grandmother was, sadly, a young widow. My grandfather passed away when my mother was about 10 years old. And so, my grandmother had to go to work in the early 1960s to take care of her two young daughters, a single widow. And she went to work for a life insurance agent at the New England Life. And so, a couple of years later when my mother got married, my grandmother’s boss, did what you do in a life insurance agency? It’s like what do you do when your secretary’s daughter is getting married? You give the new husband a life insurance policy. 

 

[00:29:26] Michael Kitces: So, my father had this like 25-year-old life insurance policy that was gifted from my grandmother’s boss when she worked as a secretary for an agent at the New England. He had long since retired. She had long since retired. And around the time I was graduating from college, my father out of sheer coincidence got a phone call from an agent at the New England because he was an orphan policy, and they were doing an orphan policy check-in and the New England was on the company’s at least back then where sales managers were also in production and so the guy who called him happened to be one of the sales managers. So, he went out and did the policy review of an orphan policy for my father and then when he finished he like took off the production hat, he put on the sales manager hat, and was like, “By the way, do you know anybody who might be interested in coming into the business? We’re hiring.” And my father goes, “Funny thing, my son’s about to graduate from college. He has no idea what he wants to do with his life. You should talk to him.” And like that was how I got pulled in. 

 

So, literally, I graduated Memorial Day weekend on a Saturday, packed up everything I owned on a Sunday, drove home Memorial Day Monday and first Tuesday after graduation, first business day after graduation, reported for work at New England Life. And the only thing or the primary thing I learned in that first year was essentially I’m a terrible salesman or really, I was a mediocre salesman. I was a terrible prospector or like I’m an introvert. Parties are terrifying, networking events are terrifying. This is not good when you’re trying to prospect from scratch. We could at least cold call if you didn’t want to go door-to-door because that was prior to the do not call list but that was pretty horrific as well. And so, like when I left that job, I spent the next seven or eight years of my career trying to find jobs where I could do the financial planning stuff and sit across from clients and not be in business development. 

 

[00:31:18] Michael Kitces: So, it’s particularly ironic in this kind of full circle mechanism that, as you said, like the focus of my time now is driving the growth of this platform that makes rain for, you know, eight or nine different businesses. All of the guy who spent a decade of my career trying to make sure that no matter what I never was in a position where I had responsibility to make great. So, you never know how these things come full circle. 

 

[00:31:44] Brad Johnson: Funny how life…

 

[00:31:46] Michael Kitces: Yes. Just had to find the mechanism that worked for me, which was I like nerding out on things and sharing my expertise. And it turns out if you put that out there in places that are findable, people can find their way to you. 

 

[00:31:58] Brad Johnson: Alright. So, that’s a good segue. And the challenge going back to how we started this, being the interviewer here, there are so many different places I want to go and we have a limited amount of time. So, I’m going to do my very best to not screw this up. Okay. So, let’s go back into content creation. And, it’s funny, your third or fourth episode with Carl Richards was around social media and I listened to it actually a day or two ago. And what’s interesting is once at least what I found, and I’m sure you found this too, once you actually start creating things in financial services where we’re, you know, talking to a very niche group here, they’re like, “Hey, I want to do that too.” So, I’ve started to get hit up by so many advisors on, okay, how do you do a podcast? You know, I think I could put some content out there too. I’m sure you’ve been hit up on many of those same conversations. 

 

[00:32:52] Michael Kitces: So, many we just write articles. I mean, I got an article I like here’s what we learned after the first hundred episodes of doing our podcasts like here’s what I learned after the first five years of blogging but even the content creation process for me and what I always recommend for people who say like, well, I don’t even know what I would write or what I would produce like what I would talk about, just take whatever questions come to you from the people you’re trying to reach. Like, I wrote articles about those because if I get the question once it’s interesting, if I get the question twice, I write it down. If I get the question three times, I just make it an article. Because clearly there’s an interest and then I don’t ever have to answer the question again. It’s like there’s plenty of people to the article so it’s very time efficient as well. 

 

[00:33:30] Brad Johnson: Yeah. I think that’s a brilliant way to look at it. I look at it as like, if I was a Google search bar, what would people type in that they’re looking for? Sounds like that’s very similar to how you’re creating content. 

 

[00:33:40] Michael Kitces: Absolutely. Absolutely.

 

[00:33:43] Brad Johnson: Okay. And actually, let’s go back for a second. I don’t think we ever answered the question. So, you put out a crazy amount of content on multiple platforms. Gary Vaynerchuk, I’m a big fan of and follower, he has a concept of document don’t create, where he’ll take like long-form content and then like slice and dice it and put it out on all the different platforms. That’s one way to do it. What’s your philosophy around creating content? And then your team behind you to actually go out and distribute it? And have you found in financial services, there are certain platforms that are better suited for your content or for financial advisors’ content? 

 

[00:34:21] Michael Kitces: So good question. So, overall, for most of the time, I’ve been doing this all the content creation was me, like all the content creation was me. And even building team around me has actually been a relatively recent phenomenon of about the past two or three years. In part, actually, because some of the business, the spokes of the hub are now actually growing large enough that I need to spend a little bit more time there, like the original vision was I’m just going to be the nerd that does my little writing thing. And I can do that with my time and I’ll take on partners for all these related businesses, and they can run the businesses and I’ll just drive business growth to them. That’s worked for the most part as my time’s gotten pulled to some of the businesses in the periphery, particularly AdvicePay and actually my planning network these days. I’ve had to build a little more team around me. So, this actually has evolved in a couple of stages. Early on, my focus was just I’m going to create the content and I can basically automate about 99% of the distribution. 

 

You know, we have an email that goes out every day at three o’clock. I don’t sit around to hit a button at three o’clock. You know, the blog publishes to an RSS feed. The RSS feed fields to Mailchimp, Mailchimp detects when a new article is live on the blog, if it was live by 3 pm, and boom, it sends out an email. So, I’ll even get like questions or joking comments from people sometimes like, “I was sitting in your session at a conference and you were literally on the podium and I got an email from you with your article like how do you do that?” Like it’s actually pretty straightforward technology like I set that up once five years ago and haven’t had to touch it since. So, a lot of that stuff I think even the advisor community sometimes underestimate how easy and straightforward it is to automate. So, email distribution is all entirely automated. We’ve done a couple of different platforms over the years. We use Infusionsoft for a while. We’re on Mailchimp right now. We’re looking at potentially going to ActiveCampaign just as some of the feature sets build-out. For most advisors, something like Mailchimp works absolutely fine. 

 

[00:36:24] Michael Kitces: The social media, you know, there’s a bunch of different tools out there to push it as well. Some firms use a platform called Deliver-it. We use a combination of a platform called Meet Edgar which pushes out articles we’ve done in the past, as well as a WordPress plugin called CoSchedule that just lets us queue up a bunch of social media shares across all of the different platforms of the article that’s queuing up. And so, for the first many, many years like I focused on creating the content and distribution, frankly, was largely automated. The articles would push. It would pull the title. It would pull the link. So, I would still show up on social media platforms so people tweet at me, ask a question, put a comment on LinkedIn, wherever it is. And so, I want to respond to those and engage there. So, I would have the conversations myself. You can’t really delegate conversations but distribution is highly automated. Well, it was highly automated then, and the tools that are even better and easier and simpler now. 

 

And so, early on, my focus just I’m going to create our content. You know, our goal is we create one article a day. That’s it because we write pretty long articles. Frankly, most people don’t even have the time to read one full Kitces article every day because we write a lot of content, which is fine. So, I don’t expect everyone to read it. Not everything is relevant to every advisor because we’re all in our own stages and places so super clear headlines like no clickbait. We say exactly what it is. We have an executive summary that says exactly what it is. If that’s of interest to you, you can click through. If that’s not, you can delete or save the email or whatever you do. My goal is to keep a connection to you. So, I want to spam you up with clickbait where eventually you learn, “Oh, well you just click on the headline, that’s usually BS anyways,” then you unsubscribe. I want to send things out that just says here’s exactly what it is. It’s this thing I just made, here’s the thing that might be helpful for you. If it is, I hope you come read it. If you do, you’ll probably enjoy it. You may even share it some others and just you wash, rinse, repeat that over time and allow it to compound and things actually get pretty big. 

 

[00:38:26] Brad Johnson: Michael, can you go into that? There’s a couple of things. So, one article a day? Most financial advisors hear that and their mind just exploded. What’s your system? Are you typing it all? Are you transcribing it? And then your team’s cleaning it up? How do you put out that much content on daily? 

 

[00:38:44] Michael Kitces: Good question. Well, so first of all, I’ll caveat that just from the framing of other advisors looking at this. Like realistically, well, first of all, you don’t need to do daily and you certainly don’t need to do daily at our volume of like our length just to move the needle on business success. I mean, realistically, one a month is feasible but not great. One every other week is better. Once a week is probably ideal and quite ample for what any advisor does. And they don’t even have to be huge. They just have to be relevant. It speaks to whoever it is that you’re trying to reach. Now, our content tends to be longer, because my particular nerdy affliction is I like to go deep into complex things and try to synthesize them out. So, that’s part of what happens to differentiate my content. It happens to be my style. You don’t have to do it that way. You do have to figure out something that’s relevant for the people you’re trying to reach. 

 

My platform works at the end of the day, because there’s a subset of advisors that are tired of the fact that everybody else goes shallow. So, we go deep, and that becomes our differentiator and we build audience around over time. In terms of producing the content itself, I happen to be the child of two computer scientists who made me do Mavis Beacon Teaches Typing when I was six years old on a Commodore 64. So, I learned good and proper typing skills from early on and I’m a very fast typist. I typed about 130 words a minute, which is pretty close to the pace that we just think and talk. And so, the writing process for me is essentially the equivalent of dictation. I can just actually type at that pace. So, I type a dictation style brain dump, like just, “Hey, here’s what I say about this topic,” dumped it all out onto a page or a few, and then I go back and just edit through it like, “Okay, this doesn’t actually read well,” when I’m reading what I said. Let me rewrite that little section with that paragraph or clarify this point or copy-paste all this stuff, right? 

 

[00:40:48] Michael Kitces: God bless computers, control X, control V, I can move stuff around. It’s not like I’m doing this with a hand manuscript. That would be much more laborious to edit and move things around. And so, really just I dump the content and I clean it up so it’s readable. And it’s not that much more complex. It’s a little longer than most because I happen to be a fast typist and I can get through it a little bit faster. And because I just like to read a lot of stuff and synthesize a lot of stuff so I tend to have a lot of stuff to say in the articles that I’m producing. 

 

[00:41:18] Brad Johnson: And so, you’re cleaning it up, you’re editing it, and then so essentially, most of your writing is 100% on you. You don’t have like a writer that’s editing up kind of your thoughts and bullet points. 

 

[00:41:29] Michael Kitces: Correct. And not that I think there’s necessarily anything wrong with that. You know, there’s a saying out there that you don’t have to be a writer to be an author. You know, being an author means you bring the idea of the content, the expertise, the point, the insight, the whatever thing it is that you’re trying to bring to the table. There are lots of people who can help you write it, particularly in a world where, frankly, the media industry is kind of getting decimated these days. So, there are really good writers out there, really trying to look for any decent work that they can get and writing for an advisory firm is actually a pretty good paying job for a lot of them or good-paying freelance gig. So, you’ve got to come with your idea so I think the nature of content of just what it takes to succeed in content marketing is, frankly, more flexible than most people realize. If you happen to be pretty good at writing or you find a good writer who can help turn your thoughts into something that’s better prose for the reader, like, by all means, go for reading. 

 

If you’re better in front of a camera, do video work and post it up to YouTube. If you’re better talking to people or interviewing people, do a podcast like this. You know, over the years, we’ve experimented with a lot of those different content mediums, short articles, long articles, video content, audio content. At this point, we make a mixture of it because I actually want to reach a slightly wider range of people. Some people would prefer to hear it and not read it. Some people prefer to read it not hear it. So, we try to do a couple of different modalities. But that’s literally not something I even paid attention to or cared about for the first seven years, eight years. So, like, no hurry even to get there, like, find one way that you can do something that demonstrates your expertise and make content that way that works for you. And just repeat it, like the consistency and it’s really like anything like saving and investing in the first place. Like, how do you get a million bucks in 40 years? 

 

[00:43:29] Michael Kitces: It’s like you save a couple hundred bucks a month, and you just keep doing it for 40 years. And almost everybody who starts down that path feels really depressed after the first month or two or 12 or 24. So, like I’m on my way to a million dollars. I have 2,000. And it doesn’t feel very good but we underestimate compounding and how effective it is. And so, frankly, I think one of the things that’s worked the best for our ability to grow the platform is just we did it consistently. And we never gave up on it and we just kept going. And I had some metric to know that it was growing. You know, we installed Google Analytics. I would look at my data every day and we just make sure it’s trending in the upward direction. As long as moving the upward direction we just kept going and after a couple of years of compounding, the numbers got really big. 

 

[00:44:18] Brad Johnson: Okay. So, I want to dive into you hit on this with Carl Richards and I will link to Episode 4 because it was a great episode where you guys kind of discuss social media. And you’ll find this surprising, I’m sure, Michael, that every financial advisor, at least the ones I work with, they have this super long attention span and a lot of patience for results. 

 

[00:44:44] Michael Kitces: Oh, it’s glorious. It’s great. It makes it so much easier to coach and consult them. Yes. 

 

[00:44:49] Brad Johnson: And here’s the, they’re all type-A personalities like hard-charging entrepreneurs and that’s what makes them successful. For the most part, there’s some different variations of that. And what I found is like just even going to the little formula that you had on how you post a blog, and you hit Mailchimp and you automated it, and I understood all of that because I nerd it out in IT in college and I have that side of my brain that goes that way. Anyway, that’s one of the reasons I have a podcast. Most financial advisors have very, very little of that technical wire and what it creates from my experience is the opportunity to be taken advantage of by a lot of these what I’d call social media gurus. And here’s I think the key thing. Everybody wants Michael Kitces’ back end results. Everybody wants Downtown Josh Brown’s Twitter following. What they don’t want to do is the 8 to 10 years of work it took to get there. 

 

However, there’s these different firms out there that are like, “Oh, I just literally have this email two days ago. One of my buddies, Jerry, that I’ve worked with a long time on the East Coast he’s, “Hey, there’s this firm out there,” and for $7,500, I can do 10 videos. They’ll fly me out. I’ll do these 10 videos and then for $5,000 a month, they’ll build my platform for me on Twitter, Facebook, you know, I’m not sure what all the platforms work. And so, I want you to, let’s nerd out here for a bit, let’s speak to social media as like building a following and a brand. They have all kinds of compounding and years’ worth of work versus what many advisors actually want, at least the ones we’re working with is more social media as a direct response platform where I’ve now started to see Facebook ads replaced direct mail and have some really cool things you can do over there. It’s a little bit quicker, right? So, what’s your viewpoint on that and some of the different firms out there kind of preying on advisors and selling them things that aren’t really possible for my opinion? 

 

[00:46:50] Michael Kitces: Yeah. So, a few things around this, like, certainly I’ve seen just pay us all this money and you’ll get quick, amazing results as well that just pretty much isn’t realistic and isn’t going to happen. Frankly, having had a bunch of these conversations with some advisors over the years, it disturbs me how similar the conversation is with the advisor that’s like but if I just buy this thing like I can get the faster results and the pickup faster, right? And the client who comes in is like, “I just heard like if I put my money in this like gold private investment thing, I’ll make 17% a year.” I’m like and then we go back to like, “No, you need to invest in the slow and steady. Keep the, you know, like stay on track, small dollar amounts, compound,” all those things that we tell clients to save and invest diligently and stay the course and allow compounding to do its thing. 

 

And like sometimes I find for advisors we don’t even realize like we’re literally not taking our own advice that we give to clients over and over again like you can’t like the pursue, the get rich quick things just don’t work. The save and invest diligently and allow it to compound is what actually works in the real world. And so, that to me is very much true here as well. I got burned on one or two of those in my early years as well, less so I didn’t spend a lot of dollars on it but I took a lot of bad advice early on. Ironically, the worst of which was, you know, email is dead, the future is social media like particularly back in 2011, 2012 timeframe. So, early on, like, we didn’t do anything with email. We weren’t trying to collect email addresses and send people the blog post. We were just pulling it off. Pushing it all out to the different social media channels and eventually I was like, “You know, I look at my habits as someone that’s actually engaged in content like social media is neat, but I run my business living in my inbox. I still kind of see this stuff in my inbox. I think I should probably still be sending emails after all.” 

 

[00:48:51] Michael Kitces: And so, we went against the social media guru wisdom as it were at the time and put a mailing list up and what we find today is for our email list gets somewhere between 30 to 40X the engagement results of social media, like literally 30 to 40 times the engagement click throughs and draw for people back to the point that from a functional business perspective. My only business goal on social media is to get you to my website to sign up for my newsletter because the actual business results from social media without converting it in something like email where I can have an ongoing relationship is just so drastically different. It’s all about getting to an email list. As much as I’m sure a bunch of people are hearing or thinking, well, you know, our email boxes are so overloaded, there’s so much like you think your email box is bad. You don’t even see 99% of what comes across on Twitter because it’s such a firehose that blows by. 

 

We don’t even get a chance to see everything on Facebook because it’s such a firehose. Facebook’s algorithms filter out like 98% of it. It’s like, at least email it goes. And if your emails deliver value, if you’re actually focused on having them deliver value, people tend to keep signed up and they actually open them and they actually look at them. You know, it’s the spamming newsletters that we all get, we don’t want to get. That’s the stuff we unsubscribe for, feel overwhelmed by. It’s not annoying when you keep getting an email that’s really useful. And so, I got burned by some of the social media “experts” early on and found pretty quickly that just you don’t listen to the social media experts and gurus. 

 

[00:50:46] Michael Kitces: You listen to the people who are actually doing things on the platforms and running businesses off of them because they’re the ones driving it back to actual business results and they’re the ones who will give you advice that works. What I found for a lot of the social media gurus, I’m not trying to throw all of them under the bus. I’m sure there are some good ones out there. But what I found overwhelmingly for the social media guru types was, you know, they were selling their thing, not necessarily what actually works. They often didn’t have much experience in what actually works because they weren’t actually tying their social media to a business in the first place. They were in the business of selling it to other people. So, I’ve tended to look for, frankly, people like you mentioned, like Gary Vaynerchuk who are doing it and actually building businesses around it. Because if they were an all decent businessperson, they implement things, they test things, they have business metrics, they measure results, and they iterate towards the things that work and that’s who you want to learn from. 

 

[00:51:49] Brad Johnson: Such good advice there. Michael Hyatt who I know is someone that you followed as well, some advice I got from him and in a mastermind is anything in life that you want to do, lose weight at the gym, build a business on the internet, whatever that is, go find a coach or somebody that’s been there before and just learn from them and shortcut it rather than buy some product from somebody that’s just trying to sell you something. 

 

[00:52:16] Michael Kitces: There are some good products to folks out there. That to me it’s a little more hit or miss, like I’ll give credit to folks like Ryan Deiss, the DigitalMarketer. They’re a platform that kind of sells, they sell courses, they sell a bunch of stuff as frankly a lot of other social media experts do as well, but their stuff’s legit, and they actually literally do it for their own business. So, there are some legit folks out there. Again, like I don’t want to drag them all down but I absolutely agree with that advice from Michael like find people who are actually doing it. That’s where you tend to find your results and your good advice because they’ve literally lived it and turned it in action. 

 

[00:52:57] Brad Johnson: So, one other piece of advice you gave, I just want to make sure I expand upon. Going back to that hub analogy and all of the different spokes that come in, you’ve chosen to build your platform on something you own and control. And therefore, if Facebook changes an algorithm, yes, that spoke, you might not get as much traffic but I find like a lot of advisors may be are out there building something on Twitter or Facebook and with one change, all of a sudden, your whole business can change. So, what are your thoughts on, hey, gathering the emails from the platform, getting them to kind of that central hub space as we’ve described it, how important is that?

 

[00:53:36] Michael Kitces: It’s hugely important. I got I guess lucky on this early on that this is one of the areas I got the right advice again because I found someone who’d actually done it for a living. At least where I remember hearing it first was Brian Clark, he was at Copyblogger back then. He’s had a few different platform iterations and the saying that he had was you don’t build your foundation on borrowed land. Right? Like, “Don’t be a digital sharecropper,” was his label. Don’t be a digital sharecropper. The challenge with the sharecroppers was they farmed the land, but they didn’t own the land and at any particular time the landowner can take the land back and then you had no job, no career, no nothing like if you’re going to farmlands, you farm your land, because you own it, you can control it. And I think it’s incredibly powerful advice. You know, it’s one of the things that we built foundationally for our platform from day one. 

 

Like, it’s on a domain I own. It’s with a WordPress site I own. We tie all of our stuff to email because I own that email list. And I know I can send the email who’s going to go to the person who signed up for my lesson and said, “Please send this to me.” So, our business is not subject to the vicissitudes of Facebook algorithm changes, LinkedIn algorithm changes, Twitter. Google Plus we were on for a while. Now it’s completely gone. God, we didn’t build our foundation there, I don’t really care. Because that’s the point, like for me from the business end, social media our channels are all, you know, they’re rented pathways to get you to a pathway that I own, which is a website and an email list. You know, I’ve known a couple of people over the years that have built-in this realm who basically said, “Look, if you’re going to destroy everything, like if you were going to take my whole business away, and I only get to keep one thing to rebuild from scratch, just let me keep my email list. I can rebuild everything from there.”

 

[00:55:40] Brad Johnson: [Crosstalk – 55:41] full of emails. 

 

[00:55:43] Michael Kitces: Yeah. And I think that’s still true as well like as much I love our side, what we’ve done, it’s not like my life’s work of 1,000 articles we probably written but you could take away everything but the email list and I could rebuild, because I can reach the people who are interested in what we do and I have their attention because I’ve been careful to create value and respect their attention. And that’s all you really need at the end of the day. The rest is just what are you going to do to execute from there. And so, yeah, again, I’m all for being on a lot of those different platforms. I am on pretty much all of those platforms are experimental from a lot over time, but I don’t build there. I build on my foundation. I use them as pathways to get people to my foundation and bring them into my ecosystem as it were and then we build a connection with them directly in a way that we can sustain. 

 

[00:56:33] Brad Johnson: Awesome. Okay. So, I have one more thing on kind of the social media front and then I’ve got a really big conversation that I’m super excited so I want to leave time tonight. So, following guys like Gary Vaynerchuk and I don’t want to make this like a fanboy shout out but that’s been a guy that he was on YouTube before people knew you could build businesses. He built his dad’s liquor store into a multimillion-dollar all on like wine videos back in the what mid-2000s. So, he’s very big right now. He did kind of a State of the Union in 2019 social media. Very big on LinkedIn. The organic reach right there that used to be Facebook back before you have to pay for it, right? 

 

[00:57:16] Michael Kitces: Yep. 

 

[00:57:17] Brad Johnson: And he’s probably even bigger right now on audio and podcasting. So, this being a podcast, you being a guy that has your own podcast and has to two going now or three. How many podcasts? 

 

[00:57:29] Michael Kitces: So, two going now. Financial Advisors Success has been going for a while. It’s about two-and-a-half years in and then the Kitces & Carl podcast we just launched. We literally launched it a few weeks ago. We actually started recording them at the beginning of the year. We were putting them out as YouTube videos then decided to convert it from video to audio. So, we package them and now release them as a podcast. Just the two. 

 

[00:57:52] Brad Johnson: Only two. 

 

[00:57:53] Michael Kitces: It’s busier for me now. 

 

[00:57:54] Brad Johnson: Actually, I’m very disappointed. You only have two rolling right now.

 

[00:57:58] Michael Kitces: We’ll get more. Give me a little time to compound.

 

[00:58:01] Brad Johnson: Okay. So, Roger Whitney, who I’m not sure if you’ve crossed paths with him or not. 

 

[00:58:05] Michael Kitces: Yeah. Absolutely. Retirement Answer Man. 

 

[00:58:07] Brad Johnson: Yeah, really good dude and he said something in an episode we did that really stuck with me and this is coming from we produce 100-plus radio shows out of our office here at Advisors Excel and he talked about radio is talking at people. Podcasting is talking with people. And that hit home to me and I found that to be very true. I’m going to combine that with one other quote and then I’m going to ask my actual question here. You put something out this has been months back, but basically, the future of financial advising won’t be going to the local advisor but it will be going to the best advisor to serve my niche whatever that may be, right?

 

[00:58:46] Michael Kitces: Yeah. Or just the best advisor to solve my problems. 

 

[00:58:48] Brad Johnson: Yeah. The best advisor, right? And so, what I found is we’ve got this shift going on with digital to where back in the old school brick-and-mortar days, which I still we’re very much there but there’s some cool things going on right now that it’s taking it more virtually. It was, okay, I’ve got my radio show on my AM station and call it Kansas City since that’s right down the road from us. And I put that out, I talked to these people, they come into my office. Well, as advisors have started to reach out to me and say, “Hey, there’s this podcasting thing. So, I can just take my radio show and copy and paste it over here to my podcast, and then I’m good, right?” I don’t think so and I think there’s some big things going on. I guess it depends on the content of the radio show. But let’s speak to how podcasting with the click of a button. You’re now syndicated worldwide, how you now have to shift mentally into a completely different state as a financial advisor. If I’m now going to drive business that way and what that means and what you see as the future of audio marketing.

 

[00:59:54] Michael Kitces: So, over on I’m bullish on audio marketing, have been for a while. Ironically, so we launched the podcast in the beginning of 2017. Originally, it was actually a 2014 project. So, I saw early-stage podcasting and just said like I can tell this is going to be the next thing. And I think one of the things that just happened to work and work particularly well for me and building the business overall is I’ve actually been really good at figuring out what the next thing is going to be. So, you know, I mean, I was in Twitter way before other advisors were. I was active to LinkedIn before other advisors where. I was active in email list building before other advisors were. I was active in podcasting before other advisors were. And I actually thought it was going to be the thing even then. And then in 2014, I essentially had two strategic kind of high-level strategic initiatives for what I wanted to do for my business. 

 

The first was launch a podcast and the second was launch this thing called XY Planning Network. And number two grew so fast and ate number one, and basically derailed it for two or three years of growth until we built the team over there large enough so I could kind of get back to this podcast thing that I wanted to do. So, I’ve been interested for a while now and I am really upbeat about the medium, ultimately, for a couple of reasons. One, just it speaks to a different like learning modality than others. Some people like to read things, absorb it, some people like to hear things and that’s how they learn this. And so, just it literally gets to a set of people who will never read your stuff but will listen to it. And likewise, there are people who will listen and will never read it and vice versa. So, it reaches a different group that you will never get well, my writing stuff online because they just don’t like to read stuff. It’s actually a very flexible content medium for people to consume. 

 

[01:01:55] Michael Kitces: So, the challenge for written content is you actually got to get someone who’s, well, hopefully on their button-up walking while they’re with their phone in front of them. Like they could be sitting in front of a computer or sitting in a chair looking at their smartphone to read something and then our content like to with a decent chunk of time to read something because our stuff’s not short. Podcasting, frankly, fits people’s lives better. You know, we actually did a sort of lightweight survey out to readers or our listeners about how they consume the podcast content. Like, our top consumption channels were daily commute, exercising, walking the dog, mowing the lawn. I was actually at a conference last year, and I had an advisor and his spouse come up to me and his spouse said, “I just want to thank you. Our lawn has never been better mowed than since you launched your podcast, because now Jim actually goes out there and mows it for a full hour every week because it’s his excuse time so he can listen to the podcast.” 

 

So, it fits into people’s habits like the neat thing about podcasting and just audio in general is like, we can kind of do it while we’re doing something else because there’s a lot of other something else we do that don’t actually occupy our brain, but it occupies our physical activity enough that it works well as a background. The second thing I find that’s particularly powerful about podcasting, granted, it depends a little on what on how you’re listening in the car versus when you’re exercising or walking the dog or mowing the lawn, but particularly those latter items, you are literally in someone’s ear, hearing the earbud. You are literally in their ear and there’s just a level of intimacy that comes from the content as well as the fact that we just tend to connect with other people by kind of hearing them or seeing them much more so than reading them, where you lose all the tone and the context. 

 

[01:03:56] Michael Kitces: That I just find podcasting can just connects and builds relationship with people better than the written content alone. Ultimately, I use it as a complement as opposed to a sole channel. But frankly, I think it would work pretty well just as a sole channel. It’s a really powerful medium because it’s so easy for people to consume in a way that fits around their lives. You can get material chunks of their time and attention, right? If it’s pretty decently long, it can get a lot of your time and attention every day or every week and it’s got that intimacy factor because you’re in their ear that I found it’s especially powerful as building relationships, particularly in businesses like ours, whether it’s going to clients, consumers directly or even some of the essentially B2B businesses we have for first part of the Kitces platform like, again, I’m not selling like $4 cupcake impulse buys. 

 

You know, people who joined XY Planning Network like literally quit their job at their current firm so they can go start an independent RIA doing financial planning subscription fees for their peers. It’s like it’s a life-changing leap. It takes a lot of trust and build up to get there. Podcasting is particularly effective for doing that I’m finding and building that trust, so much so that we actually even have a separate podcast called XYPN Radio that’s just focused on what’s it like to make the leap to RIA status and doing financial planning business models and what does that look like. 

 

[01:05:23] Brad Johnson: Yeah. So, if you are an advisor out there that wanted to use a podcast to market my business, and now you’ve got to get out of this brick-and-mortar because you can be in Kansas City and somebody who’s tuning in in California or somebody who’s tuning in on the East Coast, how would you start to think about your business differently, whether it’s content creation? Do they need to go specifically after certain niches, as opposed to just be the financial advisor with the podcast? And then how does their sales process need to be altered if they want to start to deal with people that could potentially be all over the country? 

 

[01:05:54] Michael Kitces: It’s a great question. So, here’s how I think about it because you made the comment earlier of like podcasting is completely different. All the content’s different than radio, like it’s a different medium and I would actually, I would challenge that a little bit. The way that I look at it is, when you do this in radio, what you’re doing in practice is you’re trying to build a brand and visibility around some kind of expertise in your local market, right, whatever the reaches of that AM radio station and your niche is I am the advisor within 10 miles of where you’re hearing this who can do this for you. In essence, your niche is your local geography and if your niches can be your local geography, often we differentiate by just letting our geography be our niche. So, I’ll talk about anything financial planning related for anyone in my town who can hear my AM broadcast and that’s how I differentiate right down to the fact that when you look at like any find a financial advisor website, what’s the number one first criterion that anybody enters to find their advisor? Zip code.

 

Now, frankly, I think most advisors don’t really think of themselves as the primary differentiator for my business is the zip code in which my office is located but that actually is how we tend to run our businesses. So, it’s worked for a lot of advice over time. You know, we’re not quite densely enough out there that there’s so many people in the zip code that doesn’t work, although, depending on your zip code, it’s harder than others in some areas. But we’ve essentially differentiated by saying, I’m a generalist in my local geography. And the geography is what closes the business. Now, if you’re going to go broader, frankly, whether that’s just our radio show is getting syndicated nationally out to I’m going to do a podcast that can just broadcast naturally over the interwebs. 

 

[01:07:50] Michael Kitces: Now, you got a problem because now you’re not a generalist advisor with a geographic niche. You’re a generalist advisor with no geographic niche because you’re reaching people outside of your geography, which means this ain’t going to work because you’re down to having no actual differentiation or reason to do this, even if you’re entertaining to listen to. I don’t actually know what your need or value is like, yeah, I listen to a neat radio show and then I go and meet my advisor. In fact, I listened to this funny radio show with the guy 5,000 miles away and then I go in to see my advisor in my local market. So, if you want this to work, you still actually need some differentiator that will pull someone especially that will pull someone over a geographic distance. And I think the tendency for a lot of advisors is to think, “Well, yeah, that’s why I just focus my local market because like people want advisor who’s local. They’re not going to come and travel to me.” And if you’re a generalist, that’s true, right? Like, why would I go 100 miles or 1,000 miles across the country to see a generalist advisor when I can I just find one who’s local and convenient? But that doesn’t mean nothing works at a distance. 

 

So, I like to tell people so think of it this way. Imagine you’re coming back from the doctor and the news is not good. You have a very rare potentially fatal disease. It’s so rare the doctor has never seen it, has no idea where to refer you. There’s probably only half a dozen experts anywhere in the world who have even seen this disease or have any clue how to treat it. And so, the question to you is you’re walking out the doctor’s office is what will you do to find the expert who will literally save your life? You know, I asked this question sometimes I’m out at conferences and events and basically, the same answer always comes up every time like Google. Probably on my smartphone, like punching in the disease name even before I left the waiting room of the doctor’s office like I’m looking for who’s published journal articles on this. I’m looking for people who have treated it or talked about it on their website as their expertise. We all find like a community of other people who have the disease and who treated them. And what I find is when you ask that question, nobody ever says, “Ask my friends and family for a referral.” 

 

[01:09:55] Michael Kitces: Friends and family referrals work great for small stakes, generalist problems. So, when we were starting a family a couple of years ago, I bought a house about a mile-and-a-half up the street from my folks who still live in the house I grew up in. So, I’m very tied to my local community here but I’ve never been a homeowner before. So, you know, took all of about nine months of being a homeowner until the first time the toilet broke. So, ask me tax law questions, I’m good. Ask me plumbing questions, I’m hopeless. So, I call my father in a panic and say, “What do I do?” And he says, “Call this plumber. He’s very good. We’ve had him out to the house a bunch of times, reasonable prices, does a good job on the service and he’ll come to you on Sunday.” I was like, “Great. Thank you.” So, local problems, friends and family referrals work great, right? In our business, it’s like I need to roll over my IRA. I got to make a profit-sharing plan for my medical practice like small stakes, local problems work fine. 

 

But when you get to the high stakes stuff where your life is on the line, your health life is on the line or your financial life is on the line, friends and family referrals just suddenly completely break down and you’re going online to find the expert who can solve your high stakes problem. Because if it’s a high stakes problem enough like I’ll go anywhere in the country anywhere in the world if that’s what’s going to save my life. I will go anywhere in the country anywhere in the world if this is going to save my one biggest financial decision in my lifetime. So, when I’m starting my medical practice, I need a profit-sharing plan, I ask my friends and family for a referral. When I’m getting ready to sell my medical practice, the one biggest financial event in my lifetime, I go online. I start googling how to maximize the value of your medical practice and if I find Perry, the planner in Philadelphia who specializes in doctors selling their medical practice, I will fly there from San Diego and spend a couple of hundred bucks on a plane ticket to get another million dollars out of the sale of my business. 

 

[01:11:43] Michael Kitces: And so, what all that means in the context of this podcasting discussion and it’s really beyond just podcasting and audio content. It’s true for written content in any kind of content. The way you differentiate is having a specialized expertise with a particular group that has a problem that you are the leading expert in solving. And so, you can do that with podcasting. Roger Whitney is the Retirement Answer Man and he’s even got a particular flavor of who he speaks to really, it’s not just I answer random questions about retirement, the retirement transition, and all the emotional stresses that go with it as well some of the complex financial decisions, and he gets people hooked into that. So, he’s not for everyone. He’s for people that are on the cusp of that retirement transition and want to see what does it look like on the other side of this transition of life that they’ve never done before that has all these really complex financial decisions around it. And that, ultimately, is why any kind of niche works. You can be into doctors, you can be into lawyers. I mean, functionally our platform is into financial advisors. That’s our niche. And the deeper you go, the more specialized your solutions become and the more expert your content comes for that particular person to the point where you don’t just solve their small stakes, local problems. You solve their high stakes, I’d fly across the country for that solution kinds of problems. 

 

And what you end up with kind of similar to our site and platform, even just as our spillover, new client business development we do even though I don’t target them, what we end out with is a small number of people who have really big high stakes problems, otherwise known that for most of us in the industry is really good prospects. 

 

[01:13:17] Brad Johnson: Right. Thanks for diving into that because I think that’s like becoming frontier, that it’s like the Blockbuster-Netflix, right, like that’s coming in financial services. I don’t think it’s quite here yet, but it’s getting closer and closer every day. So, I couldn’t agree more with you there. Okay, I’m not going to forgive myself if I don’t go here. I don’t have as much time so, hopefully, we’ve got enough time to expand on this. 

 

[01:13:41] Michael Kitces: All right. 

 

[01:13:42] Brad Johnson: Okay. So, I didn’t actually realize until we got on this conversation that you actually started out in the insurance industry. What’s interesting is if you look at Advisors Excel, our firm here in little Topeka, Kansas, we started very much on the insurance brokerage side. So, primarily annuities, then life insurance serving independent advisors all across the country and now we’ve evolved to really a true wealth management firm where we have an RIA that’s growing very fast over 7 billion now, probably seven-and-a-half by the time this releases. And so, what I’m really starting to see in our industry is this convergence of two very if you go back even five years, two very, very different worlds, the insurance industry, the asset management, RIA or whatever world you want to call that over there. And what I see because I know you started there, but you really live more on the RIA space, I see biases. 

 

I see lenses that advisors look through and I know we all have our own lenses and biases but if we come full circle, and we say, “At the end of the day, I want to take a fiduciary standard and I want to do what’s very best for my client.” What I’ve started to see are certain biases actually get in the way of a true fiduciary standard and sometimes people don’t even realize them. And here’s a good example and then I want to have you expand and I want to get your viewpoint. The words fee-only in fiduciary become very much interchangeable I think oftentimes in our industry where in reality, they’re very different things, right? And so, I think sometimes what happens is you have marketing, which is how you acquire clients and then you have the value proposition of actually building a holistic plan for clients and those get all tangled in or web and there’s just a lot of confusion in our space, let alone the consumer space, right? 

 

[01:15:41] Brad Johnson: So, what are your viewpoints? I know you’re like a financial history nerd and you know how a lot of this stuff evolved over the years too. Two very separate worlds, how they converge, how do we start to do away with biases? And the way I explain it is here’s this toolbox as an independent advisor of all of these different financial tools. My viewpoint, my philosophy is it’s better to have all the tools in, figure out what the problem is back to your plumber analogy. If I’ve got a toilet I need to fix, I want all the tools that can fix that and now I want to pick the best tool out of the toolbox to fix that. Just like philosophically there, what are your thoughts around that? What are the biases you’ve seen? As these worlds converge and I think they’ll continue to converge, what do advisors need to be thinking about out there? 

 

[01:16:27] Michael Kitces: So, I’d answer this kind of a couple of different ways. And first kind of noting my history like I actually, I not only started on the life insurance side. I actually had a stint in the independent broker-dealer side as well, including actually doing a lot of annuity business. My first book was the advisor’s guide to annuities. We published it back in 2004, 2005, have done four or five updates since then. And so, I started deep on that side of the world and I’m now in a partner in an advisory firm that does no annuity business. We’re an RIA and we can’t sell the commission-based annuities. There’s now at least a handful of fee-based annuities. So, that conversation is starting to come up again but spent more than a decade neither having a license to do them if I wanted to. So, I look at this a couple of different ways. First of all, so in terms of the marketing side, you know, I have always been of the mentality that if you’re giving advice, you should be a fiduciary, period. 

 

It’s like, it’s literally the definition of advice is to advise someone as to the outcome, like, the path that will improve their outcome, like, the definition of the word is basically about the other person not you like it’s just sort of inherent in the term and the label. And even for my career, I’m one of these guys that’s got alphabet soup after my name, all the different degrees and designations. So, we said earlier, like I didn’t study that in college before I joined the industry. I was a liberal arts transplant, landed in the industry. I did all that later because it hit me very hard in the first year of being out prospecting and trying to get business, A, just well I wasn’t the best prospector. Part of that is just not my skill set as an introvert and part of that is because I knew deep down I didn’t know squat. Like my Series in 6 and 63 that I started out with, I don’t think I got to 7 until a year later. 

 

[01:18:31] Michael Kitces: My Series 6 and 63 did not prepare me to give advice to someone about the life savings that they had been accumulating for longer than I’ve been alive. You know, they spent 30 years building up the money, and I spent a week or two in my Series 6 and 63 and then two more weeks in New England Life VUL product training, to give them advice about what to do with their life savings. That’s what drove me down the road of getting the education, the degrees to the designations. It’s like if I’m going to give someone advice about what to do with their life saving it was like, not to be over melodramatic, like I view that as a sacred duty, like, you are giving people guidance about stuff that they cannot fix or change if you screw this up for them. 

 

And so, that to me is, by its nature, a very fiduciary sacred duty, not just with respect to the kind of the conflicts of interest and the duty of loyalty that we like to talk about these days in the industry, but also the duty of care that just you should actually know what the hell you’re talking about before you’re giving people advice, which is why I’m such a strong advocate for programs like going to get CFP certification and pursuing that route just our regulatory licenses are sales licenses. They’re not advice competency standards. Now, that being said, so I’m one of those people that thinks all advice needs to be delivered under a fiduciary framework. We can talk a few minutes later if we’ve got time about regulatorily how to do that like there’s some complexity about how you implement that as a regulator but conceptually, it’s like duty of loyalty and duty of care are real things when you’re helping people with their life savings. That being said, I’ve long been an advocate that you should be a fiduciary to your clients. Marketing that is a terrible business strategy. 

 

[01:20:23] Michael Kitces: And even I was writing about this like seven or eight years ago and when the blog was just getting going, it’s got a lot of flak for basically saying like differentiating on fiduciary and fee-only is a really dumb marketing idea. And the problem too it is, you know, A, just, it’s frankly, a pejorative marketing strategy which people feel on the other side are just not even about what you do. It’s just about the other guy does these commission things. I’m not even a failing fan of that as a marketing and sales approach like try talking about you do that brings value rather than just try to take everybody else down. It’s also not a sustainable differentiator as a whole bunch of the fiduciary communities now realizing regulation best interests rolling out, everybody’s under a best interest standard. Now, frankly, reg BI is not a full of fiduciary standard. I don’t love how it’s shaped up, but now you literally can’t go out there and say, “I’m a fiduciary that acts my client’s best interest,” because everybody’s going to say, “Well, I’m acting best interest too.” I’m subject to regulation best interest. So, if you were hanging your hat on fiduciary as a differentiator, the SEC just blew up your differentiator. 

 

So, be a fiduciary great, terrible marketing strategy. The second thing I would say about this is there is an obligation around a fiduciary standard for acting your client’s best interest and giving them what’s right for their situation. But you don’t have to serve everyone. And if you don’t serve everyone, you serve the people you’re good at. You will end out not doing business and all types of products and all types of stuff. And it’s not because you’re being a bad fiduciary by not using a certain investment strategy or certain annuity product for a certain insurance product just because you’re working with a clientele where that’s not your solution. So, you know, I think of this even in terms of a firm like ours, you know, we do the financial planning or retirement planning work for our clients. 

 

[01:22:27] Michael Kitces: We manage their portfolios along the way. We have a particular risk-managed strategy that we do that we’ve got our 15-year track record of having delivered on it well with our investment team. And so, clients who seek us out want us to manage our risk. That is part of why they hire us. That’s part of why we don’t do a lot of annuity business. If you wanted an annuity to manage your risk, if you wanted to transfer the risk that way, you wouldn’t hire us. You would hire another advisor that does that version of a strategy instead. I kind of liken this to if you think of the medical outcome like the world’s leading brain surgeon, you still don’t go to see her when your knee hurts. In fact, it would be illegal for her to do knee surgery as the world’s leading brain surgeon, because her expertise is operating on your head, not operating on your knee. If you want help with your knee, you go find an orthopedic surgeon. 

 

And so, I think there is a nature of that that plays out in our industry. It’s frankly, the next stage of fiduciary that we really haven’t gotten to yet, which is a key part of meeting particularly the duty of care, which essentially comes down to only give advice in areas in which you’re competent and skilled, right? That’s why the brain surgeon can operate on your knee. That’s also why like the investment expert shouldn’t be doing annuity business that they don’t know. Now, if they’re working with clients that need that, you need to know that but it’s also okay to say, “Well, we work with a particular type of clientele. We’re not focused on the people that want those kinds of solutions.” If they do, you got to be willing to refer them out. You’re not allowed to sell them the thing that they don’t want. That’s still a big no, no. But it’s okay to say I don’t do all types of retirement solutions for all types of clients or I do all types of whatever solution for all types of clients. Work with the people you’re good at, that you have the expertise with, with a solution that fits what they want, and be willing and the commitment is you have to be willing to refer out to someone else, the people that you’re not going to work with if you don’t do those solutions. 

 

[01:24:26] Michael Kitces: And so that, to me, is still the piece that’s missing in the landscape. And I mean, I’ve watched this on both sides. You know, the folks on the annuity insurance side that criticize the RIAs were not doing annuity business for clients that need annuities. Look, the client needs an annuity. They should be getting an annuity. But if they need annuity and you don’t do business annuities, you don’t have to sell them an annuity. You just have to refer them to someone who does. All my clients need tax returns prepared as well. We don’t do that in our firm. It’s not because I don’t want them to get there. It’s because I refer them to a CPA who does that for a living. 

 

[01:24:59] Brad Johnson: Yeah. I think this is where it gets really interesting. And let me, I want to respect your time. Do we have time to go into this for a bit? Because…

 

[01:25:07] Michael Kitces:  Sure. 

 

[01:25:08] Brad Johnson: You can always add more to this. 

 

[01:25:10] Michael Kitces: I’m good if you do. I’m good if you can. 

 

[01:25:13] Brad Johnson: So, here’s where it gets interesting and I think you even alluded to this. It might have been your first episode with Carl on like the true value of a financial advisor. And the tough part about our industry is what the clients actually want. They don’t want you to manage their assets. They don’t want an annuity sold to them or life insurance sold to them. They want these three problems they walked into your office with. They create a lot of anxiety in their lives. They want them fixed and they want to know you’re an expert that gives them unbiased advice that most efficiently solve those problems. And what I found in our industry is because of how we get compensated, that now skews the viewpoint, whatever solutions and this does not… 

 

[01:25:58] Michael Kitces: These respond to incentives. 

 

[01:26:00] Brad Johnson: Yes, and this doesn’t have to be like a knock on guys that just do AUM or just do annuities or just do life insurance. 

 

[01:26:06] Michael Kitces: Yeah. Well, I’ve literally lived both sides like I started insurance only and annuity only. And now functionally, I live on the other side because there’s very few annuity products for the fee-based channel. 

 

[01:26:17] Brad Johnson: So, I think the hard part is how do you disconnect how you get compensated versus offering the best tool to solve the problem most efficiently? And there’s a few things and we can go a lot of different ways her but I think sometimes in the fiduciary world, commission is a very bad word, right? Commission is bad. Well, if you look at the standard annuity and how an advisor is compensated call it 10-year product, 6% to 7% commission, do the division somewhere around 0.6%, 0.7% annualized. Not that far off from an AUM model that most advisors run with. However, because it’s commission, it’s bad, right? And so, I just want to start to unpack this conversation because I think this is a really, really big topic. And I just see so many different biases in the space based on the world you grew up in, whether it was the insurance side, whether it was the asset management side, whether it was the wirehouse side, and whatever your core toolbox contain, typically, I see that tends to be the framework that you still tend to view the world through. So, how do we fix that in financial services? Because I don’t have the answer but I’d love to hear your viewpoint on that. 

 

[01:27:29] Michael Kitces: So, you know, I certainly agree with you. Most of us carry the biases of the channels we grow up in or conversely, we decide we don’t like the channel that we grow up and we move to another one and then like we sell against the one we used to be in. I mean frankly that is a lot of particularly the founding class of the RIA community, a little different now because people are coming in as like first-generation or second-generation to RIAs but most the first generation of RIAs, they came from the insurance and broker-dealer world and often they went there because they really didn’t like their old firm and stuff that they did and they would sell against in all the conflicts that were there. And, A, we tend to remember the bad ones, not the good ones and, B, there’s a bias that all of us end out with. I see it more in practice in the RIA channel, which is, you know, if you’re working with a great commission-based advisor, I’m never going to see you because you work with him or her and you’re really happy with between your job. 

 

If you work with a crappy commission-based advisor who sells you a bunch of crap, then eventually you realize you got screwed over, you go look for another advisor, and you may come and find me. So, what’s the end result? 100% of the people I see who are coming from an advisor are coming from a crappy one who abused them and I never see people coming from the good advisors that did the right thing because they’re there. And so, I do think there’s a challenge even in particularly on the RIA side that a lot of RIAs do not understand how massively skewed their perspective is about who they see and that they see a steady stream of clients who are coming from commission-based people that did bad things and think all commission-based people do bad things when the reality is the overwhelming majority of them are doing fine things and you don’t see those clients because they stay with the advisor that they’re at. 

 

[01:29:20] Michael Kitces: So, there’s not only biases and just our natural solutions that tied to our channel and our regulatory structure and the rest but we don’t even get a fair look at what the other side is doing when we do this with clients, because we only get the biased sample of people who are switching and not the ones who are happy where they are. At a higher level in terms of the fiduciary discussion around compensation in the first place, the literal nature of having a business relationship has some level of fundamental conflicts like I want you to hire me which involves you paying me and I do a thing. And so, there’s always some level of tension to this. Now, that’s for the most part views as a manageable conflict of interest like I’ve got an obligation not trying to do business with you if I’m just a terrible fit. My solutions aren’t valuable for you. The part where it gets messier is where the conflicts become so dramatic that it becomes difficult to manage them, that our biases sometimes kick in in a way that is so severe, we may not even effectively control our own behavior even if we think we are because we usually don’t think bad about ourselves, but we’re not doing a good job with it. 

 

And that’s the essence of fiduciary rules, not even just in financial services, but going lots of different industries. You know, medicine has gotten its version and law’s got its version and accounting got its version, that all come down to there’s a level of conflict of interest that people can reasonably manage and there’s a level of conflict of interest that is so dramatic, it’s too likely to cause conflicts that people make the wrong decision, even if not everyone makes the wrong decision, but a material of people will that the way you manage that either as a profession or as a firm is you eliminate that conflict of interest so that you remove the temptation from yourself. And that’s the essence of why so many different professions have some version of a ban on commissions, like the doctors who see you in the doctor’s office are not allowed to work for the drug companies and get paid for the drug companies. We separated the product from the people who give the medical advice. It doesn’t mean all, still, all the doctors prescribe all the drugs. 

 

[01:31:26] Michael Kitces: Like, drugs get sold through doctors, but the doctors don’t work for the drug companies. The doctor works for the patients and prescribes the drugs from the drug companies. So, it’s still a product distribution through advice but the advisor sits as the gatekeeper for the client and so the distribution for the drug company. You know, laws got versions of this as well. Accountings got its versions as well. And so, I think the challenge, the functional challenge in our industry is figuring out, well, two things. One, just when do you go from sales to advice? That’s what to me is ultimately driven all of this different fiduciary regulation particularly Department of Labor, which to me really was nothing more than if you all want to call yourselves advisors regardless what channel you’re in, we’re going to regulate you like advisors regardless what channel you’re in. And then you get to the second question, which is what are the manageable conflicts of interest and what are the ones that needs to be eliminated? Department of Labor took a particularly strong view around, eliminate versus just manage and mitigate, and so we saw the discussions, the commission bands and the localization of the products and so forth. 

 

So, you can draw the lines in different places about where you switch from sales to advice, and which conflicts can be managed versus needs to be eliminated. That’s the crux of debate about the Department of Labor’s fiduciary rule, the SEC’s regulation, best interests, various states now that are cropping up on their own versions of the rules, and all of them really stemmed from what you mentioned earlier, which just this convergence of the insurance channels, the brokerage channels and the RIA channels, all into this advice-giving context where if you look at like the actual history of the regulations, the only reason broker-dealers aren’t RIAs, fiduciaries today is there is an exemption in the Advisors Act of 1940 that says, “If you give only a small amount of advice that is ‘solely incidental to the sale of products,’ you can still be regulated as a salesperson. You don’t have to be regulated as an advisor.” And that’s what the brokerage community has relied on for what now almost 80 years to not be subject to the fiduciary rule, but in practices, you know, that the channels have so converged, that to me, what we’re seeing is a regulator backlash, right? 

 

[01:33:32] Michael Kitces: The reality is regulators never catch the next crisis. They always catch the last one. And the last one now that we’re dealing with is I think regulators saying, “Oh, my God, all these different channels converge into advice,” and we’re still regulating some of them as advisors, some salespeople, and now we’re trying to figure out, do we do a uniform fiduciary standard when we put them all back in one box? Do we do title reform where we say, “No, no, you can still be salespeople and non-fiduciaries, but you can’t say you’re an advisor and do advice things. If you do advice things, you cross over the line, but you can keep them separate.” But you got to drill down to what the activities are, which is difficult to manage from a regulatory perspective. And so, those to me, like, those are all the battles that are playing out right now but the essence of them just comes back to, look, you can say fiduciary. I’m going to do the best thing but the whole point of why fiduciary duties exist is this acknowledgment that sometimes you get conflicts that are so unmanageable that you will bias yourself without even realizing it and do the thing that’s not actually good for the client. 

 

And that’s where all the conversation comes in about, what are we going to manage? What do we need to eliminate? Our commission is okay. Is there a limit as to how much of a commission is okay? Even in the context of commissions, I mean, I have this conversation come up a lot with fellow advisors and even some regulators from time to time. So, I get involved in some advocacy projects. We’ll point out things like, well, the 7% annuity commission over seven years, like effectively, it’s 1% a year. Your RIA is already charging 1% a year like it seemed 1% but the difference is on the advisory side, if I charge 1% a year, I actually have to be awesome for seven consecutive years or you to fire me for no longer delivering value. On the annuity side, I only have to get you to sign once, maybe get past a free look period and the whole seven-year payment is baked in upfront even if I never call you again for the next six-and-a-half years, which I can’t get away with from the advisory side. 

 

[01:35:25] Michael Kitces: And that’s why even though the comp levels outs the same thing, you see discussion, including from DOL when it was working on its rule that was essentially like, “Look, you want to get paid the 7% over seven years? That’s fine. Take 1% a year and keep providing enough value to the clients to stick around for all seven years.” So, if you think about actually doing that, you might have to do some things differently for clients and how you work with them and how much you service the existing versus the new ones. And that’s part of the point of the role at the end of the day. 

 

[01:35:54] Brad Johnson: Yeah, and that’s why this is such an interesting topic because what I’ve seen from my perspective, from my side is you have fiduciaries that completely and what I mean by that is a Series 65 advisor, right? They completely eliminate drastic, like massive sections of that toolbox, all based on the labeling around it. I’ve seen forms of, I mean, I’ve talked with multiple billion-dollar-plus RIAs and what they’re starting to see is an agent-client base that they’ve done managing assets for, that need to retire. 

 

[01:36:35] Michael Kitces: Or are retired or even a few years in health. 

 

[01:36:37] Brad Johnson: Yeah. Like some idea of some sort of pension-like fixed income. And now I started to see a lot of the products like the model RIA compensation, 1% trail or even less a lot of times, and you’ve got because of these lenses like they’re calling myself my team up like literally no clue and this is not disrespectful to them. That’s like me saying I’m going to be an expert at managing assets if I haven’t done that for the last decade. I’m not going to be an expert. But going back to the core belief, which is let’s serve the client at the absolute highest level, what I’m not seeing happen a lot in our industry is, you know what, maybe some sort of a pension-like income stream, maybe it’s an annuity, maybe it’s not, maybe it’s a bond, I don’t know. But I’ll tell you what, I’m not an expert. So, I’m going to send you the guy down the road. I don’t see that happening a lot. And so, it just shows you there is a lot of these disconnects that they’re not serving the clients at the highest level, I guess, for lack of a better term. 

 

[01:37:39] Michael Kitces: And that, frankly, to me is the piece that actually worries me the most about the current fiduciary landscape. It’s not, you know, I’d like to see more people on the insurance side doing managed accounts. I’d like to see more people on the RIA side doing fewer managed accounts and more annuities and like let’s do everything for everyone. Because, again, I mean, that’s sort of like saying that neurosurgeon just met a guy whose knee was injured and did nothing for him like that’s a terrible doctor. No, it’s a good doctor who knows he only operates on heads and didn’t try to operate on your knee that he’s not qualified for. It’s only in our business that I find we kind of have this mentality obsession like every human being I meet who has money is a qualified prospect for me. Because, though, like every human being who has any form of physical injury or impairments is a prospect for any doctor they meet. That’s not how it works. I think that, ultimately, is our biggest challenge. 

 

And, you know, frankly, I wouldn’t want to see the doctor who’s an expert in every single part of my body at the same time unless they’re like Doogie Howser 30 years later, with even more expertise, like, you can’t be good at that many things at once unless you’re a super genius. You’re going to be good at the thing that you’re good at. The fundamental nature of a fiduciary duty not applied well in our industry yet, maybe, but in other industries, that duty of care is all about acting in the areas in which you have competency and expertise, which means first of all, just learn your stuff so you know what you’re talking about. So, our version like go get your CFP certification and maybe even a post-CFP designation beyond that but the second is know when your scope ends and bring in the other experts that are necessary. And, you know, that in and of itself is an area that we tend to draw the lines around the regulatory channels. Got no problem saying, “Well, of course, we don’t do tax stuff. You got to call your accountant. Of course, we don’t prepare your estate planning documents. Call your attorney.” 

 

[01:39:38] Michael Kitces: “Oh, but you have a bucket of money, I can always do that no matter who you are,” when you really probably shouldn’t be or there’s more of a discovery process and the discovery process may actually take you to the kinds of things we do here to help our clients is not the right thing to help this client. But I don’t think that solution has to be therefore I should have brought in my toolbox everything like I don’t teach the neurosurgeon how to also do orthopedic surgery, but teach the neurosurgeon make referrals to orthopedic surgeons. And we were good at that in channels like tax advice and estate planning advice or legal advice in general. We’re really bad about that in crossing some of the insurance investment divides. And that, to me, is really kind of the expression. It’s a combination of the expression of the bias. I can always say a little pot of money with whatever the things are that I do in my quiver. 

 

[01:40:26] Brad Johnson: Or I need to be compensated to keep my doors open therefore… 

 

[01:40:29] Michael Kitces: Right. And that, to me, is really the secondary challenge that we get into is most of us struggle so much with marketing in the first place. Going to bring it all full circle like most of us struggle with marketing so much in the first place. We feel this immense pressure, like I have to find an opportunity to work with every single client, because I might only get 30 or 20 or 10 or five or one or two a year. So, if we’re only going to get a handful of clients, it makes us even more desperate to find a way to do business with any person we actually meet. And that, to me, is the starting point of where it breaks down. I don’t know how I’m wired, like, I’m a very abundance mentality sort of guy. You know, I refer out immense amounts of business both on the advisor side and on the client-side. I refer a ton of clients to other advisors because they come in, and they’re like here’s my thing. Like, we totally don’t do that. Like, I know an advisor who does and I’m going to send you to him or her. 

 

And, you know, part of that is I think in a mentality of abundance, and part of that is I actually have a pretty good marketing system. So, I’m stressed about where the next client comes from so I can focus even down to the point of saying, we’re not going to be everything to everyone but I am willing to refer the people out who are not a good fit for us. And I think most of us have advisors have trouble with that. And that’s not even just industry channel bias. That’s the bias that comes when you don’t have a good marketing system in the first place and you’re stressed about where your next client’s going to come from, that you start convincing yourself whatever channel you’re on or whatever version it is, I got to do some business with this client because this might be my only new client this week or this month or this quarter. 

 

[01:42:13] Brad Johnson: It’s the old saying to a hammer everything looks like a nail, right? 

 

[01:42:17] Michael Kitces: Correct. 

 

[01:42:17] Brad Johnson: And when you’re stressed and trying to feed your family, there’s just personal biases that creep in. 

 

[01:42:25] Michael Kitces: And the industry has, I was going to say like in the industry has a history of that, like, you know, one of the firms I interviewed out when I was starting my career, they didn’t like me, not just because I was too young, but because they picked two other guys who had kids and a mortgage. Because they knew the other two were going to be more financially desperate to make sure business got done and I was a 22-year-old who is still living at home so I had no financial stress and they figured out probably accurately that I wasn’t going to have a big fire lit under me to push our product no matter what because I wasn’t under financial duress myself. And there really is a piece, I mean, I see it in the RIAs. I see it in the insurance and annuity channels. I see it in the broker-dealers. I see it in people starting and launching firms like you want to do right by your client. 

 

The absolute unequivocal number one thing you have to do first is get your own financial house in order because when you’re financially stressed and impaired, it tends to impair your decisions. I mean, that’s why we have disclosure, bankruptcy disclosures, and we do background checks on employees for things like their credit history, like this stuff actually matters. You know, our finances can compromise our own decisions. And so, to me, the biggest challenge that we have, like, if you can’t do everything for everyone, that’s fine. Refer out the clients that you can’t and if you can’t refer them out, that’s a problem. That’s either a marketing problem with your business or an issue of not having your own financial house in order that you’re feeling that pressure and that’s the thing to me that you have to solve first. 

 

[01:44:08] Brad Johnson: Yeah. Well, thanks for going there with me. I think that could be a much longer conversation. Obviously, that’s a big… 

 

[01:44:14] Michael Kitces: And I’m sure we’ll get a little bit of fan mail and a little bit of hate mail for this conversation. 

 

[01:44:20] Brad Johnson: You know, and to me, that’s a big problem like it reminds me of politics and religion in our industry. Oftentimes, it’s like, why can’t two people have an educated conversation? Maybe they have different viewpoints, maybe they grew up in different schools of thought, but let’s just talk openly if the end goal is the same, serving clients at the highest level. As long as that’s the end goal, you should be able to have an open dialogue around that. So, I appreciate you going there with me. 

 

[01:44:45] Michael Kitces: Absolutely. 

 

[01:44:48] Brad Johnson: Cool. Alright. So, this doesn’t turn into a Michael Kitces style blog post version of the podcast. 

 

[01:44:56] Michael Kitces: We might be there already. 

 

[01:44:57] Brad Johnson: We’re getting there. Let’s go ahead and wrap. Are you good for two final questions, and we call it a day, Michael? 

 

[01:45:03] Michael Kitces: Sure. Absolutely. 

 

[01:45:04] Brad Johnson: Okay. Thank you. So, what I want to ask you that we talked about just before we went live here, you’re a very highly educated advisor. And we basically said, would you be cool with kind of sharing? Do you have your own financial advisor? And we don’t have to go the extended version. But does Michael Kitces have his own financial advisor, what’s your viewpoint around that? 

 

[01:45:28] Michael Kitces: So, I’m kind of a split right now. I do not manage my own portfolio money. Most of that’s our company, profit-sharing plan, and that gets managed by the company. So, you know, eat your own cooking as it were. I’m going to the same models that our clients go into. I don’t have a financial planner for I call it sort of the personal, you know, just family side of things and call it the non-investment side of the financial planning, but it’s actually something we’re getting ready to do. And the dynamic for me is very much around, you know, I’m not looking for a financial planner for the technical expertise stuff like I’m good with that. I can do my tax planning and monitor my portfolio. I’ve got the technical knowledge. It’s because part of the challenge in our household I think for a lot of financial advisors, and frankly, a lot of clients in general, we tend to carve up financial duties. 

 

Some become the spouse that’s responsible for the financial stuff. Sometimes you split. One spouse does the investments, the balance sheet. The other one does the checkbook and the cash flow. Sometimes one spouse does both. And the challenge that I’ve realized in our household is because I’m the financial planner dude like I do this for a living, it’s very hard to have effective conversations with my spouse about money. Right? Like it’s hard for me not to just be well, I’m the one that does this for a living. So, here’s how it’s going to be and like I try not to be overbearing that way but I think my wife also has a natural tendency to defer to me on those decisions because I do this for a living. And essentially, I’m going to be looking for a financial planner to help us facilitate some of those couples’ conversations around money and to make sure that the conversation is more even than I think both my wife and I have a tendency to fall into, which is, I tend to stay stuck because that’s what I do for a living and give advice and she tends to defer because this is my living and she does other things and focuses her time elsewhere. 

 

[01:47:31] Michael Kitces: And I’m trying to figure out how to rebalance that household conversation a little bit. The other kind of X factor to all of it, though, is I also don’t keep a sizable like portfolio and fit a traditional advisor model in the first place. And so, we’ll be looking for someone that works on a retainer fee basis for a flat fee because as with I guess technically many small business owners, I don’t put a lot of money into retirement accounts, investment accounts. I put them into my growing businesses because, frankly, they grow a lot faster with the stronger ROI. It’s not even vaguely close. And so, you know, I don’t keep a portfolio and put a lot of dollars toward portfolios. In fact, I essentially cut off all contributions, my retirement accounts aside from doing our own internal match on our 401(k) plan for more than five years now, because I put dollars, I reinvest dollars back into myself. 

 

You know, in my 20s I was basically investing in my education and then in my 30s. And now it’s my 40s it’s investing in my businesses and it’s my career and not in, frankly, the way we often see even some clients get in trouble like, take a bad, this is failing, keep throwing more money into it losing more money, which is not good so I don’t advocate that for anyone. But when you actually have a growing business, it’s growing well, you know the ROI on marketing your business, the ROI on hiring staff for your business is often drastically orders of magnitude higher than the return you get on good old investments by my diversified portfolio. So, at some point, that will shift and eventually, I need to change that concentration risk of net worth and businesses and shift it outside. But you know, how old am I? I’m 41. I still have a really long timeline.

 

[01:49:29] Michael Kitces: And so, I also don’t fit a traditional advisor model well in the first place because of that, because I can’t work with someone on a [inaudible – 1:49:37] basis. I would have to work with them on a retainer fee basis. 

 

[01:49:41] Brad Johnson: And I also get, I don’t want to put words in your mouth, but I also get a sense you’re very passionate and you get a lot of joy about what you do. So, it might not be a business you retire from for a while. 

 

[01:49:55] Michael Kitces: No. I really can’t imagine myself retiring from this stuff ever. I don’t know what I would do with my time. You at some point, I’ll do a little bit less than the businesses, a little bit more elsewhere. And at some point, just from a financial prudence perspective, I can diversify some wealth out of the business and elsewhere, even if I’ve been still working in it, or doing some things or doing some entrepreneurial endeavors, I don’t know how to let go of them. But when you just look at, I mean, even an advisory business, if your business is growing up 15%, 20%, 25% a year or like it means the net worth value of your business is coming at 15%, 20%, 25% a year. We don’t project public markets at that rates or anything close. And if you’re good at what you do and you’re good at building business and team, you sometimes can even accelerate that growth rate by investing further into that business and trying to lift the growth. And so, I look at it from that end. Now you get higher rates of and sort of economic theory. 

 

You get higher rates of return because you’re a small business and concentrated risk and a bunch of other stuff. So, you know, we don’t do this all of your life, right? At some point, you have to diversify. But I think, frankly, for a lot of advisors and even very successful ones, they diversify far too soon, rather than putting money back into their businesses for a team and marketing, the things that you can do to pick up a growth rate once you build a good thing. Don’t throw me a bad business, but it’s actually pretty good to throw money at good business. 

 

[01:51:28] Brad Johnson: That’s one of my core coaching things I talk about a lot as you go into where do you invest inside of the marketing funnels in financial services. What’s crazy is oftentimes advisors are sitting down in the slot machine that they put in $100, pull the handle. Mike, would you ever get up from that slot, you know, this hypothetical slot machine? No. Well, that’s your business right there. Why would jump right back? 

 

[01:51:52] Michael Kitces: I mean, you know, from a pure marketing perspective, I mean, to me, there’s just this gap in the industry like we don’t measure our marketing costs and outcomes. You know, if you could figure out mathematically like, okay, and for every $2,000 I spend, I get a client and the average client goes and whatever, I get good clients to give me half a million dollars, $5,000 a year. Like, how many times would you spend $2,000 on marketing at a $5,000 client? It feels like I mortgaged my house like, you’re printing money like every one you get, it pays for the next two. You just start compounding that for a while and the numbers blow out very quickly. Most of us virtually no advisory firm. I know everything gets to the point of saying what is your client acquisition cost? What is the spend it takes and dollars and labor and time and staff and the rest to get the next client? And once you measure that, then you can start saying, “Well, is that a good ROI? Do I want to borrow more to get that? What else can I do to refine that funnel to get that cost down?” 

 

You know, I spend a lot of time looking at that stuff and we look at it on our platform. We look at in most of our businesses and marketing decisions suddenly get really easy like either the cost to get the next client is worth it in terms of what you earn from them in profits. And if it is, put more money in and repeat that formula. And if it’s not, fix your marketing and you get your client acquisition costs down. 

 

[01:53:22] Brad Johnson: Well, and just looking at your business model, you’re no dummy. And I guarantee you have blog posts that you wrote five years ago. You’ll have a podcast that was two years old. Somebody found it. Now they’re in your funnel. Now they’re on your list. Now they’re a prospect and that’s the beauty of content creation. 

 

[01:53:38] Michael Kitces: And that’s what gravitated me towards all this content marketing stuff like I now have a 10-year library of expert content I put out. And granted some of it is not so relevant anymore, because the world moves on and time changes but some of it is. You know, we still got some articles you did. We’re like that’s the leading authoritative article on that topic. People Google it and find it and like absolutely. We still get very sizable prospects leads that come in from things we wrote 5, 7, 10 years ago because, in a good way, nothing dies on the internet. Now, in the modern world, other people can cover it as well and you can get pushed down the SEO page to the point where it’s sort of dies because no one sees it. But the deeper you go with your audience and who you’re trying to serve, the more likely it is the content you create is something that no one else has created and no one else ever will create. And if you’re targeted to people that have a lot of value to you, as a business, there might only be 10 people every month who search for that. If three of them become your clients, you might blast your business to outgrow in 36 clients a year. 

 

[01:54:34] Brad Johnson: Yeah. Alright, last question. Thanks for speaking of going deep. We went super deep on this conversation. So, if you could distill down one piece of advice, obviously you’re talking to a bunch of financial advisors out there that’s led to Michael Kitces success to this point, what would that be? 

 

[01:54:53] Michael Kitces: I think overwhelmingly just be invest in yourself. Invest in yourself first. You know, I spent the bette2r part of my, well, I spent the better part of the decade of my 20s as a continuous student getting all the alphabet soup stuff, and I didn’t do it by stepping out of the workforce, because it’s actually hard to make back if you step out completely. Same conversation we have about people going to college today. You know, I took literally the minimum course load I could. One course per term, whatever it was of a designation or a master’s degree program or whatever it was. You take a minimum like just one course at a time load. It’s like, for me, it was basically a couple of hours on a Tuesday night, an hour or two on a Thursday, and a coffee house on Sunday morning, which is kind of my routine. It was a couple hours a week, little bit on Tuesday, a little bit on Thursday, and a coffee house. I just had like a standing seat on Sunday mornings. And then I did it for 10 years. And 10 years later out pops about six different designations and two master’s degrees.

 

[01:56:06] Brad Johnson:  That easy?

 

[01:56:08] Michael Kitces: Yeah. Well, and I mean, it’s the same thing for blogging, like, how do we build the platform? You know, the first 10 years all I did was invest in my education in the absolute minimum load that I compounded for 10 years. And then I spent 10 years just investing in creating content and value for people and let it compound for 10 years. And now it’s a sizable business. I mean, I think across all the different channels, you probably brought in $2 million of new revenue last year. It came after in terms of assets because not all that’s the advisory business. But, you know, I mean, we’re bringing a couple of million dollars of new revenue across the businesses, driven by all this platform. Like you don’t get that in year one. Basically, nothing in year one. It compounded for 10 years. And so, just that that slow and steady process of continuously reinvesting in yourself, we all want like the linear path or the fast path and the crappy thing about compounding, I’m like air drawing the curve. 

 

So, anybody who actually like watches the video can see this. If you’re listening, just imagine like that classic compounding curve or like, you put in a couple hundred dollars a month and you let it go and like it’s really, really low and flat for a long time and then all of a sudden, the compounding takes off and it like launches in the last few years. You know, the same thing happens anytime you’re investing yourself. You’re investing in business. It’s certainly true when you’re investing content marketing. And so, we’re all hoping for like this fast, straight line and the truth is it starts off much slower than that, but it compounds much faster than that in the later years. And we tend to give up too early. And I think, ultimately, like the bulk of my success, start from just being the right place, the right time. If I didn’t grow up in the internet age, I’d be screwed. Aside from just being the right place at the right time for the industry and the internet, overall, like, I attribute my success to ultimately mean the fact that I continuously reinvest in myself and I’m patient enough to let compounding work.

 

[01:58:10] Michael Kitces: And, you know, you got to be really patient in the early years, but as long as the numbers keep moving up, and I didn’t do it blindly, like I always had metrics I was measuring. As long as the numbers keep moving up, we so underestimate how powerful compounding is in the out years. And I’m now living that part of the compounding curve, which is why a lot of people see the stuff that I do today and building process in the early years. But just continuously investing in yourself and letting the compounding work. 

 

[01:58:39] Brad Johnson: Awesome advice. And I just want to end this conversation by saying thanks from my side, because you’ve been a mentor of sorts from afar and that’s what’s fun about the internet. We don’t have to be personal friends for that to happen and I know you’ve been that for a lot of people in the industry. So, I just want to commend you and personally say thanks from my side for the work you have put out there because like you said, in early days, nobody was reading. Now a lot of people are. So, thanks for that, Michael, and thanks for sharing your expertise here today. 

 

[01:59:10] Michael Kitces: My pleasure. Thank you for the opportunity to join you on the podcast. I’m looking forward to hearing how it turns out and episodes going forward as well. 

 

[01:59:17] Brad Johnson: All right. Until next time, Michael. 

 

[01:59:19] Michael Kitces: Take care.

[END]