The Perfect RIA

Latest Episodes:

Stop Lying to Yourself [Episode 27] May 17, 2019

Show notes

There's something that plenty of advisors are guilty of doing without even realizing it: lying to themselves. It's easy to inflate the numbers in your practice, or even guess at them without truly knowing the metrics. And while it may seem harmless to toss around estimations, the truth is that it's actually quite the opposite.

In this episode, Matt and Micah dive into the subject of integrity and how to make sure you're living and owning your truth. Listen in to learn how this subject relates to continuous growth, improvements in your practice, and increased efficiency.

You can find show notes and more information by clicking here: http://bit.ly/2UMSDfU

Appointments Outside of the Surge [Episode 26] May 10, 2019

Show notes

When it comes to client meetings, we've talked a lot about why grouping appointments is beneficial to you, your team, and the people you serve. But what happens when someone wants to see you outside of the appointment surge? Do you let them come in during a time you haven't blocked off for meetings, or is it better to stick to your pre-established schedule?

In this episode, Matt and Micah discuss what it takes to reach that important balance between working with clients to achieve their goals and making sure they don't dictate your full schedule. Listen in to learn how to set time parameters that empower both you and your clients, as well as systems you can put in place to make sure client communication runs smoothly and efficiently in your practice.

You can find show notes and more information by clicking here: http://bit.ly/2L0dxII

Luck of the Draw [Episode 25] May 03, 2019

Show notes

Too often, people hang onto the idea that anyone who is successful must be lucky. Worse yet, those same people decide that a similar type of success is impossible for them because they believe that they don't have that kind of luck. So today, Matt and Micah are setting the record straight about what really leads to success.

Listen in to hear how attributing others' success to luck not only discredits their knowledge and hard work, but also discourages us from taking ownership of our own ability to change our situations. You'll discover where "luck" truly comes from, how to adjust your mindset so you can learn from successful people instead of envying them, and what you can start doing today to create the kind of practice you want.

You can find show notes and more information by clicking here: http://bit.ly/2X895Zw

Let's Talk About Taxes! Part 2 [Episode 24] Apr 26, 2019

Show notes

Key Links

[Link Needed for QCD/Tax preparation document Report that Matthew generates for clients. He references that if someone emails Colleen, we can get a sample of it for the show notes around the 12:34 mark of the episode]
Gear Up Program to learn about taxes: https://checkpointlearning.thomsonreuters.com/GearUp
Bob Keeblers site for education resources: http://www.keeblerandassociates.com/about
Ed Slott's website for resources: https://www.irahelp.com/
Michael Kitces' site: https://www.kitces.com/

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Important Show Note/Disclaimer: When Micah discussed doing paperwork for ROTH conversions/rollovers, he was referring to establishing standing instructions for the client with the custodian so that if a rollover is needed, the 'link' and permission has already been established. Micah was NOT suggesting that you have clients sign paperwork that is held until needed. This would be a huge compliance issue that we strongly discourage.

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Matt and Micah are back to talk about taxes! Last episode covered a lot of ground, but there was still a few key points that hadn't been addressed.

So, this talk covers expands upon the previous themes of bringing massive value to clients through tax planning and a solid communication of your expertise to the client. And as a showcase of the always pragmatic advice of the Perfect RIA hosts, they delineate key tax planning strategies for your benefit, as laid out below.

[#1 Tax Benchmarks ]

Micah has a system for tax planning with clients that accounts for the next 30 years. He stresses the importance of looking forward and not in the rearview mirror. Because tax codes aren't static (nor are rates), dynamic adjustments are needed. Only forward-thinking moves can adequately handle this.
And once this 30+ year benchmark is projected and established, then every tax move with the client is relative to the baseline number that is set. It's a very tangible, measurable way to plan for taxes. And keep in mind, the overall goal is save the client money, so the benchmark becomes a way of adjusting to taxes to make that happen.
And one more vitally important aspect of this benchmark is that you have to communicate to clients in a graceful and effective way. Being able to articulate the plan in a way that keeps in mind the emotional aspects of writing X amount of dollars now to save money in the long run can take a lot of grace. Very important to consider.

[#2 Enhancing a Client's Tax Benefits Through Charity ]

For tax planning, Matthew involves himself with client's and maximizes the return that his client's get for charitable giving. He says that giving to charities is not a means to an end for a tax break, but that it can still be used as a way to leverage tax benefit.
They both also bring up the value of Qualified Charitable Distributions (QCDs), which can bring a lot of tax benefit. But Matthew also states that whoever is doing the tax preparation needs to be told about the QCD, or else it might go unreported.
And to ensure that clients get the tax benefit they are entitled to, Matthew actually sends out tax letters to the tax preparers of his clients to make sure they know about any QCDs, so they can factor them in.

[#3 Asset Sales ]

Rental properties, land sales, and other various business aspects are often neglected. Micah stresses that no, RIAs are not real estate agents, but you can still look at demographics and stats that are reinforced by taxes from planning perspective. Often real estate agents won't factor in a long term strategy for taxes like a tax-savvy RIA can for clients.
It's all about timing! And good timing often means being proactive with clients about the timing of an asset sale and what that means from a tax standpoint. It could be the difference of saving $15,000 in taxes for a client.

[#4 Roth Conversions and Rollovers ]

Micah breaks down the combination of Roth conversions and rollovers for increasing the tax value for clients.
And Matthew explains what he does in his practice to achieve 'tax liquidity,' where he moves remaining amounts of money in a client's tax bracket to a Roth IRA.

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Matt and Micah's Action Items

You need to start getting tax returns from clients. Every page is key! And make sure you are articulating the importance of getting the tax return so that clients are jumping to send it to you!
Continue your tax education. Don't settle for a certain amount of knowledge. Really keep studying and improving your tax knowledge. Micah suggests Gear Up seminars and Ed Slott for tax learning and tips. Matthew suggests Bob Keebler and Michael Kitces as resources.
Learn how to articulate this essential tax information to clients.
Have a checklist, especially if you're newer at doing tax returns, to ensure that you're covering your bases and asking the right tax-related questions.

More details at: http://theperfectria.com/lets-talk-about-taxes-part-2/

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Produced by Simpler Media

Let's Talk About Taxes! [Episode 23] Apr 12, 2019

Show notes

Key Links

Micah's appearance on Michael Kitces' podcast: Adapting the 4-hour work week

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Matthew and Micah are of the opinion that an expertise in tax planning (not preparation as is accentuated in the episode) is an essential base of knowledge to cultivate for all financial advisers.

As they both elaborate, it would be a case of gross negligence to neglect discussions of taxes with clients. In fact, Micah says that taxes are the biggest expense for any client. So you should invest considerable effort in tax planning.

This begs the question of tax expertise in your own firm. Are you well-versed in the nuances of the tax code? Can you provide the necessary value for clients on the nature of tax planning?

Matt and Micah talk of their own experiences and give advice, represented by these key talking points below.

[#1 Difference Between Tax Preparation and Tax Planning ]

Micah stresses that he doesn't give advice on tax preparation, which involves gathering the necessary documents, etc.
He is involved in tax planning, which means that the future is brought into focus, and things are looked at that might affect the taxes of the client. So, it doesn't hinge on giving tax advice.
Matt and Micah share that the role of the tax planner really is about educating compliance officers, CPAs, and the client, about the line between financial planning and tax preparation.

[#2 The Infrequency of Tax Planning in the Industry! ]

As our hosts state, it is surprising just how little tax planning is being done for their clients.
They state that even though clients may have CPAs and other professionals who are handling taxes, what they're really handling is the tax preparation side and not the planning side.
This means that ultimately clients are spending a lot more money on taxes than need be because no one is doing the necessary planning.

[#3 The Importance of a Client's Tax Return ]

Matthew likens a client's tax return as an essential tool for checking the heartbeat of a client. That is, he compares it to a doctor checking the blood pressure of a patient, as an introductory measure.
And Micah says that a tax return is a quantifiable way of measuring the value you can bring to your client. It's also key for making tax planning decisions as well.
But they stress that you need to know how to read the tax return to a T. That way you can break it down and readily discuss it with clients. And it shows you have a handle of what's going on. It is very valuable.
A warning from Matthew though is to really know your stuff before you jump into tax planning with clients. Also, making sure you work as a team with the tax preparers is essential as well.

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Matt and Micah's Action Items

Go out and get tax returns for all of your clients. If they ask why, just simply tell them how big a role that taxes play in getting the big picture and returning maximum value.
If you are getting the returns, the next step would be studying the tax codes, knowing the new laws inside and out, and actually using the information to return value to your clients in whatever way possible.
Learn how to view a tax return and then communicate that information to clients in an effective manner. It's one thing to know taxes like the back of your hand, and it's another to explain it in a clear way to someone who doesn't.
Incorporate taxes into your prospect process.
Set up a long term tax planning strategy with every client so that you know their future tax implications. Clients love having that safeguard in place.

More details at: http://theperfectria.com/lets-talk-about-taxes/

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Produced by Simpler Media

To Fee, or Not to Fee? [Episode 22] Mar 29, 2019

Show notes

Key Links

Micah's appearance on Michael Kitces' podcast: Adapting the 4-hour work week
Joe Lukacs' website: http://practicepower.net/

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Some common questions that Matthew and Micah encounter are: "should I charge a commission? What about a planning fee? How much of a percentage should I take for that?" And so forth.

If you can think of any variation of question regarding fees, Matt and Micah have been asked it.

And so in turn, to set your mind at ease, they spend the entirety of this episode setting up simple systems and tips for determining how much, when, and why you should charge a certain rate.

Below are the most telling aspects of the episode.

[#1 Make a Business Plan ]

As Micah states, it's ok to charge different amounts for differing levels of service. When likened to what a motel charges, depending on the amenities, service, and value you receive, the price expected will rise in response.
And the way to really know how much you should charge is to break down the financial goals for your firm through a business plan. This is the first thing that should be done. The purpose is to delineate the amount of money needed to be able to guarantee that clients will receive the massive value they deserve.
But Matthew confesses that he didn't really have a business plan in place until his practice was a little more profitable. A decade ago he used to charge 1% for certain fees (to keep it simple). So he offers that as an alternative to a business plan until your practice is robust enough to warrant one.

[#2 The Many Different Types of Fees ]

Income fees, asset fees, hourly fees, commissions, and the list goes on. How should you build a system around the many different types of fees out there? Both Matt and Micah suggest that you don't overcomplicate the issue.
Matt also likes to stress that perceptions of fee-only advisors could be that of the slimy used-car salesman. But really, there's no one way of charging that is better than the other. It's up to you as a person: your integrity, character, and the value you bring to your clients.

[#3 Don't Stigmatize Any One Type of Fee ]

As Micah elaborates in an anecdote he shares, he provides direction to clients regarding insurance. It doesn't earn him a lot of revenue, not by a longshot. But it definitely brings value to his clients who would be thrown out to the wolves in certain situations.
Matthew echoes this sentiment by stating that commissions shouldn't be stigmatized. That is, you shouldn't feel the need to protect your clients from certain methods of fees (commissions from an insurance agent), you should only focus on bringing clients as much value as possible. So if that means someone else is getting a commission based on your actions, there is nothing inherently wrong about that dynamic. The outcome for the client is most important.

[#4 Transparency With Fees ]

Micah expresses his dislike of surprise fees and undisclosed commissions. Again, whatever fee you decide on (fee-based, fee-only, commission, etc) doesn't matter so much. There's nothing wrong with any one of them. But you have to make sure to communicate all you can about fees to the client.
And this transparency has a lot to do with your integrity as an advisor as well. Being willing to openly discuss how and what you charge is key for perceptions of your integrity for clients.

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Matt and Micah's Action Items

Let your fees reflect the real value you bring to clients. Not through some abstract interpretation that is far removed from the actual operation of your practice.
Jump on Joe Lukacs' website: http://practicepower.net/. For his resources on how to cultivate the necessary internal dialogue for bringing value to clients. He calls it My Operating System (MYOS).
Look to see what the non-independent brokers (the wirehouses) are charging their clients. This is just for a frame of reference for what you should be charging your clients relative to the service and value that you provide.

More details at: https://theperfectria.com/to-fee-or-not-to-fee

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Produced by Simpler Media

Account Minimums as a Metric for Finding Ideal Clients [Episode 21] Mar 15, 2019

Show notes

Every advisor doesn't necessarily need to establish a clear-cut account minimum for their clients. In fact, Micah Shilanski doesn't have one in his practice. He has a system of fees in place which function in a very similar way.

But for those who do establish account minimums, like Matthew Jarvis, this all-important number will guarantee, at the very least, the growth of your practice.

To ensure that you practice what Matt and Micah consider to be one of the most important facets of the industry, they provide some great advice on the topic through these keys talking points.

[#1 Be Ready For Clients Who Are Below Your Minimums]

Matt starts off right away with the recommendation that you should know how to react to the select clients who fall below the account minimum you have set in place.
A great practice that Matthew likes to utilize when clients don't meet the mark is to refer them elsewhere using an apt analogy. He likens himself to a cardiologist. But what the client actually needs is a neurosurgeon. No hard feelings, just not at the right place.
In addition, for those who perhaps get irked that you won't take them on as clients, explain to them that by taking on any more clients, you run the risk of spreading yourself a little thin and taking away value from already existing clients.

[#2 It's OK to Tell People No! ]

It's hard to tell people no sometimes. If you have a new practice, if you have a more general enterprise versus niche clientele, the idea of turning people away from your venture can be difficult.
Micah says one of the quickest ways to grow your practice is to respectfully tell prospects that don't fit, no.

[#3 Discounted Fees? Not a Good Idea! ]

The question of 'what if it's someone you know?' comes up and Micah states that every instance where he has been involved with a discounted fee situation has blown up in his face in some say or another.
But Micah also does state that he has done some pro bono work in the past with strict conditions in place that actually led to the making of very strong clients he still works with to this day.

[#4 The Risks of a Hybrid Firm ]

Matthew says that making your firm a quasi-charity will probably lead to burnout because you are burning valuable time and resources on many different cases. You aren't really doing anyone that much of a favor.
As Micah states this hybrid dynamic (part charity, part financial advising practice) makes for a confusing time for clients. This is because so many clients are part of the same network and know each other. If you have a reputation for pro bono work, recommending clients becomes harder: "Do I recommend those who need cheap work or those who will bring more value to the practice?"

[#5 Common Mistakes Most Advisors Make ]

All business is not good business. In this respect you risk running into the quantity over quality realm i.e. rushing around in a mad frenzy with too many clients.
If you are afraid that your hard account minimum (say $750,000 in revenue) is too much and you'll miss out on so many clients, don't worry! The million dollar clients are out there and will find you.

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Matt and Micah's Action Items

Develop a strategy for communicating with the prospects that you are not interested in working with.
Train your team on how to filter phone conversations regarding inquiring prospects who want to join as clients.
Determine who your ideal client is: assets, age, profession, location, and so forth.
Set your soft and hard minimums.
Have an outlet for pro bono cases.

More details at: https://theperfectria.com/account-minimums-as-a-metric-for-finding-ideal-clients

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Produced by Simpler Media

Tips to Maximize Your Return on Time [Episode 20] Mar 01, 2019

Show notes

Key Links

Book that Micah references: Digital Minimalism by Cal Newport
Time blocking series by Matt and Micah: https://theperfectria.com/time-blocking/
4-Hour Workweek by Tim Ferriss

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Matt and Micah are here to talk about the importance of what they define as 'return on time'. It's a concept set in place to ensure that time is spent growing revenue.

Because revenue and growth are both extremely important for the longevity of your firm, your time should be spent accordingly.

To calculate your return on time, Matt simply divides the amount of hours he works every year with the gross revenue of his firm. This then is his 'hourly rate'.

There you have it. Simple enough, but oh so crucial for weeding out the work hours that don't serve your practice. If you're in the middle of doing a task that doesn't equate to your hourly rate, it's probably not worth your time.

The rest of this episode is spent reinforcing this idea. Here are some of the key principles to echo:

[#1 Don't 'Play Office']

Matthew admits to his wasting time with powerpoint presentations and obsessing over the minutiae of the slides, but realizing that if he spent 6 hours on designing the thing, what kind of value was he bringing to his practice? Was he making his hourly rate? Not at all.
Again, playing office in this context means spending too much time on tasks that would be best delegated to someone with powerpoint design strength. Someone who could knock out a powerpoint in 30 minutes, instead of wasting 6 hours on font size.

[#2 Forcing Mechanisms for Productivity]

Matthew likes to set a timer when he's designing a new financial plan. In addition to making the financial plans simple (a different podcast episode entirely), he makes sure he has this simple forcing mechanism in place, or else he can get caught up in the details.
Micah, in addition, likes to remind himself that his work should be bringing his practice, his family, and his clients as much value as possible.
Another example is that Micah has to constantly remind himself that he does need to delegate tasks to other people. He can get caught up in thinking he can retain and handle a lot of different responsibilities that are best delegated elsewhere.
Never underestimate post-it notes! Micah likes to have a note he sticks on his computer that keeps him focused on the 5 most important tasks he has to get done during that day. Essentially, he limits the things he needs done in his day to the most important.

[#3 Outside Accountability ]

To keep yourself on the straight and narrow of productivity and revenue-producing best practices, your team, clients, family, and so forth can help keep you focused.
Having your assistant keep you on track with meetings and to stay less-distracted by 'shiny objects' as Micah states, brings that third-party accountability that is so crucial.

[#4 Misconceptions About What is Required for Work ]

Matthew says that so many feel that being reactive is real work. In other words, you need to block out the required time for responding to emails: always being on call to the whims of clients or killing your own productivity by stopping and starting projects to respond to an IM (if you can help it) is a bad practice that detracts from your overall value.
Don't let your teams interrupt you all of the time. A better system needs to be set in place to prevent your teammates from always interrupting your flow.
Social media and news is not needed to be a really good advisor.

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Matt and Micah's Action Items

Check out the time blocking video series that Matt and Micah just put out recently.
Put a post-it note on your computer as a reminder to work your true hourly rate.
Read or reread the 4-hour workweek by Tim Ferriss.

More details at: https://theperfectria.com/tips-to-maximize-your-return-on-time

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Produced by Simpler Media

Stop Pretending to Work [Episode 19] Feb 15, 2019

Show notes

Key Links

Book referenced in this episode: Eat That Frog! by Brian Tracy

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Matt and Micah are tired of well-worn assumptions about advising. In particular, about how lifestyle advisors are lazy by nature.

On the other end of the spectrum, many think the job should entail 60+ hour work weeks.

Both are wrong. It's not about the time spent, but how effective the time was used. Matt and Micah have four words of advice to give to advisors: quit pretending to work.

The hosts lay the issue to rest through these tenets:

[#1 Evaluate How Much Work You Actually Do]

Really dive into the weeds and evaluate what you do every day. If you are reading ESPN articles, stop. If you are on social media, disconnect. If you are working 60+ hours a week, ask yourself if you are just pretending to work. Really be honest with yourself.

[#2 Take Time Away From Office]

A counterintuitive notion, but one which makes your work practices effective.
Schedule time away from work to keep yourself fresh. An advisor who is fresh is an effective and personable client.
Someone who is burned out, working 60+ hours a week, is not going to be able to bring massive value to clients.

[#3 Work for a Thousand Dollars an Hour ]

This means to examine every action you take and ask yourself, "Am I doing something that is worth a thousand dollars an hour right now?"
This also means working with clients as much as possible. Making calls, setting up meetings, and helping a client achieve their goals is much more valuable than hiding behind a computer screen. Do real work. Don't pretend.
Do the things you find yourself avoiding at the office. They are probably the most important.

[#4 Analyze The Overall Scope and Vision of your Firm]

Analyze the evolution of your business.
Take time to think, plan, and practice forward-thinking with your venture.
Work in-house and make sure your team dynamic is strong.
If working alone, hold yourself accountable, and look to strengthen your prospecting, process, and overall net revenue.

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Matt and Micah's Action Items

Put an alarm on your phone that reminds you to ask yourself the question: "Am I doing something that is worth $1,000 an hour right now?"
Write up a list of things that are not worth your time at the office: social media, websites, ESPN articles. Get rid of them.
Set up an exercise where your team holds you accountable for every time they catch you on social media or wasting time. Pay $100 to a lunch fund or for fun team activities. Hold yourself accountable that way.
Shorten your work day, as it will make you work more efficiently.
Set a hard boundary that bars you from working past a certain time. Let's say 5 or 6 PM.

More details at: http://theperfectria.com/stop-pretending-to-work/(opens in a new tab)

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Produced by Simpler Media

Talking Points for True Communication with Clients [Episode 18] Feb 01, 2019

Show notes

Key Links

Books referenced in the episode: Extreme Ownership || The Dichotomy of Leadership by Jocko Willink and Leif Babin
The Five Love Languages by Gary Chapman

----According to both Matt and Micah, to truly know your clients, you have to put these key principles to use in your practice:

[#1 Learn The Communication Styles of Your Clients and Team]

According to Micah, there are about 15 different communication styles out there, but he personally likes to use 4 styles that he and his team attribute to clients and each other: these are the Driver, Analytical, Amiable, and Social communication styles.

The Driver is someone who wants to get things done right away. They aren't impatient so much as they are eager to get right to work and tackle their tasks diligently.
The Analytical person on the other hand works at a much slower clip because they want to make sure their ducks are all in a row, that all of the relevant data is squared away, and that no surprises crop up.
Thirdly, Amiable types of communicators truly value conversation and friendliness and won't open up and communicate effectively until they feel comfortable enough. Opening meetings with conversations and chit-chat is the best way to communicate with this style of person.
Lastly, the Social type is more spontaneous. A person with this communication style tells you what's on their mind and is expressive in their decision-making process. Maybe a little impulsive and emotion-driven, but in the best way, of course!

[#2 Start Meetings With a Client-First Mentality]

Like Matthew states, starting meetings by addressing the needs of the client first has made all the difference in communicating with his clients in an effective way.
Start with the phrase: "How can I be of most assistance?" Or a variation of the same phrase. The emphasis should be on turning attention towards the client first, as this will help ameliorate any nagging concern and thus open up a more concentrated meeting thereafter.
A follow up question of, "anything else on your mind?" is always a great addition to the aforementioned phrase.

[#3 Ask the Client About Their Most Pressing Expense(s)]

Micah says a great way to gauge the priorities (and subsequently adjust to them) is to ask what the next 1-2 months of cash flow will be most directed towards. If it's a vacation or a trip versus tuition for a grandchild, then Micah has the information he needs to communicate further with clients.

[#4 "Can You Tell me More About That?"]

One of the most effective questions in the book, asking if clients can further articulate an expense or a plan can initiate a positive dynamic of trust, as well as unlock information that would have stayed put if not addressed.

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Matt and Micah's Action Steps

Start small! Take your top 10 clients and figure out their communication styles.
Next step is to go internal and attribute a style to yourself and your team members. Be honest and take ownership!
Lastly, Matthew suggests buying The Five Love Languages by Gary Chapman, which is not only for learning how to effectively communicate with your spouse, but for broadening your mind on the whole spectrum of communication styles and methods out there.

More details at: https://theperfectria.com/talking-points-for-true-communication-with-clients

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Produced by Simpler Media

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