In 2016 I carefully added another "hat" to my business. I was feeling good about the direction of my practice and decided it was time for me to sink my teeth more into Ashford and give back to the organization. So, I started directing our training program for new associates ultimately leading to me jumping right into assisting with the recruitment and mentoring new advisors to the career at the beginning of 2017. All of this while continuing to work with new and existing clients.
While training our new folks, and helping them stomach the ups and downs of building their own business, there is one thing they always come across that I STILL run into routinely when meeting a new potential client. It’s the:
"Hey Andrew, I appreciate (insert client name here) introducing us, but I'm all set on the financial advisory front," or it may go something like: "Thanks for reaching out Andrew, but I've got a guy."
Basically any variation of "I'm good", "I've got a guy", or "I'm all set" irks my nerves because in my experience, 90% of the time it’s nothing but a complete throwaway line. (However, if you're my client and you're being introduced to other advisors, keep saying the aboveJ)
People LOVE to feel like they have the “I’m good” box checked even if that’s not truly the case. I mean this type is usually the person who has about $300 in a 529 plan but thinks he’s good and ready to check the college planning box. It’s the person who thinks just because she put $300 aside to use on trip next month she has a fully functional savings account. I don’t need to write here and tell you that’s not true, but for most people, checking the box emotionally is good enough and usually that’s the BIG factor when it comes to money: emotions.
Most people are not “all set” when it comes to money because if they were, most people wouldn’t be broke. They're struggling but many are unwilling to do anything about it or explore if they're indeed "good" or if they need some help. One of the things I've learned this year from one of my business coaches in his 20+ years of working with people is this:
- 90% of people are comfortable with their struggles. They will flat out do nothing to try and improve. There is a certain comfort in the status quo.
- 10% of people are uncomfortable in their current state, whether it's financially, mentally, spiritually, with a relationship, or with their health. These people are unhappy but unwilling to go through the pain of improvement or change. Within that 10% however is a very exclusive and unique 1%.
- This 1% of people not only want to improve and achieve their best, but they're also willing to go through the pain and do the things average people are unwilling to do to reach success (whether it’s personally or professionally). These are the people that are relentless in pursuing their goals. These people would do just about anything for their family and friends and they genuinely care and you know it. They go after everything they want in life and you feel motivated, upbeat, and encouraged just being around them.
So, if you look at it, any new associates coming into financial services as well as myself only have about 10% of the population we stand a chance of being able to help. As unfortunate as that may sound, those are the people we want to work with. Ideally, we want the top 1% but we’ll give the extra 10% the chance to prove that theory right or wrong.
Luckily there are more than 330 million people in the U.S. so I have a shot with around 33 million with an emphasis on finding the 1% of around 3.3 million. The pond is big; we’ll be okay without that other 90% who don’t have the personality and pain tolerance to improve.
I generally meet somewhere between 30-50 new potential clients every month. It’s going to take me a while to meet 33 million…
Just to clarify with all this percentage talk. I’m not stressing % of income earners or net worth, I mean the personality of the person and their desire to reach their potential.
So the questions to ask yourself now are these: What type of person are you? Are you apart of the exclusive 1% personality club? Did you even make it to the top 10% club? Are you assuming that you and your family are “all set?”
Or maybe you actually are all set? Need help answering these questions? You’re in luck, I have the PERFECT stress test for this. Remember the blue collar comedy tour movies, where Jeff Foxworthy would say, "You might be a redneck if....." I'm taking this from him.
You might be financially all set if.......
- You are currently saving 15%-20% of your family's gross income or are on the path there.
Nicotine was the health crisis of our parents' generation. I think sugar will be the health crisis of our generation. The financial crisis of our parents' generation and what could be ours is a lack of saving the right amount.
My industry has done a horrible job of painting a picture for people that rate of return on their investments is what will ultimately be their financial saving grace. That’s just not true. Compound interest is great, but you have to actually put some money away on your balance sheet to see powerful results. When money hits your accounts every month or every two weeks, where does it go and in what order? Do you pay yourself first?
For more on this subject, check out my buddy, Ed Inman's article:
- You have more than a portfolio manager advisor.
"Thanks for reaching out but I already have an IRA at XYZ Financial."
Thank God, I figured you were burying all your money in the yard like Cousin Eddie in "Vegas Vacation." Last movie reference I swear…but do you remember in "Big Daddy" with Adam Sandler when the kid on the playground randomly announces to Sandler's character....."I have a bellybutton." That's how I feel when people tell me "I've got a retirement account.” Of course you do. I know that. I'm here to fix the problem you don't know about.
When I first meet a client, 99.9% of them have some sort of investment/retirement plan. Maybe the firm that runs their 401k plan comes in a couple times a year to review the employees' investment selection. There are a BILLION other things your typical family has going on financially other than an old 401k or the current one you have now. If you do work with an individual advisor, are they helping you save more and to manage your cash flow? I think the days of charging 1-2% of your money just to hold it there for you are going to come to a screeching halt with tech advances. As an advisor, you better be more than a portfolio manager.
- You're growing assets outside of your personal residence or 401k plan.
Two things here:
- Kroger is not going to take the shingles on your house as currency for groceries when you retire. "Oh but Andrew, we'll sell our house, make a big profit, downsize and have a big nest egg to live on." Are you sure? A decent 3/2 ranch in Dunwoody might fetch $450k these days. Think downsizing is as cheap as you thought? What if the real estate market doesn't cooperate with your timeline?
- With a traditional 401k, you contribute pretax dollars, so the growth of your money is tax deferred...You pay taxes when you withdraw that money in retirement at ordinary income rates, just like a pay check. So, when you contribute to a 401k, you're signing up Uncle Sam as your business partner.
Would you take on a business partner that's 20 TRILLION in the hole? Well I hate to break it to you, but every month in a 401k that’s exactly what you’re doing. Now...please don't take that as "don't do a 401k" but if it’s your ONLY asset, you're growing a tax shadow you can't out run just like this kid: https://www.youtube.com/watch?v=g14oX2yOSls
- You have a clue about your current protection overview.
- You understand your liability limits for your home and auto insurance. It’s not, “Well I have whatever my parents got me when I was 16.” Chances are their coverage isn’t good either…
- You have a Will, trusts and health care directives. They’ve been updated more recently than the ’96 Olympics. A probate judge won’t have to decide between your Coachella enthusiast brother or your mid life crisis suffering ex-sister in law as the guardian of your kids…
- In 30 minutes or less, you could find and explain how you’d get paid if you got sick or hurt and you can’t work and for how long. 70% of your income is replaced…not less than 50%.
- You know how much life insurance you have. Your spouse’s ability to adapt to the newest online dating app will not be the livelihood of your family. Your income is replaced…
- You have a plan for your assisted living expenses. (They’re coming, currently between $200-$300/day.) Do the math on that along with a bear market…
- Your advisor isn't 10, 15, 20, 30 years older than you.
Another line I hear occasionally is "I'm good. I’m working with my buddy’s dad and he’s been doing this for 40 years." While I can appreciate experience, and I could probably learn a lot from your advisor (like how they helped guide clients through 2008 or Black Monday), what are you going to do when they retire?
When I joined Ashford after my illustrious Division II football career (0-2 passing with 1 interception, google it) I always thought my age would hurt me. Now it’s my biggest asset. I'm 5 years in but younger than 30. When you step off into that time where the pay checks stop, I'll still be here. I'll be working. The average financial advisor is 55 or older, I can all but promise you they won't be working. Maybe you need someone who will be there then, who will adapt and grow with you, the industry and the technology.
Do you really want to be handed off to your advisor's kid? (I heard he tore it up in his 6 1/2-year college experience in (insert SEC football town here). I'm sure he's legit. You'll be fine).
- Your behavior is in check.
You have the expert. They care, they have the resources at their back, they'll be there for you in the long term. Imagine you're lost in a desert, and have to get over a mountain to the other side in order to survive. An expert comes along and they know the path to get there. All you have to do is follow them, are you still going to do your own thing? Are you going to follow the instructions in their order or the order that fits your "priorities"?
Now this list could go on but I think I’ll stop there because if by this point you aren’t reconsidering if you are truly “good” then maybe you are. Or maybe you’re just really in denial or you haven’t met anyone you trust to look under the hood with you.
I feel like I came across as "snarky" in this post but it’s only because I'm deadly serious about this stuff. This is my passion. (Not to mention I'm writing this at 30,000 feet and turbulence scares the daylights out of me so I'm a little on edge at the moment. (This is why my wife hates flying with me...)
People need help, I know it. They're not "all set" and when they find out the hard way, it’s often times too late. I grew up in a nice suburb of Atlanta and watched dozens of successful families I care about fail financially. It rips families to pieces.
So, to those of you that tell me "you're all set" I wish you luck.
But to those of you that do want help and are willing to go through the pain of improvement, those that can lead AND follow, I'll die trying to help you and give you everything I've got. You can also check the box and feel “all set” because you will be or you will be on your way to that feeling.
So, I challenge you to ask yourself if you are a part of the 90% or are you in the elite 10%. And if you answer 10% than I have a follow-up question: Are you the unwilling 9% or are you that extra, rare, special 1%? The choice is yours…