Burn out is a huge problem in the financial services industry. I’d recommend finding a business model that rewards your hard work with recurring revenue. If you are on a never-ending hamster wheel of prospecting and closing business, you will eventually burn out. If your employer is built on this model, consider looking elsewhere. There are plenty of ways out there that financial planners can find fulfillment and earn a living by helping existing clients.
As part of my series about the “How to Navigate and Succeed in the Modern World of Finance”, I had the pleasure of interviewing Matt Elliott, a CERTIFIED FINANCIAL PLANNER™ and founder of Pulse Financial Planning. He provides financial planning and investment management to help healthcare professionals organize, invest, and protect their assets. Pulse Financial Planning is a fee-only fiduciary advisor and never earns a commission of any kind.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I started by selling candy bars out of my locker in middle school. When the heat (AKA principal) got onto me, I decided to focus my energy instead on studying business and finance.
While studying finance in college, I decided to pursue an internship. I interviewed at 3 firms:
- Behemoth Mutual Life Insurance Inc. The interview went well. I could see the interviewer salivating when I told him my dad was in sales, and my mom worked in finance. I was granted a second interview! Simply bring the names and phone numbers of 25 family and friends with money that would be interested in learning more about “Behemouth Mutual Life Insurance Inc.” and I’m hired! It sounded good at first, but after sleeping on it, I declined the second “Interview”.
- On the Corner of Every Neighborhood Advisor. He was well established and successful at his craft. The interview went well. It was advertised as paid — but when he offered the position, said “I just can’t make the numbers work to pay you”. I declined.
- Online Brokerage Firm. The manager was young, vibrant, and excited. My primary role would be to help service their existing clients and learn about investing. It was paid at $10/hour and would qualify for school credit. The interview went well. I accepted the position at my first employer — Scottrade.
The Scottrade internship worked out great. With a limited job market when graduating in 2010, I accepted a position as Stockbroker Trainee across the country in Indian Wells, CA (I am from Minnesota).
From there I moved back to Minnesota and earned promotions to Stockbroker and eventually Branch Manager.
More importantly, I learned my first lesson in working in finance. There is no shortage of “jobs”. You need to be careful to differentiate one-sided arrangements from legitimate opportunities.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
I don’t know if it is funny — but I did believe my employer had my best interest at heart for many years. It took me a long time to realize that I needed to take my future into my own hands if I wanted to be happy.
I guess that’s not funny, is it?
Is there a particular book that you read, or podcast you listened to that really helped you in your career? Can you explain?
The one podcast I recommend to everyone looking to start their own financial planning practice is XYPN Radio. Start from the beginning — each episode is an individual’s story on how they got started and mistakes made along the way.
More generally, I really enjoyed Malcolm Gladwell’s books “Tipping Point” and “Outliers”. They are filled with interesting lessons you can apply to any career or personal endeavor you find yourself in.
Are you working on any exciting new projects now? How do you think that will help people?
As any financial planner will tell you — doing the technical aspects of planning is the “easy part”. Marketing and getting your message across is hard. I’ve been working to create relevant content for my blog that my clients and potential clients would find useful.
If I’m successful, I’ll be able to help 1000s get their finances on the right track and relieve their daily stress around money.
Thank you for that. Let’s now shift to the central focus of our discussion. Extensive research suggests that “purpose driven businesses” are more successful in many areas. When you started your company what was your vision, your purpose?
The financial services industry has rightfully earned it’s poor reputation with consumers. Don’t believe me? Read my experience trying to get started in the industry again.
My goal was to create an environment built around 3 key areas:
- Integrity. This word get’s thrown around a lot, but the truth is that most financial advisors aren’t required to act in your best interest. I’ve taken a fiduciary oath for my clients. This means I am legally required to put client’s interests ahead of my own (no exceptions, ever).
- Transparency. Costs of investments can be confusing. Most people actually have no idea how much they are really paying for their investments. I set up Pulse Financial Planning to never receive commissions of any kind. Clients should know exactly how much they are paying for their financial plan and investments. This removes the conflict of interest that exists with many sales commission products. It makes developing the trust required to implement life changing financial recommendations easier.
- Expertise. Most people would be surprised at the low barrier of entry to calling yourself a “financial advisor”. It takes nothing more than passing 2 short exams. These exams do not cover many topics that are essential to financial planning, can be passed with just a few months of studying and do not require a college education. This is why I believe strongly in the Certified Financial Planner™ designation. The board requires a certificant to complete a rigorous curriculum and pass a 6 hour exam that covers all relevant aspects of financial planning — including investments, taxes, risk management, retirement, and estate planning. The board also requires at least 3 years of industry experience and a college education. I believe this is necessary to provide truly comprehensive and competent financial advice.
Do you have a “number one principle” that guides you through the ups and downs of running a business?
It’s a marathon, not a sprint.
Lead generation is one of the most important aspects of any business. Can you share some of the strategies you use to generate good, qualified leads?
I create content that is designed to help people. Consumers are smart. If you barrage them with things that are not relevant, or are designed to only capture their information so you can sell to them, they will know.
I approach lead generation as trying to help people first. If they see the value in what I do and become a client, great. If not, and I honestly helped them, that’s not a bad outcome either.
If a fellow CEO would ask you for advice about whether to bootstrap or to look for VC capital, how would you help them weigh the pros and cons of that decision?
I bootstrapped my business, largely because it is not an incredibly capital intensive business to start. If you are starting a business that requires large amounts of capital, venture capital may be your best option. I would avoid taking more money than you need only because it is being offered.
What measure do you use to determine the value of a company? What advice would you give to other leaders about how to get an optimal evaluation of their business?
It is no secret that the value of a business is the present value of it’s future cash flows. How do you determine the future value of a great company culture and a leader that is willing to invest several years into the future?
It is not possible unless you have a crystal ball. I would, however, put a premium on businesses that take a very long-term view and value their people because those investments will pay off and are often missed by traditional valuation techniques.
What would you advise to a founder who initially went through years of successive growth, but has now reached a standstill. From your experience do you have any general advice about how to boost growth and “restart their engines”?
Are you still hungry? Everyone gets a little complacent when the pressure is off. Consider brining in a new perspective that is eager to bring the same energy you did years ago.
What are the most common finance mistakes you have seen other businesses make? What should one keep in mind to avoid that?
Complacency based on past success. You will need to re-invent your business several times during your career to remain relevant. This can be difficult when everything you have done so far has brought you nothing but success.
Would you still be a Netflix subscriber if they delivered DVDs to your mailbox? Netflix is as big as it is because the leaders were willing to re-invent the business several times rather than become irrelevant.
You will need to do the same thing for your business.
Ok, here is the main question of our discussion. Based on your experience and success, what are the five most important things one should know in order to succeed in the modern finance industry? Please share a story or an example for each.
I see the actual investing piece of the business becoming largely commoditized over the next 10 years. We’re already seeing this happen with commission free trading and robo-advisors. This means as financial advisors, you’ll need to add value beyond what technology can do cheaper and more efficiently than you can.
The good news is there will still be a ton of work to do that a computer will never be able to do. Most of the mistakes people make with their investments are based on their own emotions. Helping people to make the right choices with this in mind will be key to an advisor’s success. I’d recommend focusing on the area of behavioral finance to understand why people make the decisions with money they do. You may find it has a lot more to do with their experience with money as a child and their own fears than based on rationale decision making.
I also see the industry getting better with some of their current sales related compensation structures. Currently, many financial salespeople aren’t required to do what’s in their client’s best interest (i.e. sell them a high cost product so they can earn a higher commission). As the commission-based compensation structure declines, advisors that are fee-only fiduciaries will become the norm instead of the exception. I see this happening for a few reasons:
1. Current sales related compensation models have eroded public faith in our industry.
2. As trusted relationships with clients becomes more important than a commoditized product sale (due to technology being able to do this better and cheaper), commission-based advisors will be forced to re-invent themselves.
3. Regulatory pressures have started to mount in favor of a fiduciary standard for investment advice. We saw this with the DOL fiduciary ruling (that was eventually stripped down) and the XYPN lawsuit against the SEC over regulation “Best Interest”. Most people are surprised to find out a fiduciary standard isn’t already in place for financial services.
4. The public has become more aware of conflicts of interest that exist with many advisors. Consumers are increasingly looking for advisors that reduce this conflict. Organizations that cater to this like NAPFA, Fee-Only Network and XYPN are growing.
5. It’s the right thing to do.
If you’re a young person, I’d have a few recommendations to keep you relevant in the future (and help you sleep at night):
1. Be competent — earn the CERTIFIED FINANCIAL PLANNER™ marks.
2. Do the right thing — only consider working for a firm that has signed a fiduciary oath to always put their client’s interest ahead of their own.
3. Be transparent — only consider working for a firm that has a fee-only compensation structure.
By far the biggest challenge is overcoming the public’s general perception that financial advisors are only out to sell them products for a commission to make money for themselves. This isn’t entirely unwarranted. It’s rare I talk to a client over the age of 40 that hasn’t already had a negative experience with a commission based financial salesperson. When I entered the industry out of college, I was naïve to this challenge you will have to overcome with most clients.
You will also need to get education and licensing beyond your 4 year degree to be able to provide financial advice. You’ll also need some experience before most people will be willing to talk to you about their money.
It takes more than simply being an honest financial professional that does the right thing for clients. You will need to do that, but you’ll also have to be able to communicate this well. If you decide to enter the financial services industry, don’t underestimate the amount of work and practice you’ll need to do to be an effective communicator of the value you bring to a client’s life. Simply being able to do technically correct financial planning analysis, unfortunately, will not lead to success.
Why It’s Worth It
Despite the challenges and transition the industry has seen, I do believe most of the changes are for the better. Increasingly, the public is seeking out qualified financial professionals instead of financial salespeople. The industry is aging with the average CFP over the age of 50 (and average age increasing every year). Many advisors in their 60s and 70s are struggling to find a successor to serve their clients and tons of clients will be in transition as these advisors begin retiring.
In addition, the financial services industry as a whole has completely ignored younger generations as a source of clients. This is simply due to the fact the main service model was to charge based on the amount of assets a client had to manage. In many cases, the minimum to work with a financial professional in the traditional “Assets Under Management” model is $250,000 or more. That can leave younger people out that are just beginning to save, or if most of your investable assets are in an employer plan such as a 401(k).
The AUM model works if you already have money, but can leave younger investors underserved. Clients under the age of 40 are just out there for the taking. The slowness of the industry to evolve from the AUM model has left a huge opportunity for advisors to serve these clients based on a subscription or hourly model instead of AUM.
Real financial planning is a great career. I truly enjoy building financial plans for people. I look at it as a puzzle — people come to me with their current set of circumstances, an idea of what they’d like to build, and a set of restraints. For example: “Currently I have $20,000 in student loans, I’m spending what I earn, and I am not willing to work past the age of 60. Getting all the pieces together for their financial puzzle and making them fit is enjoyable to me. What is incredibly satisfying though is working with them long term to help them carry out their plan and be successful with it.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
Burn out is a huge problem in the financial services industry. I’d recommend finding a business model that rewards your hard work with recurring revenue. If you are on a never-ending hamster wheel of prospecting and closing business, you will eventually burn out.
If your employer is built on this model, consider looking elsewhere. There are plenty of ways out there that financial planners can find fulfillment and earn a living by helping existing clients.
You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I’ll give you my twist on the Golden Rule for financial advisors: Treat every client like you wish your grandma’s financial advisor treated her.
How can our readers follow you online?
You can find me at https://www.pulsefinancialplanning.com/
This was very inspiring. Thank you so much for joining us!