You're listening to “Financial Advisor Marketing”—the best show on the planet for financial advisors who want to get more clients, without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal.
James is the founder of TheAdvisorCoach.com, where you can find an entire suite of products designed to help financial advisors grow their businesses more rapidly than ever before. Now, here is your host, James Pollard.
James: Every so often, I like to do an episode where I break down a plan for financial advisors who are looking to make a certain amount of money or reach an income goal, because at the end of the day, you are in business to make money.
Now, the way you make money is by serving others and you make more money as you become a better servant and/or serve more people and that's really all there is to it. What's cool is that I have the Inner Circle newsletter, which allows me to see what successful financial advisors are doing and how they become better servants. [01:02.4]
I've also been able to observe unsuccessful financial advisors and I’ve paid attention to what they do and don't do differently from the successful ones, and I’ve noticed quite a few patterns over the years. The reason I picked $500,000 per year in the title of this episode is because it is a good sweet spot for where you can really begin accumulating personal wealth, especially if you keep your expenses low. It's also something that pretty much everybody can do if they work at it.
To use a fitness analogy, it's like getting below 10% body fat, if you're a man. For women, it'll be a little bit higher. Almost anyone can get to that level, assuming they work hard and stay disciplined. It is achievable through the everyday person, and if you're below 10% body fat, then you are an exceptional human being. But getting below 10% body fat does not mean you will be a supermodel. It does not mean you will be a bodybuilder. It just means you are exceptional, but you are not at the zenith. You are not at the pinnacle. [02:02.4]
I think of money the same way. Almost everyone has the capability to make $500,000 per year, but not everyone has the discipline. The same isn't necessarily true for $5 million or $10 million per year, because it just takes a different ecosystem, a different set of skills to generate $10 million per year. It is significantly more difficult to make that much money, especially as a solopreneur. Of course, it can be done, but it's like becoming the bodybuilder. It basically becomes your whole life at that point. You need a little juice, no pun intended and that is how you get the eight figures per year.
But I'm going to assume that the $500,000 is revenue, too. Please don't get nitpicky with me. If you want to picture $500,000 net, then adjust your numbers accordingly. The strategies in this episode still apply. Let's say that you net $300,000 per year. After taxes and all your expenses, you've got $500,000 in revenue, $300,000 net. You're spending 200k a year. Okay, this is very, very, very easy to do as a solopreneur. [03:07.6]
The average household spends about $63,000 per year. If you have average expenses, it means you will have $237,000 to invest. Are you following me? You start with $500,000 revenue. Then you get to $300,000 net, which, quite frankly, I'm being conservative there, too. Then you spend $63,000. You are left with $237,000. If you think that is unachievable, if you think you can't do that, I'm telling you, you're thinking too small. If you're like, Oh my God, that sounds really hard. I could never do that. You're thinking too small. You need to really open your mind and, hopefully, this episode can help you.
So, 300,000, minus 63,000 for expenses. Those are the average expenses for American households. You're left with $237,000. But I know that, in the real world, you would treat yourself. You'll take some vacations. You'll indulge a little bit. We're all human. Let's say you're left with $200,000 per year to invest. How quickly could you build wealth, investing $200,000 per year? [04:07.8]
I put it into a compound interest calculator, and starting from zero, at an 8% rate of return, you will have $3.1 million after 10 years. If you stopped investing after 10 years and you let that money grow for another 10 years, it would grow to $6.7 million, meaning, you work, work, work, work, work, like Rihanna. You put the money together and you don't touch it after 10 years and you let it grow another 10 years. You’ve got 6.7 million.
When you start thinking about numbers like this, you can begin to put together your life plan. You can bust your butt off for a little bit. You can get to that metaphorical 10% body fat of income, and then invest almost all of it. Is this difficult? Yes, but that's why most people don't do it. They want something easy. This is not easy, but it is worth it. [04:57.6]
Now let me give you the two things you need to get to $500,000 per year. The two things you need are the right offer and the right audience. Having the right offer means you need to be good at something. This might be tough for some of you to hear, but you might not be good at what you do. You can't multiply zeros. If you suck at what you do, then you're going to have to improve your skills, but you need to be good at something.
Then you need to find the right audience. These are people who value your specific skill that you bring to the marketplace. You might be great at something, but nobody values it and nobody is willing to pay you for that skill. If that's the case, then you're going to have a bad time.
I want to share a story with you about a guy named Shoji Morimoto and I'm probably butchering that name. He's known as Japan's Do-Nothing Guy. People pay him to accompany them and do nothing. Yes, doing nothing is his skill. He doesn't engage in conversation. He doesn't do anything than be there at whatever event he has been hired to attend. [06:03.2]
He's been hired to wait in line for people and to wave goodbye to them at the train station, and you might think that's something, and you're right, it is something. But he's been branded as the Do-Nothing Guy. He's not fixing cars. He's not installing pipes or electrical wire. He's not doing tax planning for people, but he's still providing a service that people value. He has the right offer for the right people. It doesn't matter if you like it. It doesn't matter if you think it's a waste of money.
If you're a hater and you're like, Oh, I can't believe he's getting paid to do nothing, and I have so much more value than him, he's getting the money and you're not, okay? It doesn't matter if you think that. His market does not think that. There are people who think hiring a financial advisor is a scam, but guess what? Those people are not your people. You need to find the right audience. [06:55.2]
Shoji Morimoto isn't a lazy guy either. He has a postgraduate degree in physics, but he discovered that doing nothing is a skill and people would pay him for that skill. If he wasn't getting money with his physics degree, but he can get money doing nothing, and he's money-motivated and he understands that he needs to build wealth for himself and his family, and to build a legacy and to donate to charity and just make the world a better place, then he pursued the path of doing nothing.
I frequently hear from financial advisors about how difficult it is to get clients and how hard it is, but this guy's service is literally doing nothing and his calendar is full. Is it possible that he knows something you don't know? Hmm. Maybe he understands how important it is to have the right offer for the right people, and if he can find a niche, so can you.
In fact, niche marketing is much easier for financial advisors because advisors offer something that is, in my opinion, this is just my opinion here, a better service than doing nothing. I think financial planning is incredibly valuable and it provides a lot of real, tangible quantitative value and qualitative value to people in their lives. If that guy can fill his calendar doing nothing, imagine what you can do. [08:08.4]
If you're not where you want to be, wake up. Realize you can do it. It is possible. I'm not trying to motivate you or anything. I'm not trying to be a motivational speaker. I'm merely pointing out that markets gravitate to people who serve them—and speaking of markets, a big part of getting to that $500,000 per year, the milestone, is understanding supply and demand. I am amazed at how many financial advisors do not understand basic supply and demand.
Now, let me tell you something. If you haven't read Basic Economics by Thomas Sowell, you need to read that book right away. I started off as an economics major in college because I loved econ, but I ended up dropping it because the professors were so gosh darn boring. I loved the material, but hated the professors. I really did. They were just absolutely awful. They were just terrible. [09:03.3]
When I got my hands on Basic Economics, it was like my whole life started anew because he explains economics better than any textbook I’ve ever read or any professor I’ve ever had. One of the fundamental tenets of economics is the idea of supply and demand. Supply and demand are some of the most powerful forces in the universe. If you use them correctly, it's pretty easy to become more successful. It's pretty easy to make more money, spend more time with your family, whatever you want to do.
Imagine that there's only one source of fresh water in the world and it's owned by a single person. Suddenly, the world's demand for water will be focused on one fixed supply. What would happen? The price would skyrocket. The same is true with food, energy, shelter, everything. [09:54.0]
Hey, financial advisors. If you'd like even more help building your business, I invite you to subscribe to James' monthly paper-and-ink newsletter, “The James Pollard Inner Circle”. When you join today, you'll get more than $1,000 worth of bonuses, including exclusive interviews that aren't available anywhere else. Head on over to TheAdvisorCoach.com/coaching to learn more.
Here in Delaware, here's a fun fact, there are more chickens in Delaware than people. I don't remember the exact stat, but it's like 200 times the amount of chickens or 200 chickens per capita in Delaware, so chickens are abundant. I can go out and it's practically raining chicken, and that way, I can have fried chicken and I can have all little chicken tenders and chicken nuggets, and all the chicken dishes that I want.
But one of the benefits of being a Delawarean is the chicken is cheap. Hmm, why is that? Because this supply is so abundant. As demand increases and supply remains fixed, price goes up. If there was only one chicken and it had to be spread across 800,000 people and 800,000 people were all bidding for that chicken, they're like, Rah-rah, I want that chicken, the price of that chicken would be way, way, way, way, way higher than it is today. [11:11.2]
I currently charge $2,500 for 30 minutes of coaching. Is that a lot of money? I don't know, but sometimes I think I need to charge more, because that is my “force me to help you” price, because, quite frankly, I don't want to coach people. I would rather work on my problems instead of yours. I would rather build my businesses and increase my income that way. Why in the world would I coach someone for 100 bucks an hour when I can make more than that building my businesses? Hmm, that my friends is basic economics.
However, I'm not stupid and I know what my personal income is compared to what I can reasonably make in the marketplace, and if someone wants to invest $2,500 for 30 minutes, I will stop whatever I'm doing and start coaching. If you cross my palm with enough silver, I will make it happen.
Oh, by the way, I’ve never had anyone who was unhappy with one of those coaching calls, ever, because the people who invest in themselves that way, typically have a big problem or big problems they need help with, and solving that problem or problems, it's worth a lot of money to them. [12:10.5]
You could pay the money to have me go over your entire email marketing funnel, for example. I'm arguably the best email marketer in the entire world for financial advisors. Don't you think having me look over your emails is worth a little something? But I digress.
After working with some incredible financial advisors, I’ve discovered that demand can breed more demand in professional services, which means the more in demand you are, the more people want to work with you. This also means that it gets easier over time, so that's good news, too.
If you're a new financial advisor, getting started is like getting a locomotive, a train, to move a few inches. It takes a tremendous amount of energy, but once you get it moving, it doesn't take as much effort to keep it going … or it's like compound interest—if you're compounding to a million dollars over 30 years, then the 15th year is not halfway to a million dollars. It is not $500,000 in Year 15. It's actually less because compounding hasn't worked as hard yet. [13:09.8]
When you are marketing, you are increasing the demand of people who want to work with you. Your supply/your time/your access to you, it remains fixed, and I know people might say you shouldn't build a business that's tied directly to your time, but there are financial advisors out there who charge by the hour. I understand that they exist. It is a business model. I don't dislike it. I don't like it. It just is. I understand that people charge in different ways, and guess what? If you charge $500 per hour, all you need to do is book 1,000 hours per year and you're there. You will hit $500,000 in revenue from that one income stream.
That might seem like a lot to you, but you can break it down and realize it's not that much. It’s 20 hours per week, assuming you work 50 weeks per year. If this is going to be your full-time gig, your business, you're probably going to put in 40, 50, 60, 70 hours per week into it anyway. The rest of the hours are going to be building your business, running marketing campaigns, and doing admin stuff. [14:11.5]
I get it, this is not going to be a four-hour work week, but guess what? That's one income stream. As you grow and invest your money, you can build multiple income streams and your entire financial ecosystem will become more powerful. You get the 20 hours per week, actually like billable hours, but you're putting in 50 hours per week. You're building, building, building with the other 30 hours per week. Get it? This is how it works.
What about subscription models? If you have a subscription model where you charge, I’ve got 500 on the brain, okay, so $500 per month, then all you need is—clickety-clickety-clack, let me get my calculator—84 clients. That's it. That's it. That's all you need.
I'm seeing more and more financial advisors charge on a subscription basis, and at those numbers, they only need 84 clients, 84 families. You might think that's a lot. You might think, Oh my goodness, I could never imagine working with 84 families. Then adjust for the numbers you want. I'm merely telling you that with $500,000 in revenue in mind, this is what you need to do. [15:13.7]
Again, this is one income stream. I want you making investments. I want you to have rental properties. I want you to have real estate. I want you to have dividend stocks. I want you to get money from multiple sources. This is one income stream. Good marketing systems will fill the demand part of your business. That's why you're listening to the Financial Advisor Marketing podcast. It's all about increasing demand for you and your services. From there, you need to know your numbers.
When I talk about this, $500,000 in revenue and the 84 families, and charging this amount per hour, I understand that this is not going to apply to everyone. Some people will say, “I could never dream of only making $500,000 per year.” Other people will say, “Wow, that's a goal. I'm not sure I can get there.” Different people are listening to this episode, okay, but you need to know your numbers. [16:01.8]
If you convert one out of every three appointments into clients, then you need to get 252 appointments to get those 84 clients. Now you have a goal. This is a real target that you can use to build your business. Now the question becomes what gets those appointments? Let's think of something like online ads. If you're paying $100 per booked appointment, you need to invest 100 times 252 appointments, that's $25,200 into online ads to build a $500,000-revenue business. Can you do that? Is that a good deal?
Let's say that it's $250 per booked appointment. That means you need to invest 250 times 84, which is $63,000. You don't have to do it all at once either. You can cashflow it as you go along, because if you have a good marketing campaign that's working, please, please, please, please, for the love of all that is good and holy, don't restrict yourself to some made-up marketing budget. Don't try to reinvent the wheel. Don't try something new simply because you get tired of the old thing. If you have a profitable marketing system, ride that thing until the wheels come off. [17:11.8]
Here's a little side benefit to manipulating supply and demand. When people work with you, they feel as if they're the winners, not you, and in a sense, they are the winners. If you're great at what you do, it is a privilege to work with you.
There's a contractor here in Delaware who does such good work that he's booked solid for two years. He's very picky about taking our new jobs because he can afford to be. When he accepts people as clients, the clients know it is a privilege to have him do work for them. It's not something that they can take for granted.
How much price elasticity do you think that guy has? A lot, right? He can raise prices and make more money overnight, because he has control over supply and demand. Again, if your supply remains fixed and you increase demand, you can charge more money, period. This is a basic economics law that many business owners, sadly, do not understand. [18:09.8]
If you want to work with fewer clients, you can raise your prices so more people say no to you. Work through some numbers with me. Let's say you offer a service for $500 per month, and it doesn't have to be financial planning. Get your mind out of financial planning for a minute. Just walk through the numbers with me. $500 per month, 50 people work with you. That's $25,000 per month. But then you raise your prices to $1,000 per month and only 25 people work with you. That's still $25,000 per month.
Let's say you were maxed out at 50 people. You felt like you were burning out and that you couldn't possibly do any more work than your business. You had no room whatsoever. You were just completely at the end of your rope. When you cut back to 25 people, it gives you breathing room. You can go back out into the marketplace. You can get some more clients and the money from those clients can be used to hire people. You can hire people to service those clients, if you wish, so you can go back into the marketplace and get more clients. [19:10.2]
If you work your way back to 50 clients, then you're making double the revenue you were before, assuming it's still just you. If you hire people, it'll be less, but then you can go past 50 clients and you can just make it bigger and bigger and bigger, and your net profit is going to be even higher and things will be good.
I hope this is causing you to think about how you run your business. Getting to $500,000 in revenue is a good milestone and it's one that can really start to change your life once you get there. $500,000 per year in revenue is a lot better than $250,000 per year in revenue. It's not just twice as good. It's significantly better. Because you have more breathing room, you can build personal wealth a little bit.
If somebody's making $250,000 and you're making $500,000, and you're both spending $63,000 per year as an average American household, you're going to build personal wealth a heck of a lot faster and you're going to have a much better time, so I want you to really, really, really think about this. [20:08.5]
That's it for this week's episode. If you haven't subscribed to the inner circle newsletter yet, seriously, what are you doing with your life? Go to TheAdvisorCoach.com/coaching. One more time, TheAdvisorCoach.com/coaching. I will catch you next week.
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