How To Go Independent

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Flying High: Craig Cowles' journey from Pilot to Financial Advisor

InterviewsSean KernanComment

This is a transcript of HTGI podcast episode 11 (click HERE to check out that show) I did with Craig Cowles. It has not been edited to a final draft quality, so please excuse any hard-to-follow passages. You can also listen to the show using the media player to the right or below if on mobile. 


Sean: Today I'm talking with Craig Cowles. He's a CFP and actually part of the network that I helped manage and put together. We've known each other for a couple years and thought he'll be great to have and talk about his practice and how he got here. So thanks for joining me today, Craig.Craig: Well, Sean, it's great to be here. I'm glad we made the chance to talk about this today, any way I could help.

Sean: Great. You and I enjoy talking about the business quite a bit so I figured might as well go on a record and hopefully someone else out there can benefit from either our knowledge or our perceptive knowledge. So first, why don't you tell me a little bit about yourself and your background and how you got here story -- how you got in the business, what did you do before you got into the financial advisor business. And we can go from there.

Craig: There's a pretty long history when I started in college but the most recent thing I did was I was actually a professionally aviator, basically a pilot. I flew corporate and also kind of what we call in the large aircraft world private charters, which we did a lot of sports teams for flying them around including the US worldcup, worldcup soccer -- we did that couple years ago. We flew around basketball, we flew around hockey teams, and I kinda come from that background. I never really flew for a major airline even though we did sub in for major airlines and I flew a bowling commercial aircraft starting in my career, ended up kind of in a smaller jet corporate side. Then we decided on September 11, 2001 that things changed a lot in the aviation world. I was a pretty senior pilot in my organization. I worked for here that was located in Dallas and so I wasn't affected but we saw the writing on the wall was going to change. A lot of my friends that worked for some of the major airlines that laid off almost within the first year. But it’s been there basically for year and, believe it or not, they had only gotten recalled up to about two or three years ago based on their story. So it's kind of amazing that it took that long to get back in the swing of things. And at that time, my wife and I live here in Dallas and we have two boys (about ten and five) and we didn't actually start our first until when I got married back in 2000 until 2006. So I had to make a decision at some point because of several of my colleagues in the aviation industry and I said, “You know, it might be worthwhile to look at something different than this because most of us, if you appreciate your lifestyle -- and that is your time and you're with people and whatever, the industry's changed since, what I jokingly call the “old Panem days” when it was a lot easier and a lot different type of air and environment to walk in. So changing career's kind of what happened and a gentleman invited me, “Hey, you know, you could start in financial services part time!” I said, “Man, I have no experience doing this.” “That's okay, other people in the industry don't either.”  So that's kind of funny for them like, “Wow, that's a word of comfort right there.” But what I decided to do is, when I go for something I usually go into it full force. I just don't kind of take it half-hearted and go into the organization and say “I'm just going to do this.” I decided to go on the Certified Financial Planner track and eventually got that. I actually started the business probably in 2001 part time.

Sean: What else attracted you to the industry besides the potential flexibility that we kind of appreciate these days?

Craig: I’ll tell you what, I would say that it was my own family. My parents are divorced and it was not a very clean divorce and what I found out was that a lot of times, the arguments that my parents would have is about financials and about money. And I thought that was very interesting because I never knew that there was any other way. My dad was mildly successful in his career but I know that they had quarrels on the values about money. And I felt that, “Wow, if they would've just sat down and talk to somebody”, which they did at one time but they did not agree upon the outcome of the scenario.

CraigCowles

People really need to have a sense of values about money. In fact, the communication about money itself is probably the number one cause for divorce, about their value system and how this align. So I really felt in the favor with helping people, with determining their values about money instead of just going along to get along, that sort of thing. And so I think what really began for this is I never really talked about it myself and ever since don’t talk about your money with other people ‘cause that's what you grew up with. That's the kind of psychology behind it. And what is happening is, it really hurts you in the future so I said, “You know, I'm trying to get more people to be comfortable talking about their money. It's okay. But let's focus on the means and there were the end, which of money is, and don't have it.

Focus on something else and that's your values, that we’ll provide.” So that's why I kind of got into it, ‘cause I really wanted to do that. I didn't want to be a stock picker, a bond guy, or stock mutual funds -- that was not my game. My game was really trying to help people achieve what they really wanted to achieve.

Sean: Yeah, when you really sit and think about it. And hopefully a lot of us got to the business because of that. It's amazing how much of our lives is touched by money and, like you said, it's not the objective for most of us but it certainly is a key factor just like our health and other factors. It's involved in everything. Very interesting. I didn’t know about that before we talked, that’s what I like about these interviews. So you never really had, if i'm not mistaken, an employee arrangement since you've been in the business, right? Is that accurate?

Craig: I always have been in the independent track. I've been kind of fortunate. I didn’t want to work for one captured organization. They did an excellent training program on how to work with people, which I really appreciate. They really need the value.

Sean: Now when you say “captured”, for those people who are maybe in the wirehouse environment and maybe haven’t heard of that term, can you clarify what you mean by that?

Craig: They were part of an insurance broker dealer, which usually takes people from the start and is an easy way to work. They really had a great training program and the thing about that is you get great training there but eventually you grow out of it. There's nothing wrong with being at one place and growing out of it. Even though they like you to stay, they can't force you. And so I decided I kind of outgrew that model and decided to make that break.

Sean: Did you find that to be sort of a fairly steady focus on the insurance aspects of planning or was it pretty balanced? What was your experience?

Craig: No, I would say fairly balance. It was one of the few organizations that said, ”No, we think that if you're going to do this business you need to look at it with an offensive and defensive perspective.” I believe in the insurance side is used as a lever for a person to stay. I usually explain this but you're going to give up ten cents for every dollar that you're going to risk -- to have access to a pool of risk. And here's what really solidified it, I did a policy a long long time ago for one of my friends who was really appreciative.

We got just a little life insurance, let's say, and I wrote the policy form. They had a very exciting software to make sure that it was the right coverage, not overcoverage. The insurance is inexpensive. We usually, just as an added bonus, we just want to have the children added to those policies. Because if you have couple kids it would only cost you a buck to do it, it's just burial cost -- just in case something happens, hopefully nothing happens. Sure enough, about four years ago, that policy was used because a daughter developed a rare form of leukemia and in about two weeks, after she was in the hospital, she died -- October 31st. And that was an eight-year old. And if there's anything that will wake you up in your life, it’s going to an eight-year old's funeral open casket. That's something that is ingrained in my brain forever because my son used to play with his daughter.

She was a little bit older than he was but what really impacted me was the service that I provided that family because I worked with the funeral director to get that claimed and that made a dramatic difference. His wife and him still thank me thank me today. He was a colleague of mine in the aviation and they could at least give her a nice funeral instead of worrying about the cost for it. That was something that wakes you up every once in awhile. He’s kind of my poster child that I say that that was my actual first acclaim ever paid or I was the writing agent. And in another story, the same thing happened. I met a guy that was an oncologist that I insure the one-term policy. He had a whole life and was looking at it and said, “You know, you probably don’t need that at your age. You probably just need a simple term policy to cover till this point.” And I did that one about five years ago and I haven't talked to him about insurance of all things.

And it was about 250,000 dollars and he was retired oncologist and I had checked with him in a while. He manage his own stuff and pretty smart guy. I mean, really smart. I call him three years later, he says, “Wow, it’s fortunate that you just called. You're not going to believe this but two months ago, I was diagnosed with cancer.” And last year, he died. And guess what? The policies that we've put enforced was paid to his wife exactly as planned within three years. It was unbelievable that two cases were really impactful, which meant something to somebody. When you do stuff like that, that's what really matters in this business -- when you see the net effect of your worth. And what I would say is, anybody who's a financial advisor, is that when I did this business I never thought, “Oh it’s insurance! You pay a bunch of money for something you never use.”

Sean: Yeah, it’s necessary evil at best.

Craig: Right. So originally when I was caught in this business, I was always taught by the guy. He said, “Don't ever discount that. Don’t let it go. Do not write any asset based business unless they have adequate protection because even the compliance officers will tell you if you write/sell something that's an investment based asset to them and you did not go over the insurance with them, the family will come back to bait you on that because you did something. You didn't do a holistic job.” And that's the first thing I learned in this business -- make sure you do a proper analysis for the clients so they understand what the risks are.

Sean: I would say for anyone listening, just like the proverbial coupler, kids that have no shoes for ourselves, to look at that and make yourself your best client from a planning perspective especially if you have a successful business. One of the few things that can do really is your family's long-term plan, if you're not here to earn that income maybe over the years and that's something to have a healthy paranoia, for me personally. My wife appreciates the level of life insurance I have in place. It’s very straightforward and I need to make sure I accumulate some security outside of the insurance by the time it expires.

Craig: Absolutely

Sean: We’re not guaranteed tomorrow so it’s a good plug for covering ourselves,

Craig: Ask people what's their birth date, they can always tell you. You ask them what’s their death date, they look at you like, what do you mean? That’s the question you ask.

Sean: I know you've made at least one change of broker dealers/firms you’re associate with, tell me a little bit about what triggered you to do that kind of intra-independent firm ‘cause that's interesting. I know there are several people that have done that but I’m excited to talk about it from a payout standpoint or other flexibility but what were you looking for when you made that change? Tell us a little bit about that story.

Craig: First of all, there's no perfect firm out there. But for your own thinking, there is a perfect place to be in your life. Value wise, I look at it from the first time I encountered a coaching program that I used for a little bit that helped me realize what I needed to do and what I needed focus on. And that was what sort of lifestyle that you want first? What are your values that are most important to you? What sort of business do you want to have? What sort of clients do you want to have? What sort of plans do you want to avoid? What sort of issues do you really want? And then you take those measurements of that program, a success diagram of what you want your business to be. Now, personally, I believe over an entrepreneurial mindset or at least a business mindset to even go independent, the first thing you decide is do you want to be an employee? Do you want to be comfortable being self-employed or you truly want to be entrepreneur and have a business mindset? That's the first thing you have to determine.

So, in my case, I would have said, “You know, how restricted do I want to be in a way or do I trust myself enough to know that if I do something, I'm going to go at it full hearted?” Everybody knows this business is extremely difficult. Why would anybody pick this industry trying to talk people out of their money to go with you giving them some sort of assurance that everything's going to be okay? It’s one of the most sensitive things in their mind and one of the closest things to their brain is what we call “no idea”. I mean, there are several businesses out there that are transactional that people could probably go into that are easy. I met a guy this morning that was a painter and he’s like, “Do you want to have million dollars revenue in this business?” and I'm like, “Wow, that sounds pretty easy. Just talking to people getting cruised to pain.” right?

Now the complaint was time was limited until it gets to a certain point. So when I made that jump, the biggest thing that I thought about was what is it I'm looking for? And the biggest thing that I'm looking for is the freedom and independence of going -- think about it this way, I want to hire a compliance department and I want to have resources available that I can pick and choose as I need that I feel are reasonably decent enough to help support my business and then have everything else aside, build it the way that would that works the best but have the flexibility to use what I need. So when you're making that decision to jump, I think the biggest thing you want to look at is, is who you're going to work going to match your success goals? Are they going to support you on what you do? Then I could tell you what to do. You know, a lot of franchising doesn't work for people for a true business owner because he doesn't like the rules that are in place. They won't buy Mcdonald’s because, “Jesus, I just dont think thats the best program. There's a better way to make it.” Well that’s not the program Mcdonald's wants. So that's the first thing you have to decide. But the second thing that I decided why I want to make that change which is very simple for the reason of you have more flexibility that I can add value and freedom to my own family and have something that I created as opposed to being part of something bigger or name that overlays on top of mine. And I think that's part of the reason I wanted to make the change is having flexibility and freedom to do what we needed to do.

Sean: Got it. In a minute we’ll talk about some of the details of what that looks like because one of the misapprehensions that a lot of advisors have if they’ve been in the employee world is sort of this all-or-nothing. You're in a place where everything is decided or you're out on your own picking every single thing about your business from the ground up with no help or guide. And obviously you and I know there's a whole spectrum from one to the other. We'll touch on some of the specifics on what that means.

Craig: Sure. I’d love to get into those details. Sure. Certainly.

Sean: From a business perspective, give me a high level of what’s your typical ideal client, who you’re trying to work with, where do you find/attract those people, how do you run your business.

Craig: Okay, The easiest way to describe that is this, first, I think you have to define your ideal client and your ideal practice. Those are the two things I think are most paramount. Our ideal clients are people who are delegators and we have about seven characteristics or traits we show clients. They have to be trustworthy. To be able to trust, they have to be able to work with you. They have to have their own values involves and dreams outside of earning money. So once you identify the profile of our clients -- we do that through a vetting process that we use on our office coaching program but we just slightly modified but I think it works well on its own -- is going through a conversation of that discussions of client values. We actually never talk about money until the very end of conversation about how much they have, which is kind of surprising to most people.

So that's the way we vet the overall. Now, the client in the business model has to produce/meet at least a predictable revenue every single year that has a minimum to it. So we would say a good client we have roughly half million dollars or more of assets to manage or they could pay the minimum planning fee per year on an annual basis without question. And those recommendations that we do, more of a full service client model where we cover financial planning and which includes the risk management, the wealth management, money retirement planning, and everything else that goes along with real estate planning.

And we have checklist on those six areas, every single year we cycle through. Now, not every client gets every checklist but it's always checked. Now, is it a lot more work? Sure it's a lot more work but what does the client get out of it? He actually gets what he's paying for. So we're basing it on the fact that, “Hey look if you want to run your business what scale do you want to run it with a client?” We have a top end of how much, I mean, I don't think it's good to offer the numbers five million or more.

The client really needs a different approach to their wealth and what we can provide. I think you have to measure them between five and ten million. In ten million they probably need a family office or possibly a multi-family. So we're very very specific about what clients are looking for. Are they delegators? Do they want us to do all this work for them? We call it, are you the CEO of your family? Fire yourself as your CEO, promote yourself to board member. It makes a lot easier and hire us as your CEO -- not your CFO, your CEO. That way the client has a clear understanding what our engagement process is. So that's our ideal client and what you do is you just model everything after that. Some people say niche marketing. You could niche market in certain areas. You can subdivide that into certain what they call “niche marketing” but I think it’s a psychographic niche more than it is like a career niche. If that makes sense.

Sean: Right. Demographics is one thing but I'm with you. A lot of people that looks on paper, they have different approach to money -- how they work together as spouses or how much they want. I'm with you. I like that psychographic term.

Craig: What's important is we qualify two other things -- we don't work with do-yourself-first and we avoid what we call “collaborators”. Collaborators, you're like, will you do this stuff and I'll do this and I'll check on you.

Sean: That's right.

Craig: We don't work with that person now. It’s either you delegate it or you don't. And that's very important for advisors to understand. Do not try to work with a collaborator.

Sean: Or if that's what you'd like to do, for some reason you're good at that, then go for it.

Craig: Then go for it. That's right, but we don’t.

Sean: I don't tend to do that either. But I guess I bring that up because I think you might have, you know, there’s lots of competitions, right? If you somehow like to debate if you want to have a bunch of stereotypical engineers.

Craig: Especially the investment part.

Sean: Yeah. If you’re good at it, you enjoy that, great! You should probably deal with marketing around that because in your positioning..

Craig: I work with engineers.

Sean: Okay, very good. I know in your linkedin profile you've got business owners, pilots medical professionals, do you end up sort of those personality fit or -- obviously pilot you've got background -- but have you ended up with those kinds of clients or is that you’re trying to focus on?

Craig: We just did it because it was recommended and yeah, we do want to focus on that. Business owners is kind of broad and generic but they really make a great client base. I’m not too much on executives of corporations. People say it's great but the problem is they don't really have a lot to do with them unless you charge them a planning fee. Now, some of them, if we do happen encounter them, that's fine but a lot of those times, I guess it just depends but business owners seem to be a lot more complex than we do. Actually kind of the side amongst the other is the planning, we actually do some business planning.

We’re actually working on that avenue right now. We’re trying to develop business planning checklist using some of the existing services out there that already provide some resources for you to help us develop the business market and a lot of different things that business owners gotta deal. They gotta deal with all their own risk. They gotta deal with purchase, violation. And first and foremost is why you're in business in the first place, are you creating a job for yourself or do you really want to create a business that you can sell in the future?

Sean: And then the long-term impact that you work with them to that place is what do you do when you're not going to work anymore? The emotional and financial implications of transition and success is a big deal. That's a whole episode to itself and then obviously in the event that you have been able to sell the business then that's a transition that we’re able to help put as well.

Craig: Yeah.

Sean: Very good. I think one of the things I would tell advisors (that I think you would probably echo) is work with people you like and you enjoy helping them solve/frame problems. Like you said, people with a lot of stock options work in corporate ladder. They have a lot of challenges but if you're not interested, don't get psyched up about that and really fired up to help those people, they're probably not your best clients. Someone who has a passion for that is probably going to be a better fit anyway. So I find that being independent gives us a little bit more latitude because we get more revenue, for one. But we can kind of pick and choose -- it's a lot like dating -- you can deal with people you want to deal with. You don't have to work with someone just ‘cause they happen to have a lot of money or they might one day.

Craig: Yeah, they don't have to. There’s a client I'm trying to work on that is a plastic surgeon, got his first big contract out of his residency and working for this firm. It’s much like a law firm where they have junior associate type deal and then they get partnership agreement. He goes from making x dollars to multiple six figures but he has no money saved ‘cause he went to school for so long. So how do you get paid? So most advisors would turn, “Why, you don't have much to work with.” I said, “He needs all the planning in the world to make sure he doesn't make the same mistakes that his colleagues do.”

So can he write you an annual fee for the planning service as well? Sure. absolutely, with no assets. You help him build that part. And he certainly would appreciate that. So that's why you never wanted to discount anyone to help them out because in my opinion, you work with the emotional -- you close them with the logic, as they say. And that's what I'm looking for. I don't even care how much they have, I just want to know if they want to engage in a relationship where they're compensating us for helping them achieve ‘cause the value of what we do versus the compensation is so tremendous in our business. That's one of the lacking things to train advisors. That way they'll do great.

Sean: Yeah, it's tricky because in any relationship in life you're really spending a lot of time and energy to build that bond, right? And the payoff is down the road when you work together and gone through ups and downs and built something whether that’s marriage, business, or advisor relationship. You kind of know how each other might react and you know what to expect. You can do it together instead of knowing that you can't trust someone. You need to kind of have figured that out.

Craig: Absolutely.

Sean: Very good. Let me touch on (just curious a little bit) kind of the tactics in day to day running things. People get worried (I think) about spending money like, “Oh my gosh I have to pay for stuff. My firm pays for things.” If you don't mind, give me a sense of, for example, how you setup your office, the things you looked at, why you chose where you are. If you don't mind sharing about how much cost, give us a sense of that piece.

Craig: Okay, so, basically you do look at the contractual payout of who you're going to go work for. I would frame it as how much do I have to -- as part of my business casual, I think first you have to run your own pro-forma to figure out what you want to spend and what you gotta earn. Then you say ok how much do I want to pay out to the firm for doing what I need to do what I don't want to do

Sean: When you say pro-forma, how detailed would you mean? Give us a sense of how simple or detailed that needs to be.

Craig: Pro-forma, I think, needs to be simple enough to know what you're going to cover. Basically, if you googled excel spreadsheet business pro-forma statement, group it as much like your taxes are going to be paid on it ‘cause you know you only have a certain amount when you file your return on your expenses for your business, there's only certain categories that they need to know. You don’t need to go on details like, “I need to spend x dollars on x software.” They don't care. They just know, “Okay technology. You need to spend this much money on your phone system, secretary.” That sort of thing.

Sean: Let me interrupt, I would say, for me, getting to what the number looks like, I’ve got a spreadsheet I use that’s no more than ten to fifteen lines -- sort of that, like you said, those categories. I asked about the office ‘cause that's one of the big two expenses that most of us incur, maybe three if you count the overhead of your firm, something less than 100% of the top line revenue that we get. But that spreadsheet can be fairly straightforward at least to get a sense of, you know, “How do I make decisions about these expenses?” I'm happy to provide that. If anybody wants to email me at sean@indyFA.com, I’m happy to share that spreadsheet. Okay, sorry about that. Go ahead.

Craig: No, it’s good. So, the way I look at expenses is we pay a rent for, let’s say 600 dollars a month in my office, but believe it or not, our office is 1200 but the nice thing about that is my partner and I -- Eric -- we just share the office. Number one, it creates collaboration. I’m not a big guy to have my own office and second of all, where are you going to meet your clients anyway? I never want them in my office across from me at a desk. I'd rather be it around table in a comfortable room, the way that they are saying that people should come in and see you with a couch or a round table or something that's very simple and oriented ‘cause why do they need to be in your office in the first place? This is just the place for me to exist.

Sean: So you have access to a conference room? I know the answer but for our listeners.

Craig: Yeah, we have two conference rooms. We have acess to actually three or four, believe it or not. We have a third one, which is the building one and then we have, believe it or not, across the hallway. They’re actually one of the vendor providers, they say, “Come and use the conference room. If you're running out of room, come at ours. You can use it anytime. You can use it once a week.” Literally on tuesdays.

Sean: That's a nice thing, not having to pay for it.

Craig: And most of the time you want to do that because first of all, the philosophical point. I don't really meet clients outside the office. There's a rule on unknowns -- what I call it. They either come here or they talk to us on the phone. But a lot of times when they're doing this business you want to learn about, you show up at their place. The reason is to control the environment so we have to think about when you’re moving in an environment, think about your professional business. If you don't want to be a salesperson, if you go out of them yourself, they come to you or they talk to you on the phone, you're a professional business owner. There's a huge difference. So going back to the expensing, technology, overwrite overlay, you got the compliance...

Sean: Okay so we touched on office, what about -- kind of go down my experience -- what cost the most dollars potentially you spent on. So you got the office and, you said, in your case 600 bucks a month which I think most people would find shockingly affordable.

Craig: Yes.

Sean: And I know you're not out in the boonies. You’re in a fairly decent city. You're not on the coast.

Craig: No.

Sean: Again, that's very reasonable. One conference room really looks sensible, the other one’s more of a normal or one of those for but a very very economical, at least from my perspective, that is. What about from a staff/assistant standpoint, how are you set up right now?

Craig: I just use one part time assistant. Let me give an example, one guy works that was kind of a mentor in another office. In a certain generation they have a full time assistant and paying lots of money and that's a big expense. Mind you that's a great thing, you eventually want to get to a point where I could hire somebody just like them but they're really hard to find right now, from what I understand. What I do is I’m going through the technology to find out now how the technology integration can reduce the expense of having a full time assistant.

First, figure out how the technology will work first and then go back and hire the assistant to fit the technology because what happens is if she gets everything integrated, number one, you have to understand how it works. Some people say, "No I don't need to worry about this stuff." Now they kind of do because if you want to build information effectively and efficiently, this is the way it works. So, I have a part time assistant, part of that. She just works a certain amount per month because I have it built directly out of the firm so I don't have to worry about the paper issues or W-2, they do that. They pay her and she has schedule about five hours or plus some change a week. In some weeks I don't use her ‘cause sometimes she’s out of work one week and then back towards the next week but I try to keep it even and steady. But the cool thing is she doesn't live here, she lives in Florida.

So how the heck do you get this work done with an assistant that lives in Florida? That's the element of technology. Since most of the stuff we do is electronic, all the stuff can be scanned and sent to her or she can build it up and use the features like docusign to get the document signed. The client doesn't know any difference, that it’s coming from an assistant. So you assign those task through a resource management system that she gets and she logs into. We have a huge advantage of just scaling down the requirement to have someone in person to do everything. I mean, everything is done on the phone, to your computer, to everything. And some of the new clients that I have are just really technology savvy. It's a no brainer -- send it to them and they send it right back in two minutes or so. The older clients are not that good but they can get in the system.

Sean: It just depends and that’s where you can build process just to hope we make it easier on the less tech savvy or the less tech comfortable. It's intimidating even though it may not be difficult. For example, why don't you touch on, if you don't mind, how we set up this meeting.

Craig: Calendly was I think one time on the blog but it just seems so familiar but there's a whole problem of the email battleship which is where, “Hey what time are you available to meet? Here's what I'm available. I don’t have that time. How about this time? Oh, wait, we forgot to decide on the place. Where’s that? Oh, how about what we call the Jesuit Starbucks ‘cause it’s one of the most popular places where I live in North Dallas?” (and it has nothing to do with a Jesuit school owning a Starbucks, it's just where it’s located, it’s across Jesuit high school.)

And so the funny part is that if you could add up all the time that you spend trying to coordinate scheduling, that you spend with wholesalers calling -- I mean, I think there was an advisor one time that actually studied all the time that people called in, all that stuff. I'm a pilot. We're really big into prevention. In fact, a flight is all about prevention -- preventing things happening, from the maintenance to the flight planning, to everything. You want nothing to leave chances of surprise because the outcome is always devastating in some instances. So I'm always interested in process efficiency. One of the big things I focus on a lot in my business is how do I make this process more efficient? How do we make more effective communication? That's what you're consistently doing in refining this business. So this calendly tool is like, “Wow, wait a minute. I’ve looked at several calendar tools and I'm surprised that none of them fit the actual way that people want a calendar and this is the first one I actually saw that you were using, Sean, and I said, “Wait a minute, this one really works the way it's supposed to.”

Sean: Good. I kind of just started using it. I didn't do a real thorough analysis. I've read about several, I think the concept is phenomenal like, “Hey, the computer can tell what's on my calendar. It can send you an email with options.” And I can set the parameters in there to set up these kinds of interviews or just phone calls in general or meetings in personal if I don't have to deal with the, like you just described, the setting it up process. It's like a whole another job to do that. And again, in the task, I think people have higher resistance and a large part of their job was to do what the technology did and I think it doesn't hurt the end user, the client, or the person on the other hand but I think we gotta be careful. We don't want technology to replace or reduce the client experience or the personal experience like, “Hey, I don't have to coordinate with you or link up with you or your assistant. Tell me my five options and I'll just do it myself.” 99% of people your’e going to work with are probably comfortable with that approach. So for ten bucks a month, I’m still really diving into it but setting up different categories and again there's lots of people -- they’re way ahead of me in technology -- you and I know lots of advisors who don't use a tool like that and tells you, “You're pretty quick to adapt.”

Craig: There are two things you want to measure. I think this is very important for advisors to understand. Your time is valuable and also the cost. So what is happening is the cost, I mean, is based on your hourly cost. If my rate is 220 bucks now for planning, should I be spending twenty minutes trying to schedule stuff? So how much of that is worth your time as opposed to setting it out to client and just following it up. You could probably cut out about 40% to 50% of the effort required just by saying to a client, “Hey, look at this calendar. Pick a time, put it on and I’ll schedule it.” Great. Sometimes, another very efficient tool beside that when a client need to schedule something is, once you schedule it, you can use the outlook feature of scheduling time and most people would say, “Pretty much agree” and you say, “That's good, you don't need to use a calendar system” That does a pretty efficient job as well but the big thing is holding people accountable in every process.

Sean: Right. From a staffing standpoint, sounds like you got a pretty good option and I assume that will be so much scalable in terms of adding more client if you need to. There are other resources out there, how did you link up with that part time assistant?

Craig: Well, actually she was recommended by, I think you're the first one that came up. She was looking around for doing some extra work and I needed someone who need a part time but didn’t need someone here in the office. The offer was more than reasonable, eventually I may have to have another part timer in the office at some point, eventually working towards a full time. This is, I think, is a big gate in the industry like, “Hey, there are advisors that can use some help” just like this lady does but it'll be great to have a centralized platform where they knew exactly how your business works or at least knew the tools and processes.

Sean: Right.

Craig: They could understand it and then hire them and not even worry about putting them in an office, setting a map, training them, that sort of thing. I mean, I haven’t seen a good resource tool yet.

Sean: Agreed. I think I've told you this, one of my many ideas for a new business would be for our broker dealer, which is the largest independent one. There are lots of people like us that could probably use some help but may not need a full time person just for one advisor, right? They might share just half their time or third of their time or fourth of their time but how do you share that person effectively and it can be done but it takes some foresight, some thought, and again maybe you find people all use the same CRM, or all have a similar mindset of how you talk to clients or if you're going to deal with clients that are over eighty, it’s probably a business opportunity. I would love to figure that out and then use the technology correctly and educate advisors to use it ‘cause we all have different speed at which we adapt to new options.

Craig: I think there's one lady that tried that and but she's trying to go across multiple platforms but it just wasn't working. You have to either choose specific channels and I think the rates were really having advisors not ready to buy it off and some of that they kind of have to start small and grow into it if their business grows. I think one of the lacking things is what sort of business value are you getting for that.

Sean: Right.

Craig: And these advisors are always looking for new clients.

Sean: And the big take away for advisors who's considering independence or maybe who's already there but hasn’t thought this through, there are a lot of ways to build your capabilities and resources to help you grow in a modular way, a la carte, to get down to 60 thousand a year, plus benefits, plus 401k. That’s intimidating cost and headache wise just setting it up. There are options out there you just have to dig around and connect with people. That’s one thing I love to do and again it's not a full time endeavor for me but it can be a lot of responsibilities but it can be done.

Craig: It sure can.

Sean: That’s a big deal. There's way to get there. Do you have any other favorite resources or tools you use that are critical to your business? Or major expenses? We haven’t touched on health insurance, we’ll get to that but what else do you spend money on and/or what are your favorite things that you use day to day?

Craig: Well, the main thing that I remember is all part of a system. Resource, you gotta have your resource management system and that is for client business. So we use redtail technology, one of my favorites. I think it does a great job, been around it for a long time, they’re more integrating now with the contract, with the broker dealer. Anyway, the more integrate we get. We don't integrate yet the assets for the client but..

Sean: Coming soon.

Craig: Yes. But I’ll tell you what, I just found out the other day that jive communications, which we use ringcentral right now for our phone system, jive actually has what we call an application portal interface -- I think it's called an API and techspeak -- and that system will now allow when a client calls in, if it recognizes that number/database, it logs the call for you and automatically brings it back to the database and says, “Great, we’re moving the jive.” So they’re just as good as an IP phone provider but what a great tool to have a record when a client calls in. I use the money street version, not the one that’s branded because they move a little bit quicker and I don't really want the client logging in to what they call the account view system where they find their statements just for their investments.

I feel that they have that access to that portal but the view when they first get there is looking at your account value right off that bat which is not what I want them focusing on. I want them focusing on their total net, where they're going, their goals, vision, and that sort of thing so I use eMoney advisor branded version for that purpose. I'm a very goal-focused planner and that platform has a lot of integration. It integrates with Redtail, integrates with Morningstar, integrates with Riskalyze, and I think we're just about to sign on with doing our own Riskalyze account because I didn't realize how in depth they got psychologically and they're working with clients. So I think it's a great tool since it was built by psychologist and not by investment people. So that's another thing we like doing. We don't have to worry about the printer ‘cause we have one here, it does scans and does all that.

I think we don't really given much in the research except for LPL, Morningstar use a little bit that and personally I like using Horsesmouth for a lot of client communications and ideas from other advisors. I mean, they have Horsesmouth radio which has a lot of advisors talking about their practice but I think it's an essential tool for marketing is using that service. It cost about a thousand bucks a year but you get some great things that are working and they really focus on helping you build your business and then I think you need to pick a system out there like Bill Bachrach is now putting on his system online the summer and is having a special right now, believe it or not, for 600 dollars you have access to some of his tools that he uses to help people build their business. So I think you need to have a business focus or use CEG worldwide as another tool that would help you coach. But I think coaching, if you don't know where you're going, I think some coaching would be beneficial so I use some of that as well. But mostly, other than that, you have to just try various tools until you find something that works. Make sure they integrate.

Sean: Yeah. What's interesting about what you laid out there is I think that can be intimidating to the person who hasn't made those kind of decisions but in many cases there's any number of people -- coaches, product providers, your colleagues, your peers -- that are willing to say “Here's what I use and here's why I like it.” And again, that's another reason I started the podcast was to hear, you know, some people say sales force is the greatest thing and many of us will say it’s a little bit overkill. What I’m trying to accomplish is my enterprise and people that say they can do it with outlook, it seems limiting to me and and to a lot of us but hey, if it works and you're organized..

Craig: I think it all goes back to one thing. I think it goes back to, you know, you can use outlook but if you don't have a CRM, how are you going to record your client interaction as part of your compliance requirement for recommendation? I mean, they also use the talk/recording software.

Sean: Copytalk.

Craig: Yeah Copytalk or the other one that I have. But I use it and that's where they just say, “Fire your assistant” because of what it does. It's a great transcription software that lets you record your content in your meeting but I think that's what's also really important is making sure that you have your CRM software or something. It should never happen if your business is setup right but you never know if you picked the wrong client they want to come back at you. From what I understand, from an old compliance officer, he told me exactly how it works, he told me exactly what to do and he told me exactly how to document things and he said the way the paper will overwhelm them and the first thing I asked is if you ever had a disclosure request, send them everything? Yeah, i, look at it and the client has nothing. don't worry it's not going to work.

Sean: That's good to hear. One of the biggest expense, especially unknown, that I think a lot of people that are already self-employed or that would love to consider it, one big consideration is health insurance. How do you have your family covered right now?

Craig: Okay, so that’s a thing in our family. We have one child with special needs. He's more of on the spectrum for autism and very mild to moderate but we had to review our healthcare cover last year because as you know healthcare system cost quite a bit in the amount of premium you gotta pay.

Sean: What is your existing policy? How was your existing policy? Was it independent?

Craig: Yeah, independent. We used the healthcare plan Scott and White and we changed it last year. They’re great plans. Unfortunately, the healthcare landscape is changing and not even corporations next year is going to get hammered with exactly based on the new laws coming. So it doesn't matter if you're working for -- I’ll tell you this, from what I understand from the healthcare people it doesn't matter if you're going to be working for corporation or being independent. It's going to be almost the same because corporations are not going to spend that much money subsidizing health care plans as much as they have in the past versus the premiums that are going to be charged.

Health corporations have been forwarding quite a bit of benefit because of their current contracts but now those contracts are coming to an end and major healthcare groups are changing them because they can't afford to let those corporations pay the lower premiums anymore. This is coming next year. So what we did was, there’s a group out there that does it -- I guess it's called religious preference if it’s based on your beliefs that qualifies us private healthcare based on social conscious type thing that I participated with myself, my first son, and then my wife, which is a much lower cost because we don't spend a lot on healthcare since we work on the preventive side a lot, as it is. So we just want something, just in case something happens and it doesn't matter anyway even if it is completely against the insurance philosophy, you can really go to the hospital and buy insurance for a major medical. It's funny but it's completely against insurance modeling. That’s weird. My other son who's, mildly autistic has his own separate health care plan.

It's a gold plan because we know these certain occupational speech therapies and that plan was cost-effective because of the premium cost. So basically, from last year to this year, we cut our cost in half in health care. It was unbelievable hell. It was a friend of ours that recommended it cause he's self employed too and his wife found this plan that we could use and I said, “Sounds like a good deal to me!” So that's what we did.

Sean: That's great. I think you touched on one of the big principles that I tend to espouse which is it doesn't matter where you are, health insurance costs are going up. You're going to feel them. The wirehouse world or any employer, they're not covering your cost -- any cost of your doing buisness for their own benefit. They're doing it as part of an overall package so if they have to pay more here, they’re either going to not pay it or they're going tweak your payout otherwise, there's no free lunch. Now, again, a fifty thousand person/organization might have a little bit better pricing power than you and me individually but my observation is that, especially in our business where we can generate pretty nice incomes, at a lot of places the health insurance, again that’s probably across the board, but I know at least one firm that subsidizes newer advisors but not the more experienced ones, for example.

Craig: I agree with that. I’ll give you a quick story. A friend of mine's wife asked me when they went there and he works for a wirehouse private trust area and thinking that he would be knowledgeable, which he wasn't, about their health care plan. His wife asks me, the financial planner, “How does this healthcare plan work? I don't get this.” So I had to explain it to her ‘cause she was dealing with that part and gave her kind of the quick story of how it works. She’s like, “This is terrible. We should just go to the doctor, pay 25 bucks and that's all we pay.” And I said, “It's not world anymore.” I said you're going to be born in a lot of cost personally and that's what the mentality is. That’s one of the problems. All I have to do is a fifty dollar visit or thirty-five dollar visit and guess what? It's no longer the case for that. And then they go to the hospital or ER, get admitted and then give them their portion of the bill and they don't understand that either like “I never paid this before.” So the mentality is still there. So it is going to be a big thing.

Sean: Right. Agreed. And again, there’s a bullet to being independent that makes the health insurance great but like you said, it's sort of global in terms of wherever you work issue, not specific to hiding out as an employee anymore.

Craig: Exactly.

Sean: One thing I want to ask you about briefly, you touched on a lot of ways but one assumption that some of us have that are working in the wirehouse or employee firms, there’s going to be all the stuff we have to do everyday to run the business -- compliance, computer  breaks or running a business sounds overwhelming or intimidating. What’s your experience and what would you have to say for people that want to hear what's that truly like?

Craig: Yes there is going to be some extra work for you but the thing is go to other advisors who have been there and ask what they’re doing in respect to that issue. So one of the recommendations I had is I just saw a buddy of mine who kind of worked on a coaching program and he’s now working for a national real estate firm helping with her coaching and they just put up a blog article today about time blocking -- how important it is; to be successful, you have to time block on your counter. That just means general area which you're going to do that moment, doesn't mean a specific task.

So if you're going to run your business and you're going to be paying yourself as a CEO CFO of your corporation if you're going to run it, right? So you're going to have to reserve some time during the week to come to this specific task that you need to get through. Most important thing is just learn like a Covey method where you’re using the quadrants one, two, three, and four and depending on how those quadrant fill up. Those one, two, three, four quadrants -- important urgent, important not urgent, not important not urgent, that sort of thing. When it gets to quadrants three and four, those shall be delegated items. Those delegated items are the items that aren’t your CEO CFO type duties. Your quadrant two items, which is your not important urgent, are your advisor duties and the reason I say that is because quadrants three and four are your thirty to forty dollar an hour items and your quadrant two is your two hundred and twenty dollar an hour item. So when you’re dealing and you're doing your extra work that you will be required, you'll learn and gradually learn a system that works for you like, okay take care of this administrative items as it come up and then you decide whether or not you need an assistant to do that work.

Quadranting your tasks is very very important in keeping organized. That’s one thing that most advisors are probably not used to because a lot of times if you're coming from a wirehouse, they provide someone to do processing every work for you sometimes and they mostly just want you on sales mode to acquire new clients and the difference is you’re going to have to get used to two different roles -- one is being the president of your company and the second one is you have to be the advisor. But in this coaching system I learned, you learn to delegate anyway. You can make an ideal life out of it.

Sean: Sure. That’s a great point and it's a very high level and important business concept that there's no reason to be extra efficient with your time when you get very similar payout regardless when you have your own practice and you have the responsibility and the opportunity to make delegations of time and money. I think that's what really made you in the independent model in the first place. It's great to hear you talk about similar things. Well, great. I think we've covered a lot of ground. If people have questions, how would they track you down? And also, I guess before that, what is it that you dont want about being independent or if you had a do-over, what would you do differently in your career?

Craig: I would say if I had more coaching in the very beginning about doing it, making sure I have someone who's guiding me, a mentor that really was aligned and understood. The one thing I probably will sought is someone who has been through the ropes. You need someone who's experienced ‘cause one of the things is when you go with a coach or a mentor, did they actually go through the experience? That’s one of the problems in the industry is people that don't do, teaches the old rule, right?

And one of the funny parts is that you’re either a really good mentor in the beginning to understand people excellently the way you did, very passionate. And I miss having that sort of interaction with somebody, it's a level you get to. So when you step out into -- I wish I would’ve had a little bit of that ongoing, continuing mentors because a lot of this is probed by fire, techy risk in doing things so having a more structured focus system, finding a right system out there that fits you is what I think is what I wanted more of.  

Sean: Right. Sometimes you don't know you are on a path that you’re not going to like until you get down the ways and you actually want to shift gears. It's kind of a tricky thing to navigate. Well, great! Craig, I appreciate your time. How can people find you if they want to pick your brain or have ideas or want more details that you’re happy to share?

Craig: Our firm website is cardinalWA.com (like the bird) then give us a call at our office 972-590-8808 or they can jsut email me at craig@cardinalWA.com.

Sean: Great! Thanks again for your time and I think people appreciate this. Have a  great day!

Craig: I appreciate it. Thanks a lot, Sean! I appreciate the time.

Well, there you have it folks! Great conversation, obviously touched on a lot of information so if you've been this far I appreciate you for sticking around. I hope some of it is useful, hope a lot of it is useful. Shoot me a note at sean@indyFA.com or twitter, facebook, etcetera,

if you have any comments, thoughts, topics you like to see. I’m working on a tagline for the show. for now I have that -- how to go independent will help you formulate, establish, and/or improve your business as an independent financial advisor and ultimately help you build the life around it that you want.

So I think that sums up what I’m looking to do and if there's anything I can do to be helpful towards that end, please let me know. Thanks and until next time! Keep working hard to make today the best you can and thinking hard can make tomorrow even better!