Steven Jarvis:

Hello everyone and welcome to the next episode of the Retirement Tax Services Podcast: Financial Professionals Edition. I’m your host, Steven Jarvis, CPA and in this show I teach financial advisors how to deliver massive value to their clients through retirement tax planning. On today’s show I’m really excited to have as my guest, Penny Phillips, who is the co-founder of Journey Strategic Wealth. And I’m going to let her talk a little bit more about what they do at Journey Strategic Wealth, because it’s really exciting, I don’t want to get it wrong! Then we’re going to dive into a really fun conversation about how to develop teams. So Penny, welcome.

PP:

Thank you so much for having me! Great to be here.

SJ:

Yeah. So go ahead and talk to the audience a little bit about what you do at Journey Strategic Wealth, so we have some context for why I’m so excited to have you on the show.

Brief Intro of Penny Phillips, President at Journey Strategic Wealth (01:14)

PP:

Absolutely, and the intros, by the way, in terms of self are always the hardest part of a podcast, but I’ll do my best. So my name is Penny and I’m a co-founder and the president of Journey Strategic Wealth. We’re an RIA based in New Jersey, actually Summit, New Jersey. We just opened our office and so we’re super excited. We’re a national RIA. So one of our teams who just joined us out of San Francisco, California team actually left Northwestern Mutual to go independent and join us. And we’re super excited. We just launched the firm in January, but two of my business partners are advisors and they’ve been in the business all across the industry for the last 40+ years. What we wanted to build and I know super, we’re talking a little bit about this was a firm that enabled advisors to go independent, because we know that there are some advisors right now who are seeking independence. But maintain ownership of their company while having access to full fledged practice management support and being a practice management coach in the business for the last 10+ years what I noticed is that we, you know, advisors had a lot of choice, but the choice in the independent space wasn’t always what they were looking for. So it’s either ‘go independent and run your own business’ or ‘join a firm as an employee and have the business, you know, run for you’. And so we were trying to create something that was in the middle of that. Prior to launching Journey I co-founded Thrivos Consulting, a practice management coaching company. And I spent the last several years coaching advisors on managing change. And so what an interesting time to be a consultant, in 2020 during a global pandemic. But I’ve always been interested in the advisors and firms that have been able to achieve incredible results despite managing change. And so that’s been the last 10 years of my career really.

SJ:

Yeah. That’s definitely a very relevant skill set to have right now that, that change management. I think a lot of people and not just in the advisor space, in the accounting space where I come from as a CPA, you get that a lot as well of; you have this core skillset and people just kind of neglect to tell you that if you want to be in this independent space in particular, you also need to just run an entire business. And you go in thinking, ‘Hey, well, I’m going to help people. I’m going to prepare a comprehensive financial plan so that someone can be ready for retirement someday.’ And you’re like, ‘oh, well, what about, what about hiring? What about payroll? What about, uh, your tech stack? What about all these other things?’ Yeah. So I’m really excited to talk about some of those other things.

Normally we talk about very specific tax topics on this podcast, and we’re going to divert from that just a little bit today, because first, especially for some advisors who are new to tax and then advisors who maybe are just looking to shift some of the burden of, of who is doing some of the tax planning, having the right people around you and developing that skillset, uh, is essential to doing this successfully. So love to hear your thoughts, Penny on maybe, maybe let’s start with adding people to your team, developing people on your team. What do you recommend to advisors as they’re looking at that?

The evolution of independent financial advising (04:31)

PP:

Yeah. You know, you just touched on something so important. The advisor role has evolved so much, obviously over the last 30 or so years in the business and even more so over the last five years. And, and I’ll sort of make the connection between human capital, which we’ll talk about today. At this evolving value proposition of the advisor. Back in the day, the advisor’s value to the end client was that they had access to information and, you know, intelligence, technical information that the consumer couldn’t get access to. Right? Pre internet days, you had to go to an advisor to get your advice on a specific, you know, stock or, you know, whatever. That was sort of the exchange. So the value was ‘advisor is all knowing’ and then ‘advisor delivers something’, sells something and gets a commission in return.

PP:

That value proposition is, has had a 180 degree change to today, right today the consumer has access to a ton of information from everywhere. And the advisor’s value is to not just deliver on one aspect of wealth management i.e. investment management, but to deliver on all aspects of wealth management… investment management, tax planning, cash flow management, budgeting, risk management, legacy plan. And so an advisor can’t possibly possess all of the technical competencies necessary to be able to effectively deliver on all these things and then filter information so that it’s customized to the client. It’s just way too much responsibility. And thus it’s become increasingly more important that advisors figure out how to properly create and develop, not just an internal team, but an external team of experts around. So one of the things that I tell advisors even before they start thinking about how to construct their ideal team and business is to really ask themselves whether they’ve taken the first step of articulating to the end client, the difference between wealth management and investment management or risk management, right?

Why you should clearly define deliverables (06:52)

PP:

And when we talk about challenges with, you know, advisors and fees or fee compression, it always comes back to, has the advisor properly articulated to the end client and consumer what they actually do? Because most of the time when we say the term wealth management in this business, what we actually mean is investment management, right? Or risk management, if you’re in the insurance BD channel. So step number one is making sure that you articulate to the client what wealth management actually means and all of the things that you’re responsible for. And once you’ve made sure that you’ve established that step number two is now thinking about how I can construct this team around me to actually be able to deliver on all of those aspects of wealth management. So I’ll pause there for a second, Steve, cause I’m sure that resonated with you helping advisors deliver on one aspect of wealth management.

SJ:

Yeah. I love that description. It’s really interesting to me as I’ve gotten more and more involved in the advisor space, how much almost internal to the industry kind of fighting there is about definitions of certain words. And I really loved how in your description there, you’re not talking about, Hey, you need this fancy description on your website so all of your other advisor friends know what you do. I think the way you said it is articulating what you’re responsible for as the advisor. I talk about it a lot as how are you delivering value? But I think we’re getting at the same thing of making sure the client knows what it is you’re going to do for them, because you made that point very well of information is abundant now. And so one of those things you should be responsible for is giving them things like peace of mind and confidence. And how, how do you articulate to them that you’re responsible for some of these emotions in their life around wealth management, not just, ‘Hey, I can get you a good deal on insurance’.

PP:

Right, exactly. You just hit on something else. In any industry, we talk to one another as professionals in this business using industry jargon, right? We use wealth management and comprehensive financial planning and holistic, this, those terms don’t necessarily translate to the end client. And so in the spirit of explaining to the client, what you’re responsible for, it’s what you just said, but also how. How do we deliver peace of mind? Well, we do that by one meeting a year, we’ll coordinate with all of your other financial professionals that you work with your accountant and your attorney. We have, you know, reviews twice a year. We’ll give you space and time to think through your goals. I mean, actually articulating in layman’s terms to the client, how you’re going to deliver on those emotions. Critically important and much more powerful than saying, you know, ‘we deliver holistic financial planning.’

SJ:

Nah, I love that. And in the tax space, people are especially guilty of that. It’s really easy to use lots of jargon and all everyone’s $5 words on these complex tax planning strategies when really what it comes down to is, you know, Mr. and Mrs. Client making sure that you pay the IRS, what you owe is really important. We’re going to make sure that you are being compliant, but we’re going to make sure that you’re not overpaying the IRS over your lifetime. You know, making sure you don’t leave that tip to the IRS. And that’s as simple as it needs to be. Not this explanation that takes a half hour. And they started looking after the first 30 seconds because they don’t know what you’re talking about.

PP:

Yeah. Well listen and what you just said resonated with me because I don’t want to pay more or really anything to the IRS, even though I have to. So yes.

Setting clear expectations for your clients (10:23)

SJ:

Yeah. You know, and I have yet to meet the person who does, and I noticed the same with advisors, but certainly with taxes, try not to get political with clients or advisors because really that’s not what clients are asking me to do. They don’t need my opinion on what I think tax laws should be. They need my help with following the rules that are there and making sure that they’re not paying any more than they have to.

PP:

Yeah. You just reminded me with this whole conversation about lately Bitcoin and NFTs and advisors listening. Well, we’re hearing so much of this, not just from the media, but from clients as well. We’re asking, should I, you know, be in this, should I be in… and the advisor plays the same role that you just described you playing, right? It’s not the advisor’s responsibility to say, ‘Hey, I believe this is good or bad, or this is going to stay or not.’ It’s the advisor’s responsibility to say, ‘this is the plan we put in place. Let’s talk about the things that you need to do and not do in order to continue to make sure that you’re achieving your short and long-term goals.’ So I think, this could sort of take us down a rabbit hole, but the advisor not feeling that pressure to… It’s impossible to know everything that’s going on right now in our business or in your business. And so understanding value and having conviction in what that value is going to be really important for advisors moving forward.

SJ:

Yeah, so critical for advisors really, even for themselves, and definitely for the client to set those expectations, because if out of the gate, you’re not making it really clear to the client that okay, if we take tax planning that my responsibility, the advisor is to make sure that I’m considering the tax implications, that I’m looking for opportunities that over your lifetime or over the next five or 10 years, that we can reduce the amount you pay in taxes. If I’m not clearly communicating that expectation, the default can be, ‘oh, well, my advisor brought up taxes. So they’re going to make sure that I don’t pay any taxes.’ That’s not realistic. That’s no! That’s not how this works. That’s not what I’m promising. You know, I really, what I’m promising or what I should be promising as advisor is that ‘I’m going to do that fiduciary duty – that word gets used way too often- but that I’m going to keep your best interest in mind that I’m going to do everything I can, based on the information I have. And I’m going to walk alongside you, if anything does come up, because aunt Iris is notorious for changing her mind, it’s going to happen again this year. And so, as things change because they inevitably will, I’m going to walk alongside you.’

PP:

And, and give you the information that’s relevant to you and your family and your particular circumstances. That’s another important, really important piece of it. Especially with tax, I mean, I know I’m not no tax expert, trust me, but I don’t necessarily care about all of tax law and all the things that are changing. I care about my specific situation and that’s why we have advisors to help us sort of filter that. So filtering information is another key part of value right now for financial professionals.

SJ:

Yeah. I think advisors can kind of get in their own way sometimes, most professionals. With the abundance of information that’s out there. It can, sometimes it can be hard to feel valuable because well, somebody can just go Google that. Well, there’s a reason they’re sitting in front of you. Sure, you can go Google ‘tax planning strategies’. You’re going to get 17 million options that are available to you and you’re going to have no idea what’s applicable to you or how to implement them.

PP:

Totally, It’s the same for my discipline, coaching and consulting. Any advisor can Google how to write a business plan. You know, business planning templates. There’s a reason why people hire experts to help – again – customize the exercise for them, guide them, provide accountability, you know that’s a big piece of this too. So, I completely agree and it’s relevant for practice management coaches like me as well.

The right way to develop your team and employee insights (14:23)

SJ:

So we kind of kicked this off saying, okay, let’s talk a little bit about team development. So let’s bring this back to taxes and team development. One of the things I’m constantly encouraging advisors to do is get tax returns for every single one of their clients every single year. And for a lot of advisors, this is going to be a new step. So definitely one of the questions or kind of hesitations I get is that okay, well now I’ve got to go to my team and say, ‘okay, guess what? You already have the jobs you’re doing now. I want you to do this other thing.’ So, and you had mentioned change management. How do you effectively do that with your team? To say, ‘okay, we’re going to go ahead and add this new thing on top of it. Um, ready, set. Go.’

PP:

Yeah. That’s I mean, that’s a big question and the answer is multifaceted. So I’ll give a couple of answers. The first thing, and it’s really important for advisors to start preparing their teams – and even if it’s one person that they have on their team or two – preparing their teams for what the next, you know, 5-10 years in this business is going to look like. And what I mean by that is, you know, I think for many advisors who’ve been doing this a long time, there was never really the thinking, the mandate for them was always ‘I’m the producer, I have my metrics that I need to hit’ and especially for folks who are in a firm where there are, meters clubs and, you know, numbers that they need to hit, and so their thinking was always very tactical.

PP:

‘I’ll come in, I’ll do my 20 meetings a week. I’ll have this number of AUM and logs a year. And then, you know, if I need somebody and we’re at capacity, we’ll hire’. I haven’t really seen a whole lot of, sort of bigger strategic thinking about, you know, what an advisor wants the next five to 10 years to look like, what they want the culture of their organization to look like. And so I say to advisors, there’s never been a better time than now to go back to your team and say, ‘look, I’ve done a lot of thinking and reflecting over the last 18 months, and I’m thinking about culture, I’m thinking about efficiencies, I’m thinking about how to better serve clients’ and, you know, organizing an offsite with a team to start prioritizing all of these initiatives that the team wants to implement. One of those being, we just went through a global pandemic. Clients have access to more information than ever before, but are more confused than ever before.

PP:

So now’s the time that we really have to double down on our value proposition and our business model to better serve clients. And so what I found is that, and then by the way, the ask of the team is let’s start to brainstorm what our client service model looks like. Even for advisors, who’ve been in the business for 20-30 years. Some of them haven’t even really established in a very institutionalized way what service they deliver to clients on an annual basis i.e. the two review meetings or review of their tax returns to your point, meetings with their CPA. Now is the perfect time for advisors and teams to say, ‘look, if we really want to be even more committed to our value proposition, let’s plan out what the next year looks like in our annual service model with our clients.’ Preempting those asks of your team with the greater mission and vision for the organization, ensures that people are, um, understand the greater purpose, feel buy-in, feel engaged.

So, imagine that versus just sending out an email to a team and saying, ‘Hey guys, I want to start collecting everybody’s tax returns a year.’ If the team understands what the greater purpose is and what the team and individuals are driving towards and how it impacts clients in a positive way and impacts business results in a positive way, they’re much more likely to be engaged in it. So that, that would be the first thing I say. The second thing is most advisors when we ask them to do something different, they either get really excited, they go back, they present it to their team. And the team’s like, you know, we’re completely at capacity and can’t possibly implement this. What I say to advisors is most teams are actually overstaffed in the industry. And the reason is because every time an advisor or a team feels frustrated, or like they’re at capacity, they tend to throw human capital at the problem.

So they’ll just hire somebody else to do more paperwork. So what I want advisors to do instead is spend the rest of this year, really thinking about whether each person on the team is operating as productively and efficiently as they could be, and whether the business is really institutionalized, meaning, do you have a schedule of service items that you deliver to clients? Have you segmented in a way that enables you as the lead advisor to only be working with 20 to 30 relationships? If you haven’t done all of these things to institutionalize the business, then no matter what idea you introduce to the team, they’re always going to feel like they’re too busy or too at capacity to do it. That’s how I would start addressing that question, give the bigger sort of mission and vision to the team before you introduce an initiative that you want them to focus on. So they understand the ‘why’, and then work with the team to really identify this year, whether you are as operationally efficient, as you want to be.

SJ:

There’s so much great advice in there. I love that. Starting with why, and not just dictating to your team, ‘Hey, we’re going to do this’. I think that’s really great insight on, you know, trying to evaluate whether people are really at capacity or are they spending a lot of time playing office is what we call it sometimes. Are there things on there daily or weekly task lists that they do because they’ve always done, but they don’t really tie back into that why, they don’t tie into that schedule of ‘here’s how we’re providing value to the client’. Here’s how we’re following through on those things we told our clients we’re going to be responsible for.

PP:

I’m nodding my head so hard, Steve, cause that’s exactly it. And we’ll couple that with – so remember I spoke earlier about you, it was just a very tactical industry, especially for folks who grew up in a sales channel – like you’re taught literally to just focus on maximizing the day versus thinking about, you know, what the next 10 years looks like. And that has rubbed off on teams, I mean, we hire team members based on task-oriented job descriptions, which I am not a proponent of. We need to hire people based on culture, number one, number two – objectives, and key results. Does the individual person who’s joining your team and anybody listening, ask yourself about your current team. If you ask them at a strategic level, what are they trying to achieve in their role on an ongoing basis that positively impacts the business? Would they even be able to sort of process that question? And the truth is most because we’ve never thought about our roles that way on a team, most people can’t answer that question. Like if you ask a receptionist or your admin, what is your objective in your role on this team? They would probably give you their tasks. Like I answer the phone, you know, I take care of client service. Their objective is to serve as air traffic controller for the business. And how do they know they’re achieving their objective? Well, all calls are responded to within 24 hours. You know, we have our key metrics and results that we track, but it’s a totally different way of thinking about an individual’s role on the team, and I encourage advisors to start thinking that way. I’ll also say there’s something called Parkinson’s law, the idea that work expands to fill the time we have to complete it. And you’re exactly right. If people are working from nine to five, guess what, their work is going to expand to five o’clock. It’s the reason why, if you have, you know, if you tell your team, you can leave Friday at one o’clock, guess what, all of their work is getting done before one o’clock. And so it’s a great point. I’m guessing it’s not just in the financial services business that we deal with it.

SJ:

No, that’s pretty widespread. Parkinson’s law, uh, was just so eye-opening to me the first time I heard it, especially coming from an industry where charge hours and billable time is what we talk about endlessly. There’s a lot of unhealthy habits that go on with that, when the focus is just strictly on how much time is this going to take.

PP:

Yeah, and I had done consulting work years ago and I remember I was on a project and there was a study that revealed that, in our business, employees in an advisory organization actually work efficiently for about 2 hours and 47 minutes out of the day. Which means that the remainder of the day, not that people aren’t working right, but it’s sort of filler time. I think when you really recognize that as a leader, you have to start thinking about this – come into work nine to six structure, really conducive to a productive team? And the answer is honestly no. We learned that over the last year with everybody having to be virtual.

Action Items (23:58)

SJ:

Yeah, definitely. Well, Penny, I want to pivot just a little bit here and talk about action items. Cause I always want to make sure that what we talked about on these podcasts are things that advisors can go in and implement. I could probably spend the next half hour making a list out of the things we’ve talked about, but let’s boil it down to just a couple of things. So I’ll, I’ll start with one of the things that stood out to me about what you were talking about was getting really clear on that, ‘Why are you doing this?’ For my listeners, I’m going to say that the first action item to me is why are you thinking about tax planning? I can give you a ton of reasons, I think there’s plenty. But you need to be really clear on why you’re doing this. How does that fit into what it is that you’re responsible for to the client, that’s driving you to take interest in this and spend time on it? So that as taxes or any other topic evolve, you can always tie it back and have that real clear connection to why am I doing this?

PP:

Absolutely, and that connects to the first thing I recommended for advisors is that, first of all, I always recommend creating a dialogue with your consumer base, your clients. You know, it’s funny how many advisors, even last year when I said, during the pandemic, I guess that now it’s a year and a half ago, it’s okay to constantly remind the client of what you do. First of all and you probably can attest to this too, Steve, as I can over the last year, you know, any services that I was connected to in some way, whether it was my Verizon account or Delta or Amex. We were bombarded with emails from these companies about what? Their value, what they’re doing for us during the pandemic, how much they value our relationship and what to expect. Yet I talked to advisors and advisors felt shy and nervous in some cases to reach out to their clients on a weekly basis and just say, ‘Hey, we’re here. we’re here for you. Here’s what we do.’ And so I want advisors to get into that mindset of, by the way, door frames have amnesia, the minute a client leaves your office or gets off the zoom. They’re going to forget everything that your firm represents. So we have to get into the habit of constantly doing that. So the first thing is send a correspondence to your clients at some point over this month and say the same, same way I just, I talked about before, ‘we’ve done a lot of thinking over the past 18 months, we recognize how incredibly valuable the relationship is with your family. We also realize how important it is for us to remind you what we offer and what we can do for you and your loved ones.’ And literally list out the things.

PP:

Just as a reminder, we are a wealth management organization. This is what that means. This is how we define wealth management. And then I get in that letter by the way, with a little survey, asking the client, first of all, ask the client if they enjoy engaging with you virtually. If they do and you get their buy-in, then you don’t have to do review meetings in person again, number one, but number two, what other services could we be providing? And ask your clients to think about the last year. What other services could we have provided or content or information that would have made you feel even better and more secure over the last year? This is such a unique opportunity to be able to really say anything to the client and not have it be weird because we’re coming off of such a crazy year. It’s a perfect opportunity to your point, Steve, to articulate the value of these services that maybe don’t directly link to financial advising, but that are part of the wealth management umbrella.

SJ:

Yeah. I love that. I mentioned it earlier, but one of the action items I’m always recommending to people is to get those tax returns for their clients and kind of that script you just gave of that communication with the client. If you’re new to getting tax returns, that’s the perfect platform for asking for them, ‘Hey, here are these things that we’ve been thinking about over this past, whatever time period, to make sure we’re delivering value. And we’ve been spending a lot of time on tax planning and need to incorporate that in what we’re doing so that we’re providing our best value to you.’ That is a great opportunity to incorporate that with your clients.

PP:

The power of the advisor email, you know, and, and rolling out an initiative. You know, I would say that this is a great way to keep you and your team accountable as well. If you send an email or a mass communication out to your clients and say, ‘Hey, we’ve been doing a lot of thinking. We’re doubling down on client service, we’re enhancing our client service platform – that’s just a fancy way of saying you’re going to, you know, introduce your services – here’s what the rest of this year, or here’s what 2022 is going to look like at XYZ financial. We’re going to set up a time to review your tax return. We’re going to pre-schedule all our review meetings at the beginning of the year. So they’re on the calendar, so we don’t have to feel like we’re going back and forth.’ I mean, these are little tiny things that not only enhance the client experience, but hold your team accountable to delivering wealth management services. So it’s a win-win.

SJ:

Yeah. I love that. Well, Penny I really appreciate all the conversation today. If people are excited about what you’re talking about, how can they learn more about what you’re doing?

PP:

Absolutely. So I still have the consulting company. I’m not there anymore, but we do great work with advisors and that’s Thrivos Consulting. My business now obviously is Journey – journeyswadvisor.com. I encourage advisors to see what we’re doing on the practice management front. And then you can find me really on any social channel. I have a YouTube, Practice Management with Penny and I’m on Twitter a whole lot at Thrive hosts, LLC. And like you, Steve, I’m constantly trying to create value for advisors that they can embrace and then pass on to their clients.

SJ:

That’s awesome. We’ll make sure we get links in the show notes so that you can follow up on what penny is doing. I really appreciate everyone listening today. Please take a few minutes to go out to wherever you listen to podcasts and leave us some feedback. Those five-star reviews, get your questions in so we can answer them on this podcast. Good luck out there and remember to tip your server, not the IRS!