Why Your Book of Business May Be Worth More Than You Think — Dr. Jon Randall

Welcome & Introducing Dr. Jon Randall

Speaker 1 0:02

Hey, good day, everybody. Welcome to the Deal Podcast. Today's uh conversation is gonna be fun because we get to talk about the psychology of scaling a business, the psychology of building something great, and maybe what are the limiting mind factors that get in the way of building your practice? Dr. John, welcome to the show.

Speaker 0:22

Thank you, Josh. It's awesome to be here. I'm a big fan of the podcast.

From Advisor to Coach: The Origin Story

Speaker 1 0:25

Yeah, man. Cool, cool. All right. Who are you? What do you do?

Speaker 0:29

So I was a financial advisor most of my career and I stumbled into helping other financial advisors grow and scale their businesses. So we really help people 10X within five years and really set them up for a massive, not just income lift, but also equity lift. And a lot of them in our mergers and acquisitions, very much in the wheelhouse of the things that uh that you get into in these podcasts. So it should be a fun one today.

Speaker 1 0:54

Yeah, cool. How'd you step from the stage of financial advisor being in the business to now helping other people with the business? Walk us through that journey.

Speaker 1:04

Yeah, I stumbled into it. So I started as an advisor in New York in 1999, where my wife, my wife's from New York, and we moved to North Carolina in 2004 before we had kids, our two wonderful sons. It was when I moved. All these people asked me, what are the big producers in do in New York? Would you show me? And then I grew really quickly because I knew what worked and what didn't. And more people said, Whoa, how do you attract clients quickly? Would you show me? It spread across the country. It became much bigger business in my practice. And I said, you know what? I can help a lot more Americans through helping other advisors than me trying to do it myself with my team of advisors. So uh in 2017, I took a leap and uh sold my financial advisor practice, and I've been all in on really scaling this business to help more advisors grow and scale their businesses.

Your Book of Business Is Sellable — Here's Why

Speaker 1 1:51

Yeah. All right. So I think, you know, I've I I I did an internship one time. I was trying to figure out what I wanted to do with my life in the career field. And I'm still working through that, by the way. But uh I remember doing an internship at. Like seriously, handed this was back in the day, hand a phone book and say, you know, make phone calls, right? And um, you know, as I went through that, I was like, you know, that that industry fascinated me because the of the people you meet, the impact that they're having in doing it. And what I what I saw is the financial advisors cranking. And now they were big box, they weren't RAA, right? But they were, you know, building, building, building their book of business to increase their income, right? Um, you kind of took a different path. You were going uh a path that you could actually sell your position. Now, did you walk us through that? Because I think a lot of financial advisors, maybe listening in, maybe never even thought that they could sell their practice or that they had a business that is sellable. Walk us through that.

Speaker 2:53

Yeah, it's a tremendous industry. There's a lot of other service industries where there isn't quite the multiple that we have in a financial services industry to sell. It's pretty sticky. And a good sign that it's a good market is uh you've got a lot of private equity checking out uh the financial advisor industry, right? That's a good sign. It's a very good sign. But you've got a significantly higher multiple than, let's say, an accounting business or CPA practice, right? And so uh advisors build their book, right? It's very income-centric for a lot of the time. And then once you build up enough income and you save enough that it's not as important, then it's, huh, I'm sitting on this huge asset. For a lot of advisors, it may be their biggest asset that they own. And to sell that could certainly lead to an earlier retirement for them. And we've had younger advisors in their 40s and 50s say, you know what, with what I saved, if I sold my business, I wouldn't have to work again the rest of my life. I could hang up with my kids and help out of their school and or do some other endeavor like real estate, whatever it might be they want to do. It's really, really neat to see. So I think you're right. It's this, I just need to do this job to make money, but really, there's the opportunity to build a business. And no matter where you're at, whether you're at a big box shop, like you mentioned, or you are building your own RIA, there's a tremendous market out there of buyers. There's a lot of buyers in our industry. They have cash, they're ready to go, and um, they'll pay, they'll pay. Clients are sticky, which is why it's uh uh an easy acquisition in this industry.

Speaker 1 4:24

Got it. So when when looking at a uh financial practice and you're kind of helping someone building scale it, and then maybe one day exit it. I think some of the misconceptions that I see just kind of walking into this is no, this could never be sold. I built those relationships with John and Susie or whoever, they would never go with whoever I sold this to. Is that a misconception? And are there ways to educate people on that?

Speaker 4:54

It is, and it's pretty humbling when uh how quickly you can be forgotten about. Someone else takes over.

Speaker 1 5:02

You're not that important, right?

What Buyers Actually Look For in a Practice

Speaker 5:03

Yeah, well, it in there is that perception that no one else could do what I do, right? I built this and it's all about me. Uh that's natural for humans to think, but you get a taste for it when you get another advisor on your team and you see them take over relationships and you see the clients gravitate towards the other advisor and they forget about you. So that's kind of the first taste an advisor might get. But if advisor hasn't had a taste of that, it's it's kind of unfathomable that somebody else could could take over. But the most valuable businesses we see, obviously, uh profit margin is a huge part of business valuation, right? And and savvy buyers are going to be looking at that. What's profit margin? But also they're also looking at how much work do I have to replace that the owner's doing. So the owner's the one doing all the client work, all the client meetings, and there's a lot to replace. It's not as attractive an acquisition. Sure, it can it can be done. It can be done all day long. But the the most valuable firms are where the owner has scaled it, meaning there's others on the team doing everything, they're just really sitting back being an owner, that's very attractive to a buyer. So it it's a humbling experience that other advisors are the ones who your former clients are working with, but you know what? That's part of scaling, right? It really is there, getting yourself out of all the doing.

Speaker 1 6:24

Yeah. No, that's interesting. So when someone's getting started in the financial advisory uh role, you know, there's probably different stages that you've seen. And you you kind of put this like marker is like a lot will hit the ceiling. And I don't know what causes that ceiling. It's around 1 million, is what you shared with me in the past. Yeah. Kind of like walking, walk us up to how do you get to that point? And then why is that a ceiling?

The $1M Revenue Ceiling and How to Break It

Speaker 6:51

Yeah, I'll tell you exactly why. So uh an advisor can build easily to you know, million, maybe 1.5 million is is is is common. So it's a lot of grit and grind to get to that stage, right? It is how can I do more for clients? How can I track new clients? It's really about that. But you hit a capacity point if you're working with typical clients. Now, there's outliers that work with really affluent clients that produce much higher revenue per average that can do three, four, five million on their own. We we coach people like that, but that's rare, right? It's rare that they have such above average clients. Most advisors have industry average level clients. So they hit a ceiling because it's just time, right? It's capacity. And capacity is the number one constraint that we see that holds back growth and profitability. So they just hit a ceiling for what they can physically do. And it's around a million, maybe 1.5 million. And what happens, you need to change the game. It's a totally different game to go from a million to 10 million. And that's why a lot of advisors get stuck. So part of, I always joke why I got a PhD in performance psychology is figure out why advisors aren't doing what they should be doing. Yeah. But it just has to do with how we are as humans. We have some wonderful protection mechanisms that are built into uh the organ that is our brain. And one of them is that we crave equilibrium. So our mind will take us back to what it knows, our routines, our rhythms. So if all we know is I bring in more clients, more assets, and I do all the work, it's totally different game to I'm gonna leverage other people to do all the work. Now my profit margin isn't what I'm doing, it's my spread and what I'm having somebody else manage for my firm and what I'm paying them. That's a completely different game. So the ones that can shift to that game, they are the ones that can 10x very quickly. But what I find is people get stuck because they're playing an old game or they have an old model that got them to this point, then it stops working for them and they need to shift models to 10x to that next level.

Speaker 1 8:57

Yeah. And we're talking revenue to the advisor, we're not talking AUM, assets management.

Speaker 9:03

Okay. Exactly. Revenue to the advisor, million or 1.5 million is most common glass ceiling.

Speaker 1 9:09

Got it. So, you know, people crack past the six-figure mark, and there's they start to do well. Well, maybe not in today's age, maybe you know, double six figure. And they're, you know, they're they start to get to the point where they're like, man, I needed an assistant. Right. And then, you know, like walk us through that where they where they push past the grind, they start getting some some actual income, some revenues, starting to pay off all their licenses, the seven, the sixty-threes, the SIEs, all of this stuff that they went through to get into the game, and they start producing some some revenues, they're not no longer on a draw, and now they can breathe a little bit, maybe take a vacation. Walk us through like what's that next level of growth. Is it learning how to partner with someone? Is it the uh um the assistant? Is it systems processes? Where do you think that that first ceiling is?

Speaker 10:03

So in the industry, right now it's around a half million in revenue per team member. So you're right, at some point, founder is gonna grit and grind their way to you know a half million. The the path from a half million to a million, there probably needs to be some kind of admin help, right? Some administrative work taken off your plate so that you can focus on more growth, doing more with the better clients, duplicating clients, attracting new assets, right? That's gotta be a big part of it. So you just see that. And that's why, you know, again, going to that ceiling of a million to 1.5 million, then it becomes, okay, now we need another advisor on the team to either help me service more clients, right? We we work as a team in divide and conquer, or it's I need to have them take over client relationships to keep me freer. Then it becomes now we need another admin, right? So we're about 50% to 41% advisors, uh, client-facing advisors versus behind the scenes support people. And that's shifting because of technology. So a lot of the best firms, the most profitable firms we coach are more like two advisors to one support person right now, is where we're at. But if you think about every half million needing a person on the team, it's a it's the current barometer. That number is going up, which is great for profitability, but it's pretty much where our industry is at.

Speaker 1 11:23

Got it. And is this uh comparison just RIA or big box, or is it just across the board?

Speaker 11:29

Good question. I focus a lot of um what we do at XFA on independence, whether they're tied to an independent broker dealer or RAA. So we get a lot of research from investment news. They put out a wonderful study annually that we buy. It's hundreds of pages of insane detail. I mean, they get down to what's the PL of an independent, what are they paying people? They have compensation ranges, medians for every single position. So you can get down to okay, what's the level of revenue per person on a team? What's the makeup of these different teams? So it's really helpful for firms that aren't sure where they're gonna go or what their next hire might be. The industry averages are a guide and it kind of helps them with what to pay. Um, now they're averages, right? These are just averages, but it's helpful information because you would have to buy it to get this information. Like advisors just don't know. And that's why a lot of them come to us as gosh, I want to, you know, 10x. I just don't know how. I don't know any of this stuff. And I don't blame them because it's not out there, it's not really uh available. So you would really have to do research or purchase some research to get this info. And so we do that X-Vay, we try and make it easier for advisors and shortcut some of this stuff.

Speaker 1 12:41

For sure. Now I've seen a few different personalities. Let's just say we're we're building that out before we hired the admin. We're cranking. I I have seen in the world of you know, sales and self, you know, producers that you kind of have these two different personality types. One is the super analytical, digs deep, knows, you know, the best suggestions, you know, really not a great promoter, more on the systems process integration side. EOS would call that visionary integrator, right? That's the integrator. And then there's this person who's just great at sales, has all the friends in the world, and just great at cracking open that thing, but not great at customer service, not great at the follow-up, not great at creating the systems and processes. Do you see that same kind of like um visionary integrator personality that gets into this world?

Visionary vs. Integrator: Which Advisor Are You

Speaker 13:34

Definitely, because it's yin and yang, right? You need both. You need both, you need that promoter that can go make it and bring in business, but you also need someone that can keep the train on the rails, right? And and keep the details in order. So when people build their teams, it's good to know you know what their preference is or how they naturally are. Because to do something that they're not natural at is going to be stressful, it's gonna inhibit their performance. So, really, as you just you know, look at how you are. It's great to build a team that you know can can really help. Now, the super analytical person or the integrator, um, them hiring a promoter is tough because if they bring in someone who can figure out how to get a whole bunch of business, they're probably gonna go out on their own one day, right? They can just they can just make more. So, really, you you want to be building a business and bringing in people on your team that that need you, if they can make more money than they could on their own being with you. And they need you to feed them clients and help them make a great living. So as you think about who you are, um I think your ability to bring in business is a great barometer to should you scale this on your own? Or something you mentioned earlier, Josh, do you partner with somebody that has some of these things figured out that might have some of your gaps that they could quickly fill? So we're seeing more of that too in the industry that, hey, I'm good at these things, I don't have this other stuff. It's gonna take me too long to build. Why don't I just plug in with somebody that's got it all done and figured out and we can all grow faster together?

Speaker 1 15:03

Yeah. I definitely don't like overgeneralizing things, but I have seen it thousands of times, and it just becomes more and more true to me, right? Emith talked about it, three different personalities you got, or three different types. You have EOS that talks about the different types. For the person out there who is more, they got in the industry because they love the the analytical side, the integration side, and they're just fantastic at building models and you know, analyzing portfolios and and providing that deep level context to people, but they're not the rainmaker. And maybe they've capped out because of self-promotion and sales. What could they do in that world? So maybe partner, you you mentioned that, but is there other things that they can do to crack through those different ceilings?

Speaker 15:52

Yeah, it's um uh I mean if if they have raving fans that love what they do, I mean the access to other people is through you know, the people you serve. So, really the foundation to getting new organic growth is just being incredible with your existing clients. So if you're just better and better for them and the experience is so referable, they can still grow, right? I know plenty of very analytical people that just have a constant stream of referrals. They don't do any you know promotions, they don't do any marketing, it just comes their way because they're really, really good at their craft. So um, I mean, that's the what we call a client optimization. I mean, that's a that's a really important uh base to build from because if you're really good at what you do for clients, it just happens, right? You're naturally going to get referrals. So we see it all the time. It can it can totally happen until we be done.

Speaker 1 16:41

And then maybe the other side, great at sales, a little bit more um, you know, out there knocking on doors, but probably messy, right?

Speaker 2 16:50

Yeah.

Speaker 1 16:50

Paperwork, you know, yellow pads everywhere, you know, follow-up sticky pads, note where, you know, notepads everywhere, you know, like that's the generalities. That's more like me. What advice do you have there for building a business? And maybe, you know, for us, our own limitations are no systems, no processes, and we are just pure, you know, piss and vinegar is what drives us.

Speaker 17:14

Yeah.

Speaker 1 17:14

And you know, like how do we optimize us?

Speaker 17:18

Yeah, because the the cracks, you know, that you mentioned of the details can show up, especially in the in the financial industry, right? We're dealing with somebody's money and there's transactions involved. Um, that's where we've we just got to be real really careful. So look, we're human beings. I'm sure pretty sure everyone listening is human beings, and uh none of us are perfect, and things are going to fall through the cracks for all of us. So for advisors, we just got to make sure if anything falls through the cracks, it's gonna be something really little, not something really big. So we just got to get clear on where would some extra energy need to go to make sure we get it right. There's a small number of things like transactions or things like that. We have to get these right no matter what. And there might be some smaller things you let fall through the cracks, which eventually you hire somebody to help you fill, or you know, you you uh you have other who's handle for you. Uh eventually, in building and scaling a business, I mean you you you hire to fill your gaps, do things that you either don't enjoy or aren't good at, right? And you can probably find people that are better at those things than you. But at least in the building stages, it's just being aware of those things and at least having a small number of things you just have to get right, and you may have to apply some uncomfortable energy as you build until you can get that who on the team, which might be some good fire motivation to grow enough to hire that next person. Uh, and then you make a big uh return on that investment in somebody else.

Speaker 1 18:44

For sure. When it comes to hiring, the the world of delegation and scale is, you know, I think some people are, I think the integrators are so much better at creating clear SOPs and and like expectations and like the the playbook, they're they're so fantastic at it. Where I think the more of the visionary side, we hire, it doesn't work out. So we constantly turning people and looking for that diamond in the rough to run it. And that's where I think the partnership thing really works well between the yin and the yangs, if they both value each other and they're both aligned. But that that's that's what I see. Is is that kind of an accurate view of it?

Partnership Equity: What Goes Wrong and When

Speaker 19:25

I I think so, but I think the uh you know the rocket ship type uh uh promoter, you know, when you do get that first person on the team. Um, and I went through this uh myself. Um I hired someone that used to work at NASA at one point, uh, working operates in NASA and came in and said, What? How have you built this business? Because there's like this is a disaster. You know, successful businesses were growing, but they're like, nothing is organized. This is a mess. And so what's interesting is those people can help you build those SOPs and things like that, right? If it's not your strength, that's okay. But what's really cool is somebody coming in new can build it from their perspective, not your perspective. So if you've been in the business a long time, you might be speaking language and over the head of someone that's newer on your team. So if you do bring in that first two, leverage them to build some of those systems for you. And what's great when you bring in the next person, they can show them that when I learned this, this is you know, from my perspective, from that new higher talking. Uh, that's really worked well. And it takes the pressure off the you know, the founder to need to go to that level of detail because they're probably not, right? Somebody could observe them, record them, and build some kind of system based on what they're talking about and start to build some small number of SOPs which can expand, and then they can teach other people those SOPs down the road. So there, I mean, there's a clear path to scale, no matter the the you know, the visionary or the integrator is is really fine. It's just eventually, though, it's having someone else on the team, or as you said, or a partner to help.

Speaker 1 21:00

Yeah. Now we talk about partnership. Uh Dave Ramsey, I'm sure he's listening in right now. He says the only ship that doesn't sail is a partnership. Um, when it comes to partnerships, you you know, you and I have had conversations in the past about equity and about, you know, how to incentivize, you know, good relationships. Like what have you seen gone wrong in these kind of partnerships in the RAA space, independent space?

Speaker 21:27

Yeah, a couple things that come up. Um it there's usually two. I categorize them in two. I think there's one, the star that's on a team that wants to be partner, wants some equity, and founder is resistant to it. So if you get somebody really, really good, listen, there's options. All right. We there is a need for financial advisors in our industry. The McKinsey study came out last year, February 20 uh 25, said there's going to be a 100,000 advisor shortage by the year 2034. So Like there's demand for them, and somebody will pay them more. So if you have someone that's worthy, it's worth it to make them a partner to keep them around. Now, on the other side of that coin, I've also seen people make someone that really isn't partner worthy a partner too early. I've also seen people make uh a partner, a partner in the mothership. And let's say they do it in the early stages of building the business that was built organically, then they get into inorganic growth of buying other financial advisor businesses and quickly 10x. Well, sometimes, you know, junior partner uh might be along for a hell of a ride on things they had nothing to do with, right? They didn't source any deals, they didn't negotiate the deals, they didn't close the deals, and then working on the clients that came with those acquisitions, uh, that's some things you you've got to be careful of. Because if you're gonna have a partner of your mothership or your entity, they've got to be someone that can do some of those next level things, right? Help you make it rain, help you um get acquisitions if that's one of your growth methods. So uh so it's a two-sided coin, right? I mean, there's there's a there's in-between spaces you can make a part someone a partner, what they're managing for the firm, maybe not the whole mothership, right? To retain them and keep them. But there's some really common mistakes that don't show up until you put a zero behind your numbers, or maybe you're you're looking to sell down the road and don't realize, oh my gosh, I got to give up so much of the sale to somebody else that you know really rode my coattails to this place that we've we've built to. So it's a delicate one, but unfortunately the issues show up, like I said, when you 10x put a zero behind the numbers or get ready to sell.

Speaker 1 23:45

And I think that this is where proper expectations of what's required of you, what's expected of you, and what you could expect from here. You mentioned earlier is look, if you come work here, you're probably gonna make more and do more and be a part of something bigger than if you were to go at it alone. I think this idea of giving up equity too soon has hurt a lot of people. And I think it's I think it's harmful for both because I think it missed the the person receiving equity super early on, riding that coattail, they feel it. And there's it's there's something about us not realizing our fullest potential that I think that if they're honest with themselves, they'll be like, I got lucky, but I'm you know, I'm not gonna say anything because I'm getting you know a crap ton of equity. But there's something that will always live with them. And for me, I I wouldn't that wouldn't sit right with me. Yeah, on the flip side, you give someone equity and they're not showing up, you know, if they're not partner material, that sits with you till the day you exit and probably 10 years after. How do you prevent that? Like, what kind of questions should you be asking? What kind of milestones should be hit? Like, what have you seen work well?

How to Build a Partner Track With Real Criteria

Speaker 24:56

Yeah. So outside of people that come to us that have already, you know, had these issues, what I see work well is build some criteria, what it takes to be a partner. Maybe it has to do with bringing in a certain amount of business, maybe it has to do with managing a certain amount of revenue for the firm. Maybe it has a 10-year component that you're with the firm maybe five years or 10 years. So build some criteria uh for both sides. It gives the business some rails, right? It gives the business some uh uh some minimal so an owner doesn't move too quickly, right? Hey, we got to follow this process of what we have built. But the other side of that too is it gives expectations for the future partner to be what it'll take to get there. So you look at look at the big um the big accounting firms, right? Like at KPMG or uh PwC, there's very clear levels that hit their partner levels, right? And it's like you climb the ladder, you get to those levels. So to help someone on your team see that in your business that may not be as big as KPMG or PwC, uh, they can see that wow, I have a future here. I have a future career track, I can climb steps, and there's income, you know, gains in each of those steps, and maybe one day there's a partner level to achieve, but I have to meet these criteria, right? And I have to climb the steps to get there. So that that really helps. It gives clarity to both sides here and and keep some rails on uh maybe an emotional reaction that uh I'm just gonna give this person because I like them, just gonna give them equity. It gives some it gives some rails to both sides.

Speaker 1 26:30

Yeah, and I think that's healthy. I sure do. Um when it comes to your education, why did you go for your PhD? Why did you you go that route?

Speaker 26:41

I kind of ran out of stuff to do. I was doing all these coaching designations and and things like that. Uh, how could we get better at helping advisors? And uh um I wanted to delve more into how we are as humans and how we are as performance because in the professional services industry, your performance with uh clients and with prospects is everything. And I got a taste of this. I used to play music professionally when I was younger, my college years. I used to tour in the summers during my college years and got a taste of this kind of stuff and some people that helped me with um really performance psychology. So I've always been a fan of it. Uh, I've always kept up with performance psychologists and been very, very interested. But to go down the rabbit hole was just the ultimate, okay, now I know how I can help advisors so much better. I know why we are the way we are as humans. I know how to uh get out of some of those ruts faster. So it's been a neat component, even though we have very tactical things of how to build a financial advisor business faster and more profitably. We just know what the roadblocks are at different revenue points, but we also know the psychological roadblocks too, that you've been thinking this way, it requires thinking this way to go to the next level, knowing that we can help them shortcut those things. And uh integrating a little bit of performance psychology into what we do has been really fun. So it was really just driven by helping advisors. It's my passion, what gets me up every day uh nice and early, and uh start texting people. And I just love it. I love listening to any, you know, podcasts like yours, audiobooks, anything I can get my hands on, I'm constantly learning. But this would just to me is the next level of learning to really help financial advisors even more than we have in the past.

Speaker 1 28:24

I love it. Um, what instrument did you play? And like what kind of music were you playing?

Speaker 28:29

Yeah, I was a drummer. Um, and I started out in this activity called uh drum core, which is some of the hardest kind of like marching percussion music. And it led to doing uh some shows that became Broadway shows, like Stomp, Blast, um, things like that. So I when I played, I was in the touring cast before they hit they hit Broadway. But um uh I got offered to be in them, but I was uh thankfully in the financial advisor world. But it was fun working in New York because I had friends that were playing in in shows in New York. I still have friends today that uh uh play shows in New York. Uh my my my family went up there um uh not too long ago and uh still have friends playing in shows after you know 27 years later since I've been an advisor and uh decided to get out of that world. But uh it's a it's a neat world. It's it's uh it's fun. But um, yeah, anything drums, I still play. I just love it.

Drumming, Broadway, and the Pursuit of Excellence

Speaker 1 29:20

Okay. Compare and contrast like the breakthrough you had with drumming. You said you you you had some training there, but there were some breakthroughs. Compare and contrast how that shows up in the world of like careers. How can I apply what you've learned to my career?

Speaker 29:36

Yeah, I had a couple just tremendous mentors um um that showed me the drummer world. One's named uh Tom Hanham, uh, another is Colin McNutt, who's like what one of my best friends in the whole world. Uh and what I learned from them is what it takes to be successful at something. It was way more than I thought it would be, right? I was always a hard worker. Um, I had a wonderful family. My parents are very hard workers, they'd still that in me. But the level it takes to go to, um, you know, this gentleman Tom Hannon would say, you know, if you think you're doing enough, think again. There's a whole nother level to go to. And I remember hearing um in the um Michael Jackson documentary, I remember one of his uh basketball coaches, Roy Williams was assistant coach at the time at University of North Carolina. And um, there was a moan of talking about that with Michael Jordan, who's an insanely driven, extremely hard worker. And there's some points as like, oh, well, you said you wanted to be the best, and you know, what you're talking about is here to be the best takes this. So it was really that just learning the level you need to go to to have a level of excellence to achieve and excel, to be, you know, asked to play in a in a Broadway level show is really, really hard to do. Not many people get that opportunity or get to that level. So when I got into business, when I was a rookie cold-calling people uh in New York, I wasn't from New York. I didn't know anybody. So it was just how many phone calls can you make? And I said, okay, I'll just make three or four times what everyone else makes because that's what it takes to be successful. So I just practiced more at drums than everyone else, and I just made more phone calls than everyone else. And it's the only way I made it because it's a high 90% fail rate to be a brand new advisor with no book and to build it. And um, so those foundations just became the same. And then when getting into consulting, it's the same that hey, it takes a lot more than you think it does to be really good. There's a lot of consultants in our industry. So, how do you build the ultimate program that covers everything an advisor would need to build growth and and profitability in their business and to actually 10x in five years or less? It's uh took a lot. It took many, many thousands of hours of of repetitions. I mean, tens of thousands of hours in coaching sessions, but I put in thousands of hours just building our program and our content uh of what we have and refining it constantly. So it's very copy and pastable to help practices at no matter level that they're at to be able to grow much faster.

Speaker 1 32:02

What was your um thesis on?

Speaker 32:05

It was on a change theory. And so when you do a doctoral dissertation, you can't do it. You have to be anonymous. So I went in and think I could do something in our industry, it would be packful in industry, but you can't because someone might know me that's in the study. So I have a passion for the service industry, hospitality industry, specifically restaurants. I'm a huge uh foodie. And uh my my wife and I, we watch chef shows for fun. So I did the study on the hospitality industry, and I was thankfully in um uh started my doctoral program just before the pandemic. So when the pandemic hit, there really wasn't much research on there. Like there's a lot of data on, well, restaurants what this many went out of business. This is how much income that industry lost in that that year, how much revenue they lost. There weren't any studies on what it what they went through psychologically. I imagine just, oh, sorry, Josh, your business isn't allowed to be open tomorrow. And we don't know when it can reopen. Like it may never. I mean, that is a really scary thing to go through. So I got to interview so many different hospitality owners of just reliving that and going to back to what it was like. But there's a three-step change theory that that the was the the kind of the foundation of the study. And um, so it's just really how we experience change as humans and how we go through things ending to this weird neutral zone, which we don't quite know what's going on, to some new beginnings of understanding, okay, this is the new, the new norm, if you will, this is the new way, and you kind of run down that direction. So it was really, it was really just tied and based to that, which is so we haven't had that many extremes in the financial advisor industry, but we go through changes, right? All right, here's AI. How do we use it? Right? It's different. So our old ways are gone. We're in this neutral zone, we're kind of uncertain of, oh, is this going to take my job away? Do I need to use it, leverage this to a new beginning of, oh, I know exactly how to use this in my business, and it's gonna help me replace you know, some people and be more profitable.

Speaker 1 34:10

So successful people still go through those three different stages of change, and they just learned how to do it faster or more efficiently?

Speaker 34:19

I think there's definitely people that go through it faster. Um, what the only potential gap in the research study I did, it was only on people that survived the pandemic because they would have had to go through all three stages of change. It did study did not include people that that went out of business because it's possible they never completed the stages of change. So they were eliminated from the study. But right, but it's very possible they could have been holding on to their old old ways, right? That's I can never do take out. We only do eat, you know, only dining in and could have just said, well, I'm out. I'm gonna go sell solar roof panels or something, right?

unknown 34:59

For sure.

Speaker 1 35:00

Yeah, it's it was uh it was a crazy time. Um when it comes to you know your studies and with working with give me give me an idea of how many financial advisors you've worked with on the coaching side.

Speaker 35:12

Well, we currently work with about 320, 330 uh praxes around the country. Um, and a lot of them have practices on their team. And um, I work with a lot of them individually. Uh, we have a team of coaches that works with the majority of them. And I do some group things weekly with everyone. We have some small groups that get together that I run, you know, I build a lot of our content uh every single week working on it, refining it. But you know, over time it's been, you know, we've touched uh, you know, well beyond that over the years. I mean, I'm sure we've touched over a thousand practices in my 22 years of doing this so far. And um, you know, a lot of them we've helped build and scale and they've sold. And a lot of them have sold to people who we work with in our network because we do have a lot of buyers. And when someone's ready to sell, I mean, I can probably get a business sold by the end of the day of the day.

The Chip on the Shoulder — and What Drives Success

Speaker 1 36:00

Yeah. Yeah, super cool. When looking at someone and meeting the the main driver of the group that you're working with, the the founder or maybe the the person who's taken it over. What do you see in people to kind of like in your head you go, this person has it? Or they need to do some work. Now everybody has to do some work, but I think that there's you you see someone and you're like, you know, what does it take to be successful? If you look at a hundred people, not all hundred people will be successful or live up to their fullest potential. They might not have it to get to that next level. What is that it that you've seen?

Speaker 36:41

You know, it's a chip on the shoulder. They had something in their past um that drives them. I'll give you a great example. The number five ranked advisor in the industry. Uh, he was he was one of my training managers in in New York and uh been a pleasure to be able to you know learn from him back then and then to to work with him. Uh, we partner a lot of things together. And um he grew up poor. His parents were bankrupt, and it really scarred him when he was like pretty much on his own in high school. That's pretty tough for young person. So that chip on his shoulders never left. Now, the guy's probably, you know, he does well over 150 million in revenue, has saved tons of money. I mean, he's probably right around a billionaire uh in in net worth, but um, he'll never stop. He'll build that firm from they'll do 150 million this year, they'll build it to a billion in revenue. I have no doubts that that they'll do it. And it's not like he needs more, right? I mean, the the the his grandkids will be fun. There's a level of wealth that is generational there that he's built, but that chip on his shoulder would never go away. So it's interesting. People have something in them, and it may just be I was a middle child and forgotten. You know, my older sibling and younger sibling got all of the attention, and um, I'm just trying to prove something to the world. They might not have to prove anything, but it's just inside of them, you know, it's in their psychology. So that was interesting too, just understanding, you know, how we are as humans, how sometimes something little from our past of just you know perceiving that I'm a forgotten middle child, or um or I went through some hardship at one point in my life that really moved me. I don't ever want to experience that. That's the people that are just, they're like rocket ships.

Speaker 2 38:24

Yeah.

Speaker 38:25

And um, it's usually some little thing in their past that creates a chip on their shoulder. Um, because people are that are comfortable don't really have that drive, right? And and I think, you know, listen, the financial advisor industry, you can make a lot of money as an advisor and not have to work very much. And I think there's a lot of people, I think the majority of industry is people that are comfortable. You know, we only work with the people who really want to grow. It's one of the things that we can uh, you know, vet and assess pretty early on with people. But the ones that grow the fastest, they they just they just got something within them. And and we don't like do psychology, we don't go back into their past and find it out, but I can just tell. And when we get to know people, it's like that's why you're rocket ship.

Speaker 1 39:08

Yeah. Yeah. My wife and I were uh on our walk this morning. We go for alignment walks. Not that that was needed in this conversation, but we were having a conversation. We were talking about, you know, as I invest in people, what I've learned, especially as I go through my own recovery process and learning and healing and and growing in my own personal self. I found when I get healthier, the better I show up to work, the better I show up for others, the better boundaries I have. But one of the things that we we shared was I used to rescue people and and try to like light a fire under people's asses and try to, you know, like help them. And I wound up like almost bulldozing in an effort to help them, but they weren't going at the same speed or drive as me. I wake up super early. I was bankrupt, I was on food stamp, I lived with mom and dad. I have a major chip on my shoulder. I don't want my kids to have to suffer like I did. I don't ever want to have to see another vehicle leave on the back of a tow truck or hand over keys to another place. I'm done with that, right? Like that's why I work hard. So the the question I have is if someone doesn't have that chip on their shoulder, nobody has to tell Josh to go faster. Yeah, I have to do it smarter because I'm messy and I'm learning.

Speaker 40:28

Yeah.

Speaker 1 40:29

For someone who doesn't have that, how can they create not create that? But what if they do want to be successful, but they don't have those major pain points? Yeah.

Speaker 40:41

No, you you don't. I mean, it's it's an unhealthy thing that you know we have these scars and it just is the people that are the biggest, they're just the rocket shit. I've just recognized it. But it's really has to do with figuring out why are you doing this business? Like what really drives you? What are you, what is it that you're working for? So there are people that had didn't have any of these, you know, chip on their shoulder kind of things that are just very clear that I'm trying to make a difference in the world and this thing. And if I know I do these right things, it's gonna happen. And here's where I'm going. I'm gonna build this business to this level. This is my goal. And they're very driven by that, and they are very successful. They follow that path. But it really has to be what's, you know, what's the why? Why would we want to build the business that level? What are you gonna do? And so there's this element of success and then significance. So success is like, okay, you can build up a point that, okay, I don't need any more income or any more money.

Speaker 2 41:34

Yeah.

Speaker 41:35

Then it may be about something special beyond that. That you know what, I'm gonna help other people. I'm gonna take this extra money I make and do something special with it, right? I'm gonna build a school that's needed in my community, or uh, I'm gonna help these people out that don't have money. Uh, whatever it might be that you're passionate about, that becomes something bigger. And so look at um like uh Warren Buffett and Bill Gates, right? Look at all they they build more wealth than you know, generations of their family would ever need. And what are they doing? They're giving it away, right? They're trying to make a difference in the world. And uh I think that there's this uh uh you know drive to be successful is one thing, but I almost see that be more powerful of hey, how do we, you know, do something that just need the world? This just takes money to do it. And uh so people that that have that, any anyone can can can get that, right? You don't have to have those scars, and that's not a healthy way to grow, even though it really, really works. It's uh um it's having clarity of the why and and what's bigger beyond you. I think that's some of the best drivers I've seen.

Speaker 1 42:39

Yeah, brilliant, brilliantly said there, Dr. John. Um, yeah, there's a great book uh Daniel Pink wrote, I think it was Daniel Pink, uh Drive, and it talks about pain, pleasure, and the intrinsic motivators. Um, really cool book. Uh, what what have you written a book or like what what do you recommend for books?

Speaker 42:57

Maybe I'll tell you some of my favorite line of books are um uh by Dr. Ben Hardy. He did a a bunch of them with Dan Sullivan. Like um he started with Who Not How, uh Gap versus Gain, then 10X Easier Than 2X. One of my favorites, and his latest one is um the science of scaling, um, which it just him without uh Dan, but it's really they they kind of culminate in in build. And uh those have just been helpful for for me. I've learned a lot from them. I share them with advisors a lot, or at least share the concepts that hey, the 10x easier than 2x, 20% of what you're doing is 10x, 80 what you're doing is probably 2x and gonna hold you back. So how can you shift? Right? You might need some who's to get there, but it's just different thinking as you you build to another another level.

Speaker 1 43:44

Can someone become successful without the belief that they can?

Speaker 43:50

Oh, absolutely. Um you see it happen by accident, um, but there's certainly uh confidence builds along. Way, right? I mean, it just happens faster when there is some confidence that I can do this, but people stumble into it, right? People say, Oh, I can never be an advisor and talk to clients, and here they are managing billions in revenue, right? Hundreds of millions in assets. Like it absolutely can be done. I think it just helps with the speed of success. So people that are confident in their skills, that they can do it, they're just going to grow a little bit faster. You see that in sports, right? Or in music, um, that someone that is confident, like Michael Jordan in his early years, right? I mean, just was so good so fastly and entered the uh professional level of basketball was really good right away. That is extremely hard to do, but he was confident in his skills and it worked, and he probably progressed faster than someone that wasn't as confident, but ended up maybe playing in the NBA down the road in their career.

Speaker 1 44:53

Outside of, I'm just gonna ask you a tough one. Outside of family, outside of food, outside of business. What brings you joy? What do you do for you that brings you joy?

Speaker 45:08

Yeah, it's uh uh it's really cooking. My wife and I, we love cooking. We love travel, spending time together. And um, I'm really passionate about a nonprofit we have called uh it's called Grace Notes. Um, we just had a huge event last night, virtual event, where um uh I used to just secretly and privately give money to those that were in need to do some of the music activities that I got to do that really helped me be successful in life. And um, my best friend who's who's a mentor said, Hey, we should like get some cool swag and not just be you donating. Maybe we get other people to help other people too, because I think other people want to be part of this. And uh now we have many, many hundreds of people uh uh giving to this organization. We give away 100% of it. I mean, the organization we lose money. I discovered the losses uh on top of giving, but uh we make a big difference for for people. And what's neat to see in the world, the internet open up the world, there you just have access to more people that are incredibly talented, but maybe just don't have the money to do something. And so I'm passionate about how do we find those people and how do we make a difference for them? How do we make a life-changing difference for them? And in music, Grace Note is it's a little note before a big note in music. And so to us, the money is a little thing at this point in life, but for for them, it's everything. So it's really the money is a little point of the grace note. The big thing is the outcome of the life-changing difference they're gonna have. And we've taken kids, would definitely end up in jail, 100% up in jail, become college professors, our high-level military people, you know, playing music in the military. You see them just become successful because of those things that that you know, I got to experience and some of the some of you know my my good friends got to experience early in life to learn how to be successful at something. Um, it's pretty, pretty cool. So um that's pretty, I'm pretty much hang out with my family. Uh, we travel a little bit, we we cook food and enjoy it. And uh uh I work at XFA to uh make a difference for financial advisors, and then uh with what we have left over, we uh we give away to others and make a difference for them.

Speaker 1 47:15

That's cool, man. It's super cool. Um what's one question that you love asking your financial advisors to kind of uncover their motivations or to uncover like maybe a sticking point in their world? That what's what's the go-to question that you love asking them?

Speaker 47:34

Yeah, well, well, I've I try and make it easier for them because uh they'll all say, like, uh, oh, I just need some more clients and it'll solve all my problems, or I just acquire another practice, it'll solve all my problems. So I I've created a growth model that's built on the theored constraints that has these are the typical constraints and they lead to one another. Like this is the foundation you need to build to build a house. This is the first floor. They want to all start on the second floor of how to acquire more clients and practice acquisitions. Listen, that's some of my favorite topics. I love that stuff, but it's it's really you need a foundation first. You can't start building the second floor. Then you need a first floor before you can have a second floor. Then you can build unlimited floors upon it. So I kind of frame it with that and help them see like, okay, here's what it takes to, you know, 10X a business. And then they can pinpoint easier of like, okay, this is my issue, or I see that's that's my gap right here. So I try and make it easy for them because you see, uh I just hear the same things every time. Everyone comes to us and says, Would you show me how to buy praxis like that number five advisor in the country ever they did that? Would you help me how to build over a hundred CPA relationships like this person you work with? Or would you help me, you know, how to attract over a hundred million organically every year? Sure, you can do all those things, but there's usually other reasons that are holding them back that just they're just kind of blind to. So helping them uncover those and that helps them answer that question a little bit better. Uh, and it then it helps them grow quicker because usually they're working on the wrong things. And by just overcoming one constraint, it can unclog the rest of their business.

Speaker 1 49:11

Yeah. Dr. John, awesome job today. Uh, we're closing out, man. Uh, what's one final thing you want to share with the audience in terms of maybe something inspirational or some advice, maybe a warning? What are your thoughts? What would you like to say to them?

Speaker 49:26

You know, the sky's the limit in our industry. The need in America continues to grow, and the number of providers is declining. So we're in a great business in the financial industry, um, but we just got to do it carefully, right? You've really got to be careful about how you build it, how you grow it. And and we're we love doing uh about every other week, we host scaling workshops for advisors to learn how these people, we've helped 10x, 20x, 100x, what on earth did they do? And so we help them identify their constraints that are holding them back, benchmark the practice, see where they stand. It gets industry averages, identify their opportunities. They have a game plan to go faster. So uh I love doing that. So I think just getting clear on those things, just where you stand, how you can take the next leap really, really helps. So um, yeah, you can check those out on our website, which is xfa.coach. Um, there's in there's some free info there of stuff we've talked about, but there's also uh access to those scaling workshops we hold about every two weeks, and they're uh they're really fun. Advisors love them, and we love helping them get some clarity.

Speaker 1 50:30

Cool. And you've got a podcast that uh I want you to uh share with our audience.

Speaker 50:35

Yeah, we got a podcast, I got a book, uh, both called the same thing, The Extraordinary Financial Advisor. And so it's really a lot of interviews. Uh, industry experts is really what we include. But I just find a lot of people want to hear from the star advisors. So that's a lot of what the uh the interviews are on the podcast. Uh me talking about stuff wasn't as exciting, but uh me interviewing some of the star advisors, people listen to more. So that's pretty much what it's all about.

Speaker 1 51:03

Yeah, man, cool. Uh ladies and gentlemen in the audience, as always, reach out to our guests. Say thanks for being on the show. Um, if you have a question for them, you can uh reach out to them directly, or you can head over to thedealpodcast.com, fill out a quick form, and we'll maybe make a connection for you. And then if you have a business that you'd like to talk about on the show or a deal process or something that you've uncovered that you'd like to share that wisdom with the knowledge, the reason we do these shows are to inspire the future generation of deal makers, and we like helping sell the companies. So if either of those are you, reach out to us and let's chat. Till then, see you guys.