DoW asked how I was doing, so I thought I’d reply here.
(Here’s the back story that most of you know. But a refresher for those who forgot and care.)
In December, I finally got the gumption to quit my job and start my own gig. I am now 100% self-employed. I have a securities license, so I do the prototypical “financial advisor”-stuff. I also have a tax practice, so I do a lot of tax returns. (More than I want, to be honest.)
Pricing investment management is pretty easy–whatever commission the product gives you, or X% of AUM. (In my case, 1.5% for the first million, 1% for everything over $1m.) Pricing tax returns is a little more difficult, but it’s mainly time-based. So however many hours you spent on it multiplied by an hourly rate (in my case, $175).
What is significantly harder is how to market and price all the other stuff, although I have found some things that work. Take Terry, for instance. Terry is a 62 year-old self employed geologist that I go to church with. Terry is a tax client, and has known for years that I have an investment license. Yet, he still continues to do business with somebody from Raymond James, because that guy is a Dave Ramsey Endorsed Local Provider. (Which is nothing more than a marketing gimmick. You pay $750 per month, promise not to sell only proprietary products, and promise to agree with anything Dave Ramsey says. It’s a pretty low bar.)
This tax season, Terry comes in and asks questions about his investment accounts. (What is the tax treatment of this? How does that work? How much tax will I pay if I do this other thing, etc.) I answered all his questions honestly, fairly, and (I think) competently. Then I turned the tables on him. “Terry, you have an investment advisor that you pay a LOT of money to. Why didn’t you ask him all of this stuff?”
His reply was exactly what I thought it would be. “Ummm…well…I…uh…hmmm…I don’t know. You seem like you understand it better than he does.” To which I replied, “If I’m going to answer all the hard questions and do all the hard work, I’d appreciate it if you let me manage the investments instead of him.” And much to my surprise, he didn’t even object. He said, “Okay. What do we need to do to get started?”
This has happened a couple of times now. And while I try never to be coarse or abrasive or derisive, I just tell people openly and honestly that I’m better than their existing advisor. (Which I honestly believe. I don’t think you’ll find a better advisor than me within a hundred miles of here. I have more education, more experience, bigger scope of services, more technical knowledge, and a better investment philosophy.)
Sure, some people push back. They say, “My guy is very friendly. I like him a lot.” Or, “He’s a good, upright, moral, Christian man.” Or “Well, he’s done all the rest of my family for twenty years.” I’ve even had people say, “Oh, I like the way you explain things. It makes more sense when you say it. Can you explain this to my guy?” And to all these, I’m starting to give the same response: “If you want it done right, by an actual technician, then I’ll do it. If you want to keep talking to a relatively incompetent salesman, then keep going to him. But I won’t answer any more questions on his investment accounts.
Not even tax questions.” And believe it or not, it actually has worked. People seem to appreciate it when you’re honest and forthcoming with them, even when it’s about a decades-old relationship.