Episode #261: Best Idea Show – Mike Lecours, fpPathfinder, “We’re Seeing More Advisors Start To Build This Into A Core Part Of Their Business”
Guest: Mike Lecours is the co-founder of fpPathfinder, a firm developing flowcharts and checklists specifically to help advisors navigate complex financial planning questions to be more diligent in their planning processes.
Date Recorded: 10/7/2020
To listen to Episode #261 on iTunes, click here
To listen to Episode #261 on Stitcher, click here
To listen to Episode #261 on Pocket Casts, click here
To listen to Episode #261 on Google, click here
To stream Episode #261, click here
Comments or suggestions? Email us Feedback@TheMebFaberShow.com or call us to leave a voicemail at 323 834 9159
Interested in sponsoring an episode? Email Justin at firstname.lastname@example.org
Summary: In episode 261, we welcome our guest, Mike Lecours, co-founder of fpPathfinder, a firm developing flowcharts and checklists specifically to help advisors navigate complex financial planning questions to be more diligent in their planning processes.
We’re covering Mike’s best idea: Checklists for financial advisors. Financial planning is no walk in the park. The rules that guide the advice planners’ offer their clients are always changing. We walk through the value that checklists can add for advisors. Not only can they help answer questions in a thorough, diligent manner, but they stand to offer efficiency gains as well. We get into how advisors are putting them to work, and sometimes even leaning on them to demonstrate what the process and path of advice might look like.
As the conversation winds down we talk about evolving the resources into a digital solution to make the tools even more user friendly and integrated into the advisor workflow.
Please enjoy this special “Best Ideas” episode with fpPathfinder’s Mike Lecours.
Links from the Episode:
- 0:40 – Intro
- 1:38 – Welcome Mike to the show and his origin story
- 4:14 – Thinking about checklists
- 4:20 – The Checklist Manifesto: How to Get Things Right
- 7:34 – Staring the business
- 9:05 – Pricing model for their service
- 9:56 – Most popular checklists
- 11:17 – Unintended benefits of checklists
- 12:03 – Goals-Based Financial Planning: How Simple Lists Can Overcome Cognitive Blind Spots (Sin, Murphy, Lamas)
- 14:47 – Learning about your real investing style through these checklists
- 16:24 – How advisors can use this with their clients
- 17:18 – The opportunity to keep people current on the latest investing rules
- 19:05 – How these checklists can improve the advisor performance
- 22:24 – Positive success stories
- 26:30 – How it integrates with technology
- 28:00 – Most in demand feature
- 30:56 – Next steps for the company
- 32:21 – Most memorable part of building out the business
- 33:35 – The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets (Faber)
- 34:08 – Biggest challenge to building the company
- 35:10 – Best way to connect: fppathfinder.com
Transcript of Episode 261:
Welcome Message: Welcome to the ”Meb Faber Show” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Meb: Hello friends. Today we have another installment of our “Best Ideas” series. Our guest is a co-founder of fpPathfinder, a firm developing flow charts and checklists specifically to help advisors navigate complex financial planning questions. In today’s episode we’re covering our guest’s best idea, checklist for financial advisors. Financial planning is no walk in the park. The rules that guide the advice planners offer their clients are always changing. We walk through the value that a checklist can add for advisors. Not only can they help answer questions in a thorough diligent manner, but they stand to offer efficiency gains as well. We get into how advisors are putting them to work, and sometimes even leaning on them to demonstrate what the process and path of advice might look like. As the conversation winds down, we talk about evolving the resources into a digital solution to make the tools even more user-friendly and integrated into the advisor workflow. Please enjoy this special “Best Ideas” episode with fpPathfinders, Mike Lecours.
Mike, welcome to the show.
Mike: Thanks for having me on.
Meb: Where in the quarantine world are you?
Mike: From my basement in Connecticut.
Meb: Well, I’m actually in my bedroom and this is a fake office background. Just kidding listeners. You can’t see it. I’m actually in the office for like one day a week. I come in just to make sure everything is still standing and operating, and it is, pick up our coffee. We’re doing a “Best Ideas” show today, listeners, which means Mike, what’s your best idea for us?
Mike: My best idea is checklists for financial advisors.
Meb: We’ll dig into that. Give me a little origin story. What was the background of this concept? You are a financial advisor by background, right?
Mike: Yeah. For the most part, I come out of the world of advertising and we tend to be very design-centric over there. And as I started to transition into being more of a financial advisor, kind of going through a career change, I was having a hard time keeping the rules straight. And it was like sometimes really silly little rules. Like, can I make a contribution to a Roth IRA or a traditional IRA? And I get hit with that question and I knew the rules, but kind of getting called from a client first thing in the morning, or at the end of the day, I always got those mixed up. And I kept finding myself having to call the client back and saying, “Hey, look, you had earned income, but you actually had too much,” or “You had income, but it wasn’t earned income.”
And so I ended up needing to come up with a simple flow chart just to kind of guide my thinking and the questions and the logic so I could give my clients the right answer the first time. And so that’s how I got started. And my business partner is Michael Kitces. And as I started to see the other advisors kind of like these flow charts I was making, then I started sharing them with other bloggers. And Michael kind of liked the idea and he’s like, “Hey, I got something that I’m trying to work on here with checklists.”
Meb: And so how did you and Kitces meet? Were you guys both shopping at the blue shirt store?
Mike: No, it was actually from my standpoint, I was making these flow charts kind of for fun. And I would just send them around to like a group of advisors and it was, I don’t know, five, six years ago, I sent it off to Josh Brown at “The Reformed Broker.” And I was like, “Hey, why do people like this? Maybe you wanna include this in…” Like he had “Hot Links” at the time. It was just articles that he kind of was teasing out there to everybody. And he’s like, “Yeah, we could do something about this. Like maybe do a quick blog post.” And I knew something was kind of happening because after that went up, we got a ton of traffic from that. And a lot of people sign up for like a little newsletter so they could get more flow charts themselves. And I was kind of looking through this going, “Hey, there’s a ton of financial advisors signing up for this thing.” Yeah, ABC their email address is just like email@example.com. And like, “Maybe there’s a business idea here. I’m gonna start sending this not to like ‘The Wall Street Journal’ or ‘New York Times’ or the local media. I’m gonna try sending this to bloggers and the financial publications.” So that’s where I started sending them around to folks, different bloggers and Michael and I just kind of connected on it.
Meb: Well, you know, it’s interesting on the checklist side, there’s the famous checklist book, ”The Checklist Manifesto,” and made such a great case for coming up with rules and guardrails, guidelines for how to think about things. This is interesting timing on this chat because on Twitter the other day, I tweeted, it’d be fun to see an entire series of checklist books but applied to essentially life. You know, it’s like the checklist guide. It’s kind of like the dummies books, but much more simplified into actual checklists. And so of course, obviously coming from the personal finance investing world with that, but everything I would love to have seen a checklist guide when I was having a child for the first time or need to…stages and live 20, 30, 40. I think that ”What to Expect when you’re Expecting” is the famous one for women having a child for the first time. So anyway, I’m an early convert and supporter of the idea. Tell me a little bit about starting the business, what the original concept was, etc.
Mike: So first of all, ”Checklist Manifesto,” it’s written by Atul Gawande and he was a huge inspiration to our business. I mean, we refer back to that book all the time.
Meb: And his focus was originally in medicine, right?
Mike: Yeah. Actually, so his story there is really fascinating. The premise of the book is around this problem that they were seeing, the World Health Organization was seeing, it was like disabling seven million people a year and killing another million people, every single year around the world. What really concerned the World Health Organization was that they were projecting this number to increase 20% every couple of years. And so they called him up and said, ”Hey, can you come like help figure this out?” What makes this complicated is that it wasn’t a disease. It was killing a million people, disabling another 7 million people. This is on par with malaria, or tuberculosis, but nobody’s really talking about it because it’s not a disease. It’s the complication rate from surgeries and what the World Health Organization was discovering was that depending on where in the country or where in the world you were going for your surgery, the type of hospital, the type of surgery, you could experience a complication rate between 3% and 17%, which is like mind boggling.
And so the solution was a checklist. It was like 17 points or something or 19 different items to go through. It was like five or six things to look at before anesthesia is turned on and another five or six things to consider before that very first incision is made. And another four or five items to look at before the patient leaves the operating room. And when they actually do that in the hospitals, it cuts the death rate, cuts it by about half and then the complication rate, like for everything else drops by like a third. And so the book really, it starts off with this story, but then it goes into a lot of different examples of checklists being rolled out. It was a driving force for me and Michael, as we started to see, well, what’s the opportunity in this business? Our role, like doctors, is really complicated.
There’s so many moving parts. It’s not like one size fits all. It’s a computer where you can uninstall something and re-install it. There’s like so many different nuances to it. And then you just add in the behavioral components and there’s just too many things to remember. And then once you do remember everything, and have it like stored in your mind, the Secure Act comes out and half the rules that you used get thrown out the window, then the Cares Act comes out. And now it’s like, you can’t even keep all those rules straight. And you’ve been in the business for 10 years. The concept was checklists don’t apply just to new advisors or new people in the business. It’s really everybody.
Meb: So tell me about the business getting started. What was sort of the first few checklists, or most popular? How many do you guys have? All that good stuff.
Mike: So we got started actually with no checklists. We just started with flow charts, like a massive test. And Michael sent out a tweet, lots of followers. So he sent out one tweet and we got like 50 or 60 members right there. And so it’s like, okay, that’s proof of concept. Advisors are willing to check this stuff out. And so then we just started to develop two new resources every single month. We started off with flow charts and then we started to introduce checklists. So what ends up happening is that we’ve developed a library of these resources. You know, it starts off with like 15 and then we just add two new ones every single month. And then we keep everything up-to-date.
A lot started off early on, just on IRA contribution and distribution rules and those things, because so many retirees are gonna be having those questions and so many advisors deal with retirees. We started to branch out with the checklists, those go into a lot of life events. So just to your point about having a checklist for when you have a child, that’s one that we do have. It focuses heavily on the financial implications, not everything else, but trying to come up with those for all the different life events. And now we’re transitioning over into checklists that you can use on a recurring basis. So what should I be looking at at the end of the year? What should I be looking at when I analyze my investments? And things like that.
Meb: Wow. Yeah. And that seems pretty comprehensive. I mean, it’s a deep rabbit hole. It’s almost like you put it into an entire manual or book of how to think about it. What is the way that most advisors…? So it’s a subscription-based right where you charge a per year and what’s it cost?
Mike: A couple of different levels. There’s $99 if you just want the pure resources. One of the first things that our members came back to was, “We love these resources. We like them, but we don’t want your logo on there. We want to brand them and have our name on there.” So we came up with another version where you could put your logo on there and change your colors. So advisors can put this out under their own brand. And so we charge $299 for that. And then our newest option is making them interactive. So we have interactive checklists now where instead of using a PDF to share it with your client, you can go through and fill out the checklist online, check the boxes, add notes, get more detail if you need to. And then you can actually just port it over and send it into the client’s contact record in your CRM.
Meb: That’s cool. Do you have any in particular that are the most downloaded or used or ones that you think that people are like, “Oh my god, thank you so much for developing this. This has been such a pain in my ass,” or that, “This is so useful.” Any general thoughts?
Mike: Yeah. It varies. It kind of cycles around time of year. Like right now we’re starting to get ready for some Medicare questions that come through. So the Medicare resources become more popular. Around tax time, they’re gonna be looking at taxes. It varies based on the advisor a lot. So some advisors have a weak area in dealing with younger planning issues like paying for college, using 529 plans. What to do when a client buys a house or maybe it’s like things that are super rare, like a client is going through a divorce. What do you do? And if you’ve never really specialized in that, then you’re coming up empty. So it kind of varies. But those are like the big ones there.
Meb: You guys are gonna put this together in book form and send out? Or is that something you guys already do?
Mike: No. No, not book form. That’s an interesting idea.
Meb: That’d be a great lead gen. You can say, look, you’ve got to subscribe for the updates, for all the new offerings. You get the buffet. But if you want a one-time, it’s like the old, was it, the “Stock Trader’s Almanac” comes out every year. I used to buy that all the time. Love flipping through that, but it’d be a good lead gen for people because you can also target it at the individual. Say, “Look, you don’t have an advisor, but you want something just to go get your house in order. Here’s some ideas.” What are the main goals of people? Is this the most obvious? It seems like the advisor using it just as a flight plan for decision-making. But I imagine this also kicks out some other unintended benefits, maybe it’s fact finding, new things come out of the conversation that are different from having conversations. What are some of the goals of this other than pure on-ramp of getting to the final decision?
Mike: Advisors use this in one of two ways. They’re either using it to cover themselves and make sure that they’re giving proper advice and that they’re not missing something really obvious. Other times they’re using it as marketing efforts. And they know the information for the most part, but they wanna convey that to their clients. And so there’s actually a study that came out recently. It actually won an award. It’s like been some of the best financial planning research that came out back in 2019. And so they were looking at this whole idea. It’s not necessarily checklists, but the idea of lists in general and just, “Let’s bring out all of the issues and put them out on the table and then let’s work with the client to figure out what makes sense and what doesn’t.” And so this study, it came out in the “Journal of Financial Planning” like July of last year.
And these researchers looked at how individuals rank their goals. And so they basically went out to 1,000 people and said, “Just tell us your top three goals.” And so everybody comes back, and they give a top three and it tends to be retirement is number one, buying a house is number two and then feeling secure about finances is number three, generally speaking. So then the researcher said, ”Great. Now take a look at this list.” They put in front of them a list of 17 goals and said, ”Do any of these change?” And so now all these respondents are looking at this and they’re going, “Yeah, actually some of these change.” And it was something like 25% of the respondents actually went back and changed their top goal after seeing this master list. And then it goes all the way down to 75% of the people changed at least one of the goals.
And so it kind of gets to this notion where this is what the researchers are coming back with. They’re saying, “Hey, you know, when you go to a restaurant and you think that, you know you wanna eat something because you’ve been craving it, but then you, when you get there and you look at the menu, all of a sudden it changes for you? Well, that’s exactly what happens with financial planning.” So now these respondents are changing their goals and they’re realizing that they’re getting more specific as a result of seeing master lists or they get to something more emotional. Is retirement the most important thing to them? Maybe it’s not retiring. Maybe it’s just feeling financially secure. It’s like, actually I don’t need to retire. I could keep working. I just wanna make sure that I could retire when I want to. Well, that’s actually a different way of like building out a financial plan than just saying, “I want to retire.” So some of what these checklists can do is just help advisors tease out certain questions to try to get a little bit more detail and to tease out some of the other planning opportunities that could exist, that don’t come up if you just gloss over it, or you just don’t cover it.
Meb: That’s a really good point. I was smiling as you’re talking about that because my method at restaurants is to simply, it didn’t matter if you gave me one minute or an hour, I would just stare at the menu until the waiter came. And then I would just panic order at the last second. And I was thinking that the analogy in the financial planning is probably not too dissimilar, particularly on the investment side with a lot of people who would hem and haw and then just react emotionally, which is obviously not how you wanna do it. It’s fine with dinner, worst case scenario, you get a dish you don’t want, but with investing and with financial planning, it can have much more serious repercussions. I think this is a though for a lot of people, advisers, at the very top level who can have a conversation or send you through a survey and come up with something like, “Yeah, I’m an aggressive investor,” or “Hey, I’m pretty conservative.” When in reality you dig in, a lot of these other questions and concepts that spit out you just think you are, but in reality you’re not. And it teases out… There’s a lot of the surveys that walk you through many of these questions, I think have been pretty illustrative of that concept too, where you actually learn some things in the process as well.
Mike: You’re right. And that is a big element is pulling out the details. There’s a study that came out in Australia a number of years ago that looked at it along those lines. And they sent a bunch of mystery shoppers to financial advisers. Conceptually, the way it worked was that it was average people going in doing real life financial planning, but then afterwards they would take all of the information, everything they learned and they would go back and consult with these experts that were running the study. And they were finding that advisors could do a pretty good job of pulling out some of the details from people currently, but then where they started to drop the ball was then translating that over into actual guidance and recommendations.
The study goes into the details of it, but they said, you can have a pretty good like first or second meeting with a client and pull out that information, but the bigger issue is, “How do we actually solve all of the problems?” And that’s where in that study, they said that there’s a huge opportunity just to be more consistent in the planning process. Because depending on who you go to, you’re gonna get one person who’s gonna focus on one area and another advisor might focus on something else. And so you create this big discrepancy.
Meb: You mentioned briefly white labeling. This is something that obviously the clients can fill out but is it something advisors will send a client to as well and say, “Look, here’s gonna be our process, here is gonna be our checklist or flow chart.” Is that a way people use it or not so much?
Mike: It depends on the advisor and their comfort level. Some see this as a secret sauce. They don’t want everybody knowing that they’ve got a checklist and a flow chart that can answer a lot of questions for their clients. So they just keep that behind the scenes. And that’s fine. Others say, “No, I want to show them how diligent we are.” And maybe they’re not even leading with it. But if you’re an advisor and you work with a lot of folk in the tech side or engineers, they may not want to know all of the details about doing a Roth conversion or mega backdoor Roth contribution, but maybe they wanna go into the weeds or they just wanna know that you can go into the weeds. So instead of having to go through and have the whole explanation, it’s like, you can just slide this flow chart over and say, “Yeah, these are the steps we go through.”
Meb: I’m famous for coming up with all sorts of terrible ideas so ignore this at your leisure. But this seems absolutely applicable to individuals as well. As example, I’m not a financial planner. We focus on investments, but the amount of time that I spend probably Googling, like you mentioned, all these rules and regulations, half the time they change about nine different retirement accounts, what you can contribute, what you can’t contribute, all this stuff, you get articles online that are outdated. I’ll Google something. I’ll be like, ”Oh, this is the answer.” My wife will say, ”No, no, no. This is the answer.” Realize one of us had an article from five years ago and it’s just a mess. I mean, this seems almost like an opportunity, not just for financial advisors at some point, but for individuals too, who don’t have advisors, which is obviously a much bigger population of people. My point being is that I may just subscribe and not even use it for clients. I may just use it for myself.
Mike: Yeah. We have some that do that. So the resources are written as though the client is reading them, as the individual client is reading them or if they’re being read to them. But they’re technical. We quickly go into the weeds on a lot of this stuff. I mean, our flow charts are just one page in size and our checklists are never more than two pages, but we cram a lot of stuff in there. So there’s a lot of detail. You have to be familiar with them. You have to have some understanding of how they work, because then you could find yourself getting into trouble because you read it, this is like, what’s my income. Well, you have to know whether we’re talking about your AGI or your MAGI and you have to know like the distinction between that, because we call it out.
Meb: Yeah. A lot of jargon in our world. I am smiling because I remember like back in university, even in high school where they say, look, you can bring in a cheat sheet, but it has to fit on an index card. And people would write in like 0.01 size font and put like an entire Gutenberg Bible on a single index card. So it reminds me a little bit of that. Okay. So that makes sense. And I was thinking too, like one use case benefit of an advisor using these flow charts and checklists is almost like exercise where you go through it nine times and you’re slowly like imprinting it in your head where eventually yes, you have it as like the pre-flight guide, but you’ve already been through it many times as opposed to one off trying to recall. It seems like a pretty good exercise as well.
Mike: Well, okay. That’s interesting. And there’s debate out there about that. When you look at the aviation industry, they’re the ones that really adopted checklists more than any other industry, because they have to use a checklist for everything. It all stems very early on when a plane crashed and they went back and they just said, “Oh, these planes are getting bigger. They’re getting more complicated. There’s more levers to pull. And we’re forgetting stuff. If we just have a simple checklist on a note card, we can solve something.” And so even now, they will go back, and they will check issues that happen in flight and say, “Well, was the checklist followed?” Because the problem is that you can get lulled into a false sense of security. You’re like, “Oh yeah, you know, I’ve done this thing like a million times.” But that one time, that one little step that normally never is an issue comes up. In that book ”Checklist Manifesto,” they go into that.
And there’s this example about this guy, I guess he was like an overweight guy. He shows up into the emergency room with a small stab wound. The wound is very thin, but he’s talking, they’re asking him questions. He’s heavily intoxicated. So they can’t get a lot of detail out of them, but his vitals are fine. So they’re going, “Okay, let’s get him ready for surgery.” And they’re going through the whole process and they’re not rushing in like on a gurney and like a fire drill. So they’re taking their time. They’re going through the normal process. And then all of a sudden this guy, he just loses consciousness, vitals start going. He’s hooked up to some machine that starts, the alarm starts going off. They rush him in. And it turns out that he got stabbed with something that must’ve been like a bayonet because the incision, even though it didn’t look very big, it went in like eight inches or something into his body. And it was like hit all sorts of major arteries and the guy almost passed away. And so as they deconstructed the whole thing, they’re going, “Okay, we did everything right except we never asked what he got stabbed with. We just assumed that it was like a regular knife because that’s the same kind of wound that we see.”
Meb: The old van that’ll get you.
Mike: So then there’s an opposite case that happened. This got written up in a medical journal because this girl, a number of years ago, this was out in like Austria, she’s out walking on the ice. And she…somehow like the ice broke, she fell underneath, and she was trapped in there for like 30 minutes. And finally the parents were able to pull her out and the medical team showed up. They took her off to the hospital and they just did their process all the way through. And they were able to save her. She didn’t have a heartbeat for almost two hours. They go through this thing and they’re going, “Okay, what miracle happened? Like what did these people do in this case to save this little girl’s life?” And the result was actually, no, everybody just did their job. The parents started doing CPR because they’re equivalent to 911 said start doing CPR and you don’t stop doing CPR. Everything worked out the way it should be. And so this little girl’s life was saved. I mean, that’s a miracle, but it was just like follow the procedure. It’s stories like that where let’s take what we’ve learned over here and apply it to the financial services industry because it’s so complicated.
Meb: And it’s not likely to get less complicated if we’ve learned anything from government regulations and challenges with all sorts of planning. What have been some of the success stories, case studies from speaking with advisors as you develop the product that either are insightful, or you think that may have surprised you the way they’re using it, or in general?
Mike: We’re seeing more advisors start to build this stuff into a core part of their business. There’s one advisor out there who he writes up an email going out to all of his clients and says, “Hey, now’s a pretty interesting time to think about doing a Roth conversion. Here are the reasons why. If you think it makes sense for you, check out this flow chart, because it goes into whether all the rules about whether you should or shouldn’t do it. And then if you really want, if it still looks right for you, reach out to us and then we’ll do like one last review and just double check everything for you. And then we can help do the Roth conversion.” So for some people they’re building it into their process, like a series of micro engagements. They do that in the fall and then they do it again in December and then their end of year planning issues in December. And then maybe they’re looking at tax returns in April and May. And so they send out the checklist.
It’s helping them show actual complexity to their clients. There’s a lot of clients where they’re gonna say, “Yeah, I don’t really need to meet with you this time. There’s not a lot to go over. Nothing’s changed since we met a year ago or six months ago.” But if you send over a checklist and say, “Hey, these are like the 20 planning items that we really want to cover with you,” maybe they’ll look at it and say, “Oh yeah, you know, that reminds me that there’s these two things on here that came up during the year.” We’ve learned a lot during our… the last two years about how to frame some of these, and that gets back to a major point in checklist manifestoes. How do you phrase this stuff and frame the checklists to make them actually useful?
There were a couple of things that we learned early on was that first they need to be rather digestible. If they’re too short, they just don’t cover enough. But if they’re too long, no advisor’s gonna spend a lot of time on these things. So we found like 25 planning issues was like a sweet spot for us. We make them very issue-specific. They’re all framed in like a typical question that a client would ask. “Are there any issues in my tax return? What should I look for at the end of the year? What issue should I consider if my spouse passes away?” We try to frame it so that the advisor doesn’t have to like switch gears too much in their head, try to then go find the checklist. And then the same happens for how we phrase the questions. All of the questions are written so that if you answer yes, that means there’s a planning issue that you need to go back and address. And if you check no, then you can just move on. There’s nothing to go through.
Afterwards, you have a quick document you can reference just to see like, “Hey, I have checks in all of this, yes column here. This is what I need to go back and address down the road.” One area that we learned was that this can get so complicated so quickly that we ended up having to create like a lot of different variations on our resources. And this is a real case for me. We had just come out with one of our first checklists and it was issues to consider when your spouse passes away. I think it was like two weeks after that came out. I got a call from a client whose parent passed away and I thought, “Oh, perfect. Let me go pull out this checklist because a lot of the issues are going to overlap.” And you’re so distracted by making sure you’re listening to the client, understanding what’s going on, thinking about what you’re gonna ask next, that the checklist just didn’t work.
There were just enough questions and issues there that made it completely irrelevant. And I don’t have time to like read through the question, wonder if it’s actually gonna be an issue for this client or have to worry about like reframing it to move it away from a spouse to a parent. And it’s like, you have to push it off to the side. So it’s a matter of coming back constantly and seeing like, okay, is this framed correctly? And then it’s a matter of listening to our members. And so what ends up happening is that we have a section on our site where anybody, whether you’re a member or not, you can go on and vote for what resources do we produce next. And then you can like vote them up and add more comments. And that becomes like a roadmap for what we develop next.
Meb: Talk to me a little bit about technology. Is this something that integrates at all? I mean, in my listener’s heads, I imagine they just picture these, like when you go into Barnes & Noble and see those like cheat sheets for like Biology 101, it’s like a laminated piece of paper. Does this in any way, have a software component that integrates into any of the other stack than an advisor would use?
Mike: Yes. That came out earlier this year and that’s an area that we’re gonna keep developing more and more. To your point, that’s a great way of thinking about it. Up until earlier this year, they were just for the most part static PDFs, which some advisors did print out and laminate, or they printed them out and they put them in a book and they just kept that in the conference room. More are going on a digital path. On our…we call it our premier membership, the checklists are interactive. So now what happens is that a client calls up and says, you know, “My spouse passed away. What should I consider?” The best practices are just in general with, for financial advisors that you’re gonna pull up the client contact record in your CRM first, you start there.
If you have the premier membership and everything’s integrated with your CRM, then you can launch the checklist directly from your CRM. You can type in notes, you can check your boxes. Yes, this is an issue. No, it’s not. And then when you’re done, you hit one button and you can take that completed checklist note and send it back to the client’s contact record. So now you have a record of it over there and you don’t have like a PDF floating around or a printout that you’ve marked up by hand. And so we’re gonna try to add, roll out, some more of those features going forward.
Meb: What have been some of the most upvoted requests for flow charts and checklists, or even ones that have surprised you, where you’re like, “Why are people asking for that?” Or what is something that is a popular topic?
Mike: That one’s interesting because there’s like this tipping point that happens. And so all of a sudden ones that have like 50 votes, all of a sudden, very quickly move up to like 100 and then like we’re jumping on it. And so once we see something hit 100 votes, we have to do that right now.
Meb: How many do you guys have in production?
Mike: Seventy-five. So to answer that question, it’s been a little bit more specific lately. It’s like, “Should I refinance my mortgage?” Really topical right now because interest rates are low. A couple of months ago, it was, “Should I do a Roth conversion?” And we’ve had others that were out there like, “Will I get penalized if I do this Roth conversion?” But that’s not really how clients ask that question. They wanna know like, “Should I?” We’ll have some questions around healthcare. For the most part, our whole resource lists, like we just start at the top and work our way down.
Sometimes we find ones where we just think they’re too cool and like too important just to leave lingering there. “So what issues should I consider if I came, like had a sudden wealth event, like I sold a business or inherited a lot of money?” That’s really important right there. We had a couple of folks reach out to us. We’ve had a couple of clients run into those kinds of situations and you come up empty handed. That gets to this other part. Like a lot of the inspiration for going down this whole tech side of things, we looked back at the aviation industry. And so the very first checklists were coming out on an index card and it was just like five or six things. But if you look at checklists now for aviation, they’re really complicated, you know, in a very interesting way in that they don’t have them print it out. They have an iPad or a tablet.
And so when they’re flying their plane and they’re trying to come in for that landing and they get to the step on the checklist that says deploy landing gear, and they try to deploy it, and that landing gear doesn’t go down, they’re not flipping through a book anymore. They tap a button on their iPad and it just says, “My landing gear will not deploy.” And all of a sudden, boom, now they have like the five steps they need to go through to re-engage and get that landing gear to come down or what they’re gonna have to do if they can’t. And so it’s just a matter of taps. And so then you draw that comparison back to what a lot of financial advisors are doing when they get a call from a client saying, “Hey, I just inherited $5 million, what do I do?” Or “My spouse just passed away.” Unfortunately, a lot of advisors will just put their client on hold and then frantically search on Google for some kind of guidance.
Exactly, to your point earlier, it’s like, maybe the information is right. Maybe it’s up-to-date, or maybe it like, doesn’t apply. So now the client they’re calling you up. That’s like their time where they need you most. It’s why they’re paying you and where you’re going to Google. And so, in some sense, it’s like we see Google as our competition and saying, boy, if we could just get our information to the advisor so they can help the client faster than if they could just go onto Google, we’d be pretty happy with that.
Meb: As you sort of look to the horizon, you guys have been at this for a couple years. Super fun idea. What has you excited about sort of next steps for the company, build outs? Is it simply, you know, you’ve got to grow the advisor base, subscribers? Is it, you’ve got some fun product ideas in the quiver as the world gets more and more technologically sophisticated, software based? Are there any things kicking around in the brain?
Mike: I think the thing I’m looking forward to the most is making our flowcharts interactive. There’s nothing interactive, nothing fancy about them now, they’re still PDFs, but what I really want, and we’re hoping we can have this ready by the first quarter of next year, the client or the advisor can see the flow chart on their screen and they can check the path that they’re taking and it can like highlight or shade the path. And then when they’re done, there’s a record of it that can go over into their CRM, because we have 35 flowcharts alone. Maybe it’s even 40, but there’s a lot more flow charts than checklists. And right now it’s like, you have this conversation with your client. How do you easily document that for compliance reasons and just for your own memory, like you go through this, how are you gonna remember in a year from now to see what the path was taken? And so that to me is like what I’m super excited for. Plus we get to move into the 21st century and have like a fully interactive business and not have PDFs that we’re sending out or accessed online.
Meb: What’s been the most memorable part about building this business out? I imagine like any entrepreneur, there’s been some agony and ecstasy of the process. Anything come to mind?
Mike: Starting a business with Michael Kitces, that’s gotta be like the coolest thing. So when I got started, Michael Kitces was somebody I like read everything that he put out.
Meb: Which is a lot, by the way.
Mike: Right. And for a long time, it was just like one or two posts a week. And then like a couple years ago, he launched the podcast and started putting out something every single day, and then it started to become a little bit harder. He was like an idol for me. It’s like, there were so many things that he talked about that just resonated with me and inspired me. I mean, I couldn’t believe it. He was like, “Hey, we should talk about this. Maybe there’s some overlap.” Still, I can’t get over that. I mean, I still think that that was like a dream.
Meb: That’s the way a lot of the best businesses and partnerships start, you know, it was just a little serendipity and two people chatting about an idea. Next thing, you know, a couple years later, here you are in the middle of a pandemic talking to Meb. That’s the normal path.
Mike: Well, which I should add that. So when I got into this business, I got into it because of my father. He’s been a financial planner for a number of years, and he was looking to bring on somebody else to help him as he kind of slowed down. And the first book he gave me to read was ”The Ivy Portfolio.”
Meb: Oh yeah. It’s still in print, I hope.
Mike: That was actually my first finance book, pure finance book I ever read. This was really big for me too.
Meb: You’re dating me. I need to go back and do a second edition one of these days. Would be fun to revisit. Was supposed to be doing a whole bunch of writing during the pandemic and not so much. Everyone probably thought they were gonna have so much time to read books and write and do all the things at home, but it’s proved to be pretty challenging. We’ll see what the rest of 2020… We’ve still got three months left, which is crazy to think of. What’s been the most challenging part about building this business out?
Mike: I think challenging has been trying to juggle some of the growth. I never really experienced this stuff firsthand, where a lot of this is thanks to Michael and him having a big reach and helping to get the word out. When we got started, we were thinking, “Hey, is anybody gonna show up? If they show up, are they gonna stay around?” And so we kind of talked about it as like a side business, just a fun project to experiment with. And very quickly, we started to realize that, no, this is not just like a little side project. There’s a lot to this and there’s a lot of opportunity. So for me, it’s been a matter of making sure that I get the right people to join the team and have the right support structure and trying to stay a step ahead of the problems that we see. We just brought on somebody dedicated to help with member support, just to answer some of the questions and kind of field some of the emails that we have that come in. And so now it’s like, I can’t just stop there. I’ve gotta start looking around like, “Okay, well, what’s gonna be the next obstacle and what should we start to do now?”
Meb: We passed over it. Where do people go? What’s the website? What’s the best way to find out what you guys are up to?
Mike: Oh sure. So it’s fppathfinder.com.
Meb: Simple. I love it. Mike. Thanks so much for joining us today.
Mike: Yeah. Thank you so much for having me.
Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcasts. If you love the show, if you hate it, shoot us firstname.lastname@example.org. We love to read the reviews. Please review us on iTunes and subscribe the show anywhere good podcasts are found. My current favorite is Breaker. Thanks for listening, friends and good investing.