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by Colleen Kowalski on December 27, 2022
Exit Planning Institute is the authority on exit planning. As we began planning for our 2023 Exit Planning Summit, we knew we wanted to feature industry experts, influential speakers, and thought leaders for our numerous sessions.
We are honored to share that Michael Kitces, Head of Financial Strategy at Buckingham Wealth Partners, and the Chief Financial Planning Nerd for Kitces.com, will share his expertise with our Summit attendees in Scottsdale this May!
Meet Michael Kitces
Michael E. Kitces is the Chief Financial Planning Nerd for Kitces.com, publisher of the leading financial advisor blog Nerd’s Eye View, and enthusiastic host of the Financial Advisor Success podcast, all dedicated to making real financial advisors better and more successful. Michael has 20 years of experience as a financial advisor, having worked across multiple industry channels, and has spoken at over 700 events for financial advisors, from keynoting the largest of national industry conferences to leading workshops at elite events to presenting his research at a wide range of industry association events. Michael is also the co-founder of XY Planning Network and fpPathfinder, New Planner Recruiting, the AdvisorTech firm AdvicePay, and the Head of Planning Strategy at Buckingham Wealth.
Described by the media as a “Financial Planning Trailblazer,” “RIA Guru,” and an “Innovator” in the industry, Michael has brought his passion for financial advice to the podium for more than 15 years.
We spoke with Michael to learn more about his career, creating quality content, and what he is most looking forward to at the upcoming Exit Planning Summit.
What intrigued you about The Exit Planning Summit?
Kitces: In the context of my world and in my business, I talk a lot about the value of advisors finding niches or specializations by differentiating themselves in the marketplace. I am a fan of organizations like Exit Planning Institute that are giving advisors more of that depth of knowledge to be able to specialize and a roadmap on how to actually pursue that specialization.
What are the three main takeaways you hope Summit attendees learn from your Main Stage Session?
Kitces: One of the biggest themes we cover in the session is the phenomenon that the rise of technology in the industry is increasingly automating the investment side of the business, which is what financial advisors have historically done. We are being driven in the direction of advisors needing to give decent and meaningful advice to clients in order to create value.
Except when everybody says they are “a comprehensive financial planner” it is hard to differentiate because every advisor is saying they are doing everything for everyone all at the same time. So, that to me is creating the next new opportunity in the advisor community. Your opportunity to succeed is to say “I don’t do everything for everyone. I am really, really good at this one high-stakes problem: exiting your business that you spent your lifetime building.”
So the opportunity going forward is all about how we differentiate in an advice-driven world by pursuing specializations.
As the Chief Financial Planning Nerd at Kitces.com, how have you seen the financial advising profession change in the past 5 years?
Kitces: There are a lot of secondary effects that come with this push toward specialization. It means more advisors have to invest in their education and expertise so we see the growth of designations of CFP marks and CEPA credentials. We also see this showing up when advisors begin spending a lot more time figuring out who exactly they want to serve. Investing a lot of time and energy to figure out how to do something like exit planning if only one of your 100 clients is a business owner, is really not a good use of your time. You need to get clear on who you want to serve and think about how you are going to pursue that clientele in particular.
It sounds like a common sense thing, but it is a fundamental change from where financial advisors have been in the past where you would determine if your client was qualified based on if they had enough money to pay you or provide you with a large enough portfolio to manage. Not really, “I have this very specialized problem, and I need an advisor who specializes in this very niche problem.”
The idea that you have to get specific about who your target clients are is also a new phenomenon in this age of specialization. For example, knee doctors are extremely focused on people’s knees. If a knee doctor worked with anyone who felt sick, they wouldn’t have a thriving orthopedic surgery practice. They find people with knee problems and they operate on their knees. The same opportunity exists for advisors, but that means we have to get specific on who we want to work with in addition to becoming specialized at solving the problems those people have.
How does the quality of content impact the success or failure of an advisory practice?
Kitces: Advisors specialize in high-stakes problems. It doesn’t really make sense to specialize in something not many people care about. People find solutions to high-stakes problems in a different way from local-stakes problems.
When I started a family years ago, I moved into a home right down the street from my parents. If you ask me anything about plumbing, I am completely hopeless, I have no idea how to do anything with that. The first time my toilet broke, I called my father and asked for his help. He referred me to the local plumber.
A referral from friends or family solves problems like this very easily. But when you get to the high-stakes problems. For example, your life is on the line, your financial life is on the line, you are sick with a rare disease, or you are trying to sell the business you have been building for your whole life. When you get to this level of problem, the pathways like friends and family referrals, historically how most advisors grew their businesses, tend to break down. When you have a really high-stakes problem, you pull out your phone, you go on the internet, you find the best person in the world to help you with that problem and you go wherever they are.
The content becomes incredibly powerful in this domain because when you search for solutions to high-stakes problems, you are directed to the content created by the people who solve those problems. Whoever is the most authoritative and credible source is typically who search engines will serve up. When you are seen as a credible source by these search engines, your content becomes the answer to these high-stakes problems. And when they ask the next question, “Who will help me implement this?”, the owners go to the advisor on the website they are already on, because this person clearly knows what they are talking about.
What inspired you to create your thriving business, Kitces.com, and expand your content to written, video, podcasts, summits, etc.?
Kitces: When I started as a financial advisor, the truth was I didn’t know anything about finances or advice. I was a psychology major, theater minor, and pre-med student at a liberal arts college. I decided at graduation that I didn’t want to do anything that I had studied in college. Ultimately, I needed a job and landed in the financial services industry.
I realized pretty quickly that the position I was in as a financial advisor was to help people make major and potentially life-changing financial decisions. This was extremely high stakes. Money problems can lead to divorce, depression, and suicide. It is a very high-stakes thing to be screwed up for people but an incredibly powerful thing to people when done right. It scared me because I had no idea what I was doing, as a liberal arts graduate with no finance background, giving people advice about their life savings.
This led me down the road of investing heavily in my own knowledge and education and finding that I enjoyed that so much. I didn’t want to just help with the problems my clients were facing, I wanted to help the whole advisor community better their responses to the problems they were solving for their clients. The crossroads came eight years into my career. The firm I worked at was helping 400 clients be financially successful and I felt that I was meant to do more than help a couple hundred fairly affluent people become slightly more affluent.
The typical advisor has a hundred clients that they serve. Helping a few hundred clients helps a few hundred clients. Helping a few hundred advisors who each have a few hundred clients, helps tens of thousands of people. Our member section on our website now has almost 13,000 advisors. I vision 1.3 million people who are now getting better financial advice because of what we are doing on our platform. That’s what gets me excited and up in the morning to do the work that I do.
Attend Michael’s Session: At The Capacity Crossroads: 3 Visions For Scaling The Advisory Firm You Want
Historically, the transactional brokerage models of financial advice meant that one could never have “too many” clients at worst, advisors just focused on their biggest clients with the best repeat business opportunities. However, the rise of recurring revenue relationship-oriented models, from charging AUM fees to monthly subscription fees, introduces a material capacity limitation for advisory firms – any one financial advisor can only handle “so many” ongoing clients before there simply isn’t enough time (or mental bandwidth) to serve anymore. And with retention rates commonly 90%+ for most advisory firms, it’s virtually inevitable that any and every financial advisor will eventually hit their personal capacity wall after enough years in the business.
Once they reach this Capacity Crossroads, though, advisors must make a decision about how to scale their firm going forward, as either a “Lifestyle” firm (maximizing income for the advisor and building a small team around them, but without any intention or desire to grow past themselves), a “Small Giant” that tries to grow focused businesses serving their particular type of clientele a particular way (and will accumulate more advisors/team over time to reach a growing number of those clients), or as an Enterprise-builders who aspires to build truly large advisory firm enterprise.
In this session, we will explore the different approaches for how advisory firms scale, help advisors understand which type is the best fit for their own personal vision and goals, and give them perspective on what they should (and shouldn’t) be focused on based on their desired approach to scaling their advisory firm (i.e., what they should do/build, what they should hire, what they should NOT hire, and what they should outsource).
Michael Kitces’ session will be held on Tuesday, May 23, 2023, from 2:00 PM – 3:30 PM.
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The Exit Planning Summit is the premier conference for professional advisors who are committed to accelerating business value, aligning personal and financial strategies for their business owner clients, and meeting the top professionals in the exit planning industry.
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