9 months of job interviews. 27 “No’s” from top advisory firms. 33,000 cold calls.

That’s all it took for Erin Scannell to open up his independent office and land his first client back in 1999.

Few people would have powered through that long, but as Erin Scannell explains on today’s podcast, he learned some hard lessons in perseverance and resilience growing up that continue to motivate him to this day.

Erin is the founder and CEO of Heritage Wealth Advisors in the Seattle area, where he directs 50 team members, 18 advisors, and about $2 billion in assets under management. Erin is also a regular on Barron’s list of the top advisors and an inspiration to anyone who thinks the next hurdle in your business’ growth is insurmountable – even if that hurdle is a global pandemic.

Learn resilience.

Erin was raised by a single mother who moved wherever she could find writing work – 17 places all over the country by the time Erin was in middle school. It wasn’t easy.

“We never had much. We were actually on public assistance quite a bit. Moving that much was challenging. But the good thing is I ended up learning at an early age to get comfortable with uncertainty and comfortable with change. I hope that’s made me more resilient than I would otherwise be.”

Based on those 33,000 cold calls, I’d say that lesson in resilience stuck. In fact, when I talk to top performers like Erin, resilience often becomes a key theme of the conversation. At the last Barron’s Teams Summit, Laila Pence told me how she fled war-ravaged Egypt as a young girl, worked her way through college, and then reinvented herself as a pavement pounding customer service expert as a young advisor. Today the firm Laila founded has $1 billion in AUM.

In another inspiring conversation, Rebecca Rothstein, Forbes’ #1 Woman Advisor, told me how she left home at 17 and bounced around a series of odd jobs before committing to building her own advisory business in the aftermath of Black Monday.

Even if your personal or professional hardships aren’t quite that dramatic, the pandemic has created a challenging business environment for all of us. Your ability to respond to these challenges and adapt to whatever the “new normal” looks like, will be a defining moment for your business — especially if you can help your clients adapt and flourish as well.

Encourage growth.

Erin’s mom insisted that he attend the University of Washington, where he majored in economics and minored in psychology. “You’d think I’d use the economics degree quite a bit, but I use that far less than the psychology degree,” he says. “As advisors, we all deal with the emotional aspect and the psychological aspect of behavioral finance. The reasons Americans make the decisions they do often don’t follow simple math or simple process. The emotions can take over.”

One aspect of Erin’s psychology studies that’s particularly relevant now is the idea of a growth mindset versus a fixed mindset. Your “fixed” clients are the ones you have to talk down from the ledge during the heat of market volatility. They get easily flummoxed by change and challenges. Even normal market volatility gives them the jitters. Throw in pandemic-sized volatility and they start thinking about abandoning the markets all together.

Erin tries to encourage a growth mindset in his clients by helping them keep their emotions in check.

“The stock market has averaged 10% for the last 30 years, but American investors do not get 10% in their stock portfolios. And it’s largely because of emotional decision making. Fear is a big motivator for a lot of human behavior. I think one of the axioms that’s so important that we all live by is that action can cure fear. And that’s what we’ve been talking to clients about through COVID. Just the encouragement to have a game plan for our clients in times like this. And I think a lot of advisors are doing this, connecting with clients.”

Part of the way that Erin is connecting with his clients is through the range of services he delivers. Clients need your calm perspective right now, but they don’t want to hear “just ride it out.” Erin’s team uses playbooks he’s developed for market shock scenarios, adapting lessons from his early experiences in the 2001 tech bubble. They look for advantages that can be particularly relevant to high-net worth clients, such as diversification, debt restructuring, bolstering passive income, and especially tax prep.

“We have CPAs on the team. We have attorneys on the team. We have stock options specialists. We have a Social Security department that runs calculations which will help optimize for the client. And there’s a very robust level of tax planning that we’re doing that goes so far beyond what I was doing before. I just met with someone last week, their total lifetime tax projection was around $2 million over the next 20 years. We got that down, with three different strategies, to $1.2 million.”

That client won’t have to do much number crunching to understand Erin’s true value!

Be bold.

Near the end of our conversation, I asked Erin if he had a motto that he lived by.

“Stop driving with the emergency brake on,” he answered.

With the world in a mess right now it’s easy to feel a little more cautious about our business ambitions than we were at the beginning of the year. But advisors who succumb to that kind of “fixed” thinking are going to miss out on a “growth” opportunity that doesn’t come along all that often. If you’re the kind of advisor who has more to say to a client than “just ride it out,” then your services have never been more valuable. Anxious baby boomers, struggling working class families, market-skeptic millennials, high-net worth entrepreneurs – whatever your niche, people need advice right now that’s relevant to their unique situations. Advisors who deliver that advice are going to change lives and reap the benefits in perpetuity.

Erin’s coach helped too.

“My coach would say things like, ‘Erin, do you want to go from success to significance?’ And it took that catalyst to kind of slap me in the face. Like I wasn’t making the impact that I was meant to make. I was helping individual clients, but not at the level I believed was possible. And I wanted to find more meaning, to make a bigger impact. The abundance mindset is such a critical part of living a more meaningful life. So, we talk to clients about it. We’ll say, ‘The numbers part of the planning we do is really important. But to create more meaning and have more impact, we want a more holistic approach.’ That’s my belief. We have to make our value far more tangible than we’ve ever made it before.”

Resources Featured In This Episode

“Mindset: Changing The Way You think To Fulfill Your Potential” by Dr. Carol Dweck Erin Scannell recommends this book for further reading on the fixed versus growth mindset.

“Selling the Invisible: A Field Guide to Modern Marketing” by Harry Beckwith Listening to Erin describe how he makes his value tangible to clients reminded me of this book, which could help you refine your own value proposition.

“7 Mindsets” to Accelerate Your Firm’s Growth My podcast with Sten Morgan, founder of Legacy Investment Planning, discusses how to think about your business in a totally different way.

Values Clarification Toolkit Click here to download this FREE tool and start living your values.

Full Transcript

Steve Sanduski: One of the things you often hear about being a successful financial advisor is if you can just make it through the first few years, then this is a great business to be in. And those first few years can be extremely tough. So, what if I told you that you would have to make 33,000 dials before you got your first client? Do you think you’d sign up for that job? Well, that’s exactly what today’s guests did. He made 33,000 dials before he got his first client back in 1999.

And from that tough start, he’s now running a firm with more than 50 team members, 18 advisors, and about $2 billion in assets under management.

My guest today is Erin Scannell. He is the founder and CEO of Heritage Wealth Advisors, which is a private wealth advisory practice of Ameriprise in the Seattle Washington area. And Erin has an incredible story about a difficult, but loving upbringing, spending time on public assistance, all the way through to today where he is a regular on Barron’s list of the country’s top financial advisors. I know you are going to love this conversation as much as I did. So, please enjoy the amazing story of Erin Scannell.

Erin, welcome to the show.

Erin Scannell: Thank you.

Steve Sanduski: Well, let’s start with where you are today. So, if you could just share, what does your business look like today in terms of maybe assets under advisement or the number of team members you have number of advisors that you work with, what does that look like?

Erin Scannell: Yeah, we’ve got, so we’ve got 10 locations now, mostly in the Northwest of the country. So the Seattle area. We have an office just outside of San Francisco, one in just outside of Phoenix and a number of them in Washington state. And we’re now up to, as far as team members, we’ve got 52 team members. Of those, we’ve got a number of leadership positions, but then of the 52 there’s 18 advisors on the team at this point.

Steve Sanduski: Okay. And then roughly the amount of assets that you guys are or managing.

Erin Scannell: Yeah, it’s a little over 2 billion.

Steve Sanduski: Okay. All right. Now I know oftentimes when I have folks on the podcast that have a large business, like you do, people are always wondering, well, gosh, did they start with a big head start? Or how did they go from where they are right now, where they started in the beginning to where they are right now. Now I know your story. You had a difficult time in the early days. And so, I want to go back now, tell me a little bit about your upbringing.

And I want to find out how the difficult upbringing that you had to some extent how that might have influenced the motivation that you have today to build the business. So, let’s just go back to, to some of the early days as you were growing up, what was it like growing up for you?

Erin Scannell: Yeah, thanks for that question. It was difficult in some ways, but also I feel pretty grateful for getting the tile. I was raised by my mom, a single parent. And there were some challenges, by fifth grade we’d moved 17 times. So I lived in the Midwest, the East coast, the West coast been all over the place, and never had much people always ask if we were a military family and we weren’t, my mom was a writer. And then we moved essentially for her to try to get work in different areas. And we never had much, we were actually on public assistance quite a bit.

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But my mom’s amazing with working with what she had. Like I remember our couch that we had, that she moved with us all over the country was she made it out of cinder blocks and cushions that she had hand sewed, and boards that she had gotten from the trash bin at the lumberyard. So, it never felt like we didn’t have much, but in general, moving that much was, was challenging. But the good thing is I look back on it is I just I ended up learning at an early age to get comfortable with uncertainty and comfortable with change. I hope that’s made me more resilient than I would otherwise be, cause I had a tough start in starting the business as well.

Steve Sanduski: And do you have any siblings?

Erin Scannell: I have a half brother, but didn’t grow up with him. So, it was me and… it was just essentially me and my mom.

Steve Sanduski: And is his mom’s still around today?

Erin Scannell: Yup. Yup. She lives in Olympia. So about an hour away and I’ve got the four kids. And so she drives up here as much as she can, although she’s pulled up throughout the COVID stuff. So, we’ve been down in Olympia delivering groceries and doing the 10 foot distance hugs, the virtual hugs and that’s been hard. So, we were down there this weekend and she’s crying and wanting to give everybody real hugs finally. But so we became very close based on that upbringing, which is nice to this day.

Steve Sanduski: Yeah. That’s great. So then, so it had a little bit of a difficult time. It sounds like there was still lots of love there between you and your mom as you were growing up. But then you went to college. So, what was the thoughts in terms of going to college? Oftentimes people that might have had a tough background, like you did, maybe college, isn’t the first thing on their mind. So, was that something that your mom really taught early on that, “Hey, you’re going to go to college.” Or how did you think about college as you were growing up?

Erin Scannell: Yeah. And I appreciate that question because I think you’re spot on. And we haven’t even talked about this before this interview. So my default was I had a buddy who got a job in high school getting paid $18 an hour, working for a trucking company and based on my upbringing and the lack of resources we had, that to me sounded like Nirvana to go make that kind of money right out of high school. And so I was planning on doing that. My mom said no way, she set up the application process with one school, which is university of Washington, that’s where she went, and I got accepted and then ended up going there. And that ended up being a pretty pivotal decision that she made for me. And I didn’t like it at the time, but I’m super grateful that she did that.

Steve Sanduski: Yeah. University of Washington, one of the great schools in this country, one of the most beautiful campuses I just happened to be there last summer when I was in Seattle, and I made a point to visit the campus and it was just beautiful. And you’ve got that great view of Mount Rainier in the distance on a bare day. So.

Erin Scannell: Yeah, yeah. Go Huskies.

Steve Sanduski: That’s right. That’s right. Now, so what did you major in, in college?

Erin Scannell: I had a major in economics and then a minor in psychology. And actually, in finance, you’d think I’d use the economics degree quite a bit, but I use that far less than the psychology degree, just because the advisors on this call, we all deal with the emotional aspect and the psychological aspect of behavioral finance and the reasons Americans make the decisions they do often don’t follow simple math or simple process. The emotions can take over. So, the psych portion of my degree was incredibly valuable. Didn’t realize it at the time, but glad I focused in that.

Steve Sanduski: So as you think back on that, a psychology degree or minor that you got there, was there an aspect of the psychology that looking back now, you think, “Wow, that was a really valuable thing that I learned in psychology.”

Erin Scannell: Yeah, it was around mindset. And they talked and this was a while ago. But they talked about the growth mindset versus the fixed mindset. If you’ve read that book by Carol Dweck, which Satya Nadella CEO of Microsoft came in and after Bawlmer, who was there and the stock had been flat for around 15 years, Nadella has taken it from what did it average about $30 a share to 180, 190 or whatever it is today. But he credits that to the growth mindset versus fixed mindset. That is one of the things he drove throughout his organization was the practice. First, the realization. And then the practice of the fact that we have control over our mindset and mindset is so critical in decision making. And he, again, credits that to be the number one driver of why he has been able to launch Microsoft to record heights.

And anyway, I started learning about that, 25 years ago. So to me, it was incredibly valuable because then we try as a firm though, take that to our clients. The mindset, because as they say, if the stock market has averaged 10% for the last 30 years, American investors do not get 10% in their stock portfolios and up getting 2% or 4% or 5%. They end up losing some amount of that return. And it’s largely because of decision-making. Emotional decision making. So the behavioral finance thing has been fun. It’s been interesting and I think very impactful for our clients.

Steve Sanduski: Yeah. And I’m definitely going to explore that a little bit further here in just a few minutes. So I made a note of that. I think the whole idea of the mindset, the psychology, both in how you’re using it with your clients, but also for you personally, because again, I’m always fascinated by the mindset, the psychology of top performers like you, and where does it come from? Where does that motivation come from and what causes you to keep it probably long after the period of time where you don’t necessarily need to work for money. But we’ll definitely touch on that. But this thing about college. So you got the economics, you got the psychology. What made you want to go into economics and psychology? How did you pick those as a major?

Erin Scannell: Yeah, it was kind of accidental. I actually started with Liberal Arts focus and worked a couple summers in Hollywood on major films in studios on major films and thought would get into that line and worked for the film commission in Seattle. But then took a couple of courses in both psychology and economics and just love the instructors and loves the content and had always liked the business. And I always liked psychology and business, which is an interesting combo, but one of the ways that we helped pay for college was flipping cars. So I would, I was always to some extent, entrepreneurial. So, I would go to the local auto auctions in Woodinville for those of you who are local and they do these auto auctions. And I would go buy, on average, I’d spend about $400 on BMWs.

I’d go buy these 1979 BMWs was my niche, and I could get them for 400 bucks and then I would go fix them up aesthetically cosmetically, go get a Maaco paint job for 100 bucks. A couple of times, even spray painted the cars a better color than they were. And then I go to the junk yard and spend another 100 bucks on some different seats, and wheels and that sort of thing. And they could sell them on average for about two grand a piece. So I could make again, from where I grew up, that was a ton of money. So, that was motivating. And it just, it had my mindset. My mindset was always one of entrepreneurial-ism and it’s kind of, it sounds cliche or corny, but the American dream. So like we’re all live in that to some extent. And so that was motivating.

Steve Sanduski: Okay. I’d love that. 1979 BMWs was my niche. I love that. All right. So now you’re coming out of college, and did you go straight into the financial advisory business from college?

Erin Scannell: Yeah. I took nine months and interviewed at 27 firms and got told no by most of them. So I went to like the Merrill Lynch’s and Morgan Stanley’s of the world, and they said, “No, come back if you have 10 or 20 million in your book of business and then we’ll talk to you.” A couple of firms said, yes. Traditionally, like the life insurance sales companies would have taken someone like me on who had zero experience. And luckily, like one of the big decisions I made that I look back on and feel like it was a positive one, was I decided to not go work for a company. I went independent and started my own shop essentially on day one, but I took nine months to make that decision. So that was a process in and of itself.

Steve Sanduski: And can you share what the company was that you started with?

Erin Scannell: Yeah, it was Ameriprise.

Steve Sanduski: Ameriprise okay.

Erin Scannell: Yup. So I went on their independent channel. So they have an employee channel and an independent channel, and I bought a franchise through them and started up in an office in downtown Seattle. And it had some struggles there too.

Steve Sanduski: Yeah. So you did a lot of cold calling to begin with. So tell me about that experience.

Erin Scannell: Yeah. I mean, I didn’t have a business plan, so like my natural market was young friends and debt, like just out of college and I didn’t have much money. I had about 400 bucks and I spent $25 to buy a phone. I remember doing that. I grabbed an extra phone books from the apartment I was living in and I just started dialing. I actually, I spent about 80 bucks on clothes. I went and got three suits from Value village, which is essentially like a Goodwill that they sell used clothes. And I went and got three used suits from Value village for 20 bucks each.

And then I bought a couple new brand new shirts. I was proud of that from JC Penny. And they always said, fake it till you make it. So I put on these suits and started dialing, just started calling people, essentially trying to get them to let me manage their life savings as a 22 year old, right out of school. So again, not a good business plan. And it was not fun. I made a lot of dials. So, I mentioned in that Wall Street Journal thing that I made 33,000 cold calls before getting my first client. So it was the epitome of like, it just wasn’t fun. It was pretty dark days actually.

But I was stubborn and just kept at it. And kept refining what I felt like, what I thought the messaging should be, that people wanted to here in terms of what consumers wanted. So, it took me a while to refine that and figure out, “Okay, here’s what consumers really want.” But after getting my first client, the next year, there were 54 people that hired me and paid me a fee to do financial planning. So I felt really good. So it took 33,000 calls to get the first client, but then it really started to snowball from there because I learned what, and I wrote it down.

I got kind of anal about the process, but anytime someone told me, “No.” I’d ask them. Sometimes they would tell me sometimes they wouldn’t. But often it would be something like they didn’t want to, what I found people wanted was they wanted objective advice. They did not want to get pushed products. You they’re the trust levels in our industry, the Financial Services Industry aren’t particularly high. Like I’ve seen some studies where they say they’re at the same level as that of Congress, which is embarrassing. And a lot of consumers site feeling like some of their keys are hidden, or some of the conflicts of interest are hidden.

Or they go work with a big firm and they get lost in the shuffle. Like they don’t get real good personal attention. And there isn’t an objective holistic planning approach. So, I bring that up because that’s what I got. It took me a while, but I got good at articulating what I felt like was a good value proposition. And then people started to hire me, and again, then it snowballed from there.

Steve Sanduski: And the value prop that you came up with back then maybe 20 or so years ago, is it the same today or has what clients are looking for from an advisor has that changed over the past 20 years?

Erin Scannell: Yeah. Yeah. It’s evolved to some extent. It’s gotten more robust and holistic, but the core foundation of it is that people want help on their investments, but they feel like investments are just one piece of the overall picture. They want a more holistic approach. And they want the advice to come from someone that they know does not have conflicts of interests. That they know is not trying to sell them a product. That they can pay an explicit and transparent fee to for comprehensive financial advice. That’s my belief. I mean, that’s what our clients want. And that’s where, that’s part of the drivers for the growth is just getting so clear on what we can deliver really well, and then communicating that to clients.

Steve Sanduski: So it took about 33,000 cold calls to get that first client. And then you said things started to snowball from there. So as you think about as the business grew, so from zero to the first client to the first 50, for financial planning to today with about 2 billion or so in assets under management, can you think of the business growth in terms of stages? So for example, from zero to the first X amount, was that like a defined stage where this is what I did to get the first 100 million or the first 200 million. And then from that point to the first billion, I did a different shift. Does the business work like that? Did it work like that in your situation?

Erin Scannell: Yeah. I hadn’t thought of it that way, but I guess the stages that would come to mind would be stages around help that I got from team members. So in the first stage, I didn’t have any staff, no assistant, no, no, no. Nobody helped me. I was in the paperwork doing all the client meetings, trying to follow the market, trying to do trades, trying to do compliance, trying to learn the tax code, all that stuff. And it was an impossible job because no one can be an expert at all those things, but I just worked really hard. I’d worked 80 hours a week and I’ll just work my butt off because I wanted to build something and I wanted to do good work for people.

And doing it with no help. I think where I got to was around 20 million and then in assets under management and then said, “Okay, it’s probably a good idea to get an assistant.” And then did that for a while and got up to between 250 and 300 billion with, at any given time having one or two assistants. And then, the decision was made. And that was a pivotal decision as well to scale it, and go from essentially a sole proprietorship of practice, to what I wanted to think of as a company. And then it took hiring really good people like building an org chart, a future state org chart, and then going in and recruiting and trying to find some of the best people in the industry to come support the vision that I was casting in the mission that we were serving for clients. So, I suppose we could look at it in those three stages.

Steve Sanduski: Yeah, lots of good thoughts in there. So basically, the first 20 million, like a lot of people, you just gutted it out and we’re stubborn, we’re tenacious, and did everything yourself. And then you realize, “Okay, if I want to get to the next stage, I’ve got to start hiring people.” So you hiring your first person or second person, and that got you up to about 250 to maybe 300 million or so, which is a very, very nice sized practice in its own right. But then you decided that you wanted to scale. And so, I’d love to hear, if you can go back to that moment, did a light bulb just go off and say, “Hey, I want to really grow this thing.”

Or why did you just not say, “Oh, I’m at 300 or 350 million. I’ve got a really nice life. I can just continue this and grow 10% per year. And everything’s wonderful.” I mean, I’m sure you probably could have done that, but you decided no, I’m going to scale this thing. What was the thought process behind? I really want to scale this thing?

Erin Scannell: Yeah, that was about… Now it’s largely driven by having a coach. A coach helped be the catalyst for making that decision. And my coach would say things like, and I always was skeptical of what I felt like were corny saying, so it didn’t sink in with me right away, but he would say, “Erin, do you want to go from success to significance?” And I’m like, “Stop saying that corny doesn’t doesn’t resonate with me.” But he kept at it. And his point was, you can keep doing what you’re doing at 300 million in assets, and you could grow it to 400 million, 500 million potentially over the next 10 years and make a lot of money and feel like you’re really successful this and that. But do you want to go from that to significance? And he just kept asking that question and it took that catalyst to kind of slap me in the face.

And the catalyst was feeling like for me, something was missing. Like I wasn’t making the impact that I was meant to make. So yeah, I was helping individual clients, but not at the level I believed was possible. I believe there was a lot more that I could do. And I wanted to find more meaning to make a bigger impact. And so, actually, the process that went through again, got kind of anal, like I did an interviewing companies when I started the firm. But in this case, I surveyed a bunch of successful CEOs, some local, and then some around the world ask over 100 of them, what their most meaningful experience of their life was not including having kids or getting married.

Those are the easy outs. So I’m like, “You can’t use those.” And 74 of these folks answered these guys in Dallas answered and it turned into some amazing conversations and dialogues and stories. Like I remember sitting in the desert by a fire in like outside of Dubai with two CEOs. And they were telling me stories about how they had similar feelings as I had, which is that they weren’t making the impact they could make, or that they were meant to make. And then they shared stories of when they did feel the fire in their life. Like where they were making a difference and the impact.

And they were feeling more energy than at any other time in their lives. And as I have more of these conversations, the pattern began to emerge that for me, at least was interesting. So 53 of those 74 CEOs that answered my question, shared a similar experience when they said here’s the most meaningful thing of our entire lives. And it was that they, they all drew back to a high school or college sports team. And actually it wasn’t just sports. For a few, it was like bands or music or debate. It was a team and it hit me like a ton of bricks. This was kind of a slap in the face I needed.

And it became clear that I needed to start forming a team. And again, I wanted to get some of the best people in the industry with the goal of making a bit bigger impact and feeling like I was making a bigger impact.

Steve Sanduski: Yeah. I really loved the story that you told there. And as you think about coaching, I’m obviously a big fan of coaching. I do coaching. And when you were telling the story about your coach, who basically said moving from success to significance, it reminded me of the comment that John Sculley made to Steve Jobs, going back to the 1980s, when Steve Jobs was trying to recruit John Sculley to come in and be the president or the CEO of Apple Computer. This was the first go around for jobs at Apple. And they’re walking around the Stanford university campus and Sculley at the time was a big executive at Pepsi.
And so finally, job’s looks at him and he says, “John, do you want to sell sugar water for the rest of your life or do you want to change the world?” It’s one of those famous quotes from Steve jobs? And of course, we know the rest of the story, both with John Sculley and with Steve Jobs. But yeah, sometimes it just takes that right phrase at the right time, in your case, your coach had to repeat it multiple times and ultimately it’s sank in.

You talk to these other folks and that process worked on you. And I think all of us, we want to contribute, we want to make an impact. And in the financial advisory business, I do see that fairly often where people realize, I want to make a bigger impact. I want to reach more people. And you’ve done a heck of a job doing that. So thank you for sharing the story there. And so you’ve got the 350, you decide, “Hey, I’m really going to scale this thing.” Did other things change in the business? Yes, you hired more people, but did you change the types of clients that you wanted to work with? Did you go more upscale with clients, or did anything happen with the types of clients that you were desiring to attract at that point?

Erin Scannell: Yeah. So we definitely did some of that going to higher net worth clients, but it wasn’t in place of we’re replacing existing clients. And actually, we not only went up market. We went down market, one of my beliefs and this was being raised by a single parent who was on public assistance was, she never had a way to go get good financial advice. Most good advisors end up setting minimums of 500,000 or a million or more. And so, the typical American consumer can’t go get good advice. And so, I wanted to not have to turn people away. And so we set up a department in our firm that is built to serve clients that aren’t wealthy yet.

Like people that might someday inherit money, but they haven’t yet. Or they are the 22 year old kid or grandkid of one of our core clients. So we absolutely have our core private wealth clients, but then we’re also building, because our mission statement is to across multiple generations, we want to help families make a bigger impact. We want to help clients make a bigger impact on their family and community. And one of the best ways to make a bigger impact on someone is to make an impact on their kids or grandkids. And so, we wanted to have a way, a formal way to be able to deliver really good advice and planning and strategy to people who weren’t yet wealthy.

You know, someone who’s 22 has very critical decisions that they’re making that are critical for them. But again, the typical good financial planning firm is not going to give them the time of day. So, broadening our reach to be able to serve yes, the high net worth. And again, those are our core clients, but also be able to serve their kids grandkids has been a pretty fun part of building and scaling this company.

Steve Sanduski: And then how did you actually attract these clients to go from the 350 to 2 billion? What types of marketing strategies? Was it referral marketing seminars? How did you actually grow the business so dramatically here in the past few years?

Erin Scannell: Yeah, no silver bullets. Just like you said, it’s been referrals. So the idea was to build a really good client experience, something that most consumers wouldn’t otherwise get. So, for all of us as independent financial advisors, I feel like we’re already ahead of the game because we’re giving objective advice that’s fee based that is not driven by the product sales or sales quotas that a big investment firm or insurance firm would want to drive. So, I think we’re already starting ahead of the game there and then building out the service to provide better advice at all levels. So an example of that would be like when I was on my own and sort of in a silo, I was trying to do all the client meetings and watch the markets and learn the tax law, et cetera.

And I ended up giving mediocre advice on a lot of things. Now we have specialists on the team or have a specialist model where advisors have access when they do financial planning, especially for high net worth clients that have access to, we have CPAs on the team. We have attorneys on the team like Juris Doctorate. We have stock options specialists. We have social security department that runs all 500 ways to take social security and actually runs calculations on which one will help optimize for the client. And when it gets into tax planning, there’s a very robust level of tax planning that we’re doing that goes so far beyond what I was doing before.

And it ends up being, and that might sound hyperbole, but it’s game changing. Because we’ll ask all clients, if they know why Warren Buffett is paying a lower tax rate than them. 2019 was the first year billionaires paid a lower tax rate than the working class. And in that study, the working class were making $37,000 a year. So how in a progressive tax system, where when you make more, you should be paying a higher rate, do billionaires pay lower rates than someone making 37,000 a year? And it’s because while investment diversification is critical, the type of diversification that’s going to have more impact on our higher net worth clients, longterm outcomes is going to be tax diversification.

And we’re not taught that by the media or in school or by most stock brokers or even CPA. CPA gets so busy doing tax returns, which is a pretty reactive process or reacting to what’s going on that year. We have our tax team running tax schedules for clients for the next 20 or 30 years. And saying, “Here is what you are projected to pay total lifetime in taxes.” Now, here are three ways we can get that down meaningfully. Like I just met with someone last week, their total lifetime tax projection was around 2 million bucks over the next 20 years. We got that down with three different strategies to 1.2 million.

So then our planning conversation elevates from, “Hey, what’s the Dow Jones doing? And the SMP 500 to, what are we going to do with this 800,000? Are you going to buy that vacation place you’ve talked about, or are you going to give it to your kids that you said you want to give some money to your kids? Are you going to support charities? Are you going to save it for medical expenses? What are you going to do? Like it takes the planning conversations to a much more meaningful level. So that’s been fun and that’s been part of the way we have attracted. So it goes back to your question of how are we getting some of our high net worth clients it’s by building a level of service that will make a bigger impact for clients, than they would get at most other places. That’s that’s the goal.

Steve Sanduski: Well, this whole thing about the taxes is really fascinating because I think did you say tax diversification? Is that the phrase that you used?

Erin Scannell: Oh yeah. I was just going to say it has to do with the fact that, you know this, but the tax code is complicated. It’s 72,000 pages. And what a lot of people don’t realize is there are different types of income that are taxed differently in the tax code. And so, the most common type of income is working, comes from a job W2, 1099, or schedule C income. That’s the most common type, but it’s also the most expensive. It’s got the highest tax bracket supplied to it in the entire tax code. And most Americans are living in that world, where all their income is tax that way.

And then you can have over 50% when tax rate on it when you add the federal state and social security taxes. And what a lot of people are or might be aware of, they do not formally plan around is that there are all these other types of income that are at lower rates and we have control over how much of our future income comes from those more efficient sources. So we’re doing a lot of work on that intentionally set up income streams for people that are taxed at a far lower rate. Like another client I just met with, they were living off 250,000 a year in income. They’re retired. Normally, if you had ordinary income, that would be taxed at well over 30% like income from a job.

But this couple has done practice tax planning for the last seven years. And we’ve diversified where their income is coming from. Their average tax rate this year is going to be just over 11%. So rather than having 170,000 of the 250 they can spend, they have 222,000 out of the 250 they can spend. And that’s not just for this year, it’s for the rest of their lives. So it’s like that thing of, it’s not about how much income you have or the rate of return you get it’s about how much you can keep after taxes and fees.

Erin Scannell: Yeah, so it’s stuff that, like advisers will all know this like capital gains income, dividend income, partially taxed income, tax free income, and income that can also have deductions applied to it. Like either a legacy trust or a charitable trust you can get income that might otherwise be taxed as ordinary income, but you can get deductions at the same time to help offset the impact of those taxes. And then the tax exempt income and tax free income, and then things like loan income. So you think of like a lot of executives at Fortune 500 companies, they might depressed their salaries intentionally, but get more of their compensation in the form of loans. And we all know how loans are taxable. Like if you have a real estate property and do you have a gain in that property?

So you have an apartment building and there’s a gain in it, and you take that million and you sell the property, you got to pay tax on, say half a million dollar gain. You’ve got a big tax on that, and it’s going to be capital gains plus depreciation recapture. It could be 50%. But if you do not sell that apartment building and take the million dollar profit out, it’s taxed at 0%, there’s zero tax on it. So like we put together a strategy a couple of years ago for a client who, and this was a pretty wealthy person, but they took out 8 million in profits from various real estate properties. That was enough for them to live on for the next 25 years. And there is an exactly 0% tax rate on that $8 million.

Steve Sanduski: Yeah. One of the things I love about that is you said a few minutes ago that you put together basically a projection that shows over your lifetime under your current plan, this is how much you would be paying in taxes. And then you show, here are a few the strategies that we can implement. And if we implement these, instead of you paying 3 million in taxes over the next 25 years, you may pay 1.7 million or whatever the number is.

Erin Scannell: Yup.

Steve Sanduski: And so, you are showing tangibly how much value you are adding. And so, if you can save them 500,000 or 2 million in taxes over the next 10 or 20 years, and you compare that to the fee that you’re charging, it’s like, “Oh my gosh, this is the bargain of the century to hire you.”

Erin Scannell: So the hope is, and I’m a generally a paranoid person, so I’m always looking for ways that we’re going to get disrupted. And so the smarter, the way smarter people than me in our industry that talk about where this industry is going, is they talk about how there’s a race to the bottom key wise. So, the robo advisors are coming out and I don’t think, many advisors are super worried about wealth vest or better meant are those, but they should sure exactly worried about the bigger players, Schwab or Vanguard. Who’s doing unlimited access to a CFP Certified Financial Planner for 25 basis points or 30 basis points or managing assets essentially for free in some of their portfolios.

There is a race to the bottom CYs. And so my belief is, I do not want to race to the bottom with them. I don’t want to go to the Walmart route. Or if you think of hotels, I don’t want to be the red roof Inn and go the cheapest. You want to provide the Ritz Carlton or the four seasons experience where there will always be cities where you can get a hotel for $60 a night, but yet people are still choosing to pay 500 or a thousand dollars a night for what’s called four seasons. And they’re doing that because it’s a different experience. There’s a different value associated with it.

The value when you go to a hotel like that is pretty tangible. You see the pool, you see the restaurants and all this stuff. In our industry, the value is not as tangible usually, it’s harder for us as advisors to communicate the value of financial planning. So that is why I’ve worked so hard to use your word, the tangible we got to make. That’s my belief. We have to make our value far more tangible than we’ve ever made it before so that we can justify if someone’s paying 1%, they’re going to get the ad from Schwab. They’re going to get emailed. I get personally emailed from Schwab, looking at me as a consumer saying, “Oh, you have X amount of money and you’re paying 1%. You could pay us this amount. And you’re going to save tens of thousands a year.” Like clients are getting those emails, meaning we need to communicate better is I guess the point that value.

Steve Sanduski: Yeah, there was a book that was written many years ago. I think the author was Harry Beckwith and the title of the book was Selling The Invisible. And it really gets to your notion here of how do you sell an intangible service, like financial planning and how do you make it more tangible? And I think you’ve done a fantastic job of coming up with a way to do that with the tax strategy that you’re talking about. You can clearly show how much money you’re saving people in taxes. And I think oftentimes advisors, or maybe even clients think, “Well, are you going to outperform the SMP 500?”

Well, even if you did, even if you added 50 basis points or 100 basis points of alpha per year on a client’s portfolio, the amount of extra money you would generate for that client would probably pale in comparison to how much you can save them on taxes in the way that you’re just describing here. So the value is really in the type of planning work that you’re doing, not in trying to get an extra 50 basis points of alpha.

Erin Scannell: Yeah, absolutely. Absolutely. Agree with that.

Steve Sanduski: Now, one of the other things that I know that you do, that I want to spend just a little bit of time here talking about is, so you’re talking about the financial planning process. You’re talking about the taxes and the state work that you’re doing there, but your investment strategy, I think is also very interesting here. And so many advisors today, I think about investing as a commodity and they look at the betterments and the wealth fronts and the personal capitals and the robos and everything. And they think, “Well, gosh, for 30 bucks a month, or for 25 basis points, I can get my portfolio managed. It can be rebalanced. Everything’s online, it’s slick and cool.” And so that’s a bit of a commodity.

But you think about the investment process, I think a little bit differently, more along the lines of the endowment model. So tell me a little bit about how you think about the investment process and what you do for clients in that area.

Erin Scannell: Yeah. I started in ’99 and at that time, the tech bubble was forming and, or getting to the top and it became clear to me throughout that process of it forming and then popping that there was a pretty stark difference in how average American investors were told to invest versus how the big institutions invest. You know, they call it the smart money. It’s like, if you listen to the banking system at large, Wall Street, they would have us believe there’s only two options for what to put our money in stocks and bonds. You go to most of their websites and I do this regularly. They will tell you right now, put all your money in stocks and bonds. Which is what they said in 2007 before the financial crisis. And in 2000 before the tech bubble popped.

And then the tough thing there is that stocks right now are still, are not too far off of record valuations. The last bull market had gone 11 years making it the biggest bull market of all time when normal bull markets only last a few years, 48 months. And even with COVID, and the historically bad economic data on the horizon of the markets, they’re near record valuations. And at the same time, because interest rates are close to the lowest they’ve ever been. Bonds are also near record high prices. If you look at the internal bond price of the Lehman brothers aggregator, a lot of these indexes, it’s well over $100, and bonds mature par value.

They go down to $100 when they mature. So, there’s built in capital loss into those portfolios. If the interest doesn’t offset it. So some people say bonds are in a bubble. But who knows, so versus what the big institutions do you look at the education endowments like Yale or Stanford, which can have 20 or 30 or more billion in them, or the charitable endowments like Red Cross, United Way, or locally here, the Gates Foundation, which has over 40 billion or even sovereign wealth funds. And they have a very different investment approach. They diversify into things where there’s a real asset behind them.

They do have some money in stocks and bonds, but they want to have a real asset behind some of their portfolio versus a paper asset like stocks and bonds. So, the events of the last decade have a lot of those big institutions now having the lowest percentage they’ve ever had in stocks and bonds. So again, they’re in other words doing the opposite of what the banking system is telling the average American investor to do. And a lot of these institutions have achieved better results than Wall Street has over the last 10, 20, 30 years with lesser risk. And it’s just about investing out there in other things, and alternatives. So, that’s nothing new to anybody on this call, but it seems like direct investments in real estate, industrial warehouse, looking for good pricing and commercial or office or multifamily.

I wouldn’t go buy at the market, but like on Mercer Island, the first foreclosure came up, that I’ve seen in 12 years. I bought the last foreclosure personally on Mercer Island. And then, which was 12 years ago, the first one in 12 years is now on the market. So pricing will well potentially get better in certain markets for real estate. And then it’s also things like private equity or venture capital, private debt, no precious metals, real assets like Timberland and rare earth metals also currencies. And then we do a fair bit with absolute return investments, which is a broad category, but they can include stock callers where you use options on existing stock positions to help reduce loss exposure.

Or structured TDs, which a lot of people on this call probably use as well, but where they have there can be SBIC insurance on the principle and clients respond pretty well to that when the market is whip sign and they’re stressed out, there’s a way to get the upside, some of the upside of the SMP 500 or the Russell 2000 with SBIC insurance on the principal. There’s appeal to that. So that’s an example of a message we’re communicating that I did a lot of in 2007 and eight in the financial crisis. So we had a lot of clients benefit from that. Who would otherwise have said, “No, I want to keep the money in bonds or fixed income or cash because I’m scared.” So, the idea of being, yeah, let’s keep the money safe, but take advantage if the market does go up, don’t get caught on the sidelines too long.
Steve Sanduski: Yeah. And I’m 100% with you on that. And I know I personally have diversified out of just stocks and bonds. I mean, I still own stocks and bonds and but gold, digital assets, real estate. So, I think you’re totally spot on there in terms of all these alternative investments. And as you’re communicating that to your new clients, how do you position that? Because I think a lot of people have been conditioned on you invest in stocks and you hold on for dear life and everything will be fine if you have a 10 or 20 year time horizon. So how would you describe the messaging of a new client?

This is what our portfolio looks like. And I think you’ve kind of touched on this already, but is there anything in particular phrasing that you say to someone that, “Hey, we’re going to be in a wide variety of assets here, not just stocks, bonds, and cash, but all these other different things.” How does that go?

Erin Scannell: Yeah. So I give them a choice. It’s like, I will very rarely tell clients here. “Here’s what you need to do.” I’ll just say, “Here’s the choice. We can invest your money in the traditional model, the traditional Wall Street model, which is stocks and bonds.” And I’ll explain what I just explained a minute ago, or we can do it in a way that’s more diversified the way the big institutions do it. What are your thoughts? And almost everybody, once they are made aware that the institutional model is an option, they choose that because it makes more sense. There’s a reason the ‘smart money’ does it that way because there’s lower volatility. And when you have lower volatility and similar average growth rates, it leads to higher compounded growth rates over time. And that’s what’s important.

Steve Sanduski: And do you I think I read that you really don’t own ETFs and Mutual funds, and instead you just directly own stocks. Is that true?

Erin Scannell: For the large cap. And it depends on how the size of the portfolio. So, if the portfolio’s a couple millions, we’ll individual positions, we’re not going to have a mutual fund go by Johnson and Johnson and Amazon. We’ll just have the client be a direct shareholder. So we remove all the expense, all the commission, all the transaction charges for asset classes that would not allow for proper diversification on a $2 million portfolio. So say emerging markets, as an example, then we’re going to go use an ETF or in some cases, a mutual fund, if it’s an asset class where there is out performance above the indexes.
Like in large cap stocks, in my opinion, at least it doesn’t make sense to use a mutual fund that makes sense to use in ETF or way better yet individual positions, but in some asset classes, it doesn’t. There are managers who can create alpha and have created alpha over the long run.

Steve Sanduski: So does every client then pretty much have a different portfolio? No two clients have the same portfolio. And if that’s the case from an operational standpoint, how do you manage that? How do you make sure that every client has a different portfolio that we’re not dropping the ball on something?

Erin Scannell: Yeah. So, they’re not entirely individualized. We have 120 models roughly and most of our clients will fit into one of those models, whether it’s an endowment style at an aggressive risk level or an endowment style at a conservative risk level. Or one that is, we have an RMD portfolio that is built to segment and create income streams that are reliable and sustainable even in times of recession in an amount that’s enough to cover the RNDs at different ages for that client. And then we have the socially responsible and ESG portfolios. And so, will their employer, really strict sustainability measures and invest in companies that are investing in workplace benefits and reducing legal and regulatory costs.

And those have tended to have lower volatility than the broad stock markets and healthier performance over long cycles. So yeah, we do a lot of work, our investment committee does to go build a lot of these models. And then we give clients choices to be able to say, “Based on our central plan and our goals, we feel most comfortable with this.” And we’ll give them that guidance, but I would tend to not at the outset, just say, “Here’s what you need to do.”

Steve Sanduski: Well, Erin, I know we’re starting to bump up here on the top of the hour here. And there’s so many more questions I’d love to ask you. So let me just kind of go through a few of these quickly here. So earlier we were talking about mindset and motivation. I’d love to just circle back on that here for just a minute. So I think we learned a little bit about your mindset, your motivation, how does that transfer to the team? So now you’ve got a staff of about 50 people or over 50, how do you make sure that the way that you think gets incorporated into the culture and that you’re hiring the kinds of people that maybe have the kind of mindset that you do? How do you think about that?

Erin Scannell: Yeah. I love that question. I mean, so building the right culture has been one of the biggest challenges in scaling the business. It’s adding a lot of different people with all different backgrounds, different personalities, different skill sets, and just expecting and hoping everything is going to go well. But we’re so focused on culture and then guarding it, like building a good culture and then guarding it like nothing else.

It’s like the Peter Drucker, that business strategist guy says culture eats strategy for breakfast. Every organization has ideas and many of them have really good ideas, but that’s not the differentiator. The difference comes down to execution of those ideas, which relies on culture. And this is how we’ll make the biggest impact for clients. So we invest a lot in what Dan pink, he’s got that top 10 Ted talk of all time, Dan pink does. And it’s called The Puzzle of Motivation. And he mentioned that people need to feel really good at work. They need three things.

We all get so wrapped around the axle advisers do on how do we set up comp models to incentivize and motivate people? His point is no one’s going to change their internal level of motivation, their intrinsic level of motivation based on a comp model. It needs to be three things, autonomy, mastery, and purpose. So we do career and personal planning for everybody. We learn about what makes our people tick. What really motivates them. We do four blockers, which are things where it’s an exercise where we bucket our life priorities in the four areas. I do this multiple times a year for myself personally, and my kids. And we do it for every team member.

But we bucket in the four areas. It’s meaningful relationships like family and friends. That’s one bucket, another buckets, health, body, and fitness. Another bucket is health, mind and spirit. And then the fourth bucket is meaningful work and money. And then we’d develop financial plans, just like we do for clients. And then career tracks for everybody is like finding out what people’s goals are, what is important to you? What would make the next year and 10 years, the most meaningful where you look back and you’re like, “Heck yeah, like I’m really excited. We just did that.”

We want to know what those things are to our people. And then we have a process and a system for keeping those things in front of our people, just like we do with clients, and then helping them take action to go meet those goals and giving them support. If they exhibit our values, we’ve got core values and they don’t just sit up on the wall. But we talk about them constantly to the point where it probably gets annoying. But if people are living by our core values, then we are going to go invest in those people in professional development, personal development.

And the idea is to make the organization a place where people can grow more than they could anywhere else. Like we’re all happier if we’re making progress. Growth is important, not just money growth, but again, personal development, professional development growth in our relationships growth as a parent, growth as a spouse or significant other. And our belief is if we’re going to spend more than half of our waking hours at work, we owe it to ourselves to make absolutely certain we’re living this aspect of our life on purpose, like our life is aligned with our goals and values. And then it gives us purpose and meaning.

So like tactically we’re just putting together ways for our team to connect outside of the office and build relationships. We’re doing team happy hours. The company pays for those and organizes them. We’re doing vision boarding exercises, where we create visuals for our goals, not just writing down the goal, that’s important, but creating a visual, putting it on the wall and looking at it every day. You know, we’re doing silly stuff. Like one of our COO has a boat. He takes us for cruises around the Island. We do that regularly. We go, our office is on an Island and we’ll do boat cruises around it. We do wilderness retreats on Mount Rainier. HWA Olympics hurt as well as advisers Olympics. We do team hikes and team Yoga, how to slip inside contest last year.

Anyway, we like to have fun, but those are just a few examples. And then it’s about the last thing I’ll mention is just investing in diversity. So, we believe that a more diverse workplace will result in better outcomes for our clients. And it’s an industry, we’re in an industry that’s the epitome of the old boys network. But over our half our leaders are female. And my name even spelled like a girl, whatever that’s worth. But in 2019, we were awarded the number two firm in the entire state of Washington for equity by gen index. And that’s not a financial services survey that was across all companies in the state of Washington. So just some things that I’m proud of that we’re investing in. We’ve got good leaders that are helping put focus and attention on these things.

Steve Sanduski: So what are some of the corporate values that you have?

Erin Scannell: The number one, one is the abundance mindset. So, it’s just again, that realization that we all have a choice. It’s the glass half full, the glass half empty. We all have people in our life who have a certain set of life circumstances. And when you hang around, them are energy drainers. You just feel the energy gets sucked away. And then we have other people in our life who have very similar circumstances to that other person, but yet you’re around them. And you feel good, like you come away from that interaction feeling better than when you entered it. And the abundance mindset is such a critical part of living a more meaningful life. So we talk to clients about it. And that gets so ethereal or esoteric, the clients will say, “The numbers, part of the planning we do is really important.”

But to create more meaning and have more impact on our clients. We’ll say this on our families. We want a more holistic approach. So we do a lot of investment in wellness. And this, again, ties to that abundance mindset, core value. So wellness workshops where we’re having, we’re having like a certified presenter from the human performance Institute come talk to our team and our clients about what top athletes or maybe fields do to cope with stress, or even thrive in stressful environments. And we do those quarterly throughout COVID, we’ve done a lot more of those because people are sitting at home and like me, I’m trying to work from home and homeschool for kids.

And so that can be stressful. Yeah, so we’re investing more in wellness workshops, but other core values would be things like Kaizen, which is that Japanese term for continuous improvement. So we want team members to have an existence where you don’t just come even new people. You don’t come to the company and just say, “Well, we’re going to do it this way, because that’s the way we’ve always done it.” We want people constantly thinking about how do we make things better? So our client’s experience is good. How do we make it great? How do we keep improving?

There’s a lot of good ones. Impact is one of them. And so in all things we’re doing. When we think about the client experience, we’re thinking about how do we make a bigger impact on that client? And that ties to, yes, the numbers are important. Yes. If we could save that person 800,000 in tax, that’s huge. Lets high five over that. But also, are we going to make the biggest impact if we are not helping this person focus on the things that will give their life the most meaning, they do those studies of the top five regrets of the dying, palliative nurses.

The last one I read, this woman had worked with 3000 dying people in her career and she surveyed them and they all have the same five regrets, not all of them, but the majority of them had similar regrets. And it’s like, “Why not go learn from that? Why not go learn from the people who have made these mistakes and have these same regrets and build that into our financial plans, into a life plan that is going to deliver more impact, not only on us, but our kids and our grandkids, our families, or the causes or charities we want to support? And that’s what’s been energizing for me is, and that wouldn’t have been possible on my own when it was being, I had two or even 10 staff people.

Now we’ve got a team where we can have specialists go pour their heart and soul into getting really good at these various specialties and then bring that value to our clients.

Steve Sanduski: Yeah, the whole idea of the culture. The core values of continuing to reinforce that day in day out is absolutely critical and very much a differentiator for firms that are super successful like yours. And I think one of the tricky parts is how do you hire for that? In the hiring process, how do you know that someone has an abundance mindset versus a scarcity mindset? And again, maybe we’ll save that for another conversation, but just kind of throw it.

Erin Scannell: Yeah. That’s the million dollar question. That’s a great one.

Steve Sanduski: Yeah. And then this idea of you talked about, we save our clients a whole bunch of money on taxes and we high five each other, and that’s great, like you say. But then it’s about how can we help you live an amazing life? How can we help you live your best life possible with the money you have? And I loved how you talked about that idea. And you talked about the five regrets of people who are dying. One of the things along those lines that I’ve heard, and I think this was from Oliver Wendell Holmes. And he said, one of the regrets that a lot of people have is that they die with the music still in them.

And the idea was that there was something that they were meant to do, or that they always said that they wanted to do in their life, but they never had the courage to do it for whatever reason. And so, at the end of their life, they just regret, I wish I would have done this, or I wish I would’ve done that. And then a lot of people will say what you regret most are the things you did not do as opposed to the things that you did do. So, something to keep in mind there. So, well, Erin, this is great. I’ve got a couple more quick things here that I’d like to wrap up with. And one of them is I always like to ask, is there anything else that you want to share here that we haven’t had a chance to talk about yet?

Erin Scannell: Just that fear is a big motivator or driver for a lot of human behavior. For us as advisors, for clients, for our team members, and I think one of the axioms that’s so important that we all live by is that action can cure fear. And that’s what we’ve been talking to clients about through COVID. And so, just the encouragement to have a game plan for our clients in times like this. And I think a lot of advisors are doing this, connecting with clients, but what I, encourage is getting beyond what clients have described as the patronizing advice that Wall Street gives in times of crisis, which is just do nothing, just write it out. Like everything will be fine once, we’ll get through this and everything will be fine.

And while there’s no exactly playbook for COVID, there’s absolutely a playbook for market disruptions and market shocks. And that’s what we’re seeing right now. And the playbooks can include several things that the value is not personally, when our clients have done them in past shocks has led them to much stronger recoveries. So, I developed our playbook. Everybody probably has their own version of it, but we have a 12 step action plan that we use in times of disruptions, I’ve developed it in 2001 in the tech bubble, and it’s mostly stayed the same since then.

And it’s good. It’s like really good tactical stuff. It’s for example, invest using the methodology, the large endowments, pensions foundations institutions, that’s just the heading, but then it gets tactical there’s, consider socially responsible in ESG portfolios because they do have lower volatility than they have better recovery trajectories. It’s things like bolstering passive income streams, restructuring loans, now interest rates are record lows. So the thing where the SBA has a six months of forgiveness of payments. We have multiple business owners we’ve talked to about refinancing their debt right now, even though they don’t need to, because they can say like one client, we just calculated.

They’re going to be able to save $300,000 just with this one restructured loan strategy. And their interest rate is not going down. So it’s not about lowering the interest rate for them, it’s about the loan forgiveness. And then things like SITC and SBIC insurance. Like we have the ability to stack the coverages amongst different banks. So we have some clients with multi-millions of SBIC or a lot of money, tens of millions and SIPC insurance and just communicating an action plan so that clients feel like they’re doing something. They’re taking steps in a time where fear is real, right?

Because when we’re scared, our brain secretes cortisol and adrenaline, essentially, and we need to, when we feel that we need the fight or flight mechanism kicks in. We need to feel like we’re taking action. And again, some of what I feel like is tired advice from Wall Street is, “Just don’t do anything. Just wait, just wait it out.” And clients don’t want that. They want to feel like they can improve their situation. We also have a playbook for layoffs. 23 million people are out of work right now. And we’ve got some really good steps, like really tactical steps to take while laid off.

As granular, do some masterclasses taught by experts. Do some, there are free courses through Yale. Yale’s number one course of all time, it’s free online right now. The number one course that one of the top universities in the entire world is free. There are some courses that are free on Python or Excel or SQL or PowerPoint. And things like Ted Talks and podcasts. But anyway, I bring that up because in a time like this, when people need that leadership, they need that advice. They need to feel like they’re taking action. And yeah, that’s been a big part of what we’ve been communicating to clients and our team members over the last few months.

Steve Sanduski: Well, I love everything that you just shared there, and you’re just a perfect example of what a great financial advisor can do in terms of the impact that you can have in a client’s life. Because you’re checking all the boxes here in terms of doing things the right way and delivering massive value and impact in people’s lives. So just a great credit to the industry. So, I’m super thrilled that we’ve had an opportunity to talk here. Let me just wrap up with three rapid fire questions. The first one I want to ask here is what is your strangest daily habit?

Erin Scannell: Strangest daily habit. I got to say polar bearing. So, I’ll either go jump in the Pacific ocean where in the winter it can get in the 30 degree range, well, high 30s, or Lake Washington, which also gets to about that temp. Or if I’m not motivated enough to go down to the Lake, which is a few blocks away, I’ll just do a cold ice shower. I’ve heard it called priming. You’re priming the body and mind, not just for any old day, but for a day to remember. Can sound corny, but there’s so much to the mindset stuff that, that has been a fun thing that I added into the daily schedule, a number of years ago.

Steve Sanduski: Yeah. I don’t do a… I haven’t done a polar plunge yet into a cold Lake. I probably should, since I live right here on Lake Michigan. But for the past couple of years though, I have finished my showers with cold water for six days out of seven. So Monday through Saturday, I finished my showers with a long blast of cold water. And then I take Sundays off. I get hot shower on Sunday.

Erin Scannell: One break.

Steve Sanduski: One break a week for that. So yeah. I’m a big fan of that. Yeah, I think just kind of the shocking of the system from the hot to the cold to the hottest, I think the Scandinavians had it right with their saunas and being in the hot sauna and then jumping into the cold Lake there. So lots of benefits today.
Erin Scannell: Yeah. I’d be that all day.

Steve Sanduski: Yeah. All right. Let’s see here. How about what is there one thing that few people know about you?

Erin Scannell: A few people know probably Wedding Crashers was a loosely based, the movie was loosely based on my high school years.

Steve Sanduski: On your high school years.

Erin Scannell: Yeah.

Steve Sanduski: Really?

Erin Scannell: Not literally. But I had a couple buddies where we drive where we grew up partially in Olympia and we’d drive around and you’d see balloon somewhere designating there’s a wedding nearby while we follow the signs and we go hang out at the wedding. We didn’t do anything as nefarious as isn’t it. You know, go get some free cake.

Steve Sanduski: There you go.

Erin Scannell: Do some dancing. Yeah, we did that a few times in high school.

Steve Sanduski: Yeah. Awesome. I’m sure a few people did know that. Well, now millions will. All right. Final question here. So you talked a lot about the culture about values. So I think this would be a good one to wrap up with. Do you have a motto for life? Something and maybe a sentence or so that would sum up your motto for life?

Erin Scannell: Yeah. Yeah. I love that one. It’s, “Stop driving with the emergency brake on.”

Steve Sanduski: That’s great. All right, Erin, this has just been fantastic. I’ve really enjoyed the conversation. You’ve shared some great ideas here, and you’ve just had an amazing life so far, and hopefully you have many, many years to come and a great credit to the industry. So, thank you for taking some time to be with us here today and sharing your story.

Erin Scannell: Well, thanks. This was fun to do, and I appreciate the opportunity.

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