How are you going to grow your business?
You do have a plan, right?
Thanks to the nine-year bull market, though, you’re probably pleased with where your business is right now. But, I can assure you, if you don’t have a growth strategy in place, you’re going to be singing the blues in two or three years.
Now’s the perfect time to put your growth strategy in place. Why? Because you can do it from a position of strength, not out of necessity in weakness. Like the old saying, the best time to get a loan is when you don’t need it.
My guest today is Michael Chasnoff. We talked about how he grew Truepoint Wealth Counsel, his fee-only wealth management firm, to $3 billion in AUM and 750 households—without any mergers or acquisitions. Do the math and that averages out to about $4 million in assets per client, all of them acquired organically. Michael told me that growth was a result of his company’s client experience, knowing its culture, its niche, and what its clients value.
Key Insights from Michael Chasnoff
Client Experience Is Not Just Pleasant-Sounding Words
How do you grow organically to $3 billion in AUM? Well, a game-changing referral early in his career helped but that alone wouldn’t sustain a nearly 3 decade-long record of stellar growth.
Go to any conference and you’ll hear the words “client experience.” But what does that really mean? Michael Chasnoff said, “Our business is based upon client experience. We have developed a strong level of client satisfaction which has led to roughly 80% of our new business coming from client referrals. The next largest referral pipeline is coming from important centers of influence, primarily attorneys in the Cincinnati area who refer us to individuals and families that are seeking an integrated wealth management experience.”
He defines client experience as, “the coordination between multiple members of our team addressing all the different financial and life goals that our client has shared with us.” And that coordination can take the form of using in-house specialists including a tax specialist, estate planning specialist, investment specialist, as well as the wealth advisor.
Clients respond to this level of coordination. “When we survey our clients, their response to the team and the coordination, their appreciation for their wealth advisor who seems to know them extremely well, is leading to a very positive outcome.”
Be Brutally Honest
Years ago, I heard a phrase that was described as a key to success. The phrase was, “Under commit and over deliver.” It sounded nice at the time but now sounds manipulative. I think a better phrase is “Set high expectations and exceed them.”
Similarly, Michael says he sees too many advisors who think they’re better than they actually are. He said, “We have to be brutally honest with ourselves and make sure that we can deliver the things that we are suggesting to our clients.” Further, he says, “I like to think that when I sit down with a prospect and tell them what we can do to help them achieve their goals, that we’re not only going to be able to deliver on that, but we’re actually going to exceed it in the experience they have with our firm.”
For your firm, think about the experience you deliver. Are you setting high expectations and exceeding them? Are you surveying your clients on a regular basis and getting 90%+ satisfaction rates?
Are you constantly raising the bar on your service levels? If not, why not?
A Separately Branded Digital Advice Service
Michael’s team came up with an innovative way to structure their services to include an option for prospects whose assets are below Truepoint’s minimums.
The firm offer three tiers of service, with a fee schedule that caps out at 80 basis points. Clients with over $3 million dollars fall into the True Wealth category, where the minimum fee is $24,000 a year, and offers breakpoints at 5 and $10 million using a weighted average. Clients under $3 million fall under Truepoint’s Foundational Wealth Service, in which a client works with a wealth advisor who gets input from the firm’s financial specialists, but without the specialist being present at meetings.
Finally, Truepoint created and branded a digital solution on the Betterment Institutional Platform called RhineVest for clients who are just starting to accumulate wealth. There’s no minimum for digital service, and clients who also want some financial planning can talk to Truepoint team members for $45 per month.
“The types of activities that we’re engaging in that no-minimum space are different from the marketing activities we engage with Truepoint Wealth Counsel,” Michael says. “RhineVest is actually generating quite a few referrals through digital search opportunities and some area marketing event activities. I think RhineVest has created that young professionals type of organization that goes across many, many different professions and industries. They do a lot of great activity just to promote and grow awareness for the RhineVest name.”
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Integrating for Maximum Value
The real key to Michael’s success is how thoughtful he’s been about structuring his company to provide maximum value to his clients through the client experience.
For one, Michael doesn’t scrimp when it comes to hiring top staff: More than 20% of the people on his staff are CPAs. That’s 13 out of 63 employees! Many advisory firms don’t even have 1 CPA on staff.
“That’s a significant cost,” Michael admits, “but many of our clients have very complex tax pictures, and just providing some tax planning around their situations isn’t enough. It’s actually a turnkey type of service. Being able to prepare our clients’ returns gives us an insight and an ability to serve them in a way that I think many of our peers don’t.”
Truepoint offers its clients a set of services and solutions that are customized to their specific planning. It’s an integrated approach to wealth management that might prove to be the “special sauce” that sets successful RIAs apart going forward.
“I think something happens when the individual has really become vulnerable, sharing with the wealth advisor areas of sensitivity,” Michael says. “We find that an investment decision, the ownership and title, how it fits into the client’s long-term financial goals and objectives will have lots of impact on income tax, estate, just general income requirements that the client seeks. Understanding how it all fits together for the client is really where the value is created.”
CEO Still Meeting With Clients
At first, I was surprised to hear Michael estimate that he spends 60% of his time meeting with prospects and onboarding new clients, and the other 40% working with his marketing and business development committees.
A CEO, spending so much of his time on the ground floor?
It works because Michael long ago hired a president who does a great job running the day-to-day business of the firm. With a top president in place, Michael is free to do the work he loves, and the work that is most critical to growing the company the way he wants to grow it.
As you start reaching the $5 million revenue mark, it’s time to consider installing a CEO and/or a chief operating officer. And you have to decide, as the company grows, do you want to morph into the company executive, or, would you rather focus on client work and big picture strategy, while hiring an operator to manage the day-to-day business?
In Michael’s case, he loves client work and business development, so he hired a top-flight president who could run the ops and free Michael to do what he does best and loves the most.
Where Life and Finance Intersect
Truepoint’s broad offerings are a challenge to advisors who still believe investment management is their added value. It’s long past time that our industry peeks its head out and starts taking in the whole panorama of our client’s financial needs and their lives, not just their money. That’s where Life-Centered Planning comes in.
“There are a lot of families in our generational planning that do require guidance,” Michael says. “Just sitting down and having family meetings and conversations. We get involved and we talk very frankly with family members about how our role here is to help find an efficient, effective way to protect each other so that we can have a smooth transition. It’s clearly not a financial conversation even though there are financial incentives behind everything that’s involved in the conversation.”
This, to Michael Chasnoff, is the model of a modern, organically-grown client experience, one that focuses on coordinating and addressing all the different financial and life goals of the firm’s clients.
And it’s an experience that begins with one of the most organic ways we connect as people: advisors and clients having a conversation about their life transitions, goals, worries, and of course, money.
– Truepoint Wealth Counsel Visit Michael Chasnoff and his team online.
– RhineVest Explore Truepoint’s no-minimum hybrid platform.
– Connect with Michael Chasnoff on Linkedin.
– “Critical Knowledge Transfer: Tools for Managing Your Company’s Deep Smarts” by Dorothy Leonard-Barton, Walter C. Swap, and Gavin Barton. Michael Chasnoff recommends this book on leveraging and retaining the most gifted individuals on your team.
– Values Clarification Toolkit Click here to download this FREE tool and start living your values.