Interview with Students of “Leadership In New Ventures”

Last week I was interviewed by a University of Colorado student. His assignment was to interview an entrepreneur that was of interest to his group for a class titled, “Leadership in New Ventures.” This is the first time I have been interviewed and recorded for a graduate class. The questions were expansive and interesting. It was a lot of fun. Below you’ll find the entire recording of the interview. We talk about everything from mission statement to leadership to ultimate goals. Hopefully it gives a little insight into an entrepreneurs mindset. Cheers!

Recording – October 2015

So, What Do I Get For the 1%?

The way an advisor charges a client has been rehashed many times on a number of different blogs, so I won’t get too far into explaining each and every option. Recently, there have been some advisors bucking the norm. The norm for advisors has been to charge a percentage of assets under management. Some advisors have bucked this trend and have been charging a flat fee no matter how much an individual has under management. There have been some recent blog posts about why charging a percentage of assets under management is not in the best interests of the client. I agree and disagree to a certain extent.

In my mind to charge a fee based on assets under management aligns an advisor’s interest with the client’s interest. If the portfolio appreciates, the advisor gets a raise. If the portfolio depreciates, the advisor gets a pay cut. Pretty simple, right? Well, I believe the more difficult issue comes about when you look at what each client is receiving for the percentage they are paying for the management of their assets.

Let’s take an example. Mr. Smith pays his advisor 1 percent to manage his $500,000 portfolio, so he pays $5,000 per year for the services. So, what is Mr. Smith receiving for $5,000 he pays his advisor? Mr. Smith is receiving a portfolio of mutual funds that the advisor has researched and chosen and thus outsourced the management of the portfolio to these funds. So, for $5,000 Mr. Smith is paying his advisor $5,000 to be a manager of managers, be invited to play golf, and receive a call a couple times a year to stay in touch. This scenario plays out over and over again in the wealth management business. So, for the most part I agree with the argument that an advisor should be providing more for the fee he/she is charging their client.

Some firms have been incorporating financial planning into their pricing model, which provides a great value to many clients that are looking for that service. Financial planning can get very expensive and to provide that service as part of the management fee is a great value in my opinion. On the other hand, my firm provides a different service because my firm targets a very specific demographic: business owners and entrepreneurs. Financial planning is not the most important service that they are interested in being provided. We wear many hats for our clients. We can and should be thought of as investment managers, business consultants, tax strategists, and estate planners. These are the services that are most important to our clients. We provide value over and above just managing our client’s money. Our clients need someone to answer questions and provide relevant answers that relate to their business and effect their personal life. Some frequently asked questions are; What accounts should we open and fund to save on taxes? Who can you introduce us to that would benefit our business?  How should we structure our business going forward?  What assets should be held in trust as we become more successful? Can you review an investor deck and give me your opinion? Etc.

These are the questions we get asked and these are the questions we are prepared to answer. We try to provide the very best guidance for our clients. We work with our clients throughout their personal and professional lives. We are successful if they are successful. Providing our clients with these ancillary services allows us to be part of their team. If our clients were to go out and hire a firm to answer these questions or to help them to strategize, the out of pocket costs would be prohibitive for most and time consuming to find the right fit. We not only provide our clients the benefit of using our resources and capabilities to build their businesses, but we help them to cut the fat and simplify their personal and professional teams.

If you’re considering working with an advisor make sure you ask the question of, “what services are you providing for the fee that I’m paying.” If it doesn’t add up or if the ancillary services don’t fit with your needs, move on. There are some great firms our there that will fit your requirements, it just takes a little digging. Fees aren’t everything when you pick an advisor, but they are certainly a big factor when considering what you receive in return for the fee you pay. So, do your due diligence. There’s someone for everyone.

Why Law School May Be A Good Idea For Some.

Yes, I am a hypocrite. Every month, I’m constantly reminded of the hole that law school left in my bank account and I cringe at the thought. The bad taste in my mouth isn’t necessarily law school, but the overwhelming cost of attending law school. It’s the biggest reason why I tell those contemplating law school to not attend if there is any hesitation as to what they will do with the degree. Another reason why I tell people not to go to law school is if they are actually thinking of becoming a lawyer. These days, there aren’t too many newly minted attorneys that make over $50,000/year. Yes, you read that right. Those that actually get jobs may be looking at a small firm gig at the whopping $38,000 salary. In addition, there aren’t many seasoned attorneys that make six figures, unless you want to put in the time at a large firm hoping at the end of eight years you will be considered for partner. Me personally, I’d rather live in the slums of Bombay than go through that torture. So, why am I a hypocrite? Because I wrote a number of blog posts chastising the thought of going to law school, but I do believe it can be of benefit if you leverage it in a certain way.

Debt aside, law school teaches you a few things that you typically wouldn’t learn by experience alone. It teaches you how to think differently, write logically, and sharpen your analytical skills. Law School gives you the ability to visualize, articulate, conceptualize or solve both complex and uncomplicated problems by making decisions that are sensible given the available information. These indispensable skills transfer over to anything you decide to do. The major problem with law school is the lack of information provided to law students of how these skills transfer over to other areas outside of law. Many will quit law school before they finish because they discover they do not enjoy practicing law. To be candid, I don’t know many attorneys that do enjoy practicing law. If law schools can help law students open their eyes to the opportunities outside of law, I believe, it would be a much more pleasant and successful experience for all.

Most employers understand what it takes to complete law school. It isn’t an easy endeavor. It takes hard work, dedication, and discipline. In my opinion, it’s just as much of a risk as starting your own business. You’re putting up $150,000 in the hope that you complete those three years and pass the bar exam. An employer sees you as battle tested. You can withstand a highly competitive and stressful environment and end up on top. Leverage that experience to get what you want!

After I stopped practicing law I knew that I wanted to work for myself. I loved the financial industry and thought I could leverage my background in law to break into wealth management. My background in law allowed me to leapfrog several candidates for a highly sought after position at a large firm. I got the position over those that had been in the industry for years. They took a chance on me because of the skills I gained practicing law. The firm believed those skills would transfer over to provide a benefit to the firm and their clients. This started a transformation within myself. From then on I leveraged those skills for any endeavor I went after.

Over the past 4 years I have started three successful businesses. Having a business partner with extensive legal knowledge is huge when starting a business. From filing state documents to creating a business structure, these are some of the most important components of business creation. Given, some businesses use legal services like LegalZoom, the business founders have no clue what those documents mean. They are being provided a standard document that provides them with little insight into what the potential pitfalls may be. I have drafted numerous legal documents and the knowledge I have gained provides me with an understanding of what specific provisions are most important and how to structure those provisions to deal with certain outcomes. My background allows me to deal with everything from lease negotiations to lawsuits. If I don’t know how to deal with it, I know a friendly attorney that does. This has provided my business and business partners knowledge that otherwise wouldn’t be accessible without in-house council.

My legal background has also provided me with a steady stream of business opportunities. I have friends, family, and acquaintances that ask for my advice and inquire as to whether I would be interested in their idea or concept. They understand how valuable it is for a company to have an investor that comes armed with knowledge that can help the company operate more effectively. This comes back to my previous blog post about picking investors that bring more than money to the table.

This is not a blog post about me believing you “should” go to law school. My intent is to give insight to those that are contemplating law school. I want those contemplating law school to understand that a law degree can do more for you outside of law than within. Some of the most successful entrepreneurs and business owners have a law degree. Law School doesn’t teach you to be an entrepreneur but it does teach you how to solve complex problems and as an entrepreneur solving problems is one of the most important skills you can have. It’s a tough road, but it may provide you with the experience you need to succeed in whatever you decide to pursue.