Michael Clarke, Founder and Chief Implementation Officer of Protection Point Advisors, joins Adam and Tom to discuss insights from his book “A Firm Worth Building.” The discussion focuses on transitioning from individual-centric practices to sustainable business models, emphasizing teamwork, effective communication, and trust-building with clients. Key topics include the importance of valuing support staff, networking, and continuous learning. Michael also addresses common mistakes in managing firms and offers practical strategies for professional service providers to enhance their practices.
“The smartest people in the world know where their expertise ends and someone else's begins. We all need to understand that because if we're on the right team, everybody wins.” – Michael Clarke
The finer details of this episode:
• Transitioning from individual-centric practices to sustainable business models in professional services.
• Importance of teamwork and collaboration among professionals serving the same clients.
• Common mistakes made by professional service providers in managing their firms.
• Strategies for building trust and effective communication with clients.
• The significance of understanding and targeting ideal clients for growth.
• The role of support staff in enhancing client relationships and operational efficiency.
• The concept of “trust compression” and its impact on client onboarding and retention.
• Emphasizing education and clear communication in the advisory process.
• The value of networking and continuous learning for professional development.
Episode resources:
● Summit Virtual CFO by Anders website: https://www.summitcpa.net/
● If you have questions or would like to be a guest on the show, email us at mcpasuccessshow@anderscpa.com
● Check out the Virtual CFO Playbook Course: https://vcfoplaybook.summitcpa.net/
● Connect with Michael here:
● Check Protection Point Advisors out here: https://www.protectionpointadvisors.com/advisors/team/mike-clarke/
Timestamps:
Welcome and Introduction (00:00:00)
The host introduces the podcast and its mission to provide insights for accounting firms.
Guest Introduction (00:00:22)
Adam shares his thoughts on the upcoming discussion with guest Michael Clarke and his book.
Michael Clarke's Career Journey (00:01:40)
Michael discusses his background in the insurance industry and the founding of Protection Point Advisors.
Overview of "A Firm Worth Building" (00:03:03)
Michael explains the motivation behind his book and the lessons learned from his mistakes.
Transitioning from Individual Practice to Business (00:04:13)
Michael emphasizes the importance of moving from individual-centered practices to sustainable business models.
Building Relationships with Other Professionals (00:06:03)
Michael highlights the value of collaboration between professionals to enhance client service.
Common Mistakes in Firm Management (00:09:21)
Michael identifies key mistakes professionals make, such as being the center of their practice.
Practical Lessons in the Book (00:12:12)
Adam asks Michael to share one crucial lesson from his book on managing professional firms.
Understanding Trust Compression (00:12:50)
Michael introduces the concept of trust compression and its significance in client relationships.
Education as a Key Element (00:15:27)
Michael discusses the importance of educating clients to build trust and improve service quality.
Applying Trust Compression Beyond Onboarding (00:17:59)
Michael suggests ways to apply trust compression in various processes, not just onboarding.
Making Client Interactions Painless (00:19:01)
Michael stresses the need to solve client problems while making the process as painless as possible.
Good Growth Explained (21:22)
Michael discusses the concept of "good growth" and why professionals struggle with it.
Identifying Ideal Clients (22:48)
He emphasizes the importance of knowing your ideal clients to avoid bad growth.
Balancing Growth and Client Quality (23:35)
The speakers discuss the challenge of balancing client acquisition with maintaining quality.
Building a Reliable Referral Network (25:09)
Michael shares insights on developing a trustworthy referral network for business growth.
Creating Effective Partnerships (27:34)
He explains how partnerships can enhance client services and improve business outcomes.
Edifying Team Members (32:21)
Michael stresses the importance of building up colleagues to foster trust and collaboration.
Managing Client Growth (33:17)
Discussion on the common belief of firing low-priced clients to make room for better ones.
Building What Should Exist (39:43)
Michael defines his philosophy of creating optimal solutions for client care within CPA firms.
Practical Changes in Practice (00:41:08)
Discusses how professionals can implement small, incremental changes rather than overhauling their entire practice.
Importance of Support Staff (00:41:58)
Emphasizes the role of support staff in making professionals look good and the need to value them properly.
Learning to Manage (00:42:41)
Michael reflects on his journey to becoming a better boss and the importance of self-improvement.
Transitioning from Doing to Managing (00:43:12)
Highlights the urgency for professionals to transition from doing the work to effectively managing their business.
Collaborative Learning in Networks (00:44:48)
Michael advocates for joining networks to learn from peers and create a collaborative environment for growth.
Inspiration and Continuous Learning (00:46:05)
Encourages surrounding oneself with inspiring individuals and cultivating a habit of reading for personal and professional growth.
Intro 00:00:00 Welcome to the modern CPA Success Show, the podcast dedicated to helping accounting firms stay ahead of the curve. Our mission is to provide you with the latest and greatest insights on cutting edge tools, innovative marketing strategies, virtual CFO services, and alternative billing methods. Join us as we change the way people think about accounting.
Tom 00:00:22 Adam, we're about to hear from Michael Clarke. Any thoughts on what our listeners are about to hear?
Adam 00:00:27 Yeah, he wrote a great book with some real practical lessons on things that, you know, business owners, we just need to make sure that we're always actively working on the business. So, I think he's got a lot of experience and talking through the book is, is, has been powerful. Good examples in there.
Tom 00:00:42 Yeah, yeah. And specifically, here it addresses accounting firms either professional service firms. So, I think people could listen for their own firm and maybe for the clients that they serve for that. So, I hope people enjoy it. He gives some nuggets from the book, some examples, some things.
Tom 00:00:57 And we talk about some of the things that relate to what we do also. So hope people really enjoy it. Welcome everyone to another episode of the modern CPA Success Show. I am Tom Walton, joined by my usual co-host, Adam Hale. Adam. Welcome today.
Adam 00:01:14 Hey, Tom.
Tom 00:01:15 So guest today we have Michael Clarke and Adam. Michael is a founder and chief implementation officer of protection PowerPoint advisors. Michael, welcome.
Michael 00:01:25 Thanks. It's great to be here guys.
Tom 00:01:28 So, would you love to hear, by way of introduction, a little bit about your career story and kind of what brought you and then what does Chief Implementation officers all the power that's bestowed upon you with that role?
Michael 00:01:40 Okay Well, sure. So, I started in the business, a long time ago, back in 1992. I started with a big insurance company, as a life insurance agent. as many of us do. and for a while, it was just kind of transactional.
Michael 00:01:59 an insurance policy here, an annuity there, that sort of thing. but it wasn't too long before I started to kind of migrate over to investments and financial planning. I became a part of their advanced planning unit that they had developed in, in the mid 90s. And, and then, that continued until 2009. And, you know, it just didn't make sense for my partner and I who founded this firm to be there anymore. So back in 2009, we formed what are now Protection Point Advisors. and we are independent advisors. We're fee only advisors. So, we're not selling commission products anymore and whatnot. And, you know, this I like to say the story continues. I like to call myself a cheap limited implementation officer. That really just means that I have the lion's share of the responsibility for executing what are a lot of really, really great ideas in innovations that we've put on the table over the last few years.
Tom 00:03:03 Cool. And some of that has come together in a book, a firm Worth building.
Tom 00:03:09 Tell us a little bit about why you wrote that. And we can dig into it a little bit.
Michael 00:03:13 Yeah. Well, the firm worth building is. And here I'll plug the book here. There it is. available on Amazon. it really, in some ways is, A result of having, I think, made a lot of mistakes over the years. I like to say the secret of my success is I didn't die, you know, because I should have. I mean, I made every mistake you can make when it comes to building a business, but I'm out on the other side of it now. And I think the book is about essentially how any professional can turn a professional practice into a real business. And I think it begins with kind of thinking entrepreneurially and thinking of, you know, how do you begin working on your business, as they say, as opposed to working in your business? And we see a lot of CPAs, attorneys, other professionals who are kind of prisoners of their own success.
Michael 00:04:13 I mean, they're making a good living, but they don't have any freedom because it's just their practices are running at capacity, and they don't know how to get out from under it and take themselves out of the center of their own universe. So, a lot of what's in the book is about how to do that. how to use different principles. We talk a bit about a lot about edification, where you always look better to other people if you're talking well of other people and you're building up other people who are on your team, we very, very much believe in the concept of teamwork, where professionals work with other professionals for common clients. because it just follows the family office concept, and we talk a lot about building digital family offices for our clients. So, all this stuff goes together, and the book really takes you on a journey of how to get there. Okay. So, anybody who reads it, you're going to come out the other end and go, okay, I think I can develop a roadmap for how to have the business I've always wanted.
Tom 00:05:17 Yeah. You know, I think the audience is listening. I can see two different places that people would take this. You work with CPA firms in the modern CPA successor. We target CPA. So, I think one could be well for my own practice. Right. I can leverage this. And then we also talk about we want to be advisors, and we are advisors to other businesses, often small businesses. Right. Sounds like a second piece. You can say you can also turn around and be an evangelist and explain kind of these things to people.
Michael 00:05:42 Well, yeah. No, I think we can. And it's an admittedly, I get a little evangelical myself about this concept because I just think it makes so much sense and it's so simple that if you have a common client, if I have a client and they have a CPA, CPA, and I should be working together, we should. We should least know each other. It's not like we're going to talk all the time, but heck, its tax time.
Michael 00:06:03 There is stuff I can give you that will help you. So hey, it's available if you want it. Okay, but I just I just got off the phone with a client who was asking about taking money out of her IRA and giving it to a charity. And what are the tax ramifications there? Oh, and I just said, okay, here's what I know. But go to your tax preparer and get your tax preparer to bless it. Okay, so I also believe in staying in my lane because I get questions all the time that are outside my expertise and you have got to disclaim them that way. But if I had a relationship with her tax preparer in this case I don't. But if I did, I could say, hey, why don't I call the tax preparer and see what's what? Okay? And that elevates my standing in the client. I'm more valuable to the client if I'm doing that stuff. Okay.
Adam 00:06:54 Because, Michael, I would have said, yeah, this is what I think.
Adam 00:06:56 You should go talk to your financial advisor, you know, and then to your point, you know, the client always just feels like they're kind of being ping pong back and forth between professionals. Where as where you if you can bridge that gap, shoot each other a quick email, get on the same page, then it doesn't really matter who gives the advice. You can say, hey, I spoke to Adam or hey, I spoke Michael. This is what we decided. This is what you should do.
Michael 00:07:21 I think it's important to recognize that so many of our clients, they hire us because they don't want to devote energy to this area, whether it's tax, whether it's estate planning, whether it's what I do, they just want to devote energy to it. So, the more I can say, you know what, I'll do it. The more they go, oh, yes. Thank you. Yeah. That's why you're here. and I think sometimes advisors forget that or I trying to attorneys forget that.
Michael 00:07:50 I think sometimes tax people can forget that they forget the clients just want to be taken care of. Right? Just take care of me so I don't have to worry about it.
Tom 00:08:01 Right. In a very simple example, as we just passed estimated tax payments, when we do taxes and we do for a lot of our clients, we're telling them what to do where we don't. I'm often saying, would you like me to let your financial advisor know what our forecast is for your taxable income? They always say yes, and they've got it in the statements that we give them. But it is that kind of relief that you showed of would you please do that? Very simple thing to do. But to them this feels complicated, that it's an easy thing for us to do.
Michael 00:08:31 Well, absolutely. And one of the things that we emphasize at the firm is financial planning, which kind of exists to a certain extent, its own universe. It's that place where you figure out whether you can get what you want.
Michael 00:08:44 Okay, we have to forecast taxes and do estimates. So, the more the more I know specifically about what someone's cash flow looks like, the better job I can do of building an accurate financial plan. So. Yes, absolutely. Do tax preparers give me that information often? No, I wish they did, but we're working on it.
Adam 00:09:08 Yeah. So, Michael, just kind of talking through some of the concepts in the book and everything. What do you think is the most common mistake professional business owners are making whenever it comes to managing their own firms?
Michael 00:09:21 I think the most common mistake is they're the center of it all. You know, everything's there. Their practice is centered around them. If they were to get hit by a bus, the whole thing goes down. Okay. So, they don't think about succession, particularly if they're older. They don't think about succession. They often don't bring in younger associates, groom them, take the, lighten their workload, things like that.
Michael 00:09:44 the other mistakes probably we see are, you know, ineffective infrastructure I think is another one, you know, I mean, do you have do you have the right people doing the right thing? Did you hire correctly? are you paying people for their work so they don't so they don't leave? it's kind of the basic stuff. And then are you, do you have a process that can be replicated? That's another thing. We took a look at replicating a process with all our reps that everybody could use. So, in a way, it's sort of the franchise model in some ways. But you got to have a process that, you know, works. and I think the other is CPAs, attorneys and a lot of professionals, they don't they don't brand themselves at all. There's no recognition of what they do that makes them unique in the eyes of the people that they meet with. You know, they don't tell that story, of what their superpowers are and you know why someone should consider doing business with them.
Michael 00:10:48 So, there's a lot of what we do with, the National Referral Network, which is a network of professionals that we created. So, we get outsourced without anxiety. Okay. A lot of what we do with working with our partners is to teach them that stuff. You know, how it's sort of like the elevator pitch, right? What's the elevator pitch supposed to make you do? it's supposed to make the person listen. Want to know more? Tell me more about that. Okay, so, those are some of them, I think. but they're not insignificant. And the ones we see that the professionals who see that meaningfully address this, they have different businesses.
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Adam 00:12:12 I know in the book you have. What I really love about it is you have you have actual practical lessons there. Right. And so, I think you have like 30 lessons in the book. So, if you only get to pick one, though, I know you got 30 for a reason. You know, it probably started off with Michael's top ten and then it's like, well, maybe I need to go 15. By the time you got done, there was 30, because I know they I know a lot of these kind of build off of one another and they kind of spill into one another thing. So, but I mean, if you had to, if you just had to pick one. What do you think is the most crucial for business owners to really kind of buckle in and, and you know.
Michael 00:12:47 I don't it's hard to pick just one.
Michael 00:12:50 I we, I think what I get asked about the most is this thing called trust compression. Okay. and that's where it's the, the process of accelerating someone's or building someone's trust quickly. Okay. and I think there's a psychology to it. I mean, we frame it as a series of small but deliberate interactions that are close together. Okay. So, for example, we have taken what the normal intake process would be for, you know, onboarding a client and broken it down into four small but bite sized steps. And the idea of that was that we get better retention that people were talking to actually understand what's happening. And it's not like so it can be a series of four successive meetings, but they can be combined in some cases. So, you know, for those going for meetings, don't have to be, but we usually do it that way and nobody seems to object because we can also intersperse educational content in between meetings. So, the idea being that anybody who's going through the process can digest it.
Michael 00:14:05 Right and they come out the other end having learned a lot about what we do, but more importantly, a lot about themselves and that takes so the idea of trust compression is to really run that process that, you know, you know, you know, very small but deliberate interactions that are close together to accelerate what sometimes takes a lot longer.
Adam 00:14:32 So that they can, I mean, is the idea. So, they can kind of see the I mean, because a lot of times for clients, it's, you know, building trust is delivering on promises, right. So, is that why is that what you're saying? So, you're taking that normally what you could have put into one gigantic kind of a feel. And then people not really know where the beginning and ending is. And I think we experienced that whenever we do onboarding as well and instead breaking it down into sections allows you to get small rack up small wins. And talk about it all the time.
Tom 00:15:03 We talk about like trust is like, and I can't remember who told us this time, but you'll remember, like the marble jar, right? So, you got to put them in one at a time. And unfortunately, as service professionals, you know, whenever we have an accident, the whole thing spills out. So, then you got to, like, slowly build them back. So, what you're saying, what I'm hearing you say is, instead of putting, like, one big marble in, you can put like four in pretty quick and help to kind of get that foundation going.
Michael 00:15:27 Yeah, I think so because we're our approach to this is education. You know, being teachers and I think advisors of every persuasion, we need to be teachers. It's not enough to talk about what we do and why it's necessary to teach someone and, you know, bring them along with you. I mean, how many people have a state plans? You know, they pay, I don't know, 4 or 5 or $6,000 for a big fat binder.
Michael 00:15:58 And they go, I think it's my estate plan. I think it works, but I don't know. Okay, sure. Financial plans. Guilty. I mean, I, I could print out a financial plan that's like 80 pages, okay, that no one's going to read or understand. Okay. Now, it's not that that information doesn't need to be there. I need to know how their financial plan works, and I need to know why it works. But I also be I need to explain to them in very simple terms like, look, here's in some reform, this is what's up. This is what's happening. Okay. And so I think that educational element, a lot of times it's just missing. And I referred clients to attorneys, and a client walks in, and the attorney just kind of starts in with, okay, are you married? Great. You know, in your home. Great. You got kids. And I'm going, what are you doing? He hasn't even really said, hello, my name is so-and-so.
Michael 00:16:58 This is what I do. This is how I do it. This is what it's going to cost. Okay? In that particular meeting, they got to what it was going to cost at the end of the meeting after they'd already sat for an hour. Okay. So, it's a lot of stuff like that, I think. And the book just goes through all of that. It's not rocket science, but it goes through all of that. So, you can go, okay. I mean, I think it's designed for professionals to look at it and go, oh, you know, and I can make a few adjustments from reading this book. Okay. and, and I don't because you know we're not saying reinvent your practice. We're saying pay attention to a few things that matter.
Tom 00:17:37 When you talk. Trust compression. I'm curious about onboarding. Totally. That makes a lot of sense to me because you're starting a relationship and saying, are there things I can do that are deliberate and close together that significantly improves trust? That may take a lot longer to get? Are there other things besides onboarding other examples? You can help people say, hey, you could apply this trust compression to other parts.
Tom 00:17:59 Well, sure.
Michael 00:18:00 Yeah. No, I'm sorry to interrupt. I think it starts with whatever your process is. I mean, if you have a process that, like, tax planning is a good example, when I go to my account and we do tax planning, I have to gird my loins to try to understand what I'm going to be told. I understand it, but I don't devote a great deal of energy to it. That's why I have a tax person who does it for me. But even still, when we sit down and we start going through it, it's still sometimes a little daunting and I and I wish that it could be broken down into elements that allowed me to follow it a little easier. Okay, because I don't do everything, and there are elements of my financial world that I pay other people to pay attention to, and everybody does that. Okay. So, but that's what I, you know, my favorite saying is, you know, if I hire somebody to do anything, I want two things.
Michael 00:19:01 Solve my problem and make it painless, if you can.
Tom 00:19:04 Interesting.
Michael 00:19:05 Yes. Okay.
Tom 00:19:07 I wonder, for accountants, we probably often think of the first one. Right. I'm going to have this meeting, and I need to make sure you know the numbers tie and it's accurate. I get what I need, but we probably don't think much about improving trust and making it painless for the other person?
Michael 00:19:20 Yeah. I mean, look, it's answered the client's questions without turning it into a Ted talk, you know which. Unfortunately, I did it way back in the day, so I'm just as guilty as anybody else.
Adam 00:19:35 I'll take it to talk over just reading the numbers, though. Yeah. In our world, usually it can get kind of brutal. And we do a lot of really cool things. And we talk about this all the time, but we try to make ourselves the hero, the conversation sometimes too much by showing off our tools and all of our reports. And like what you just said, you don't really care.
Adam 00:19:54 You just need to know kind of in layman's terms, what is it? How does it impact me and what do I need to do if I don't like the result?
Michael 00:20:02 I'll never forget back in the day again, just to throw myself on the chopping block here. We used to go through all these portfolio metrics with clients way back, so we had them all. We've run reports that had all those metrics on them, and I used to explain what they were to clients because I thought they were cool. Right. And I remember I had a client, he's a doctor. He's a super smart guy. He's the head of the department. I'm starting to explain this. He starts leaning back in his chair and his eyes are glazing over and he's going, please stop.
Adam 00:20:32 Right. Exactly, yes.
Michael 00:20:34 And it was a valuable lesson because a lot of us have clients that are smart people, but often their professions are so rigorous. By the time they talk to us, they have six brain cells left.
Michael 00:20:47 Yeah, I have to turn it into schoolhouse Rock. I have no choice. Sure. And like you said, the.
Tom 00:20:53 Reason they want to use you is because they don't understand this and maybe don't want to write.
Michael 00:20:58 They. Yeah, they don't want to devote energy to it. They just want, like, look, you do it. And by the way, the smartest people in the world do this. They know where their expertise ends, and someone else's begins. Yeah. And that's also, by the way, the whole idea of the network. We all need to understand that because we link arms with the right professionals. If we're on the right team, everybody wins. Yeah.
Adam 00:21:22 I think sales is a big struggle for a lot of practitioners as well. And so, I definitely want to get to like the kind of network and the referral aspect that you kind of cover in the book. But before we do that, you have this concept of good growth. I mean, you like to call out good growth.
Adam 00:21:39 Can you explain a little bit about that concept? And I mean, why does so many professionals struggle with it, I guess.
Michael 00:21:46 Well, I think part of it is, you're onboarding clients. You shouldn't at some point. I think building a business or practice at some point requires knowing what it is you want. It's like fishing. If you're out fishing for salmon, you take what is necessary to catch salmon. Now, if a bluefin tuna happens to jump in the boat, you'll take it. But you're going to throw a lot of fish back because that's not why you're there. Yeah. But I see we've met a lot of tax professionals, for example, who have all these really, small clients. And it's not that they don't need what they do. Of course they do. But they're not their target client. But they don't. They have a bunch of them, and it helps them grow, but it also helps them to be busier than ever. That's kind of a loose example of what of what? You know, bad growth is where you become, you know, as I mentioned earlier, a prisoner of your own success.
Michael 00:22:48 what should you do? Number one, identify what it is you want. Who is your ideal client. Okay then take a look at your roster of clients okay. How many people fit this description. Okay. then start taking a look at it. All right. Who can I get rid of now, I don't mean you just fire them and cast them adrift, but can I develop a plan where they are referred to somebody else? That takes just as good care of them as I do, but I'm not doing it anymore. Okay. So, I really think it's about intent, you know, and clarity regarding what you're looking for. and then focus with regard to finding that and building out your practice. So, what do you have, as a whole bunch of what you want.
Tom 00:23:35 How would you respond to this concern then? Adam and I coach a lot of CPA firms who are wanting to offer CFO services, which is great. As they're getting started. They want reps and they want clients that are in there.
Tom 00:23:49 And we are saying, really, you should focus on niche in those good clients. So is there some balance between you don't just want to take anyone because they're miserable clients, but you are trying to grow and you're maybe a little bit desperate of just finding growth. How do you kind of balance that when you're starting off and wanting to grow?
Michael 00:24:06 Look, I'm not saying it's easy. I mean, when you're when you're starting out and you're just trying to grow a practice, you just take anybody. And I get it, I did it. Okay. and I don't think there's anything wrong with that as you're sort of, you know, tilling the soil and building your book. I'm saying there comes a point, though, where that's unsustainable. So, I think it's about progression. I think at some point. This happens in our industry, you know. Look, take anyone in the beginning because you anybody who fogs a mirror, take them. but when your business starts to mature a little bit, that's when you start to look at it.
Michael 00:24:42 Okay, who do I want? yeah. Who do I work best with? By the way, a lot of this is about personality and character. It's about do they align with who I am or are we going to work together? Well, we're going to work together intimately. We might as well get along okay. Yeah. and I think it's perfectly okay to say no to everybody, to anybody who checks every box other than the eye, other than the, you know, personality aspect. You just may not mesh well with them.
Adam 00:25:09 Yeah, I think that's a good that's a good segue there. to some of that professional network and referrals. I mean, how does the National Referral Network really kind of impact your, your business growth and professional approach. And I mean, do you have any advice for business owners that are maybe listening to this saying, hey, how can I increase my referrals through professional networks?
Michael 00:25:30 Well, I mean, look, we've all been to networking events before, in all likelihood.
Michael 00:25:34 And you go there, you hand out business cards and everybody extols their virtues and nothing happens.
Adam 00:25:40 Right? Sure. Yeah.
Michael 00:25:41 You know, and, or you've met other professionals and you say, why, you're great. They say why they're great and nothing happens. Okay. so, in building the network, we realized a couple of things. First of all, we realize that we can no longer outsource anything to somebody who's going to be a knucklehead with it. And that was happening far too much. Okay, by a nickel. I mean, you have no idea how much I've done estate planning, attorneys jobs, like we're calling them, going to just put the vacation house in the trust. Oh, no. Sorry. Let me do that. It's like. You're the one getting paid here. I'm doing your job. so, he got a little tired of that. We've referred stuff to tax preparers who didn't file on time or just, you know, just stuff like that where it's not representative of the experience we want to perpetuate.
Michael 00:26:35 So we initially developed the national referral network as a means of outsourcing reliably, because we could hold everybody the same standard. If you're in the network, you have to step correctly. You got to be a squared away, Maureen, as it relates to client service and care. So that was the first thing. What we found is we weren't the only professionals that wanted to refer reliably. The biggest concern amongst professionals when they send something to another professional is what's the experience going to be like for my client? Okay, so that gave it an additional dimension. Then we thought, okay, well, since we are building out digital family offices for our clients anyway, okay. Where we need to be aligned with the attorney and the tax preparer and all the other professionals. What if we were all on the same team selling, telling the same story, talking about how, hey, you know what, you used to know me as just a tax preparer, but now I can do a whole bunch of other stuff, by extension, because I've got an affiliation with a network that allows me to do that.
Michael 00:27:34 The analogy we use is a shoe store in Costco. If you walk into somebody's shoe store and they said, you know, that door back there that leads to a Costco where you can get anything? Let me know if you need anything, right. I mean, it throws a whole new dimension onto your business, and you didn't do anything to build it. All you did was plug into it. So, it's changed our business radically because instead of just knowing an attorney, knowing a CPA, they know us and nothing happening. We're on it. What we're doing is building partnerships where we're honest to goodness team members, okay, we're all telling the same story we're almost representing the same storefront, which is the digital family office and the referral network. Okay. And we're telling that story like, we don't just do this one thing. What we want to do is build out something that's as complete as it can be. Here's how we're doing it. And then clients are either amenable or not. And it really doesn't matter.
Michael 00:28:34 The whole idea is not to sell the services. The whole idea is to tell that story. So, you get elevated in your client's eyes because they're going to be grateful to you even that you just asked. Referrals are organic.
Tom 00:28:46 Yeah. You know the place where I could see that really coming into play as, as we work with people who are starting off, they'll often say, well I don't do taxes and maybe I don't do bookkeeping or don't do a piece of this. And we're often saying, well, if you have prospects coming who want that, at least having an avenue that you can offer it to them and can say, you know, I can get your taxes done and I work with a great person, you can either white label it or let them know it's another person. But just saying I don't. To your point, people want it to be easy. And if they say, okay, you're telling me it's going to take three people or two people I was hoping to go to one.
Tom 00:29:18 Could be that kind of advantage.
Michael 00:29:20 Well, I had asked for referrals all the time. I get asked for. I, you know, I get asked for CPAs and attorneys. I also get asked for, you know, do you know a handyman, or I need to buy a car or I, I have an art collection. I don't know what it's worth. You know, it's I get all kinds of requests.
Adam 00:29:38 Interesting. So, talk to me a little bit about that because I think we probably don't do as good of a job here with our clients is, is advisors. We always tell our team like; we're not expected to be the expert in everything. And don't pretend to be, you know, there's a time and a place to bring in the, you know, all kinds of variety of professionals. And I think we do a good job of introducing resources to our CFO team. So each Friday, we have a CFO meeting, the first half hours dedicated to bringing in kind of I guess there would be a referral partner, but basically trying to create a network of hey, there's this specific problem, you need to go see a specialist, this is the specialist, so we do a good job with that.
Adam 00:30:22 But what I think I heard you just say though is, maybe there's a difference between maybe a tier one and a tier two network like tier one for us would be a financial advisor. might be an attorney. It would probably be like a human outsourced human resources department. You know, those are things that we're going to be talking about on a regular basis. And then tier two might be things that are just naturally going to be one offs. You know, they're going to be very specific. And I don't think we do a good job if we do an introduction to that. But I don't know that we've done a solid job of creating a true network. So do you have any advice, or have you had any experience with doing that for yourself to where you do make even those tier two kind of referral sources more of like integrated and top of mind.
Michael 00:31:13 Well, look, some people are inclined to refer, and some people aren't. That's just the way it is. So, we're really working actively with those that understand the value of this story.
Michael 00:31:23 But I think it starts with the idea that this is a team sport. It's not a bunch of individuals working in their own separate silos. We are really, truly a team. We need to behave like one. along with that goes the idea. And we talk about this a lot in the book, which is the idea of edifying other people, building them up, making them look like they walk on water. We need to create receptivity in the eyes of the clients so they're receptive to what that person is saying. Okay, it also makes me look better, and it also enables me to stay in my lane more. I'm not looking to be all things to all people. I can't be okay. Right? So, if I am edifying you or Tom or anybody else, then I look better in the process. And all I need. I just need to be able to trust that Tom is going to perpetuate the experience I need. But long before I even mention Tom, Tom's going to know what it means to be on my team.
Michael 00:32:21 And I'm going to know what it means to be on his team. Okay, so now we kind of trust each other, okay? And that's the differentiator. I think if you're looking at building a network, if you're a professional, you don't have one. That's what you want to build. You want to create relationships with people who are teammates, not just people you know.
Adam 00:32:43 Yeah. No, it makes a lot of sense. It does.
Tom 00:32:48 You know, Michael, one of the things from the book that you talk about is it's common, especially accounting firms, but also professional service agencies, to think of managing growth as part of like getting rid of a certain percent of your clients over time, firing clients, things like that. And I see that you're saying, hey, you guys have got it backwards in that. I'm curious about your thoughts on hearing that? Because we do hear quite a bit of people saying, I've got these low-priced clients, if I can get rid of them, I think usually I think I'll free up time and then I'll go get good clients. What's your thought?
Michael 00:33:17 I think that can be true if you know who you're looking for. Again, back to the earlier example. If you don't know what you're looking for, you're not going to find it. Okay. So, I mean it's possible to get to offload, you know, people that you don't want to work with anymore and get worse.
Tom 00:33:36 Client bringing.
Michael 00:33:37 The worst clients. So. Okay, look, it's a matter of intent and focus. I mean, if you're building a house, what do you do? You go to an architect and they draw it. They say, oh, this is what you want. Then we draw the plans. Now we get somebody to build it. It's not again, it's not rocket science. But for whatever reason, so many business owners don't have that kind of clarity. So, I think it really is about intent and focus and Discipline. I mean, you have got to show up to work every day doing things that will move you towards what you want.
Michael 00:34:10 You can't just think about it. and often. Look, I, I think when you if you can show up and do that every day when you don't want to and you're uninspired to do it, congratulations. Now you're in the game.
Tom 00:34:27 Okay. Yeah. If I tie into something I said before about people trying to grow and saying, kind of taking anyone, one thing that will tell them, though, is. But if you know the kind of client you want, you can still keep casting, like in your salmon analogy, keep fishing for salmon. If other things present themselves, you can take it. And I've often told people that for probably ten plus years we have targeted the digital agency niche with a lot of success. Right. And still, it's probably about half of our clients. And so we've said we don't turn down other people. Some people hear about us, they come and they're I've got transportation companies and manufacturing companies. They're not the agency group that were saying, hey, this is what we go after, but we do good work and so you could do the same.
Tom 00:35:08 I go after a client, and I can accept.
Michael 00:35:10 Others, and it's all the more reason that, you know, I think every practice should be looking at some point, be looking at bringing in younger associates, and it's their job to work with those people. That's what we have. We have a program called Kids Fly Free. Okay. I couldn't think of anything else to call it. So, it's called Kids Fly Free and it's where we'll work, with the next generation, our clients' kids, up to a certain net worth threshold and for no fee. No charge. Okay. and we have younger associates in the firm that, by and large, do that. And we want those younger associates building those relationships because we want our clients to not have just a relationship with us, have the relationship with the firm, with I want every client to have a relationship with 4 or 5 people, not just me. Okay. Yeah.
Tom 00:36:03 That sounds like a great program.
Michael 00:36:05 That's really cool. It all arose out of fear of not getting fired.
Tom 00:36:12 But I like the multigenerational. Well, and I was going to ask you about this from personal side. I saw that you were, or you were or are a junior achievement instructor.
Michael 00:36:21 I was at one point. Yeah, I've done it a couple of times. It was, it was fun. It I mean, you're talking to high school kids. Okay. about money and finance. And what's really interesting about it is to get there, their point of view on everything, particularly since we live in a world of often conspicuous excess. where your kind of bombarded with I mean, I live in West L.A., which is adjacent to a lot of very affluent communities. Holy cow. Do you see that everywhere you go? Sure. So, they're bombarded with those images. So, it's interesting to talk to them about money and finance and how they see it. and I may go back and do something like that again.
Tom 00:37:07 Yeah, that sounds like it's aligned with the kids Fly free group. One reason I mentioned, have you heard of the Biz Town program for Junior Achievement?
Michael 00:37:16 No I haven't.
Michael 00:37:20 I maybe vaguely that's similar. That's similar to Junior Achievement, isn't it?
Tom 00:37:26 It's a part of team owned it. Yeah.
Michael 00:37:28 Oh, okay.
Tom 00:37:28 All right. I mentioned it because my wife worked there. So, in Indianapolis, they had a location, and it looked like a small city, and they would bring school groups in, and people would get jobs and money and basically have a day where they had to interact with other people. Yeah. And would have a great time doing it, but also learn pretty well. And there were jobs that had a whole range of salaries. And so, they would find some got paid a ton and some didn't get paid much. And it was a really good thing my wife actually organized something for our family, go down and essentially play for the night. It was a lot of fun to do that. But junior achievement grade I just it sounds like it connects with kids, fly free and teaching.
Michael 00:38:02 Yeah it doesn't. And we've got an educational system that is on our website.
Michael 00:38:09 we've almost 300 different courses on finance. We way back in the day, we used to do a lot of educational seminars for like medical people, doctors, nurses, people like that. And what we heard from doctors especially was, you know, we didn't learn about this stuff in high school, college or med school. And so, several years ago we just thought, well, okay, well, let's put this all on the website and this is all the stuff you should learn but didn't. And so, I always give that if I have a client that has teenage or young adult kids, I'll always give that to him and say, look, give us your kids. You know everything you didn't learn. They can learn here and it's free.
Adam 00:38:52 That's great. Yeah. Tom, that program is pretty awesome. I got four kiddos, so I've. Yeah, I wanted to hire an eighth grader. One time I was like, man, this guy's a great accountant. He was processing payroll and doing all this stuff.
Tom 00:39:07 That's great. You're like that. I'm seeing the college coach watching the grade school like I look when you get out your mind. Yeah.
Michael 00:39:14 That's cool. There are high school kids now who are making money on trading apps.
Adam 00:39:21 Yeah. No definitely. I mean and I know I mean, just kind of thinking about innovation and forward thinking. I know your motto is, is we build what should exist, right. So, can you give me an example of how that philosophy would apply to a CPA firm, for example? What do you mean when we say we build what should exist?
Michael 00:39:43 well, I think it emanates from just, you know, kind of the need to take care of people at the optimal level. In other words, you look at what your capabilities are like, how well I can take care of this person and that should give you an idea of what you want to build beyond what you have.
Michael 00:40:02 But I don't I don't know that anymore that you even need to build it. I think aligning yourself with it makes more sense. You know, what can I plug into? What partnerships can I build with other professionals so that my clients are better served? So, I think it's about just wanting to be better. And, and, and to a certain extent, looking at what doesn't make sense and fixing it. I mean, does it make sense that if, you know, going back to the onboarding process, does it make sense that you're going to onboard a client and spend an hour with them going through 33 pages? Maybe, maybe not sure if at some point I understand it's necessary to your work. You need, you need, you need a certain amount of information. But maybe a lot of that stuff can be reinvented so that everybody is aligned and moving in the same direction.
Tom 00:41:02 Yeah. That sounds consistent with all sorts of what you said earlier around. You can take small steps.
Tom 00:41:08 Right. As you talked about in the book, these are some practical things that maybe you don't have to be overwhelmed. Say okay, you're telling me I need to blow up the entire practice.
Michael 00:41:15 No. Yeah. No, no.
Tom 00:41:16 You can't do that kind of thing.
Michael 00:41:17 Yeah. Look, if you wanted to get in shape, you're not going to go out and run a marathon tomorrow, right? I mean, you're going to make small incremental changes. So, I do think a lot of professionals can do that. I think a lot of CPA firms can just look at, you know, how do I. I think the biggest issue is if, you know, if you're older, how do I segue out of the practice at some point? Okay. Are there people in my practice or by extension, that I trust? Do I trust them to do things with clients the way that I would? What is my again? What is my infrastructure? I mean, your support staff for wow, your support staff.
Michael 00:41:58 They're the ones who make you look good. So, you better have good people. Yeah. You know, and don't undervalue them. Support staff get undervalued all the time, you know? And like the old saying goes, they make they make just enough not to get fired. So, they respond by, you know, they you pay them just enough not to quit. And so, they respond by doing just enough work not to get fired. Yeah. That kind of thing. That's shortsighted thinking. If you talking.
Tom 00:42:27 Sorry. No. Go ahead.
Michael 00:42:28 Yeah. No, I mean, and I was guilty of that for a long time. I had and I'll say this too. Just because you own a business doesn't mean you know how to run one.
Tom 00:42:39 Right? Right.
Michael 00:42:41 it took me a long time to not be the boss from hell. Okay. And I had to learn how to do it. I mean, I like to think now I'm an easy guy to work for.
Michael 00:42:56 so, there's a lot of physicians heal thyself here. and a lot of that in the book. I mean, just simple things like, you know, acknowledgements to people who make you look good. I don't think we can do enough of that. Yeah.
Tom 00:43:12 That's great. There's a mindset. Maybe it's a mindset that I see in the book, the people prioritizing, practicing their specialty over their responsibility to run the business well. And I think I'm just keeping that in mind and saying, okay, as I'm spending my time today, which am I doing? And it really strikes me when you talk about someone later in their career that might be starting to think about transitioning out, there's probably some urgency that should be there around. Okay, my head has been down just doing the work, but no one else can do what I do. There's no processes. Things that would just say that mindset might have me pull back and say, okay, how do I try to run the business well.
Michael 00:43:45 Versus just practicing? Yeah.
Michael 00:43:46 Years ago, I started taking a look at all the things I did on a given day and going, okay, what can I get rid of? Sure. And so, over the past few years, I've gotten rid of most of them. I'm now down to doing 2 or 3 things and that's it. Everything else is done by someone else. most of that other stuff, I never hear about it. My staff doesn't even tell me about it. My clients probably call my staff more than they talk to me. that didn't happen overnight, but it was a conscious effort. and I, I do work on a lot of it, you know, and that's like, again, another. Yeah. Another reason for writing the book is like, here's what we learned and what we worked at. Here's how not to get blown up. Yeah.
Tom 00:44:34 So in addition to the book, A firm Worth building, are there other resources that you would want to share? People are interested in more around the network, more around other things that your firm could offer that that people can do this.
Michael 00:44:48 Well, I think one of the one of the benefits of really any network in particular, this one is you get to be around people who are maybe a little further up the stem than you are. And if you're open to it and they're open to it, you can learn from each other. I mean, it creates a collaborative environment. I would be nothing at all. And, and, and were it not for the fact that I managed to pick a few of the right associations. and so, I clustered around people who were where I wanted to be and had the businesses that I wanted. So, I and so I think, you know, as a general premise, I think that's invaluable because we're going to learn from each other. Okay. but I always advocate the simple stuff, you know, get around people who are where you want to be, get around people that inspire you, get around people that challenge you. read a lot of books. I mean, make that just a habit. and try to grab a hold of some clarity regarding what you want, you know? I mean, what's the old saying? Those that know, those that know what you know, those that know how work for those that know why.
Michael 00:46:04 Right.
Adam 00:46:05 I think it's probably a good quote to close on. Yeah, that's really helpful. You give a lot of people things to think about. And then actions that they could take including your book including the National Referral Network. I think those are great, right.
Michael 00:46:19 Remember books available on Amazon I don't know, probably, you.
Tom 00:46:22 Know, go ahead and show it. It's a big part of what we talked about. Absolutely. Michael Clarke, thank you very much. This has really been a valuable conversation. Thank you. Thank you.
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