Just finished MJ’s book, and I am not sure if my plan is Slowlane or Fastlane. I think maybe a bit of both. Would love to get your feedback.
So, a quick synopsis: I am a Certified Financial Planner at an independent fee-only investment advisory firm. I have a website that pitches the service that I offer: comprehensive financial planning for a flat fee (currently $600). I differentiate myself from my competition – primarily insurance agents and stockbrokers – by my focus on financial planning and my ability to be objective. To wit, my firm does not sell any commissioned products and I am getting paid for the financial planning, so my conflicts of interest are minimal. I utilize Google AdWords to drive traffic to my website. The plan I put together for clients recommends a passive buy-and-hold investment strategy that just about anyone can implement on their own. But I also make clients aware of peer-reviewed academic research about an active investment strategy that has historically outperformed buy-and-hold with much less downside potential. Typically about half the clients I present plans to prefer the active strategy to the passive strategy and ask me to manage their portfolio in that style for them. I charge them a fee based upon a small percentage of their assets under management to do so.
It seems to me that the first half of this equation, financial planning, is Slowlane. I am selling 8-10 hours of my time for a $600 flat fee. The second half, portfolio management, is much closer to being Fastlane. It is scaleable in that I will spend the same amount of time providing portfolio management to 1 client as I will to 100. And, by the way, the investment strategy I use does not require a ton of my time to follow. Further, I typically only need to meet with clients once a year when I am managing money for them, so while the portfolio management fees I collect are not 100% passive money, it does not take a huge time commitment per client. When all is said and done, I think I can personally handle 360 clients (2 a day, 4 days a week, 45 weeks a year) with a minimal supporting cast. If the average client has a $500,000 portfolio and I charge 1%, that will provide me with $1.8 million in annual revenue. Plus, I will have built a business that I can sell to another advisory firm for a 2-3x multiple if I wanted.
The biggest problem is that it takes time to build up to 360 clients. Even if my marketing system is really cranking, I probably cannot put together more than 90 or so financial plans a year. And if half of those result in portfolio management clients, it will take 8 years to get to 360 clients.
There are, I believe, two ways around this time constraint. First, I could just become the CEO and Portfolio Manager of the firm and hire other Certified Financial Planners to put together the plans and meet with the clients. I could even expand beyond my current locale and make the business regional or even national. Of course, this is a lot more administratively challenging and would tie my time up in other ways.
Or second, I could simply try to work with individuals with more assets for me to potentially manage – maybe by building a specialty practice working with entrepreneurs, for instance, since as MJ informed, most penta-millionaires made their money as entrepreneurs. I also have some ideas as to an investment strategy I could use to start up a hedge fund, and attract the really big money, but that is probably more of a “windshield wiper†project for the moment.
So, any thoughts? Am I on the Slowlane, Fastlane, or some weird amalgamation of the two? Maybe what I am doing is an example of Intentional Iteration?
So, a quick synopsis: I am a Certified Financial Planner at an independent fee-only investment advisory firm. I have a website that pitches the service that I offer: comprehensive financial planning for a flat fee (currently $600). I differentiate myself from my competition – primarily insurance agents and stockbrokers – by my focus on financial planning and my ability to be objective. To wit, my firm does not sell any commissioned products and I am getting paid for the financial planning, so my conflicts of interest are minimal. I utilize Google AdWords to drive traffic to my website. The plan I put together for clients recommends a passive buy-and-hold investment strategy that just about anyone can implement on their own. But I also make clients aware of peer-reviewed academic research about an active investment strategy that has historically outperformed buy-and-hold with much less downside potential. Typically about half the clients I present plans to prefer the active strategy to the passive strategy and ask me to manage their portfolio in that style for them. I charge them a fee based upon a small percentage of their assets under management to do so.
It seems to me that the first half of this equation, financial planning, is Slowlane. I am selling 8-10 hours of my time for a $600 flat fee. The second half, portfolio management, is much closer to being Fastlane. It is scaleable in that I will spend the same amount of time providing portfolio management to 1 client as I will to 100. And, by the way, the investment strategy I use does not require a ton of my time to follow. Further, I typically only need to meet with clients once a year when I am managing money for them, so while the portfolio management fees I collect are not 100% passive money, it does not take a huge time commitment per client. When all is said and done, I think I can personally handle 360 clients (2 a day, 4 days a week, 45 weeks a year) with a minimal supporting cast. If the average client has a $500,000 portfolio and I charge 1%, that will provide me with $1.8 million in annual revenue. Plus, I will have built a business that I can sell to another advisory firm for a 2-3x multiple if I wanted.
The biggest problem is that it takes time to build up to 360 clients. Even if my marketing system is really cranking, I probably cannot put together more than 90 or so financial plans a year. And if half of those result in portfolio management clients, it will take 8 years to get to 360 clients.
There are, I believe, two ways around this time constraint. First, I could just become the CEO and Portfolio Manager of the firm and hire other Certified Financial Planners to put together the plans and meet with the clients. I could even expand beyond my current locale and make the business regional or even national. Of course, this is a lot more administratively challenging and would tie my time up in other ways.
Or second, I could simply try to work with individuals with more assets for me to potentially manage – maybe by building a specialty practice working with entrepreneurs, for instance, since as MJ informed, most penta-millionaires made their money as entrepreneurs. I also have some ideas as to an investment strategy I could use to start up a hedge fund, and attract the really big money, but that is probably more of a “windshield wiper†project for the moment.
So, any thoughts? Am I on the Slowlane, Fastlane, or some weird amalgamation of the two? Maybe what I am doing is an example of Intentional Iteration?
Dislike ads? Become a Fastlane member:
Subscribe today and surround yourself with winners and millionaire mentors, not those broke friends who only want to drink beer and play video games. :-)
Membership Required: Upgrade to Expose Nearly 1,000,000 Posts
Ready to Unleash the Millionaire Entrepreneur in You?
Become a member of the Fastlane Forum, the private community founded by best-selling author and multi-millionaire entrepreneur MJ DeMarco. Since 2007, MJ DeMarco has poured his heart and soul into the Fastlane Forum, helping entrepreneurs reclaim their time, win their financial freedom, and live their best life.
With more than 39,000 posts packed with insights, strategies, and advice, you’re not just a member—you’re stepping into MJ’s inner-circle, a place where you’ll never be left alone.
Become a member and gain immediate access to...
- Active Community: Ever join a community only to find it DEAD? Not at Fastlane! As you can see from our home page, life-changing content is posted dozens of times daily.
- Exclusive Insights: Direct access to MJ DeMarco’s daily contributions and wisdom.
- Powerful Networking Opportunities: Connect with a diverse group of successful entrepreneurs who can offer mentorship, collaboration, and opportunities.
- Proven Strategies: Learn from the best in the business, with actionable advice and strategies that can accelerate your success.
"You are the average of the five people you surround yourself with the most..."
Who are you surrounding yourself with? Surround yourself with millionaire success. Join Fastlane today!
Join Today
