Financial advising with a

S3 EP06 Virtual Advisor System with Derek Notman

04.06.20 | 0 Scale Transform

My guest today is Derek Notman. 

Derek is a virtual Certified Financial Planner®, the Founder of Intrepid Wealth Partners, and a lifetime Million Dollar Round Table member.   Derek has been featured on the Financial Advisor Success Podcast with Michael Kitces. He was included in the InBusiness Magazine’s 40 under 40 Class of 2019, where his business experience and world travels were compared to that of “The World’s Most Interesting Man”. Derek is also the creator of LoveYourFinances.com, a financial education site dedicated to teaching people how to fall in love with (and master) their money.

In this conversation, we discuss the Virtual Advisor System that Derek created to empower more advisors to grow their businesses in today's digital ecosystem. Derek’s own practice is location independent, and after having to figure things out for himself the hard way, he’s teaching other advisors how to tap into virtual tools and systems. This podcast episode will be especially useful for those who want to add a location-independent component to their service offering, or those who are curious about what it takes to run a 100% virtual practice. 

Don’t miss one of our favorite moments, when Derek shares steps on how to maintain and strengthen the human element while building a virtual advisor system. Advisors must build client and prospect relationships to create connection and trust, and there are many ways to accomplish that both in person and remotely. Derek also reminds us to know and focus on what we as advisors do best (i.e. financial advice) — and to outsource the setup and maintenance of virtual tools to a team that specializes in that skillset. 

As you think about this conversation, ask yourself these questions. Could you scale your business by outsourcing certain workflows and processes? How could you lean into virtual tools to enhance and round out the service that you deliver? And how could you add more value by shifting your “belly to belly” conversations to a virtual system?

Looking for more ideas about growing your practice? Join the Model FA Facebook Community, where you will find expert advice on how to launch, grow, scale, and transform your firm with an incredible client experience. Or, check out our Model FA Accelerator, a premier coaching and practice management program for entrepreneurial financial advisors.

Resource Links
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LoveYourFinances
#FASuccess Ep 155: Eschewing A Bricks-And-Mortar Office For Reduced Overhead And (Virtual) Flexibility, With Derek Notman
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FULL TRANSCRIPT

Derek Notman:

It's a huge commitment. It's one of the most personal things we as human beings talk about is our money. I would agree with you. I would say that too many advisors who are looking to go virtual or even just to do digital marketing, they are bringing the tactics of the brick and mortar model of just like cold calling, hit them over the head, hopefully one of them will stick, to the digital space and it doesn't work. It just doesn't work. You have to build a relationship with people.

Patrick Brewer:

Welcome to The Model FA podcast, I am your host Patrick Brewer. Today's guest is Derek Notman. Derek is a financial advisor. He runs his own practice and he has a unique business model. He travels around the world, around the country. He can work anywhere.

Patrick Brewer:

In addition to that, Derek has built a virtual advisory system for financial advisors looking to replicate a similar model. Derek, thank you so much for coming on the show today.

Derek Notman:

Awesome. Thank you, Patrick. I really appreciate it. Love your show. Love what you guys are doing, so I really appreciate the opportunity.

Patrick Brewer:

I appreciate that too, brother. I think what you're doing is good stuff as well. I noticed you, I don't want to say came on the scene recently, but I've seen a lot of the content that you've been putting out. You've been on the Kitces podcast, you've just been really active in the advisor community.

Patrick Brewer:

I think maybe where we start is just what's your story, man? I know you've built a practice, I know that you're looking to help advisors kind of transition more into a virtual environment. But I think it'd be useful for everyone listening in to just learn a little bit more about your background and just the stuff that you've walked through in your career.

Derek Notman:

Yeah, totally. I appreciate that. I'll try to sum it up the best I can and feel free to ask questions as we go.

Derek Notman:

I had no experience with the financial industry when I entered it. I actually, my bachelor's degree is in archeology and Indiana Jones was already taken after college, so I had to actually go find a real job.

Derek Notman:

So I ended up actually working with at risk youth for a couple of years up in Duluth, Minnesota. My wife is in special education and she had a job there at the time as an intern. She's like, "Hey, they're hiring." I'm like, "I'm graduating and I need an income."

Derek Notman:

So went there, had no idea what I was getting myself into and just learned a lot about myself, learned a lot about people. I'm always working with boys that were everything from murderers and drug dealers to a lot of other bad things. So learned a lot about the real world, learned a lot about myself and how green I really was, and did that for a little over three years.

Derek Notman:

And then my wife and I, it was like, you know what? We're recently married. We want to do something different, something new. So we pulled up roots, sold our house, packed up all of our stuff and drove out to Vermont, just to do something new and different. And we literally did not know a single person in the state of Vermont when we moved there.

Derek Notman:

And we luckily one way or another, we actually landed somewhat softly. My wife got a teaching job at one of the public schools there, and then I had a part-time job there because I had no idea what I wanted to do or where I was going to do it. So I did that part time, I dug out basements and did other handyman work on nights and weekends to make sure we could pay the bills.

Derek Notman:

And over that couple month period as we started to settle in, I'm like, you know what, I really love working with money. I've always had this fascination with money and investing and all that stuff. But I also love working with people and I learned the whole people piece by working with those kids.

Derek Notman:

And I'm like, well, where can I do these two things together? And that's when I got into the financial space, was recruited, came in and just drank the Kool-Aid. I'm like, okay, well, I don't know how to spell IRA. I don't know what life insurance is or any of this stuff, but I'm going to learn and I'm going to figure it out.

Derek Notman:

I did it the traditional way. I worked a lot of nights and weekends, a lot of cold calling, a lot of walk and talks, just general prospecting, which I hate that word, by the way, but a lot of prospecting. And had success early on, but started getting gray hairs pretty quickly, because it's, as you know, Pat, it's a tough industry and it's not nine to five. There's a lot of rejection, there's a lot of financial burdens on us because we don't know when the next paycheck's going to come, especially in the early years.

Derek Notman:

So went through that and ended up buying an office building and opening up your traditional kind of office. We had this building that was on the historic register right in the heart of a small town in rural Vermont, and had the big sign out front and was present in the community and had staff and all the other stuff that comes with owning a practice.

Derek Notman:

And it worked okay. But it really took its toll. It took its pound of flesh, for sure, financially and emotionally. I have a lot more gray hair now because of it.

Derek Notman:

But then I had an opportunity to come out to the Midwest. I'm in Wisconsin now and I grew up in Minnesota and we had some family in Wisconsin. And we had an opportunity, it was a business opportunity initially to work with another advisor on some stuff at a national level.

Derek Notman:

And as I've mentioned before in this story, I've told it other places, it's not what it was thought out to be. I was kind of sold a bill of goods and the whole thing blew up after only being here a month. Selling my house, like uprooting my family. We had a newborn at the time. My son was, I don't know, a year, not even two years old yet, and it was really stressful.

Derek Notman:

So then I was like, okay, well, do I stay or do I go back to Vermont? And we liked being closer to family, especially with a newborn. And we both grew up in the Midwest and there's a lot of pretty cool stuff about the Midwest. So we said, all right, let's make a go of it.

Derek Notman:

And that meant I had to still service all my clients on the East Coast. There was no model or blueprint on how to do it virtually. So initially I was flying back and forth all the time, go in for two nights, jam packed with meetings while I was there, meet with my staff in my office and then fly back and see my family.

Derek Notman:

Well, after doing that for almost a year, I got really tired of it. I got a lot of sky miles but got really tired of that and that's kind of what spring-boarded me into building a virtual practice and going down that long path to figure it out.

Patrick Brewer:

Okay. What year was this when you decided to make the switch to virtual?

Derek Notman:

So we moved to Wisconsin in 2013 and 2014 is where I made the conscious decision to start more of a virtual practice. And it was initially just for me, just to improve my lifestyle and be around my son more, that type of thing. But also I wanted to figure out like there's got to be a better way to run this business that we call financial advisor. Like there's got to be a way I can exponentially grow my income and not have to work crazy hours and spend a ton of money flying all over the place.

Derek Notman:

But a major learning curve, major learning curve.

Patrick Brewer:

Yeah, for sure. How big was the business when you made that decision to consciously, let's say, start the process of becoming more virtual?

Derek Notman:

Well, it's funny, so at about the same time, maybe six months before I moved, I made the switch from just a commission model over to a fee based model.

Patrick Brewer:

Interesting.

Derek Notman:

And so it's kind of a perfect storm in not such a good way, because my income dropped in half that first year going from a commission to a fee based model. But it was the right thing to do for me, for the future of my business, for my clients. So the revenue plummeted quite a bit initially by 50% literally. And then started to work it back up.

Derek Notman:

I think when I moved here, my AUM was 15, 20 million and we're at about 50 right now. 51 maybe, something like that. So it's had some decent growth since then, obviously. But yeah, it was a tough start, that's for sure.

Patrick Brewer:

Yeah. Was the first kind of couple of years converting folks from commission over to fee, or did you have to go out and find new clients that were just complete strangers that you could talk to about fee based management? What was the process of growing it over those years when you were-

Derek Notman:

It was both. It was really both, having that conversation and also, that was partly starting to figure out, well, what's my ideal client and what's my niche? And that's something not enough advisors do early enough in their years. I know you guys have done a lot of work around that with what you guys do and I can't stress the importance of that enough. It is so important.

Derek Notman:

So that was part of the journey. So it was a combination of like the current clients that was, hey, like let's do a review and talk about some changes that I've made in my practice and some new options. So that was a pretty straightforward conversation. And the new clients, it was, hey, like we're going to do a financial plan first and then here's all how I charge for my different services. And it was very transparent with my fees.

Patrick Brewer:

Okay. What's your specialty now in the practice? Do you have multiple or do you have one particular specialization that you focus on?

Derek Notman:

As far as like planning?

Patrick Brewer:

Like a niche?

Derek Notman:

Define a niche. I'll get to that in a second but I really like to start every engagement with a financial plan first. It's fun because it's a challenge for me and it's different every single time. Although the process is identical, it's different because each person's situation is different and it's so much fun, because I can literally tell people, like, yeah, you can retire or you can go make this purchase or we can do this or do that. And then that leads to other business as we go through that process.

Derek Notman:

But I would say like, I don't know if I would call it a specialty, but it's a passion. I like the financial planning aspect and I like the investment piece.

Patrick Brewer:

Okay.

Derek Notman:

And as far as a niche, that's been definitely a journey, but over the last six months, I've really honed that into working with elite frequent flyers who are also business owners.

Patrick Brewer:

Okay. So that's probably going to, yeah, so you got like entrepreneurs and business owners that are jumping around the country traveling too much. I'm sure part of what you talk to them about is like, hey, why are you doing this? Because there might be a better model for their business too, 

Derek Notman:

That's it. I've definitely shared that with some of my clients. I'd be like, especially the ones in the startup phase that are raising venture capital and they're like, well, I have to hire this person and that person. I'm like, well, do you? Have you thought about maybe outsourcing some of this to a virtual model? It's a fun conversation.

Patrick Brewer:

And then how to market it and sell it in a way that will get people to sign on the dotted line and become clients of your firm. All while giving you the information to scale and set up workflows and operational processes that will allow you to reclaim your time and build a practice that doesn't run you.

Patrick Brewer:

So if you'd like to hear more about that, go to www.modelfa.com/accelerator or www.modelfa.com, hover over work with us and click on Accelerator. Hope to see in the program.

Patrick Brewer:

What's been your primary driver of growth. So you make the decision that you don't really want to beating up the skies anymore. You decide to move to a more virtual model. You're converting from commission to fee based. What was the thing or the things that allowed you to get to this point now, where you have a practice that's at 50 million and a consulting practice that helps advisors? What are some of the that you did to get to this point?

Derek Notman:

Getting extremely clear with myself. Like what do I actually want? Not enough of us have that internal dialogue with ourselves. So first, really defining like what do I want as a human being? What do I want as an advisor and a business owner? And getting super clear about that.

Derek Notman:

Because then that, what I have found at least will direct all of your actions one way or another. And so it's like if we don't have that roadmap laid out, the greater vision, then it's super hard to go one direction or another. And then I've had to learn and I know you'll appreciate this, but I've had to learn how to become really good at marketing.

Derek Notman:

Too many advisors are taught like, okay, this is how you sell, here's our sales process, here's how you sell this product or this service. And then they tell you to go prospect. I've joked about this before but prospecting sounds like a bad medical procedure. I just don't like it.

Derek Notman:

I think marketing is a much better word. Like how often do you hear like the large companies, whether it's Ford or GE or whatever, Coca-Cola, they don't talk about prospecting, they talk about marketing. And the consumer is used to getting marketed to.

Derek Notman:

So it's really being able to figure out like what is your marketing strategy and plan? And what areas are you going to actually go market through to get towards your ideal client?

Derek Notman:

So having to learn that whole thing, talk about a learning curve for me where I was told like, hey, you just need to cold call people and ask for referrals and eventually that'll lead to sales.

Patrick Brewer:

Is there a particular marketing channel or platform or series of strategies and tactics that you've implemented that allowed you to be successful, you think?

Derek Notman:

Yeah, so it's really something I find that has to be done in concert. There's not one silver bullet, if you will. So obviously, having a strong online presence is usually important, but that is so many... It's multifaceted. Websites, blogs, social media presence, and then leading with education and then also engaging.

Derek Notman:

It was interesting, I've been on LinkedIn for years, just as an example. And for many years, I was extremely passive and I would just look at what other people were doing and never comment, not really post anything. And then I'm like, all right, I'm going to double down on this and learn how this works. And it's amazing the growth that I've had just from LinkedIn by engaging with people and not pushing sales, but just educating.

Patrick Brewer:

Yeah. Yeah. I think this is the year of engagement, whether that's online or in person. I feel like the past couple of years has been a big push around content, so like create video, create audio, blogs, whatever. Then now we've gotten to the point where there's so much content that it's almost like at a saturation point where nobody's actually, or some people are obviously tuning in, but less people I feel are tuning into content.

Patrick Brewer:

It's really figuring out creative ways to not only get attention through content, but engage people and interact with them as a human being.

Derek Notman:

Yeah, Pat, do that, spot on. I totally agree with you. We are at a saturation point, we are bombarded with content wherever we go. So how do we bring it back to that human element? I think that's what's terribly important.

Derek Notman:

And even one of the little things that I do that I even teach in my system, here's a freebie for everybody is it's as simple as just shooting some short introductory videos and sending them as direct messages to people that you're connecting with and trying to build a relationship with. It's personal. It's different than what everyone else is doing.

Derek Notman:

I've had a ton of great feedback just from doing little things like that, but it's the human element, especially when you're working virtually. A text message, a DM, an email, we all are used to that and get those and that's that saturation piece. So how do we differentiate?

Patrick Brewer:

Yeah, no, I agree. We've been actually training on something very similar. We use an app called Loom and we've been doing kind of like icebreaker, personal introduction videos I think for like 18 months. And you're right, it does get the attention of the person and it's different.

Patrick Brewer:

I think where the most advisers kind of drop off and this has been my experience is they expect marketing to be a point in time I did something. Therefore, you give me something in return, instead of, let me get really specific about who are the types of individuals that I'm looking to build relationships with. And then what is the process that I need to follow day in and day out to lay those bricks, in order to get them to a point where they even have a level of skeptical curiosity to meet with me to become a client?

Patrick Brewer:

I've just found a very, especially in the virtual space, which is part of the reason why I wanted to have you on is, I've found that a lot of people that want to focus virtually, not saying this is you, obviously not. But advisors who have an interest in focusing virtually, they tend to be somewhat transactional in the way that they want to acquire clients virtually.

Patrick Brewer:

Are you seeing a different thing or what type of approach are you advocating for, as far as how to actually go about acquiring somebody who let's say doesn't know you right now, to getting them to become a wealth management client, which is a big commitment, right?

Derek Notman:

It's a huge commitment. It's one of the most personal things we as human beings talk about is our money. I would agree with you. I would say that too many advisors who are looking to go virtual or even just to do digital marketing, they are bringing the tactics of the brick and mortar model of just like cold calling, hit them over the head, hopefully one of them will stick to the digital space and it doesn't work. It just doesn't work.

Derek Notman:

You have to build a relationship with people, just like dating, right? You have to build a relationship. I referred to it, a dear friend and mentor of mine gave me a nice concept that I just refer to as above the line, below the line. And people are not going to care what your credentials are, what your services are or even what your prices are. They're not going to care about any of that stuff, which is below the line information, until they are able to connect with you on a human level above the line.

Derek Notman:

Like who is Pat? And does he share similar life philosophies like I do? Does he have certain hobbies or passions that are similar to how we live our life? And when you can get humans to connect on that human level, that's a great foundation for trust.

Derek Notman:

And you can do it virtually through video and blogs and all this other stuff to educate and get your persona out there. But if you're looking to go virtual and digital marketing and just keep doing the cold calling method, I think that's a dying way of doing business.

Patrick Brewer:

Yeah. Yeah. I would agree with you. And you hit on it, and this is one of the things that I stress over and over again is specialization. You have to have a specialty and not only do you have to have a specialty, like it needs to be in alignment with who you are as a person.

Patrick Brewer:

So I think not only getting clear about who you serve and like why you serve them and how you're different, it needs to really align with how you make decisions and the types of things that you feel passionate about. Because for me, and I talk about this, I'm not sure if I've talked about it on the podcast much, but if I'm focused on working with retirees and their primary concern is how much money am I going to have and how long is that going to last me, I'm going to lose energy every meeting.

Patrick Brewer:

Like every time I meet with them, I'm going to start losing energy because I'm like a vision guy. Like I want to talk about where are we going, what's possible, what are the opportunities available to us?

Patrick Brewer:

I could be very specialized and I could create a great marketing funnel and all the collateral and everything in order to attract retirees. But I'm going to build a practice that I hate. Not to say that might not be a perfect practice for someone else, but I think just acknowledging from an individual advisor level, like what is actually going to give you energy on a day-to-day basis when you choose to do business development and marketing activities? So I think that's like the first cut. And so that's kind of what I hear you saying as well.

Derek Notman:

Totally, I agree with you completely. It's so important and if you don't have that part figured out, the other stuff isn't going to matter and you won't be excited getting up in the morning and going to work, you really won't.

Patrick Brewer:

Yeah. Yeah. The other thing I would say, and I'm sure you probably agree with this, it's still hard regardless. So whether you're working in a local community and you're trying to build your brand in the local area and you're supporting your efforts with digital marketing or you're deciding that you want to be more location independent and transition into a virtual model, I think both of those are still really hard.

Patrick Brewer:

I actually would argue that it's harder to do the virtual model than it is to do the local model.

Derek Notman:

I totally agree that both are hard avenues. This is not an easy industry and you're going to have to cut your teeth and you're going to have to get used to rejection, no question about it. And whether you use a virtual system or not, you're still going to have to put the work in, plain and simple.

Derek Notman:

And the virtual system is not something that I think young advisors should adopt 100% right away. I think it's going to be a progression. The early years and I did it a lot longer than I wish I should have, but having all of those belly to belly meetings, at least for someone like myself, I had no sales experience at all. I couldn't sell anything to anybody. It just taught me like, all right, well, how do I go into a sales situation? How do I help someone along this process to get them to implement a solution?

Derek Notman:

And doing that in person, whether you're getting rejected or not, you learn a ton. I would say for those that see there's some value in the virtual model, start off maybe looking at doing a bit of both. And there's going to come an inflection point where like, okay, I'm doing all this belly to belly stuff, but I've got my vision for the future of more of a virtual model. I'm going to make sure I start to build my infrastructure in that way.

Derek Notman:

And at some point you're going to be like, you know what? I'm getting more inbound leads and clients and business from my virtual digital activity than I am belly to belly. So then at some point, you can eventually flip over.

Derek Notman:

And one of the things I talk about my in my system is like cashflow for the advisor, both personal and business is so absolutely important. It's one of the main reasons most advisors fail. They just don't make any money.

Derek Notman:

So if you don't know what your cashflow situation is, you're not going to know when it's right to make a virtual transition and all that stuff that comes with it.

Patrick Brewer:

I would agree with that for sure. I think if your goal is eventually to work virtual, then just setting those expectations as early on in the process with clients as possible, that way it's very easy to make the transition when you decide to do that.

Patrick Brewer:

I think you also brought up a good point with sales. Sales isn't easy in general in our industry. I think this is probably one of the hardest things to sell and I've sold a lot of different stuff and I would say that consumer facing financial services is one of the hardest sells. And it's a reason why a lot of the marketing strategies that most companies implement are frankly bait and switch.

Patrick Brewer:

You do retirement seminars as a educational institution primarily, let's just say to drive people to a workshop and then you show up, there's financial advisor there. Or people do student loan consulting and, oh, by the way, now that you've solved your student loan problem, I do financial advice.

Patrick Brewer:

So for whatever reason, people don't like to think proactively and holistically about their finances on average, which makes it very difficult to sell the service. I think I would agree with the statement that in order to hone your sales skills and be effective as a virtual advisor, starting face to face will allow you to overcome some of those issues early on in the process of building intimacy, which is going to be critical for building trust.

Patrick Brewer:

I think that's the hard part, because I've tried both in our practice. We work local, so our model is we have a local building, right? Like whether it's like a WeWork or an actual physical office, a lot of it just depends on the territory and how much revenue we're generating. But we work local, we support digital, but we also do virtual acquisition as well.

Patrick Brewer:

I've found that selling virtual advice is a little bit harder than selling it in person. But I also have noticed that depending on the model, the relationships don't tend to be as sticky. And they tend to churn more too.

Patrick Brewer:

Have you noticed any difference in the clients that you've acquired virtually versus in person, as far as like how sticky you feel they are and just the level of retention that you've had in the practice?

Derek Notman:

I have. I think I've had a different experience than yours. I've experienced really good stickiness and retention and I'm not 100% sure what the reasons or reasonable reasons for that is.

Derek Notman:

One of the things I talk about is a trust and transparency exchange model and that people love to buy, but in order for them to buy, they have to trust the source that they're getting their education and information from. And then that source has to be transparent in their pricing and who they are as an individual and so forth.

Derek Notman:

And you can do that in a virtual digital environment, but you have to do it really, really well. Your website has to be robust on the story that you're telling and be very clear. Not all clients are going to want a virtual advisor.

Derek Notman:

So I use my website and other social media platforms as almost a massive filter. So the people coming in, they're like, okay, I already get it. Like this is how Derek operates and this is how we're going to have a relationship. I'm cool with that.

Derek Notman:

I would say most people are used to that in some way already, just because, look at it, we date online, we bank online. I was pretty sick a week and a half ago with a bad cold and I didn't have to go to my doctor. We just did a virtual meeting.

Derek Notman:

So we're able to do a lot more. So this has only changed in the last five or 10 years. This is pretty recent. If I had tried to adopt this model 10, 15 years ago, I don't think it would have worked.

Patrick Brewer:

Yeah, I agree with you. I would agree with you on that.

Derek Notman:

The consumer has gotten comfortable doing things through a different medium. They still want to work with an expert. They still want to work with someone that they understand and get along with. But instead of a kitchen table, we're using a computer.

Patrick Brewer:

Yeah, no, on average I would agree with that. I think a lot of it comes down to each specialization. So part of what I've done is I've actually broken this out for every single possible specialty that an advisor could focus on.

Patrick Brewer:

So I think business owners, they require a little bit of face to face time initially. So we focus specifically, one of our specializations is on entrepreneurs. And part of what we do is we join mastermind groups and we fly around the country, we meet with them, we hang out with them, we build relationships with them in person, because entrepreneurs are kind of weird. You and I, we're both entrepreneurs, we're a little weird.

Derek Notman:

Yup.

Patrick Brewer:

I would say that on average, if I'm going to buy something from somebody, if it's a service like this, like I'm probably going to want to meet them in person just based on my own personality. I want to have at least one interaction with them in person. And that's kind of what I found with the entrepreneur community is like you need to start in person.

Patrick Brewer:

But then it can progress 100% virtual, for sure. Retirees, I'd say on average are probably going to be better off in person than they are virtual. But you will get the occasional one that tunes into podcasts and things of that nature. But then it's distinguishing whether they're DIY versus a delegator. I would say that most people are consuming podcasts and those types of information are going to be DIY.

Patrick Brewer:

Executives, again, they're busy. So getting their attention, getting them on a call and explaining the model.

Patrick Brewer:

So has there been a particular audience that you've found to be really receptive to the virtual model, as far as client position goes?

Derek Notman:

That's one of the reasons I went in the niche that I did, because frequent flyers like myself are busy people, especially if you're a business owner. So time is definitely a premium. And if they can get the things that they need done and spend less time doing it, then they're going to be a captive audience.

Derek Notman:

But I've got retirees. I've got just young working couples, that all have embraced it. I would agree. I think there are some people that want that first meeting in person and that's cool. I love to travel. So if their situation is right, I'll fly somewhere and meet with somebody for an initial meeting, that's cool.

Derek Notman:

I'm not going to be hard and set in one way of doing things and then never budge. We're human beings, right? So we have to be able to evolve and adapt as the situation dictates. And having that niche or that specialty as you say, I think is helpful in educating prospective clients to, this is how so-and-so works and either they're going to be comfortable with it or not.

Patrick Brewer:

Yeah, for sure. As long as you're clear about that acts as a filter. I definitely agree with you there.

Patrick Brewer:

As far as on the operational side, like scaling the practice, talk me through the process that you went through there. So the practice is growing. You've moved to the virtual model, what things needed to be in place in order for you to effectively turn this into more of a profit center versus something where you're having to get in the business and you have employees and stuff like that?

Derek Notman:

A lot of different things. One is just like the physical infrastructure, so no longer need a large office space, which comes with all of its own expenses and just a small space, where I can work from that's dedicated. But also just upgrading my whole tech stack, from the actual computers and monitors and all that stuff to apps and programs that I'm using.

Derek Notman:

Because when I initially started going virtual, I had a desktop and I had dual monitors but it was clunky and old and it was not great. And so just upgrading all of that, it allows me to be location independent. I literally unplug one cord and I can take my computer with me anywhere in the world and be up and running within minutes.

Derek Notman:

So that has been nice and it's not expensive to maintain moving forward. And as you know, there's a ton of free apps out there. I use Loom as well, for example. That's fantastic.

Derek Notman:

But then also on the other side, like staff side, so I've had many staff over the years and it's not just their paycheck. You have to pay unemployment insurance, you've got to pay their side of the taxes, all that kind of stuff. There's all these other things. And then-

Patrick Brewer:

Healthcare.

Derek Notman:

They're going to get sick some days or things happen. And I found that a full-time staff person never really was necessary, at least for my practice.

Derek Notman:

So moving to that virtual model, I still have a dedicated reception. I have dedicated virtual executive administrator and virtual dedicated digital marketing team, but I only use them so many hours a month. I can scale that up or down depending on how busy we are.

Derek Notman:

But that has been a fraction of the cost of running a traditional model, by having it all in house.

Patrick Brewer:

No, I think that's a good move. I talk a lot about either staying small or getting really big. I think those are really the only two options that advisors have over the next call it five to seven years. With consolidation setting in, there's a lot of larger firms that are making systematic investments in their platform, so they're building out better tools, better experiences, not only for the client but also for the advisor.

Patrick Brewer:

I think building platform for advisors is going to become really competitive and the margins are going to drop, which means they either get really big, so that those smaller margins are still juicy enough to keep you incentivized and keep you interested in building that type of company, or you get really small and you do what you're doing. And you build a really lean, mean profit generating machine on the advisory side, where you have complete control of the outcome, as far as what you want to deliver and build it very intentionally.

Patrick Brewer:

I think the middle ground is where firms will struggle, similar to what you're explaining, like having a couple employees, having the brick and mortar, but not having the big vision. I think the big vision is going to be important if you want that model to work.

Derek Notman:

I think you're spot on. That middle ground is a really tough one. If you've got 5 billion under management, you're going to be just fine. No problem. You can scale easily and you can acquire practices if you need to or whatever.

Derek Notman:

But for the smaller shops, having all that extra stuff is just going to weigh you down, time and money. So I think you analyzed it correctly and it'll be really interesting to see how that kind of fleshes out over the next five to 10 years.

Patrick Brewer:

Yeah, it's going to be a weird industry, I think. Everything's moving like really fast too. I see, there's even like starting to be consolidation among the tech vendors. Like custodians are consolidating, larger firms are consolidating, wirehouses are buying RIAs, so it's going to be an interesting period of time.

Patrick Brewer:

Well, good stuff, man. I feel like we're kind of progressing towards the end of our conversation here, but I'd like to know if you could roll back the clock, let's say five years or so, when you had first made the decision to transition from a more location-based to virtual, what things would you change? What mistakes did you make that maybe you would have done differently?

Derek Notman:

Oh boy, I made a ton of mistakes. Part of that was because there was no roadmap on how to do what I wanted to do. So it was trial and error, test this, oh, that didn't work. Darn it. Now I've got to go try this. And just constantly building that over time. So I wish there would have been something there to help guide me or show me.

Derek Notman:

The other thing that I think that too many advisors do is that we overthink things and let our ego get in the way. I'm a great adviser, at least I think so, but that doesn't mean I'm great at everything else. And you have to know when you're like, okay, I get this digital marketing thing, but that's not my job and I'm not going to be good at it. I need to go hire experts.

Derek Notman:

And really getting comfortable with outsourcing things and bringing other people in to help you. Because I could have done what I did probably a bit faster if I was willing to be a little bit more open to getting advice and help than just trying to figure it out on my own all the time.

Patrick Brewer:

Yeah, I think that's great advice. That's definitely something I talk a lot about is figuring out what your skillset is, what are the one to three things that if you are freed up to do those things, everybody wins? You, your clients, if you have a team, your team, and just going through that process of constantly getting rid of the stuff that doesn't fit that criteria and either outsourcing or stopping doing them entirely.

Derek Notman:

Yup, totally agree. And you have to have an ego for this business, Pat. It's a tough job as you know. You really do, but don't let that get in the way of becoming a really good business owner.

Derek Notman:

And that's one of the things business owners know and you know this from working with all your entrepreneur clients, is that the really truly great ones are great delegators. They hire the smartest people for each individual thing that they need and let those people go do what they need to do.

Patrick Brewer:

Yeah, hire the good people, get out of their way and be available if needed, but otherwise just be on the road and enjoy yourself once you get to that point.

Patrick Brewer:

Well, cool, man. I appreciate you sharing your perspective. Thanks for everything you're doing in the advisor community. We'll be sure to list in the show notes and below the episode how people can find you and interact with the virtual advisor system that you built.

Patrick Brewer:

I think that there's going to be a lot of firms pursuing that model over the next couple of years, whether they're actively pursuing it, because they want to or maybe they're just kind of forced to. As you mentioned, fee compression and other things, market forces may drive that to be the primary operating model going forward.

Patrick Brewer:

So either way, we'll be sure to link to those resources, so they can check out what you're doing.

Derek Notman:

Awesome. Pat, thank you again for the opportunity. I love what you guys are doing too. I have to say that senior content is really refreshing. It's adding this whole human element that advisors have kind of lost over the years because we get messed up with this product stuff and talking about things that clients don't understand and you bring a really nice human element there. So rock on with what you guys are doing as well. It's just better for everybody.

Patrick Brewer:

Thanks man. I appreciate the feedback. Yeah, we're going to keep leaning into that. Hopefully explore some more creative ways to get our content out there and looking forward to building a relationship with you as well. So appreciate you coming on the show.

Derek Notman:

Rock on.