How Financial Advisors Can 10x Their Firm

On 12/31/2019 our firm has approximately $140 million of AUM/AUA.

4 years later...

12/31/2023 our firm has approximately $1.4 billion of AUM/AUA.

Yes, you read that right. We 10x'd the business in four years.

The product has been around for a long time. In fact, the company was founded in 1987 when I was 7 years old. There have been two former majority owners that each owned the company for roughly 16 and 13 years respectively.

From 1987 to 2017 the company had bouts of success but, over that 30-year period, never got above $200 million.

So, what gives?

How did a loudmouth Indian with his squad of misfits take a decades old company and attach a rocket ship to it?

Let's dive in...

Transparency

Many financial advisors think the "About Us" page on their web site is being transparent. Hell, most think the web site itself is being transparent.

My younger years in this business were under the old guard of Wall Street culture, where I was taught to answer the question without answering the question. I was taught to never back yourself into a corner by making absolute statements.  I was taught to always give yourself the wiggle room to change your mind.

I would sit at round tables with other money managers who were so afraid of giving up the "secret sauce" they would shrug their shoulders at the thought of an open dialogue.

Please listen as I come close and whisper something in your ear, "you don't have a secret sauce, just a big f/**ing ego."

There is nothing special about any of us. Some of us are just better at telling a story and articulating our values.

This all starts with being brutally transparent about EVERYTHING!

At Potomac, this isn't some ploy, we believe it's easier to be yourself than to fake it and sell something that you're not.

Rather than hiding behind power point presentations, we are open about our investment process. We show our advisors exactly why we made certain trades. We openly discuss the formulas behind our trading models, almost daring people to go do it themselves.

Across the business, our mantra is to "just answer the damn question" without tap dancing.

I don't care if I offend you or hurt your feelings, but I do care if you walk away and think we were not 100% transparent in the information provided.

I truly believe that your success is highly correlated to the number of uncomfortable conversations you are willing to have.

Try this in your business. Don't just hand someone a financial plan and an investment recommendation but open the books on how you got to these numbers. Show them your personal financial plan and your investments.

Walk them down the path you created and how you became the person you are today.

If you don't tell your story, the client will come up with their own narrative and if that happens, you lose.

Seek and Embrace Haters

The industry's leading marketing conference for financial advisors was started a couple years ago by the folks at Snappy Kraken.

They invited me to do a main stage presentation at the 2023 Jolt event. At first, I was extremely hesitant because I didn't want to be censored and I do believe that most people don't want to hear the truth about marketing.

Marketing is a contact sport. Sometimes you need to run people the f/** over.

You should be aggressive in your marketing. Take a stand and stop hedging your opinion.

Why?

Marketers will teach that you must define your audience before starting a campaign. The problem is you really have zero clue what kind of audience is going to resonate with your personality and brand.

Just. Start. Marketing.

Once you start putting out the content, the audience definition will come to you through both positive feedback and haters.

Embracing the haters isn't just a cute saying, it is the essence of marketing.

If your content doesn't piss a handful of people off, then it likely lacks conviction. Or was too boring to get through.

If you repost canned content from your Broker Dealer you are guaranteed never to get a hater. No one will read it. Ever.

Seek the haters. Be aggressive with your marketing.

Deion Sanders once said that when he looks to recruit a quarterback, he looks for someone who has a dual parent upbringing and is very intelligent.

However, when he looks for a defensive lineman, he wants someone from a single parent household who doesn't prioritize school. That person is angry and wants to take someone's head off.

Be the defensive lineman.

Market like you have a chip on your shoulder because "chips on shoulders puts chips in pockets."

Spend Money

The old cliché is that you must spend money to make money. Well, it's true.

In 2017, I took out a personally guaranteed multi-million-dollar SBA loan to purchase 80% of Potomac Fund Management, Inc. (I already owned the other 20%).

Within the first couple of years of owning the company we lost ~40% of our AUM, mainly due to industry changes out of our control.

Around the same time, I had three young kids, a pregnant wife, and a ~$30k monthly SBA loan payment.

Things got too real, too fast. My solution... Double down.

I reduced my salary to what would put food in my mouth.  After loan payments there were years where the K1 was next to nothing.

My minority owner Jeff Goodnow sold his house and most of his possessions to help buy 10% of Potomac. Imagine the absolute gut-wrenching sickness we both experienced when I had to tell him a K1 payment was going to be $0.

If you truly believe in the product then it's time to go all in.

One of the biggest mistakes I routinely see are cheap ass advisors. They would rather spend 2 hours trying to lower their Verizon bill than pick up the phone and call someone.

Pay yourself the bare minimum to survive and dump the rest back in your business.

When advisors tell me they are having a hard time growing I can usually ascertain the problem by just looking at their financial statements.

Conclusion

The marketing people have a trope about finding your authentic self, which I think is played out and makes me want to barf. But some of it is true.

Skip the hacks and self-help blog posts.

Figure out YOUR story and then tell it.

You will know when the success starts to hit because the negative Nancy's will be the first one to reach out.

Once that happens...

Double down.

Best of Luck!

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