Aug 28, 2019
When you're working in the financial industry, most approaches are very cookie cutter. But if you want to be your own person, how do you really break out of the mold? How do you start your own practice to emphasize where your passion in finance is really at, and do so successfully?
In this episode, Aaron Hattenbach, founder of Rapport Financial shares his journey from working for bigger financial service firms to having his independent service firm which to date has now managed over 500 million in client assets.
Schedule a Meeting with Aaron: https://rapportfinancial.com/
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Automated Transcript Below:
Dean Soto 0:00
Hey, this is Dean Soto, founder of freedom in five minutes.com. And
we're here again with another freedom in five minutes podcast
episode. Today's topic, is this going independent as a financial
advisor. That and more coming up. Alright, cool. So we have a
really cool show we had we actually been talking right before this
a lot. And I'm like, oh, man, we gotta we gotta save this content
for the actual show. But I'm here with Aaron Hattenbach, man, is
this gonna be awesome. So Aaron, he is the founder and managing
member of Rapport Financial. It's a boutique independent advisory
firm, with a decade of experience in wealth management in the
wealth management industry, having managed over 500 million in
client assets. That's crazy man. Aaron works with young tech
professionals in the early stages of wealth accumulation, as well
as high net worth clients, with a particular focus on physicians
and business owners. So without further ado, man, I'm so glad
you're here with us, Aaron, how's it going?
Aaron Hattenbach 1:17
Happy to be here. It's going well, for a Monday.
Dean Soto 1:22
Well, it's cool. So one of the things that piqued my interest about
you so so obviously, I have my claws out there trying to find
really interesting podcast guests. I've reached out to several, you
know, CFPB, sort certified financial planners, financial advisors,
things like people like that. And there's one thing that is very
different about you, when it comes to financial services in
general. And that is, right off the bat, you you can tell that you
are you, you have your own way of doing things, you you, you kind
of have broken the mold. And we can go into this a little bit. But
it seems to me in when you're doing any type of financial advising
any securities, anything's like that. It's very cookie cutter
people are very much on the defensive, because there's so many
regulations and so on. And so when I saw you, I was like, Oh, my
gosh, this guy's doing content this guy's doing like, just, he's
teaching other people how to run their firms and things like that,
I need to have this guy on this on the show, because that is one of
the hardest things to do in your industry. So all that being said,
I want to get your entire background, you used to work for these
big Merrill Lynch, bigger financial services firms. And now you are
your own person, and it was not an easy ride. How did that happen?
Give us a little bit of background on your entire story.
Aaron Hattenbach 2:54
Yeah, so Dean, I started working right after the financial crisis
graduated from from Brandeis in 2009. And really, this all came
from an experience working at the attorney general's office on a
case against some of the largest financial institutions and lenders
that essentially contributed to the major mortgage meltdown that we
saw, and I felt a passionate need to work on the side of the
consumer and financial services, not on the side of the sales side,
selling the institutions, and creating products, I really wanted to
help shelter individuals, families, high net worth individuals
across the gamut, and educate them really. So my passion is
financial education. And I felt that I needed to start my own
practice in order to emphasize that without limitations. So to
backtrack to that to 2010. I started with Alliance Bernstein,
they're very large, firm publicly traded, it worked for a couple of
independent firms, one of which is hopefully going to go public,
and I can cash out my stock at some point. And then found myself at
Merrill Lynch and the advisor training program, built up a decent
practice for myself. But I continue to find the same issues where I
wanted to really be a holistic financial planner, cover everything
that's beyond investing, because quite frankly, I think there's
this misconception that, that building a portfolio is what an
advisor gets paid for. I think in order to earn 1%, on a portfolio,
you have to be doing full financial planning, and that, that covers
retirement planning, tax planning, estate planning, stock options,
planning, looking at an employer benefits package. So what I did
was I saw this trend at the large institutions that were focused
primarily on portfolio management, and recognize that the future of
financial planning and wealth advisory for that matter, is helping
people with everything personal finance related, and if you're not
doing that, you're going to lose clients, or you're going to have
clients that are going to question what you're charging them. So I
created Rapport Financial back in early 2017, with only a few
clients and with a vision that I was going to go well beyond the
investing in helping my clients, but specifically focusing on young
tech professionals that were from age 22 to 23, to 35, in the
accumulation phase of life, trying to accumulate for a home
purchase to start a family for a number of goals that quite
frankly, in in this economy where the price of goods are going up,
wages are staying stagnant, was becoming I think, less and less of
it over reality. And so I wanted to show people that through a full
financial planning process that I created, that they can attain
these goals and a time window that is feasible, and not have to be
waiting decades to to eventually, you know, be a homeowner. Yeah,
it's, it's worked out really well. I really love my client base, I
pick who I want to work with. And, you know, I cover everything
from my clients even as far as if a client is going off on their
own and creating a marketing consulting business, how to negotiate
compensation, how to, you know, position themselves, with with the
with, with, with strength, so they're, they're going in there and
saying, you know, what, I don't need this opportunity. I like it.
But here's what I'm worth. And so, there's so much more than just
the investments, and that's what I get excited about is, I can
actually make an impact on people's lives beyond picking ETFs and
funds.
Dean Soto 6:52
I love that man. It's it's, it's definitely something that is
different, because I've had a couple of clients in the financial
services realm. And, you know, it's, it is a very, like, we like I
said before, it's very, it's a very defensive industry, they that
you you can, that you had your you have your standard cookie
cutter, typically focused toward like what we talked about prior to
the podcast toward baby boomer type, folks, and anytime you wanted
to go any do anything that was outside of the box, you have to go
and get it through compliance, right? content, it can be a whatever
structure, you want to do it just tons of having to go through
compliance when you're working with a big business. So like, so I
can see how easily that can be frustrating if you're working for a
bigger company like that. What were some of the pitfalls, that or
it's not pitfalls, but like what is something that you just did not
expect once you left? The big companies that that you feel what it
that pretty much every single financial advisor is going to run
into?
Aaron Hattenbach 8:10
Yeah, so I think advisors are trained on how to advise, right?
Very, very plain and simple. I'm not going to get into the nuances
of what a financial advisor does, I think, you know, it's very,
very well publicized. But we're not taught how to own and run a
business. We're not told how to hire employees, how to select
vendors, how to really create a business from scratch. And I think
that is the challenge for any entrepreneur is you might have an
area of expertise, and a knowledge base. But if you haven't started
a business before, you're in for quite the experience. And I know
that you know this Dean. So when I started this business, I had
done months of preparation. And in fact, probably about five or six
years of preparation in my head. And in collecting documentation
that I thought would be used fault. I created a dropbox folder that
I knew at some point I was going to tap it when I was writing. And
and it really token a conversation with a client of mine who was
working with me since 2010. I'm only 32 years old now. So that's
that's saying a lot that he stuck with me for 10 years, and
hopefully, many, many years to come. But he said to me, I'm not
moving my account and the relationship, you must be starting your
own practice. And so that gave me the confidence that I don't think
I don't think anybody is ready necessarily to start a business.
Yeah, but there's no perfect time, you're not going to have
everything mapped out. It's not all going to line up like a puzzle.
But I think what I found in running a business for the past two and
a half years, and even going back to Day One is you need to be
willing to adapt, you need to be willing to constantly put time and
resources into learning. And and I quite frankly, I'm constantly
looking at my business and poking holes in it and saying, Where can
I improve the client experience? How can I improve the
infrastructure of technology? What can I outsource on a day to day
basis, that is not my core competency. And quite frankly, also is
compliant. Because I it's I you know, as much as compliance is
talked about working at Maryland, Morgan Stanley, I still have a
compliance department that I outsource. And I'm still subject to
the same regulations, it's just a very different experience in
terms of, you know, day to day, if I send a client an email or a
personal note, I don't have to run it by someone to, you know, in
order to get this to the client, I can, I am my own compliance
officer, in fact, but I do still have to be subject to the same
regulations. But I would say, you know, in a nutshell, being your
own boss, setting up the infrastructure, really making a lot of
decisions in a short time window and saying, Okay, well, you know,
I'm going to do the best that I can do. And then the other thing to
do is, is I kept all my contracts very short in nature, because I
realized that if I made a mistake and selected a vendor that that
wasn't appropriate for the business I was creating, if I did a
month to month model, where I may be paid a little bit more instead
of an annual contract and that I was locked into, at the very least
I could get out of that and select a different vendor that made
more sense for my business. So there are a number of things that I
did and including, I would say, reading a lot of kids this
articles, you know, I given back to that that blog, in recent
years, because ultimately, I relied almost exclusively on kids,
this is content. And I feel like there's there's enough content out
there that if you're an advisor, and you're saying, You know what,
I feel stuck, I'm not Merrill Lynch, or Morgan Stanley, I'm never
leaving the sandbox, or I'm going to move from Merrill the Morgan
because I don't want to go independent, I would challenge them and
say, there's so many resources out there on the internet, and so
many people that are willing to help that all of those pain points
and all those reasons to not go independent. I can respond with
here, here's what I think and give them the tools and show them how
they can empower themselves. It's really, really neat. And this
didn't exist, you know, 10, 15 years ago. Now, there are technology
providers, we're talking dozens for every category that are that
are built for the independent advisory channel. I mean, I can build
a better tech stack than Merrill Lynch and Morgan Stanley has
internally that is cool, and do so cheaper, and have and have the
ability to say, you know, what, if I don't like what they're doing
anymore, there are 10 more competitors that I can go to.
Dean Soto 12:51
Oh yeah, I love I love that. Because like, because it's, it's, it's
it's riding the wave of well not really the wave, but actually, you
know, like, breaking the mold, and then just riding the wave of, of
the fact that things are changing. I mean, you could have just sat
there and complained and just been like, well, I'm just this is
what I do. I you know, I was trained as an advisor, and I'm just
going to, but you took on the entire the entire business, which
involves marketing, involves bookkeeping involves it involves, like
you said, still involves compliance. But how can I do compliance
where I'm still flexible in in various ways? And how can I give?
How can I, with where I, where you're at right now? How could you
do what Merrill Lynch does, but do it faster? Do it more in with
with a more caring touch with your clients? Because that's one of
the things about you is you actually go after you you are I
shouldn't say go after but you are, you will definitely take on
different type of client than your traditional advisor. Traditional
advisors go after boomers who
Aaron Hattenbach 14:07
Yeah, boomers is an older and younger, that are that are retiring
or nearing retirement, and have accumulated enough and assets to
work with, quote unquote, a traditional financial advisor. Yep.
What's interesting is, I noticed, in my time working at Merrill
working in Hightower, working at concentric, that a lot of my peers
were looking for financial advice. They didn't trust automating all
of their finances. So you've got a lot of these robo advisors,
which I think provide a great product, but they're not in
comprehensive planning service. Yeah, um, you know, they're not
going to tell you how to max out your employee benefits package.
Yeah, they're not going to tell you to fund an HSA, when you have a
high deductible health care plan. They're just there. They're
intended to fill a gap. But they're not necessarily there to cover
everything personal finance related. Yeah. So I saw a gap in a
really in need in my field where advisors were not gearing their
practices towards young professionals that are high income earners,
what I call Henry's high earners, not rich yet. Yeah, I didn't come
up with that term. But as an -
Dean Soto 15:20
That's an awesome term.
Aaron Hattenbach 15:21
Yeah. But being here in the Bay Area, you know, incomes are, are
substantially higher than the median income in the country. And
people here have to face high cost of living. But what I've noticed
is with with some simple tweaks, and putting them through my five
step process, I can get them from a point where they feel like
they're not saving anything to where they're maxing out their
retirement accounts, they have monthly ACH is going into their
investment accounts. And they feel like they're in a position now,
where they financially have a understanding of what the future
looks like and why they work. Yeah, like, I challenge my clients.
Why? Why are you working? Like, what is it that you're working for?
Is it the money? Is it the passion? Is it a combination of the two,
but at the end of the day, if we plan ahead, and we we build a full
plan for their finances, which I do for them using incredible
technology, that, quite frankly, I think, is on par if not better
than some of these larger institutions. Um, I think I can provide
the same level if not more, of a of a comprehensive planning
service at a lower cost, too. So that's the other thing is that I
think financial planning in general, comes with a high ticket cost,
right at a high, high price. How can we lower the costs so that
people that aren't high income earners, but really need my
services, I can sit down with them, build them plan in a couple
hours of time. And now they can sit down and every year and say,
Okay, here's our plan of action, here the things I can do to
improve the efficiency of my overall financial livelihood. And then
at the end of the day, they start making better decisions
totally.
Dean Soto 17:11
And what what better way to what better way to keep clients and to
grow with them? Because I know, in I mean, in my industry, when
people when people work with me, like, my goal is to make them more
money or save more time. But usually, the making them more money is
is the one that people they they're like, Oh crap, why would I not
keep on going?
Aaron Hattenbach 17:38
Right? That takes a precedent.
Dean Soto 17:39
Yeah. And so like, for you, your immediate, you know, if even if
they're not making a lot right now, every little time they're
making more than they would have, they're like, why would I not
keep on working with Aaron, like, I'm just gonna continue as they
start becoming rich, because they're Henry's, as they start
becoming much more it building different egg, acquiring different
assets becoming their portfolio actually growing, getting better
jobs, or building bigger businesses, whatever it is, you're the
first person they're going to go to, because you've already proven
with these small things, as it keeps growing, that you are that you
know what you're doing, and you're you're always building their
best interest.
Aaron Hattenbach 18:25
Right. And the whole thing is the trusted advisor capacity where I
think I go beyond the traditional financial advisor. And there are
there are many advisors, I know that do this, it does follow the
same kind of narrative, which is, you know, they get invited to
their clients, weddings, they become kind of a pseudo member of the
family. But really, what it comes down to is like, I think you
can't have three 400 clients and do this, you just can't, because
clients are going to move to new cities, they're going to start
families, you know, they move to a new city, you've got to make
sure that they buy renter's insurance, and they're renting, or they
buy homeowners insurance, that they're purchasing, helping them
getting a mortgage and pre qualified. I mean, there are so many
touch points in my clients lives where I want them calling me and
I've essentially built this practice. And I've, I've trained them,
in essence to call me anytime they have a major life event. Okay.
So if you have a kid, we need to look into life insurance, right?
So there's just so many ways I can help the client and this is my
passion is the educational component. And then, as one of my
clients put it recently, a hand holding, like knowing that you're
not going into this experience, and and going on one website and
doing some research and questioning the decision you made, because
you were short on time, or you didn't have a second opinion from
someone who does this full time. Yeah, right. And at the end of the
day, it's like, I look at myself, as a general practitioner,
physician in finance, Oh, I love that. That's where my job is if my
job is really to diagnose, and then if I I'm not the expert on that
subject matter whether it's insurance, mortgage, I have resources,
I have people I can that I trust that I would go to for insurance
and a mortgage myself. And I can connect them with my client. And I
can also be involved in the process and make sure that my client is
aware of everything, right from that financial standpoint. And it's
really, I think it's one of those business models that it doesn't
pay as much as advising two or 300 clients and putting them into
mutual funds and meeting with them once a year to check in on them.
But I do think that this is the future for my generation, they're
going to want this hand holding Yeah, they're going to be willing
to pay a premium for it. And I really firmly believe that if you
don't migrate your business towards this, this more white glove
level of service, you're going to get caught with your pants down.
And I certainly would rather be ahead of the curve, make a little
bit less, but know that I'm a fiduciary. And that I'm building a
sustainable long term business that I can bring other advisors
into, and feel good about what we're doing. Right like and make a
good living eventually.
Dean Soto 21:10
Yeah, I love it. So so with with all of this, it kind of leads into
the fact that not only are you helping your clients, but you're
actually helping other advisors, do what you're doing and and
start, because really, this is the way that you're doing this is a
is a new model,
Aaron Hattenbach 21:31
a new blueprint,
Dean Soto 21:32
it's totally a new blueprint. And you're spot on with that with the
hand holding. I mean, my father in law doesn't want any hand
holding, you just like, take my money, give me return. And back for
me. I'm like, and everyone that I know, that's of my age, or
younger, is there like, you know, I want someone that's a little
bit of a mentor, and a little bit of have some coach? Yeah, Coach
were great making decisions. They're also saying, you know, you
should do this as well, because, like, it's just because it's I
don't, I don't you know, for me, I like that hand holding so. So
how are you training other people? How are you? How are you
building up these other advisors, like advisors who are really
given their new different type of client, right?
Aaron Hattenbach 22:25
Sure. So advisors come to me at different stages of their careers,
I'm finding most of the advisors that want to work with me, on an
ongoing basis are advisors that have worked in the industry for a
decade or two, they've primarily worked at at large institutions
like Merrill Lynch, Morgan, Stanley, UBS, and plenty of other firms
for that matter, and they have a large client base, but they are
now realizing that, you know, for a number of reasons, it could be
headline risk, you know, a major financial firm has a huge lawsuit,
or, or a, you know, you can even point to the Wells Fargo opening
up of fraudulent accounts are opening up of accounts that clients
had not, you know, had not approved. So, I think a lot of advisors
are finding that the institutions that they've relied on for name
brand, and and and that power has kind of dissipated post 2008
2009. And I think, you know, it rightly so, right. Yeah, these
institutions lost our trust, and got bailed out by by the
government. And so, you know, it's really interesting, the ones
that come from these institutions, what I have to do is, is
basically overcome their obstacles and fears of growing
independent, yeah. teach them about the infrastructure that's
available to them. And what I'll do is, after this podcast, I'm
happy to provide you with a couple of links for your listeners, for
various, you know, whether it's finance, tech solutions for CRM,
and billing and all that. I think it's an educational process. And
if the advisors is experiencing so much pain at Morgan, or Merrill,
or UBS or Raymond James, whatever, they're going to want the
education. Yeah. And if they want the education I have, and I can
teach them, why it makes sense for them to go independent. You
know, what, it's going to end up costing them annually to run their
practice based on what they're looking for, because no advisory
practice is the same. Yeah, this is what I found. And I'm not going
to say, hey, my model, and the way I work is the right one for
every single advisor that I consult with. Now, of course, now I get
to know them understand what they're looking for, what are they
specializing in? where their clients, what services they provide?
What do they charge? You know, I have a whole list of profiling
questions that I have to rely on in order to get a comprehensive
intake of who that advisor is, and what they're looking to do with
their business. And ultimately, at the end of the day, it's
educating and it's basically telling them here are the different
vendors that I think makes sense. And then also coaching them on
how to negotiate because they've been a big enterprises that have
done the negotiating for them. So, you know, say Salesforce is
offering you this financial services cloud for two grand here.
Well, you know, you should know that they have sales people that
have quarterly goals do. So if you can get them at the end of the
quarter and say, hey, look, you know, $2,000 will read for me, but
I can I can do 1400, well, a lot of this stuff is negotiable. And
so I think you have to be your own advocate, you have to not just
accept the answer as is. And it's ultimately it's like going back
to school, again, you've got to go and you've got to embrace it,
and realize that you're making an investment in not just your
business, but your clients futures. And yeah, for me, this is, this
has been really exciting. It's something that I added to my
practice after doing this for two and a half years. But in
addition, what I've done is I've taken the best of Maryland's the
best of Hightower, the best of Bernstein, the best of like working
in these different models within wealth management, and said, okay,
because I've been exposed to all these different technology
vendors, now I do have the ability to say to you, okay, well, your
reporting needs are more extensive than mine, here are the
reporting platforms that work. So that's been in essence, what I
am, is I'm, I'm an advisor consultant on the side, and I do this
not because it's going to make me a ton of money, but because I
want to pay it forward. And I do feel like there are so many
advisors that are capable of doing this, and just with a little
more education and knowledge, they can, they can go off on their
own, and they can not just build a practice that they're proud of,
but a practice that they can eventually, you know, give to the next
generation. Yeah. And, and set up and set up a practice that, that
is sustainable, long term, and isn't reliant on an institution,
it's, you know, it's, it's cool, you're setting up a legacy for
yourself.
Dean Soto 27:12
I love that it's instead of instead of, you know, working and
building somebody else's legacy, which was like a big, you know,
the big Merrill Lynch or whatever you're, you're spot on like, you
can, you can totally give that to the next generation. Now that
it's now that it's becoming possible. And you're showing that this
is actually becoming possible to be to that it's much, much easier
now than it was 10 years ago, to become an independent financial
advisor.
Aaron Hattenbach 27:41
There's just so much I think, because of the growth and if you look
in financial services, right now, across the map, outside of wealth
management, you know, most areas of financial services are
experiencing a slowdown, because of technology out there, the fees
are going down your tech companies doing direct listings and
avoiding an investment bank. But what's really interesting is the
one area that is expanding and expanding at an amazing clip, is
this rush to independence. And you're seeing, I get emails every
day about, you know, firms that are leaving a big, or teams that
are leaving a big, firm and going independent. And it's like this
has been going on the past 10 years, you're seeing the RIA channel,
the registered investment advisory channel, grow double to double
digits, and you're seeing the Merrill Lynch's Morgan Stanley wire
house model, really just trying to hold on for dear life. And and
they're also I think, really, I think, not geared towards the next
generation. And the advisors are in their 50s and 60s, the average
age of an advisor in those models. And ultimately, what they're
doing is they're not setting up the next generation of their client
tells kids and grandkids with a service model that's going to run
with them. And so for me, it was okay, I can't be at a firm that is
not going to really embrace the fact that a the next generation of
wealth is looking for a different experience, different fee
structure. And they're just holding on for dear life and trying to
just keep keep the boat, you know, sailing, right, I'm for lack of
a better analogy, I wanted to be ahead of the curve and recognize
that the next gen of wealth is coming to me with with a different,
a different service need. And if those big firms were not going to
embrace it, I was going to create it. But what's interesting is
Merrill Lynch and Schwab have created digital monthly subscription
models in the last couple months, which I did two and a half years
ago. Yeah. And it just it boggles my mind that they're now rushing
into this. And, you know, who knows how their how that how that,
you know, how the actual service model works? But it's just like,
too little too late.
Dean Soto 30:03
Yeah, yeah, exactly. And, and and the Met, it would be hard to get
a resonating message from one of those big firms to the younger
generation?
Aaron Hattenbach 30:17
Well, I mean, I'll give you an example. I use Google Apps for a lot
of a lot of my client intake. And it just feels like there's so
many cool free ish, bringing tools available to advisors. And
because those firms, unfortunately, for them, they they have to go
through their public companies. Their their approval process is
lengthy. Yeah, it all has to be built internally, you know, they're
not able to use the best of, of technology tools that someone like
me or another advisor has available
Dean Soto 30:51
and and
Aaron Hattenbach 30:53
open architecture model. It's Yeah, we I compared as it's like, you
know, Apple and Android, right. So but, you know, in many cases,
people love Apple, it's a closed architecture system is it's great,
it's safe. But there are people that prefer more customization.
And, you know, I would say, my model makes a lot of sense. And a
lot of independent firms models make a lot of sense for people that
are not looking for that very, like simple, I would say, archaic
way of managing wealth, which is charge a person on a whim, and and
set up a quarterly meeting, it's purely based on the portfolio
returns.
Dean Soto 31:36
Yeah, no, I love that, man. I love it. I love it. And it definitely
is. Even with, with utilizing those apps and the free the freemium
type apps like that, it's what it's what my generation and and
younger generation are used to. Right, and you're speaking the
language, just even in something like that. So. So that's, I mean,
I love it and actually kind of corresponds with so I always ask the
five minute mindset shift question like the five minute like,
strategic business decision that people can make that you that,
that that you made, that changed the trajectory of your business?
And and so in your five minute one, because you're so thorough, and
you actually do the questionnaire, when I said to podcast, get you
talk about your five minute mindset shift question is, it is based
actually on questions, and asking your client questions, whether it
be someone who's your financial advising or somebody, you're trying
to help become an independent advisor. Can you talk more about
that?
Aaron Hattenbach 32:50
Sure. So I don't go into any meetings without an agenda in advance.
For my existing clients, and then for prospective clients, they
book a time with me on my calendar, a tool, countless booking
appointments. But I send them this financial planning checklist
that I'm happy to offer to your listeners as well. And the
checklist is really meant to gear the client for a conversation
that is going to expand upon the investments. And so this checklist
has a series of items that think of it as you know, an intake form
when you go and see a doctor like. So in this case, you'll have
your previous three years of tax returns, disability benefits,
coverage, 401k, and other retirement accounts. And it goes on and
on. So really the point of that being I want the prospective
clients and know that like this call is going to go beyond just
talking about my investment philosophy, or what you're looking for
in a portfolio. Yeah, that's secondary. Primary to me, is the
number one question I ask is, what are you looking for in a
relationship with a financial advisor? Yeah, advisor, financial
planner, investment advisor, there's so many monitors and names for
what we do. But at the end of the day, it's not about me, right?
When I am sitting down or having a zoom call with a prospective
client, I need to know what they're looking for. If I can provide a
service that matches what they're looking for, then let's move
forward in the process. Let's, let's have you contact a few of my
clients and ask about their client experience for reference
checking, and then continue through my five step process. But if
they're looking for something where they're like, hey, I want to be
hands off entirely, I don't want to participate in this. I just
want my portfolio manage, then I'm out there advisor. Yeah. And I
have to recognize that and see that for what it is. Yeah. So I
started off every call with that question. And I I completely shut
up. Like I asked them this question. And I hope bit before the
call, they've reviewed the checklist and the questions, and they've
given it some thought, as far as what they're looking for.
Dean Soto 35:09
I love that.
Aaron Hattenbach 35:10
Right? Because in essence, it's like any other service that you
that you look for out there. You're the consumer, you're empowered.
Yeah. And you have so many different options. Well, why should I
work with this service professionals? Yep. Because I like trust,
and feel that their service model resonates and speaks to me,
right? Yeah. So if they're looking for a comprehensive financial
planner, that is going to help with budgeting that's going to help
with with selecting of health insurance policies, and then their
employer plan, then my firm is going to be the right service
provider. But again, that they're looking for just a portfolio
manager to babysit their money. Don't get me wrong, I can do that.
But I get so much more satisfaction out of really building a full
financial puzzle for my clients, and putting the pieces together.
And also, what I what what I found is my clients need to be
participants in this process. Yeah. And they're unwilling to
complete intake forms, and complete some of the homework that I
asked them in order for me to give them the best advice, then it's
going to be more of a hassle for me, if I have to chase them down
and remind them to do something that is actually going to benefit
them. But at the end of the day, at the end of the day, some people
quite frankly, don't want to put in the time. And kind of where I
go back to the advisor, consultant practice. If I see that the
advisor wants to independent, but they're unwilling to put in the
time, then it's like, Is that going to make for good consulting
client? For me? Probably not, yeah, I would rather make less money
and have an advisor. That is that is a go getter that is committed
to this, that is saying, I've got both feet out the door. I'm not
dipping my toes in the water, I am convinced that this is the model
I need to pursue. That's a good client, someone that is just
looking for an answer to one or two questions is probably not ready
to go independent. And I seen that so much. I know. It frustrates
me because it's like these people are like, being successful at a
wire houses is hard. I mean, one out of 100 advisors eventually
becomes a million dollar producer. Yeah. So it is not for the faint
of heart and the success percentages at these firms. We're talking
in the the low single digits. Okay. So the fact the matter is,
these are these are talented people that have the ability to both
build trust, and they understand capital markets, and clearly have
been able to build rapport with their client base. Yeah, yeah. But
but the final step of the process is, you know, building a product
of building a practice that you're proud of, but also that you feel
you're giving your clients the best possible service offering.
Yeah. And I just firmly don't believe that cross selling my
clients, and making commissions on a variety of products is in my
clients best interest? I just I don't I don't subscribe to that
model. And I think, probably 80 to 90%, if not more of advisors
don't as well.
Dean Soto 38:32
Yeah. But but but to have to actually build something around that
belief. You have to be able to put in the work.
Aaron Hattenbach 38:44
It's what what it comes down to is your any life transition,
whether you're taking a new job moving to a new city, getting
married and starting a family. None of this stuff is easy. Like you
can you can read books and and arm yourself with a ton of
knowledge. But at the end of the day, it's Do you feel confident
enough to be able to know that you can make a mistake or two, and
it's not going to be Armageddon? Yeah. And what I realized is, when
I took my clients and set up my own firm, sure, they had to be very
patient, there were documentation issues, there were process
issues, but they knew that they were getting somebody that was
going to always look out for their best interest. And they were
willing to be an early adopter, like the by the first year model of
a car. Yeah, right. It's like the people are buying Tesla's right,
you have to be a believer in the product and be willing to put up
with some of the potential mishaps. But the service the offering
is, is so much better, that it makes up for some of the small
hiccups along the way. And that's what I would say to most advisors
considering independence is you got to be okay with the fact that
is not going to be perfect. On day one, certainly not perfect on
day 365. That you're you're going to become a better advisor, by
owning your own business. I really think I firmly believe that. And
for me, it, it was probably the best decision I made in my life was
finally going off on my own. And I think that there are too many
advisors out there that don't buy into the process. And I would
suggest the following. Had I not had all those experiences at those
other firms, I wouldn't have been equipped with the knowledge, I
would have been going in dark, I would have been just as scared and
concerned about compliance, and an operational infrastructure and,
and and all the things I don't know, that I'm not aware of right,
like the fear of the unknown. And so what I've said to advisors is
sure, you can read my 26 steps article, you can read a ton of stuff
on the internet. But at the end of the day, when you're making a
decision about probably the most important asset, your business. It
pays to actually work with someone, it's a knock, but this one, for
sure. And so I'm not trying to like be an advocate, you can go to
another advisor consultant know who does the same thing that I do,
it's just a matter of I don't think this is something that you go
out alone.
Dean Soto 41:19
Yeah, no, it's it's, it's totally, I mean, you don't you don't go
to school, you know, you don't you don't, you don't try and become
an advisor in general without actually being mentored in some way,
you know, and just any business, I was, gosh, this even just this
year, I spent a lot of money, on advice on mentors for my business
for people who, who guide me into places that I just don't know.
Because, you know, if I looked at my time, I'd be spending a lot
more in opportunity cost than spending the money that the capital
that I'm spending that I'm giving to my advisor, mentor [lus, you
by even just by doing that you get not only gain all the knowledge,
but you have somebody who's going to watch your back. And then at
the same time, you are also now part of their network. So if
something does come up, that you need something, now they're the
ones who are that who can introduce you to a whole bunch of people
or if they have, if you I'm sure if at some point in time, you're
going to end up mentoring and a financial advisor that sets up
their own practice that specializes in something that you don't,
and you go up well, here's some clients that I think would be
better for you.
Aaron Hattenbach 42:40
Absolutely, absolutely. I think I think it's like the benefit
doesn't just end with the consultation. It extends and had a number
of advisors reach out that were even at smaller firms that were
like, Hey, I'm gonna rip off the band aid, like, well, you don't
have to rip off the band aid. And my suggestion is you don't, you
don't wait until you leave the firm to start your own firm. Yeah,
for for compliance purposes, you can't go and register your
license, and set up your own RIA while you're working for another
company. But you can certainly educate yourself on all the
infrastructure, think about the business you want to build, build a
business plan, marketing plan, value proposition and start really
compiling all of your, your template form documentation. And that
will take time. And so what I tell advisors who are like, well, I'm
about to leave, I'm going to spend another month there, but I'm
committed to leaving, and, and then I'll get started with you, I
say to them, that's going to be too late. Like I hate to be the
bearer of bad news. But when you leave, you know, you want to
provide the best possible transition for your for the clients that
are entrusting you with their money. Yep. And that are committed to
you as a client. That's that speaks volumes, right? So you better
put in the time, while you haven't yet. Really setting everything
up for success. Because like I said earlier on the podcast, they're
going to be things you're not aware of, they're gonna be mistakes
that you make that are inevitable to being a business owner. Yep.
But if you convince yourself that you have to wait until you have a
clean break to get started with at least some of the educational
process, yeah,you're going to be too late.
Dean Soto 44:29
Well, and you were like, even with, like the template forms, I
mean, their systems, their systems that we're in a large
organizations that you don't, you don't even you take, you take for
granted. Exactly, you don't realize how many things, different
template forms different, different little processes that are
there, that if you, if you took the time to set up while you were
at the firm, they if you would be you that would cause tremendous
chaos, if you're if you had no income coming in, or if you had
clients who were like, okay, now I'm
Aaron Hattenbach 45:03
ready, I'm ready. Me, it's embarrassing. If If you go to a client
who is committed to working with you and moving their, their
business, they're moving their their, their, their accounts, or
their relationship to you. And you show to a meeting without the
right documentation. Yep, that's amateurish. And so what I tell
advisors is, you know, get started with learning about what the
process looks like, it may take several months for you to get
approval from the state regulators, which you know, that's three
months, four months of potential downtime with no income, no
clients, and by the way, the longer those clients stay at your
predecessor firm, the more likely they're not going to move with
you. Because they're going to say, like, what's been going on the
past few months, like, you know, you can't, you cannot legally work
with a client, unless you are registered with with the firm, right?
As a independent advisor, investment advisor representative
affiliate with an RA, or if you're, you know, registered as a, you
know, working for a broker, dealer, whatever you may be doing, but
the point being like, downtime and silence and not advising your
clients, because you're legally not allowed to is a tremendous risk
to your your enterprise. And so what I say to them is spend a few
months, I spent five or six years compiling documentation, thinking
about like, about my process, like obsessively thinking about the
client experience standard that I wanted to create. And even then,
two and a half years later, my practice looks a lot different than
it did when I started. It's just it to me, it's like you've got it,
you've got to embrace it, and you've got to fail fast. And you have
to be willing to put out the resources, ultimately, say you're
spending a few thousand dollars working with someone, well, they're
going to save you thousands of dollars in negotiation, negotiating
contracts. And in time, in so many ways that it's like, you're
going to get multiples of what you spend. So I can't emphasize this
enough, I just feel like advisors just need to be more open minded
and less concerned about, you know, the fears that they've created
the narrative they've created in their head that going off on their
own is going to expose them to so many risks. And and these
ultimately these firms are, they're lowering payouts. They are are
telling advisors if you don't sell four or five different services,
we're cutting your payout? Yep. And so it's about selling the
enterprise. Yeah. And what happens is when you sell the enterprise,
your client associates you, as a relationship manager at Merrill
Lynch, or Morgan Stanley, and not as their advisor. And so then the
clients never going to leave that institution. Yep. And good luck
setting up your own practice, once you've sold your clients, a
mortgage credit cards line of credit securities based loan, your
clients are going to be like, Well, you've talked, you've talked
about the institution for the past 10 years.
Dean Soto 48:13
And I now leave, why would I? Why would I leave?
Aaron Hattenbach 48:16
Right? And then advisors come to me saying like, what's the
narrative that I can create, to get my client to move their assets?
And it's like, well, if you've sold your clients on the enterprise,
and your clients have four or five different service offerings, you
the institution can be very hard. Yeah. And I'm not I'm not a
magician, I can't wave a wand.
Dean Soto 48:35
Yeah, I mean, in just in, in moving things. It's hard even if the
client loves you, and is willing, it's like, man, I have, I'm tied
up in all of that.
Aaron Hattenbach 48:46
All of that. And I'm getting discounts on my mortgage, because I've
got five different services. Yeah, you can't compete with that on
the independent side. What I can do on the independent side is say,
hey, look, I'm not captive having to provide your mortgage from the
event, because I'm at Merrill, we can go shop around and hire a
mortgage broker to go shop around for the best rates. Yeah. And
ultimately, you know, that alone, I think, is worthwhile in terms
of giving the client access to the the, you know, services of other
institutions that may be better equipped, that maybe providing a
better price, you know, so yeah, I would just say, like, for
advisors that have sold their clients in the enterprise, it's, it's
very hard for them to ever go independent. And if they do, it's,
it's a one time thing. And you better put in the hours, you better
hire someone to really help you navigate the complexities. But for
an advisor that has worked at one of these firms, and is looking to
go independent, don't go at this alone. Yeah, right. Go to go to
kids to start calm. I don't get paid anything from kid says, I
think he's his blog is the best in the industry, it's won many
awards. It's ultimately actually was ranked higher than the Wall
Street Journal in terms of influence on financial advisors, which
is saying a lot. Yeah. And if you want to get free education, go
there. But at the end of the day, you know, don't go out this
process alone. It is, you know, you're risking your business.
Dean Soto 50:21
Yeah. But the best option is going with you. So how can people
actually work specifically with you?
Aaron Hattenbach 50:31
Well, Dean, you're far too kind I, you know, I'm learning every
day. So you know, I'm not the best for everyone. But my suggestion
is if advisors interested in working with me, they go to my
website, rapportfinancial.com, there is a button to contact me and
they can actually access my calendar. And I would encourage them to
go to the prospective client meeting and select 30 minutes time
where we can learn more about their practice what they're looking
to accomplish. They can ask me any questions as far as you know, my
service model for advising advisors, financial advisors, and you
know, I do offer to a limited amount of advisors, the ability to
retain me for a certain amount of hours. You know, this isn't my
core business, it's just something I love to do in helping other
advisors accomplish what I was able to do two and a half years ago.
And so if they're looking for help on the tech marketing, business
strategy, compliance, operations, practice management, really it
covers the gamut and they're going to get 10 years of experience
running businesses for within multiple advisory models. So you
know, I think they're going to get a good mentor that is going to
help them select the right vendors and and build a practice they're
proud of all while saving some tone in the in the process and not
hitting their head against the wall trying to figure all this out.
It's it's a lot putting an entire business together I wrote this in
my 26 steps article and quite frankly 26 steps was probably only
half of what it took to create this business so um, I wish I hadn't
gone at it alone I would have hired someone with the experience and
would have prevented some money lost some mistakes and you know,
what if i think i think we're shorten up my ramp up period to
getting my clients on board and and operating so they can contact
me they can go to my website and schedule 30 minutes of time they
can also go to my homepage and there's an intake form where they
can send me an email goes to the info that gets forwarded to my my
email address but yeah, I'm would recommend going to my website,
that would be the first step.
Dean Soto 53:03
I love it man so yeah, so go check out if you want to connect with
Aaron and if you want to have that mentorship or if you just want
to you if you even just want to see if that if Aaron would be right
for you with you know 30 minute call go check out
rapportfinancial.com so report as in building rapport
RAPPORTfinancial.com and head down to the opt in form and connect
with their and he is if you can't tell he is one a wealth of
knowledge and he freely gives out a lot of value and actually cares
cares about the people that he works with if you can tell just
through what he's been sharing right now so just go check that out
once again it's rapportfinancial RAPPORTfinancial.com and go
connect with Aaron. Also have that in the show notes as well as in
the blog posts and and other places where we syndicate the actual
publishing of this podcast episode so but all that being said,
dude, Aaron, thank you so much for being on man. This has been this
has been pretty awesome.
Aaron Hattenbach 54:17
Yeah, this is a pleasure. I really enjoyed it and you know have to
do some more podcasting I guess right? Yeah.
Dean Soto 54:24
Yeah, for sure. That's I mean, that's one thing that that you have
you have you're definitely a wealth of knowledge and and can bring
so much value to everybody in the financial advising financial
services industry. So that would be that'd be awesome. So
Aaron Hattenbach 54:42
well, really appreciate it was it was enjoyable and we'll be in
touch.Thanks, Dean.
Dean Soto 54:46
Yeah, no problem. So go check out Aaron last time at
rapportfinancial.com or RAPPORTfinancial.com. This is Dean Soto
with the freedom in five minutes podcast. This this is the end of
the episode but it is not the end of the podcast because we will
see you in the next freedom in five minutes podcast episode.