Here’s why flat fee financial advisors are about to take your clients…

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Be scared, because flat fee financial advisors are about to steal your clients. And if you don’t believe me, listen to this podcast. Even if you have no interest in changing the way you charge fees, you still need to hear Andy Panko’s story, because flat fee financial advisors like him are kicking your butt.

But first…

For those of you who are new to my blog/podcast, my name is Sara. I am a CFA® charterholder and financial advisor marketing consultant. I have a weekly newsletter in which I talk about financial advisor lead generation topics which is best described as “fun and irreverent.” So please subscribe!

Sara Grillo, CFA is a highly fun and slightly crazy marketing consultant based in NYC.


I am an irreverent and fun marketing consultant for financial advisors.

The age of the flat fee financial advisor has come upon us

Every financial advisor fee model has its strengths and weaknesses; none are perfect. But that aside, there is a nascent movement in wealth management, the advent of the flat fee advisor.

Out of all the ways that financial advisors charge fees (fee for AUM, commissions, hourly, flat fee), it is my belief that flat fee financial advisors pose the least conflict of interest to the client while offering the most amenable service model. There is no perfect financial advisor fee model, but flat fee financial advisors can offer the same or better service, for a much lower fee, and conflicts of interest are minimized.

I would be scared. And I mean, really scared, if I were an advisor charging AUM fees when I see flat fee financial advisors like Andy Panko.

Meet Andy Panko, flat fee financial advisors success story

Andy Panko founded Tenon Financial with the goal of providing financial advice without the sales aspect, and a superior financial advisor value proposition.

He’s done exactly that, in a little over two years.

Let’s start with the basics because as Andy and I have both found, even financial advisors do not understand the nature of flat fee advisory arrangements. There are many dimensions to being a flat fee financial advisor, so we’re going to start with the basics and then get into how to run a flat fee financial advisor practice later on.

What is a flat fee financial advisor?

A flat fee advisor is defined as a financial advisor who charges one set, flat fee for services rendered over a certain period of time as stipulated by a contract, usually a year. The fee may be charged on a monthly, quarterly, or annual basis, but it is a hard-coded dollar amount flat fee that does not vary over a contractual time period.

A flat fee means you do not charge commissions or AUM fees. Whether you charge $6,000 a year or $20,000 a year, the amount of assets the clients has under your management does not matter. There is no ambiguity as to the fee the client pays the advisor.

Andy Panko charges a flat advisory fee of $8,400 a year for single folks and $9,600 for married couples. There is some potential for the clients to negotiate advisory fees with him, but if the situation is complex enough to warrant that then Panko usually takes a pass on that client.

Do flat fee advisors adjust for inflation?

Some advisors may adjust the flat fee they charge for inflation, and others don’t.

Panko values simplicity and cleanliness and wants total clarity about the flat fee amount he charges. However, he does have a handshake agreement that at some point in the future he may need to amend the advisory agreement with their approval, if inflationary pressures become unmanageable and he feels he needs to do so because his advisory fee has become disjointed from prices in the world due to inflation.

Does a flat fee financial advisor pass on any fees to clients?

The following information about pass-through fees is pertinent to Andy Panko’s wealth management practice, but it can not be assumed that this would apply to all financial advisors who charge flat fees.


      • Panko is a discretionary advisor, and he typically invests his clients’ money into low cost ETFs. These ETFs have an expense ratio built into them, but because they are passive investment vehicles this expense ratio is usually low. These fees are not able to be avoided. They are directly debited out of the client’s assets.

      • Many custodians do not charge trading fees for ETFs. In Panko’s case, there are no direct trading fees for buying stocks or ETFs. It is conceivable that if there were such transaction fees, those fees would be passed through to the client. For example, if a client owned mutual funds that he needs to sell, there is a trading fee that would be charged.

      • There is a bid-ask spread associated with buying a stock or an ETF, but this is an implicit fee that is not directly paid out by the client. ETFs that are large and highly liquid usually have low bid-ask spreads, and these are what Panko usually invests in.

      • In Panko’s case, there are no direct custodial fees. There is no charge for a client to open or close an account with a custodian.

      • Incidental fees such as margin loans, overdrafts, or wire fees are passed through to the client. These are not that common to Panko’s practice.

    In the normal course of business, other than the expense ratios of the funds that client is invested in, Panko does not pass through fees to his clients. The only fee his clients pay is a flat fee for advisory services, and the invoice is sent once a quarter. It’s clear as day to the client.

    What does a financial advisor’s flat fee include?

    If someone is truly a flat fee financial advisor, the flat fee includes investment management and financial planning. Panko has full discretion over his client’s assets.

    Many financial advisors call themselves flat fee advisors, but they are charging a flat fee PLUS an AUM fee as a percentage of assets they manage. These are not true flat fee financial advisors. To truly be deemed a flat fee financial advisor, you can not charge AUM fees.

    How can financial advisors start up a flat fee wealth management practice successfully?

    Panko is a great financial advisor success story.

    He started his financial advisory practice a little over two years ago, and is already at the point where he is about to close to new clients.

    This flat fee financial advisor is “killing it.”

    (Exclamation point).

    For most of his career he worked in risk management for large investment banks and brokerage firms, but he found it unfulfilling. When his mother was retiring, he was frustrated by the degree to which financial advisors were grossly overcharging their clients without delivering real advice, the advisors charging 1.5% to invest a portfolio in mutual funds with 1% expense ratios. He had a vision of a wealth management firm where advice was the advisor’s only concern instead of selling.

    He took a few years to get his CFP® designation, study the industry, learned the best practices in becoming a financial advisor and saved up money while still working at his full-time job. I like how we gave himself a long runway and took action to prepare himself for the launch; it was a very well-planned process for starting an RIA firm. He had a vision for what he wanted his wealth management practice to look like and how to get there without being desperate.


    I wish more advisors starting out would do it like that.

    How do you know what flat fee to charge as an advisor?

    He estimated the amount of hours he thought he would be spending on each clients, and applied an hourly rate to it. He also estimated what his typical client would pay if at a 1% advisor fee.

    He has low overhead and expenses are low, so he charges less than what financial advisors usually charge their clients. How does being a flat fee advisor compare financially to be paid on AUM? He usually charges less than an advisor who charges a fee on AUM for the same account, and in some cases he is delivering more than what the client’s past advisor was because of his focus on tax planning.

    Is it worth it to pay a financial advisor 1% of AUM? Meh.

    Panko is fundamentally opposed to the financial advisor AUM model. He doesn’t see how the management of assets is linear. He doesn’t see how asset size is correlated with resources needed, and that it’s not worth it for most clients to pay an advisor 1% (or more) for management of assets.

    Panko feels that passive investments are all that most people need. Investment management is cheap, easy, and commoditized. To quote Panko, “Any monkey with a computer could do the investment management that I do.” There are some cases that are more complex.

    He’s got a stunning financial advisor value proposition

    The real value of his services as a financial advisor, he feels, comes with the tax and financial planning advice he delivers. He does in-depth planning for his clients. There are tax implications for all aspects of a person’s life; the planning is where he feels the real of his wealth management services are delivered. He gets into the weeds with taxes.

    He just doesn’t see how a client with a $5MM portfolio is five times as much work as a $1MM client necessarily. Doctors and lawyers do not charge you based upon your ability to pay.

    A great example of financial advisor niche marketing

    Panko planned out his niche with high skill, and that is what makes his practice as a flat fee financial advisor work so well. He targeted people who were in retirement. Because his clients are all in the same stage of life they all have similar planning needs. He doesn’t have to go learning new skills, like serving international clients or who own businesses.

    He started a Facebook group that he uses to answer questions that retired or about to retire folks may have about tax planning and retirement. It’s a no-sales group, there’s no lead capture, where he answers their questions and does weekly live sessions.

    And the clients are coming in like wildfire!

    Advantages/disadvantages of being a flat fee advisor

    The advantages of being a flat fee advisor:


        • It’s the least conflicted. Even with a fee for AUM model, there is an inherent conflict of interest, because you are getting paid for having more of the client’s assets invested in the market. Hourly planning is also very non-conflicted however clients are hesitant to come to the advisor with questions for fear of being charged more.

        • Very transparent

        • Super simple. The dollar amount of the fee is clear to the client, whereas with AUM fees the client doesn’t usually compute what the percentage translate into in terms of dollars they will pay to the financial advisor.

      Downsides to the flat fee advisory fee model:


          • Flat fees are not going to work for a financial advisor who serves clients with vastly varying needs. It’s not for advisors who can’t say no to new clients. It works best for wealth managers who have an active, intentional, focused marketing strategy that will allow them to build a narrowly focused client base. Most financial advisors do not grow their practices that way; they grow by referral and take whoever they get introduced to.

          • It cuts off people of lower asset size. If someone has $150k they would likely be unwilling to pay $8k a year.

          • Regulators don’t understand this model in some states.

          • Scalability: you’d have to hire another advisor to take on clients after you get to a certain number of clients. Panko has capacity to properly serve 50 clients.

        List of flat fee financial advisors

        Here is a list of the flat fee financial advisors that I have heard of. Now, it’s getting late and my eyelids are starting to droop, so I didn’t confirm by ADV for all the people on this list to see if they are pure, flat fee advisors (meeting the definition articulated prior in this blog) or if they give clients the option to pay an AUM fee or a flat fee (the latter not being the definition of flat fee advisor in its purest form).

        This list may change; there is no guarantee these advisors will always charge a flat fee in the future. And lastly, by no means would I claim this list to be comprehensive – it’s likely there are flat fee financial advisors I left off inadvertently. But if you know anyone that I should add or if you have any questions about this list, contact me and let me know!

        Please note that some of these flat fee advisors in certain states such as FL, VI, OR, and IL) are required to maintain an insurance license purely to advise, not sell but advise, clients on insurance decisions.

        By the way, in no way does this serve as a recommendation to do business with any of these people listed below. Please conduct your own diligence. I did cursory research but did not verify by their ADV in all cases.

        Pure flat fee advisors

        Adda Financial

        Avalon Wealth Advisory

        Clear Retirement Advice

        The Coleridge Group

        Downshift Financial

        Bason Asset Management

        Blue Tree Financial

        Discovery Wealth Planning

        Direction Financial Management

        Emancipare Investment Advisors

        Empowering Finance

        Evanson Asset Management

        Facet Wealth

        Fenway Financial Advisors

        Ford Financial


        Freedom Found Financial

        Gray Wealth Strategies

        Ignite Planning


        Impact Wealth Management

        Laminar Wealth

        Level Wealth Management

        Lodestar Financial Planning

        Luchini Financial

        Meredith Wealth

        Noble Hill Planning

        Purpose Built Financial Services

        RFK Capital Management

        Scholar Financial Advising

        Southshore Financial Planning

        Tenon Financial

        Thrive Retirement Specialists

        Transform Retirement

        Truly Prosper Financial Planning

        Verbatim Financial

        WELLth Financial Planning

        Vilga Financial Planning

        Your Path FI

        7 Saturdays Financial

        If you want to meet flat fee and advice only planners in your area, here is a Directory of some of the financial advisors – state by state – participating in our Transparency Movement.

        Here is the list by state. 

        By the way, if you didn’t see a flat fee advisor in your state on this list, just send me a message and I’ll ask around in my network.


        Financial planning only – (“advice-only” financial planner)

        Abramson Financial Planning

        Abundo Wealth

        Ad Astra Financial Planning

        Arnold and Mote Wealth Management

        Ascent Personal Finance

        Brava Financial

        Challenge Everything Financial

        Child Free Wealth

        Datapoint Financial Planning

        Delaware Financial Planning

        Etzler Financial Advisors

        Financial Optimist

        Holly Donaldson Financial Planning, LLC

        Jon Luskin, CFP

        Lodestar Financial Planning

        Maura Madden Financial Planning

        Measure Twice Financial

        Mullaney Financial & Tax

        Plan For It Financial

        Ryerson Financial

        Scaled Finance


        Charges option of flat fee or AUM fee

        Approach Financial Planning

        Axis Capital Management

        Ascent Personal Finance

        Avea Financial Planning

        Bobb Financial

        Boundless Financial

        Cadenza Financial Planning

        Carol Weeks Acker (flat fee or a blend of net worth and number of hours involved with account)

        Coastal Financial Advisors

        Family and Money Matters

        Forthright Finances

        FPL Capital

        Java Wealth Planning

        Jersey Shore Financial Advisors

        Manuka Financial


        Next Gen Financial Planning

        Optimum Retirement Planning

        Out of the Office Planning

        PDS Planning

        Retirement Portfolio Partners

        Sage Wealth Planning

        Savvy Advisors

        Staib Financial Planning

        Switchpoint Financial Planning

        Wedmont Private Capital Capital

        Winding Trail Financial Planning

        Wonder Wealth

        Sara’s upshot

        What’d ya think of my blog about flat fee financial advisors? Was this helpful?

        The podcast transcript is below if you want to read the text of my interview with Andy Panko.

        If you liked my style and you are a financial advisor…

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        The Transparent Advisor Movement’s mission is to promote ideals of clarity, modesty, integrity, dignity, and client advocacy in all aspects of financial advice, with a special focus on Advice Only, Flat Fee, and Hourly service models. There is a special emphasis on clear disclosure of services and their related fees.

        The Transparency Movement is the future of the industry – we welcome anyone who believes in our values to join us.

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        -Sara G

        Podcast with flat fee financial advisor Andy Panko

        0:00:00.3 SARA GRILLO: Let me say this as clearly as I can, listen up, financial advisors, how there are people out there who are able to deliver the same or better service, charging clients much less in a different way. And they’re not robo advisors, this is a customized Wealth Management Service, and so today we are going to talk about the evolution of flat fee pricing and you better listen.

        Does doing the right thing by clients mean you have to earn less money? Does earning less money mean you’re doing the right thing by your clients? My position on fees is this, I think it depends on how it’s done, and on the moral compass of the individual, I’ve seen very good hybrid advisors who are doing great for clients and charging them commissions, and I’ve seen very bad, the only advisors who are giving their clients, a bad deal, even though they’re fiduciary in the whole ball wax, so there is no absolute year, but for the future, I do believe it would create a profession, not an industry, but a profession consisting of professionals, if advisors were too charged by the hour or by a flat fee, even if charging flat fees is of no interest to you as an advisor, you should still listen to this podcast because I am seeing more and more advisors go hourly or go flat, just my anecdotal experience here, and you will be competing against this pricing model in the future.

        0:02:16.4 SARA GRILLO: So you need to know how it works. And in this particular advisor’s case, he does an impeccable job and he would be kicking your butt if you went head-to-head with him, Andy Panko is a flat fee advisor and the founder of Tenon Financial. Welcome to my show, Andy.

        0:02:34.1 ANDY PANKO: Welcome, thank you for having me. Super excited to be here and share my story.

        0:02:39.5 SARA GRILLO: So there was this post I did last week on LinkedIn, and it went something like this. It was one of those quote posts, and Andy, I know you know this ’cause you comment on these things when I do this, but it was like, financial advisor says, I’m a fiduciary, I do right by my clients, 10% consultant, and this actually is a conversation… I have all the time. Consultant, would you ever consider charging hourly or flat fees, financial advisor… That’s out of the question. I won’t make as much money. And it concreted this big way because people always have very emotional responses, I guess I pushed a few buttons here, and people love to swoop in on these talk… So let’s start with a basic question. What is a flat fee advisor?

        0:03:28.2 ANDY PANKO: That’s a great question, and it blows my mind how many other advisors in the industry have no comprehension about it, so I post it on LinkedIn, on Facebook, seeking other advisors to charge a true flat fee for a bundled financial planning and investment management offering. And I got a few dozen responses ’cause I’m looking to create a list of referrals to freely share with the prospective clients, and I got a few dozen responses, probably three quarters of them that people clearly didn’t understand the concept of flashy, and they said, Yes, I’m plate. And then I look at their ADV, you know the regulatory filings, or I look at their website and it says they charge a fixed fee for planning, and then a percent of assets under management… For investment management, and I’m like.

        By advisors, people don’t understand, even with an industry, to me, how I offer it, how I idealistic, ally, envision the industry hopefully going is a flat fee is simply that whether you charge 6000 a year, 10000 years, 20000 a year. That’s your fee. The amount of assets the client has under your management does not matter, ’cause I’m sure we’ll get into this, but it’s investment management, even good investment management is super scalable, increasingly cheap, easy, a commoditized, and the size of the assets really has virtually zero bearing on the amount of time, resources, expertise needed to properly implement and service a client relationship inclusive of investment management.

        0:05:02.8 SARA GRILLO: Okay, so hold on, and let’s just go back over that ’cause that was so much and thank you very much for your good definition. A flat fee advisor is defined as an advisor who for one set fee, which is either incurred on a monthly or a yearly base, it doesn’t have to be monthly. Now.

        0:05:24.1 ANDY PANKO: And let me back up a little, I’ll preface this whole conversation by saying There is no perfect or 100%… Right, 100%. Best fee model, I’ll freely admit that I get on my soap box a little too much, I get the drum a little too hard about the merits of flat fee because it works for me and what I do and how I do it, but… No, no, female is completely free from inherent conference of interest, notaries, perfect male scenarios. But what I do it is a true flat annual fee, I choose to have it deducted from clients accounts quarterly, whether you do a monthly, whether you do it once a year, it doesn’t frankly matter that the point is the total fee that a client pays every year, is fixed? It’s hard-coded in the advisor agreement that there’s no ambiguity, there’s no officer Downton

        0:06:09.6 SARA GRILLO: Second. Does it adjust for inflation?

        0:06:14.1 ANDY PANKO: In my case, no. Now, I struggle with this. So I’ve had other folks who do eventually figure out or understand his flat fee thing, I do, other advisors are You’re dumb to not charge inflation, ’cause there will be inflation over time in my fees gonna stay fixed. And my response is, Yes, true, I get it. And maybe two error, I really value simplicity and cleanliness, so I want clients… For you to be X, I don’t wanna say, Okay, next year it’s gonna go up 21%. And now their fee is X and change the hand shake agreement, I have the clients as the fee is hard coded to the dollar and the advisor agreement, and it stays that until both of us a mutually agree to change it. So what I tell folks is, maybe it’ll be three years, maybe it’ll be five years down the road, but I may come to you at some point and say, Hey, there’s been a lot of inflation, I’d like to increase my fee to X. Are you okay with that? Clinical say, Yes, sure. In which case, we amend mutually men, the advisory put, my new fee is now something higher or client is absolutely not, in which case, I have to go back and be like, Okay, do I continue working for the same flat fee? Or Do I part ways if I feel like I’m not underpaid? Now, my thought is, this isn’t an exact science, what’s to say The them charging is the unequivocally right fee, and therefore it needs to have inflation adjustment, maybe My feet love, maybe my fees high…

        0:07:35.5 ANDY PANKO: I don’t know. It works for me. It feels mutually fair. I don’t feel the need, not the sanfl ion increases or nickel diving, but I don’t feel the need to have the Nicolai clients every year. If and when I feel my fee is that far disjointed from the reality of what prices in the world are and what the fee should be, then yeah, then I’ll seek to increase it, but otherwise I don’t wanna have to do this same year by you.

        0:07:55.2 SARA GRILLO: Okay, so a flat fee advisor, and in some cases, they may say, I’m flat, but I adjust for inflation. You don’t say that. Okay, fine. Correct, so let’s just kind of spell it out for people in… And I’m sorry to have to belabor this point, but like you, I have found that advisors really don’t understand, ’cause there’s so many different dimensions here… Okay, so I just spell it. So what about pass-through fee? Do you pass any fees through to them?

        0:08:31.1 ANDY PANKO: Great question. So the investments in which my clients purchase through me as the discretion of investment advisor, they pay those underlying fund expense ratio, so I’m a passive approach, he’s a few different pool investment vehicles, typically exchange traded funds, so there is a built expense ratio. The things that I find.

        0:08:52.6 SARA GRILLO: Whatever.

        0:08:53.3 ANDY PANKO: And the fun… Exactly the toes. Exactly, there’s no way to avoid those, unfortunately, unless you do… Not to get too off on a tangent here, but direct indexing, where you can try to replicate an index of 1000 positions by owning a 1000 individual securities, but that’s super labor-intensive. So clients in directly pay the expense ratios of the funds, which are less than tenth of a percent for the funds I use, so there’s that

        0:09:20.7 SARA GRILLO: Catiline pay the trading fees comes out of their assets. But that goes to the custodian. Correct.

        0:09:29.2 ANDY PANKO: Well, because I use etfs, there are no explicit trading fees, so you can buy and sell all day long, not that I’m in and out, all I do long, but clients, when I do rebalance their portfolios or initially invest them, there are no direct trading costs to buy or sell etfs because they trade like stocks and virtually all custodians now wave transaction fees to buy and sell stocks. There is a bid ask spread, this gets kind of technical, but ask spread, because etfs trade like stocks, you can buy them in today throughout the market, the price is simply whatever buyers and sellers are willing to agree upon, and there’s gonna be the price so much someone wants to buy is gonna be lower than the price where someone to sell, so that there’d be a little bit of slippage. Now, part of the way I try to help minimize that is the funds I use are really large, lots of assets, a lot of UCSF liquidity, also trading volumes of bid, Aspera is gonna be negligible… That’s right, plus I’m not day trading, I rebalance once a quarter, so frankly, don’t even have a way to measure the bid ask spread slippage, but it’s over the course of years, it’s gonna be negligible if that is not worse.

        0:10:33.8 ANDY PANKO: So there’s that cost. And then any… There’s no direct custodial fees, there’s no charge to open or maintain accounts I currently use TV, which will be Schwab, there’s no fee to transfer assets in charge by TD or Schwab. There are some typical sort of nickel and dime the at the client over drafts an account, if the client wants to send a wire, I think there’s fees, the client wants a margin loan, obviously, then there’s interest gonna be charged on that, but normal course of business. No, other than the expense ratios are the funds they’re in, and again, trading fees are non-existent, unless client has mutual funds that they transferred over that I need to sell out of for them, then there’s typically a 24 per trade feudal funds outside of that, not the only fee they’re paying is my annual fee, which is clear as day, I send it in voice every quarter and the fee comes out of their accounts, and they can see it there.

        0:11:26.9 SARA GRILLO: Okay, so this includes investment management and financial planning

        0:11:34.3 ANDY PANKO: 100%, and that’s the important thing to know that most advisors don’t get… They’ll say, I’m flat fee, but they’re by forcing financial planning in which start charging whatever, 30 or 5000 a year fixed flat, plus a percentage of assets, if clients choose to have that advisor manage our assets, so ultimately clients paying, let’s say, five grand for planning, plus whatever. Half a percent of assets under management. Clients got a million dollars, that’s another five grand right there, and that investment part, the festival to investments is not flat, it’s gonna go up and gonna go down as the client’s investment, well, we go down… Some flat fee is truly, my fee is X, and I could say it’s on my website, it’s 8400 bucks a year for single folks, 9600 for married. I do have the ability to increase or decrease based on complexity, but frankly, I sort of pick clients that… Whose circumstances fit? The offering I have and the typical sort of level of complexity I’m looking for on clients, if someone’s that complex that I feel they need to charge for 20 grand a year, I’m just gonna pass on them and say No, and I never mind…

        0:12:41.1 ANDY PANKO: So my feet does include investment management, whether you got a million bucks or five million bucks, the total inclusive fee, I’m charging 8496. It is the same regardless.

        0:12:53.6 SARA GRILLO: MINDBODY, you have… Okay, so you have discretion over these assets… Correct. What about if somebody has a 401k.

        0:13:06.3 ANDY PANKO: I do not have discretion.

        0:13:09.3 SARA GRILLO: But you would manage that and charge a flat fee on it, that would be a…

        0:13:16.6 ANDY PANKO: No, so you technically can’t unless there’s some names, but there are some third-party providers and platforms that will let you pipe in trading ability on employer plans like 401Ks and deduct your fee from them. I don’t do that. 401… Other employer plans are simply… They are what they are. I’m able to see them ’cause I use a financial planning software that it aggregates in all of clients positions, including things held away from TD or Schwab, so I can see what’s in them, including to the position level. I will look at them and I can make general recommendations about them, but I am not able to transact trades or do the actual re-balancing or changing contribution amounts, the best I can do is make recommendations to clients, they have to go do it himself through their 401k login.

        0:14:07.8 SARA GRILLO: But that can still be included in your mandate, even though you do not have discretion…

        0:14:14.7 ANDY PANKO: Yes, like looking over any other assets, if they have a retail brokerage account held the way that they play with one… Yes, it’s a healthy way asset, exactly.

        0:14:22.3 SARA GRILLO: Whether it’s Bitcoin, whether it’s 401k, whether whatever it is.

        0:14:26.3 ANDY PANKO: Whether it’s a rental property, whether it’s Star trading account where they wanna day trade tech stocks, whatever… Yeah, they have assets as I help review and consider that in their total big picture, it’s not solely just, These are the assets at TD or Schwab, this is all I’m looking at, I will not touch anything about the rest of your financial life ’cause my discretionary Investment Management hat is just TD and Schwab. My broader financial planning is the whole picture inclusive of pension, Social Security, annuities, life insurance they have in real estate, health way, assets like employer plans, so it’s all things that a good plan or should be looking at and giving guidance on.

        0:15:08.0 SARA GRILLO: Why did you decide to set up your practice this way, and I tell this, you’ve only been to… You’ve been enormously successful within how… On three years, a little over two

        0:15:22.1 ANDY PANKO: Sites, I think you have to know my back story for this… To all sort of makes sense. So I graduated college in 2000, went to school for Finance, wanted to be what I thought an advisor was, and they didn’t know what that looked like, but I wanted to help people make money decisions, basically. And while I was in my junior or senior year of college, I interviewed at all the big places that were interviewing on campus for roles, they call it the financial advisor, and it was a few different large insurance companies that everyone listening has heard of, and a few different large brokerage firms. Everyone has heard of… Of these five or so things I interviewed at, only one had any sort of non-commission compensation, one of them had a small first year living stipend after the first year that went away, it was pre-commission based, and I did multiple rounds of interviews or a lot of these places, and one of them was, Give us a list of 30 of your family and friends, and they… They literally called it dialing for dollars, it’s all a numbers game. You make 100 calls, only five of them will say yes to even talk to you, and of one of those, hopefully you close the sale, so the more calls you make, the more sales you’re gonna get, they were sure to cart me around and have me interview with the local studs, the 25-year-old hotshot who had gross 500000 that year, and he was sure to show me his S-Class Mercedes, it was all just production and Sal and goals and push product and it just…

        0:16:54.8 ANDY PANKO: It didn’t feel right. I knew I wanted to give advice. I knew I never had any thought or allusion of being good at sales, no interest in selling the traditional sense, so after getting disenfranchised by what I thought the financial industry actually was, I gave up on it and stumbled into an actuarial job at a large insurer, so actuarial jobs are the ones doing the analysis and pricing of insurance products basically, so it was a corporate job, there’s no sales, there was no advising, it was a true corporate… Behind the scenes, whatever. So I worked for a few years at a large insurance company, did an actuarial job, I helped do some of the management of their general accounts, I learned a lot there, and then got my MBA part-time because the place I was at paid 90% for it so I did that and with MBA in hand, I left and got another job doing which intense derivative credit risk management for trading derivatives with alternative investment vehicles to hedge funds and things. So most of my career is doing that, I worked at large institutional investment banks and brokerages, doing risk management and credit risk for funky derive trades, we was hedge funds and private equity funds, but make money, worked with great people, did some really cool things, but I was never really fulfilled and satisfied.

        0:18:20.6 ANDY PANKO: And I saw first-hand working with institutional investment managers, how much money could be made when you charge 2 and 20 like a hedge fund, 2% of assets under management plus 20% of profits. Just absolutely killing it, and having seen and analyze so many alternative investment funds, I realize there are some that you do really well, not consistently, not all the time, but something really well, some are absolute garbage, and the rest just kinda bumble around and don’t necessarily do much relative to Chief passive indexes. So anyway, is that that my first experience in college set the tone for sales versus advice, the rest of my 19 years of experience in set the tone for a percent of assets, you can make a lot of money, and a 2016m mom was transitioning towards retirement, trying to figure out social security, and I didn’t know much about it at the time, but I helped her dig in and research, and the proverbial light went off over my head, I was like, Wow, this is advice, like my mom getting your Social Security decision… Right, is the most impactful thing she can do for her retirement finances, it’s not messing around with some overly complicated 24 mutual fund model portfolio that some wire house put together that they’re charging 0% and a half on with 1% fund expense ratio.

        0:19:37.5 ANDY PANKO: I was like, That’s not it. It’s this advice, right? So that lit a fire under me to figure out, okay, I’m not real engaged, this caught my attention, I wanna figure out a way to help people make decisions like that, and so I just started digging around podcasts and blogs and whatever, and came across to have to shout out the XY Planning Network. They are an independent network of advisors who are all fee only meeting those sales licenses, but specifically, they were designed or com denominator is most people are there to help GenCanna as opposed to just the baby boomers. Now, that’s not what I wanna do. I was squarely interested in retirement, so I still work with baby boomers or people who will be a retirement age, not Jen, tan-y. Halogen-X is close to retirement. What fascinating about XY Planning was the model, it was hourly, it was the only… It was, you don’t have to sell products, you don’t have to do percent assets, there are alternate fee structures, you custom-craft a service you wanna provide and the fees under which you wanna provide it, and that bullet off for me, and I was like, Yes, this is it, there are ways to do what I wanna do.

        0:20:49.9 ANDY PANKO: How wanna do it? Charge how I wanna charge. So I was 2016. I told myself, Okay, yep, this is what I wanna do, but I wanna do it for myself by myself, offer the services, I wanna offer a charge how I wanna charge. And I gave myself three years to save some money, ’cause I realize I’d be given up a Lupron career and starting from zero to save some money and further so speck out this business. So it’s really well thought out. So when I flip the switch on in 2019, I can hit the ground running, so that’s what I did, 20, 16, 19 was learning, taking a lot of tasks, any designations in credentials, just soaking up everything I could about industry best practices to find out what I like what I don’t like, what I think will work, what won’t work, services I wanna offer who Anwar with really kinda craft my message, my positioning to… I did, yeah.

        0:21:40.7 SARA GRILLO: It… You took that before you launched the practice while you were working for somebody else…

        0:21:45.8 ANDY PANKO: Exactly, yup. So on my train rides home every day from Midtown Manhattan to Central New Jersey, every morning in every night home, I was reading… I did three tests in three years, I did the retirement income certified professional designation as the CFP, and then I did a IRS enrolled agent, so all of that was just studying on the trainings for three years straight.

        0:22:04.9 SARA GRILLO: Did you already have kids at that point?

        0:22:07.2 ANDY PANKO: I did, yeah. It was a lot of work. I leave work, I leave my office in Midtown, probably six-ish, let’s say, and then I have to get to the train station and then a 45 to an hour train ride home and then… Whatever. And my kids at the time, so 2016 was one, six years ago, they would have been six and eight. So I was in a takeover school, I just got up… As I was, I, I knew I needed the designations, I knew I wanted to do as much as I possibly could to set myself up to hopefully have a successful business, and I knew credentials matter to some extent, I knew knowledge obviously mattered. And that was kind of it. So I decided, Yeah, 201v the year I do it. And sure enough, 20-19, I left my old job and started this and have back…

        0:22:59.9 SARA GRILLO: Right, so I like this because I think a lot of people, when they think about starting an R-a firm, that’s all that they do, is they think about starting an RIA firm, it’s never as well planned and calculated and doing things and researching and contacting XY, it’s like people are like, Oh, I’m not happy with my corporate job, I’m gonna quit, I wanna do this, and then they’re thinking about it, and they even quit, and sometimes they’re like, I’m thinking about starting or I’m thinking… And it’s like they think about it So notionally, but then they don’t think about, Well, how would I actually do it, what licenses would I need to get? And should I get these before I can… My paycheck. Right, exactly. And so you’ve got a leg up on the whole thing because you had visualized the path kind of beforehand…

        0:23:49.1 ANDY PANKO: Yeah, and not just the path of the business, but even personal life, it doesn’t matter how good your business idea is, if you have zero revenue, you have to be aware of your personal expenses and you have to still maintain personal life. So part of the reason why it took me three years from inception, an initial thought to actually going live, was I knew I need to say about money. My plan was I wanted to go two to five, a minimum two years with zero revenue for my business and not have to borrow against my house or dip into my kids 5 29, so I just spent a few years just building up a cash stock pile to give myself some runway ’cause I didn’t wanna be desperate, I didn’t wanna have to take anyone with a pulse and just to get some revenue in the door, when I first started my business, I wanted time to build it out properly with the clients I wanted to work with…

        0:24:38.7 SARA GRILLO: Why didn’t you do a AUM model?

        0:24:46.7 ANDY PANKO: Fundamentally opposed to it, which is the cross of this episode, so I’ve always, again, worked most of my career with institutional investment managers, and I know what goes into our processes, investment management or operations at risk management, and I was like, I don’t see how… The management of assets is linear in terms of asset size relative to resources needed, there’s other things on the periphery that are… The more clients you have. Yes, the more work there is obviously, the more names or investments you’re researching… Sure, if you’re in an active investment management thing where you need an army of analysts ’cause you cover dozens or hundreds of individual securities, then… Sure, I got it. But for retail, working with individuals, and I’ve always invested, saved my own personal life, basic index passive products or all the vast majority of people need in different allocations, of course, it younger more risk, higher, older, less typically. And there’s tax efficiency to pay attention to, so certain investments or better suited in certain account types, whether it’s raw or traditional IRA, whatever, but outside of that, there’s any monkey with a computer, I can do… The investment management I do, and it’s not a knock on me.

        0:26:03.0 ANDY PANKO: It’s just, there really are that many good products out there that make it really, again, sheep easy, commoditized to do and do well. So I realized, I just don’t see how a 5 million client is five times more work than a 1 million client or even twice as much work necessarily. Wyre means testing. Investment Management is the only industry where the fee clients pay seem to be means tested, look at other real professions, doctors, they don’t charge you based on your willing to Rabi lit to pay, lawyers don’t… With one exception, and I thought about this, I was like, Well, what about lawyers who defend you or not defend you, but represent you for a lawsuit, if they do take a cut of what you win, I’ll take 30% of your winnings, and I was like, Oh, wow, okay. That contradicts where I was thinking. But here’s what I realized, I think you have a lot of investor folks listening to this, that’s pure alpha, if you don’t have a lawyer to represent you in that lawsuit, you’re guaranteed to get nothing out of it, 100% of your winnings are directly attributable to that law firm doing their thing with even court, so short, it makes more sense then that they could and should take a cut of that, or if they’re just providing your general guidance about drafting a will or some other basic advice, it shouldn’t be a function of your ability to pay, it should just be this, here’s the amount of service and value are providing and here’s the fee, so Vestal management field is the same way, unless you are truly trying to provide alpha, uniquely trial returns that are due to something the Investment Manager did venture charge on that alpha, but the vast majority of advisors, even those who do claim they have some sort of market beating Alan rating formula, accounts go up and down because of the market, not because something the advisor did, so don’t charge on it like you were uniquely…

        0:27:54.5 ANDY PANKO: Those games happened because something you did, most times they don’t. And on the flip side, the same thing when accounts go down, because the markets go down, our clients decide to take some money and go pay off a mortgage, the advisor is not doing any less work, so why should the advisor’s fee go up and go down based on asset size, no, the advisors fee should be based on the amount of time, resources, expertise, knowledge, whatever provided an asset size, frankly, has nothing to do with that in the majority of cases.

        0:28:22.2 SARA GRILLO: And you’re three years into this, what does the practice look like today as much as you feel comfortable discussing.

        0:28:29.0 ANDY PANKO: Yeah, of course. So I, from the onset, before I even flip the switch life, I had a very tight vision of what I wanted, 45 to 50 clients, ongoing relationships. Well, I’m a true solo, I have no employees and I don’t intend to have any at this point, maybe some point in… Change my mind as of now, I don’t… So I knew capacity-wise, 40-50 at most is how much I can comfortably service without stretch myself too thin. So that’s what I set out to build. I just announced to the world this a couple of weeks last week, that I’m no longer taking any new prospect calls, I’m not saying new clients, but new prospect calls, so I currently have about 40 clients. There’s another handful of really good calls I had with other folks who haven’t yet signed up, but I suspect somewhere something already sort of pre-agreed to sign up at a future date, so I’m gonna be at 45-ish in the next few months, and I’m good. That’s all I need. I know part of why design the business the way I do it is I know what I want personally out of it, I know what I want professionally out of it.

        0:29:29.5 ANDY PANKO: I’m not looking to make a million dollars a year, you nicias not my goal. So I’m happy with my 40 to 50 clients, that’s all I really want and need in life. And I can properly serve them. They like me, I like them. Hopefully, they like me. And that’s it. I’m not trying to build an empire. If and when I do let myself get ahead of my skis and start just hiring and trying to grow for the sake of growing, then yes, flat fee may need to be revisited, ’cause if I let my overhead get carried away, which I think a lot of advisors do they got the fancy offices with the wood paneling and the receptionist with the impossibly perfect smile who makes your custom cup of coffee and knows exactly what you want when you come into the office and that stuff all cost money. Do you need to do that to have the successful laser practice? I don’t think so, but if I ever let myself get to that point, then yeah, maybe I need to start charging more.

        0:30:21.7 SARA GRILLO: But you’re doing some pretty intense planning for these clients… Yes, Exide.

        0:30:31.5 ANDY PANKO: Right? Yeah, which I think is necessary. I think it’s a huge disservice that a lot of advisors don’t do tax planning or flat out can’t, especially if you work at a large wire house insurance company, that they will tell you in a disclosure, we do not do tax planning. Which there’s tax implications to virtually every aspect of someone’s financial life, so to say You can’t do tax planning is a tremendously miss opportunity, again, investment management isn’t the big value add that’s monkey with the computer can do that. Well, it’s the tax planning, it’s a broader planning to tie everything together, it’s a real value, so I approach my fee from a perspective of What do I think is fair and what would I be willing to pay for the service and value and things that provide… So yes, it is management of investments, yes, it’s detailed tax projections, I do do with clients like a mock tax return every year to really iron out their income so we can see how much Roth conversion should we do before you hit this tax bracket, or if you’re a Medicare age, or we’re trying to stay below with certain income to avoid Medicare premiums or charges, I get very, very in the weeds of taxes and even other general planning, so some of my clients have rental properties and I help them talk through and build those rental incomes and potential gains into their financial plans, so I figured…

        0:31:47.7 ANDY PANKO: And this is why flashy makes sense for me. Like I said before, I won’t work for everyone. I knew who I wanted to work with, and I know they’re all gonna more or less being the same stage of life, they’re all gonna have the same general planning needs, some will have a second house sun on, but whatever, I don’t touch people that own businesses, I don’t touch people with international planning angles. I don’t do special needs planning ’cause that’s a whole other area specialization I know I’m not well-versed enough in, so I choose clients that fit the prototype of who I I wanna work with, and I know they’re all gonna generally want to need the same services. And have the same planning opportunities, now some are a little more involved, I don’t wanna say need more hand holding, but… So I’m definitely asked more questions, are more inquisitive about the process or take up more time, and that’s okay. Whereas others, I talk to twice a year and things seem to work fine at that, but I figured let me come up with a fee that makes sense for what I’m doing at the time, the resources, etcetera, assets has this…

        0:32:48.5 ANDY PANKO: Nothing to do with it. And I can give you examples of where a million dollar client is substantially more time and work than a 5 million client, so why 5 million client pay more, it’s silly, an arbitrary advisor charge on asset size alone.

        0:33:01.4 SARA GRILLO: But how did you come up with what that flat fee should be, I think you said it was like 8000 or 9000 a year or something like istrian, elated

        0:33:10.3 ANDY PANKO: A few ways. One was, if I were to break down the amount of hours I think I’ll be spending with and working for everyone, and put an rate to that… What am I sort of shooting for? So I figured, I don’t know, 335 bucks an hour roughly. That was one sort of data point I tried to hit for one was also just the typical client I anticipate working with, what would they pay if they were at the typical 1% of AUM advisor… I didn’t wanna stray too far from that. I assume my clients would have about a million dollars and do the math that would be… They’re paying about 10 grand and my overhead is low, I’m not trying to be the low-cost provider, but I know it’s just me in my office by myself, my expenses are pretty low, so why not pass that on through the folks… So I don’t know, I have figured initially sort of under-shot, I was charging six grand and 7200 for single and married respectively, not really knowing, and once I started getting clients, things happened pretty fast or furious, I was four or five clients a month is…

        0:34:12.8 ANDY PANKO: Alright, I got all this done up charging it out.

        0:34:16.0 SARA GRILLO: But let’s just cover that. So you get your clients from the internet… Largely Facebook? Yes. Okay, so I think you told me once you have… You established a Facebook group. Correct.

        0:34:33.0 ANDY PANKO: Yeah, called taxes in retirement, and it’s a no sales, it’s not like, Give me your email and I’ll give you this piece of content that there’s no lead capture whatsoever. It’s just a group. People are free to join, it is a private group, so they have to request it, and that’s the screen out like bots and spammers, they can ask questions, and I share articles, I do weekly live videos where I do deep dives in particular topics, I answer questions, I never give specific advice. I don’t discuss particular securities, I never cross that line, but general things about tax planning and strategies and retirement planning, it’s all right, people not having to cough up names or emails, they’re not getting added to a list, it just hears me ask… And it’s been fantastic ’cause it’s a no-sales approach, and I think people, most people appreciate it like that… Wow. Yeah, so they found it

        0:35:25.5 SARA GRILLO: To coming in fast and furious from this Facebook group.

        0:35:29.1 ANDY PANKO: For the Facebook group, and within a few, I don’t know, six months maybe, I increase my prices to 72 and 84, respectively, still don’t slow down and so… Okay, I saw most have charge it enough and then finally landed at 8400, 9600, which is where I’m at now, and that’s when I sort of hit what I thought was a healthy balance of potential clients still reaching out… Not everyone saying yes. Not everyone saying no. So I think I hit what felt like the sort of market agreed upon… Right price for what I offer. And I should say, I believe in capitalism. I don’t wanna sound like I’m telling everyone you have to charge a certain way, but I firmly feel, and I see it first-hand, a lot of my clients, what I end up hopping as they have a few million dollars, they’re paying 20, 30, 40 grand elsewhere, and they’re not complicated scenarios at all, they just through hard work or good savings or whatever, they have a few million dollars, they realize it, I don’t know what we’re getting for tens of thousands of dollars, and I’m like… You’re right, I don’t get it either.

        0:36:32.4 ANDY PANKO: I think you’re being overcharged, and I’m not saying that as underhanded dig to try to win business as like the low cost provider, again, that we wasn’t my attention, I just wanna offer a service I feel is appropriately priced. And I did have to rely on the market. Help me figure that out. Again, I sort of under-charge initially, and then up the price is till I had it equal over that sort of felt. Right, but that’s it. So I have people that are paying me 900 or paying 30-plus grand before and… Or getting the same, if not better service for me, ’cause I’m doing tax analysis and tax planning, which other place is gonna do… Everybody wins. I think so

        0:37:10.4 SARA GRILLO: What if you have to say three up and three down, what are the advantages and what are the disadvantages of being a flat fee advisor?

        0:37:19.7 ANDY PANKO: Advantage is, I think it’s the least conflicted, so percent of AUM, even though it is you have to be a true fiduciary, etcetera, we all know there’s a huge inherent conflict of interest in there, the interest is that the more assets you have, the more you get paid it’s that simple and advice versus…

        0:37:37.7 SARA GRILLO: Or the more assets you have and they’re invested for the client as opposed to being in cash…

        0:37:43.0 ANDY PANKO: Correct, yeah, right. If you have too much cash, you shouldn’t be charging on it, you get in trouble if you can… Right, that’s a good point. Now, for what it’s worth, I think hourly, pure hourly is the most fair, ’cause it most directly ties fees paid to effort or hour serve, but for an ongoing advisory relationship, I don’t think that… Well, it’s never gonna work ’cause clients are gonna be reluctant to pick up the phone or send an email to the advisor for fear of running the clock and having your fee increase, so I don’t think that’ll ever really work for real ongoing advisory. Next, I think complexity-based makes the most sense, where asset size doesn’t really lead to complexity, we shouldn’t fool ourselves and say It does now, at some level it does if you have 100 million bucks, sure, you got a whole other host of issues and estate planning and wealth transfer things that you need to consider, more so than some with a million bucks, but outside of that, whether you got one to 5 million asset size alone means nothing in terms of flexity, but I like the idea of complexity-based…

        0:38:44.5 ANDY PANKO: The problem is, the more you tweak your model and come up with a model that can accurately reflect every bit of complexity, that model is gonna be so unwieldy and clunky that it’s gonna be a turn-off to everyone. So after that, I think flat fee makes the most sense, again, assuming you do sort of have a lack of a better word, homogenous pool of clients that I’ll want and need the same general stuff, it helps to have a niche… ’cause I’m thinking and doing the same things every day. It’s not, I got to spend 20 hours researching something. I don’t know, I just… If you’re not a fit for me, ’cause you’re not my niche, and I’ll say it in the answer, I’m not the right guy for you. So anyway, so flat fee, tremendously transparent is huge, less conflict than other few models and super simple. Everyone gets it. There’s no… Even with percent of um, I think there’s a lot of… Not smoke and mirrors, but clients know I’m paying 1% of assets, but they may not sit to how to do the math, they got 2 million dollars. Don’t worry about the percentage fee, look at the ultimate amount of dollars you’re paying, that’s what matters, you’re paying 20000 bucks or some advisor who always doing is putting on pre-canned to-do mutual fund model portfolio.

        0:39:58.0 ANDY PANKO: And that’s it. You’re grossly overpaying, and I can say that word Confidence. So these are the three transparent, less conflicted than others, and super simple. Downside, it’s simply not gonna work. And all things, like I said, if you’re all over the place with the clients you serve in areas of knowledge, you have to train yourself in it, you’re gonna be scrambling to make sense of is, which is…

        0:40:21.3 SARA GRILLO: Yeah, yeah, I wanna just pause there for a minute. In a sense, you are… I wouldn’t call you a niche provider, but I would call you somewhat specialized in that you work with folks that are retirement-focused and they need that advice on when to take Social Security, how to not get your Medicare premiums increase. And you garner these clients from an online strategy that provides information on retirement and seek those who are looking for those answers. Right, so it neatly… You’ve used a very focused marketing strategy to get to them, right, but most advisors do not… The traditional way that an advisor builds a book is by just getting word-of-mouth referrals from their clients, and a lot of times that does not translate into a focused book of business, very often it does not, because if I have a client, if I’m a wealth manager, I have a client who’s a lawyer, there’s nothing to say that that lawyer is gonna refer me to another lawyer, their lawyer is gonna refer me to the doctor that they are at the country club with, or if they’re a brother-in-law who happens to our sister-in-law who happens to own a business, and you, for example, said you are not interested in business owners, so you have to think about how do I…

        0:41:54.3 SARA GRILLO: Not just what do I want my business to be, and what do I want the focus to be? But how am I gonna feed that business, how I’m gonna form that business and be able to eat by getting those people in that particular area of focus, am I really equipped with the knowledge to serve them, Do I have a deep enough knowledge to focus on that area of specialization. And do I even wanna do that? Like some advisors can’t turn people away, like I set along the time, I’ve… So many people, I’ve said, You should the… They’re at capacity at 300 clients. The business is over-run, they’ve got people working for them, they’ve got expenses all over the place, and I’m like, You need to stream like this practice, you need to stop working with people with 200000, well, that was a referral that came in, or this and that, and I’m like, No, you need to say no to.

        0:42:49.2 ANDY PANKO: Right? You definitely need a lot of intention in all aspects of the business now, quick back story, it’s almost unfortunate to say, but I think the pandemic was the best thing that could have happened to my business, and here’s why. So when I started November 2019, from nothing, I was doing local library seminars, I was taking out centers of influence, local accountants and lawyers to launch… This was a tremendous flop, I even did, I bought a table, a wood working Expo that towards the country and was in the Meadowlands here in New Jersey, ’cause I’m a wood worker and my company name has a wood working term in it, and I was like, Let me, go be that guy to hopefully have a unique affinity with all these people in the room, a tremendous flat. But I was doing that stuff, and I knew I wanted to work with retirees, but I would have taken in of anyone that came along through those typical cast-a-wide net type type of processes. Well, a few months later, a pandemic happened, shut all that down, no more library seminars, no more lunch is no more wood working shows, thankfully.

        0:43:54.1 ANDY PANKO: And so I was home like, Okay, now what do I do? And within a few weeks, that’s when I started the Facebook group, I figured it, I gotta get more active online, and I already had a LinkedIn page, I had a Twitter page, I had a Facebook business page, but those are all on Facebook. Business page is really just a glorified contact us card. It’s a brochure. It’s not interactive. So I made this group with the intention of, let me just answer questions about tax-related retirement-related stuff, hope for the best, and that’s what I did, and because online, the reaches global or national, I wasn’t limited to just here in New Jersey or New York, so when this group finally started clicking and I got more people joining, more people engaging, more people asking me questions and me just spit in what I know about Roth conversions and Medicare and Social Security and taxes, I think people got comfortable with me, people from all over the country, thousands of people in this group got comfortable with me, and they just started reaching out, I never solicited them, they just took it upon themselves to find me, find my business site, reach out, they thought they wanted to learn more about my paid services, and it’s just the rest is history, that’s what my marketing was, but I had a very folk, to your point, very focused idea of who I wanna work with, what I wanna offer, let me make what I know and don’t know painfully evident through this Facebook group and also to less extent YouTube channel, I have…

        0:45:17.0 ANDY PANKO: So people know exactly what to expect from me, they know what I look like, what I sound like, my mannerisms, they know my technical knowledge or lack of… So the sales process was done, the courtship of them getting to know me was already done before they pick the phone up, ’cause there’s so much content of me out there just doing my thing about taxes and retirement planning.

        0:45:37.2 SARA GRILLO: Alright, but one of the so-called disadvantages of the flap-emote is it won’t work for those advisors, they can’t say no, or they don’t want to, or they don’t wanna really work with people that have some kind of a shared characteristic or interest… Correct, yeah. To what would be the second discipline.

        0:45:59.2 ANDY PANKO: Do the math, it kind of cuts off people of lower asset size, if someone’s got relatively low income, 300000 of assets, there’s no way they’re thinking twice about paying someone like me eight or nine grand when they can go to the 1% of AUM advisor down the street pay two grand the grand… And I got that. And that bothers me a little bit.

        0:46:18.5 SARA GRILLO: Well, no, they would pay for grand or five grand because for a 300%, right. All the feeders are like, Oh, that’s on a 5% to there if you’ve got under a million… Right. And

        0:46:32.8 ANDY PANKO: I struggle with that, I do genuinely wanna help, but I also… I have to view this as a business as well, which it is, so my thought was, and I haven’t quite flush this out, but think about lawyers, just because someone can’t pay doesn’t mean lawyers reduced their fee… No, maybe they have some sort of formal pro bono process, and that’s what I envision doing with my own practice at some point in… Once I’m really settled down with my clients and have my annual workflow sort of well ironed out, ’cause I’ve only been doing this for a little over two years, and I just close the parity and…

        0:47:03.7 SARA GRILLO: And you do have a pro bono kind of a support because you have that Facebook group where you go on there and you do live things and you give them all this information, I eat some extent why they have to I… But if they wanted to, you’re nurturing enough of that knowledge and that the…

        0:47:25.2 ANDY PANKO: Yeah, no, and that’s part of why I’ll always continue doing that one-to-many type of guidance, it’s never gonna be advice in a public form, I cannot give advice, but guidance, helpful hints. Education where you wanna call it… I like that, I know a lot of people are getting a lot of benefit and value for nothing, no strings attached, but I do wish I had a better way, and this is the problem one thing comes in where I can actively work with someone, give them tangible specific advice to hopefully improve their financial situation, not just say… Not just speak in generalities and sort of big words like I do the Facebook group ’cause I can’t cross the line of giving specific bias, so the only way to do that, I don’t wanna drop my feet like a 1000 bucks or 2000 bucks just because I’d much rather keep my fee as it is and just build out some sort of pro-bono program at some point, I don’t know, it just is a loose thought in my head, but that’s the other drawback is it simply prohibits people that only have a few 0000s and dollars that they’re never gonna consider paying me, and I’m okay with that for this reason, because again, I think like any profession, you should be paid for your time for your expertise, for what you provide, asset size has nothing to do with it.

        0:48:37.0 ANDY PANKO: I’m not working any less. If someone has 300 grand, that if someone has a million, 2 million, so why should I be compensated less? And same thing on the upside is ’cause I got more, I’m not working more typically, so why should I charge it more, hence the flat fee, but it does cut off people of lower and come lower

        0:48:52.9 SARA GRILLO: As… And the third one… What’s the third drawback?

        0:48:57.0 ANDY PANKO: Regulators don’t really get it. Now, this will depend state by state, so I’m registered to my home state, New Jersey, plus a few others where I have more than the minimus amount of clients. Some states like Washington State, I understand flat out, the only thing they’re okay with is percent of AUM and no if, ands or buts, even though you can make a really strong case, a percent of AUM is much worse or a model than hourly or the subscription or whatever, but whatever I digress, the states I’m retorted in hasn’t been a problem, and I think at some point I’ll hit the SEC level of assets ready to register there. The S’s okay with it. So I know other advisors who do this flat fee thing, but depending on what state you’re in, this may be a hard now, because your regulator may flat out and not allow it, if you’re managing… Investments are gonna wanna see 8% of assets under management.

        0:49:46.9 SARA GRILLO: What about maybe as a fourth one would be scalability, but there are some advisors that probably just wanna get as big as they can get, and they wanna hire people, and they wanna be able to say, I’m an investment manager with a billion under management, so that… I would this… Would it be scalable for them, I think you’d have to like the position you’re in and you’d have to hire another advisor, ’cause you still have clients coming to you, but just cutting them off, right. You’d have to hire another advisor to take those clients in…

        0:50:23.7 ANDY PANKO: Yeah, and so let’s assume I stop it, I got my 50 clients that I’m done and I can properly serve them and I don’t need help yet, the second, if I do wanna grow, I will need help. And I’d have to hire help before are growing. The second I hire someone that right there, my take on my bottom line is gonna drop, I don’t know what’s a good… Junior call 60-80 grand a year, but I don’t know. That’s a big thing. But to answer your question, it is definitely scalable, think about other advisors, you know in their practices, what’s their average revenue per client? It’s probably where I’m at 789 grand a year. Right, that are super high level where they’re… Because they can be… They’re only going out to… People are making 20, 30 grand a year. It’s probably right where I’m at, right? So they’re scalable. I’m not as scalable. If every client’s bringing in 789000 per year, groove, it can work just the same from a scalability purpose now, other advisors, and I know why I do it, they go up market simply because they can… Why, I work with one client, make an A grand when I come with one client making 20 grand, so that’s sort of the natural evolution of a lot of advisors is go up-market clients with Higher Assets and…

        0:51:36.0 ANDY PANKO: Or higher complexity or if a charge more because the advisor ultimately makes more, but from a pure scalability standpoint, I think you have to look at the average revenue per client, and mine isn’t drastically different than most advisors out there probably, so I’d be scalable. Just the same if I wanted to do, yeah.

        0:51:51.9 SARA GRILLO: Alright, I’m gonna end the podcast now, but is there anything I didn’t ask you that you wanted me to ask you…

        0:52:00.9 ANDY PANKO: Now, just to recap, I am vocal about this clearly, I do generally want to help change the industry and really make this flat fee thing and make it get some legs, but there is no perfect fee model, commission only isn’t the end of the world. I think it’s the most conflicted, but still there’s reason for it… Percenters-ing has its pros and cons. Flat fee is no different, and I’ll be the first to it, I do think it makes a lot of sense in the right situations out.

        0:52:28.3 SARA GRILLO: Alright, great, and if anybody wants to contact you, how can they reach you.

        0:52:34.5 ANDY PANKO: And I would say my business website, but I’m trying to not get more traffic there… I don’t know, LinkedIn is just a LinkedIn. And Paco on LinkedIn, you can go from there. You can message me. Go about it that way.

        0:52:45.6 SARA GRILLO: What’s the best thing you ever made with wood working. Wow.

        0:52:52.7 ANDY PANKO: Stumped me here. A lot of furniture. Cabinets, tables and things like that. I don’t have a favorite project that made this business card holder… I made a little business pothole out of walnut. How about that? I’m sorry, what’d you say?

        0:53:11.2 SARA GRILLO: What got you into this?

        0:53:14.1 ANDY PANKO: I always liked it. My father was super handy and he was remodeling our house when I was a kid, so I was always around different stages of construction and destruction in our house, and he was kinda naturally interested in always helping him grab tools and clean stuff up, and I don’t know when I got out of college, I got really interested in building stuff, built a bird house in the kitchen to bar apartment at the time, made a mess, sawdust slowly built up to bigger and more elaborate projects, and now I’m doing full built in like Walthall built in with lights, integrated adventures and all kinds of cool stuff.

        0:53:46.2 SARA GRILLO: Is that a side business?

        0:53:50.7 ANDY PANKO: It’s kind of funny story. No, now it’s just a hobby. But I did actually quasi, leave my old life when I was doing institutional capital markets banking, I tried to start up a home improvement business ’cause I always thought if I wasn’t in finance, I’d probably try to do something with my hobby. And so what I did was I was working full-time at a place. I negotiate with them to work as a consultant three days a week, and those other two days, I try to start on my home improvement business and realized quickly I absolutely hate home improvements as a job, love it as a hobby. But as a job, I just… It was other people’s headaches, I didn’t want… So within a few months, I gave up on that idea and went back to work full-time and no regrets, I’m glad I tried it, but I did not wanna stick with it. Yeah.

        0:54:32.3 SARA GRILLO: Yeah. Alright, well, thank you so much, you’ve been a great guest, and everybody is a subscribe and review my show and I will catch you next time.


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