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- Hi, this your coach, Joe Lukacs, and welcome to this episode of the Magellan Network Show. Hope everybody's doing well, everybody's staying safe, and yes, if you're on the video portion, you see that one of my companions, Doug the dog, that's what he's actually called, he's a rescue, is hanging out in my office, and hopefully he's not gonna snore too loud through this. So I want to come to you guys today, and I want to talk to you about just some conversation that I'm having with my clients, and I think this is really important in terms of kind of setting the stage for what our industry, what the opportunities are gonna be, going forward. I think, when I look at some of my clients, I'll give you one very, very important example, so I've got one of my clients, he's been with me many, many years. His lease is coming up at the end of this year, just the lease part is 5000, not including all the other stuff you have to do around, keeping an office going. His assistant is retiring at the end of this year. He has a junior advisor. So we're in a conversation and his office has not been open, he's actually in New York City, so he's sequestered, his junior person's sequestered, and his assistant's sequestered, so they're like in three points, not even in the same state in one regard. And we're talking and he goes, "What should I do at the end of this year?" And I go, "What do you mean?" "Well, my lease is up." I said, "Yeah, okay. "So what do you think your options are?" He goes, "Well, I've been doing this, "I've been using Zoom and GoToMeeting, with my clients, "and they tend to like it. "Both of my clients have retired, "they're down in Florida full time, "so we're doing it that way "and they kind of enjoy it. "My staff is okay, it could be better, "but at the end of the day, "I put $5,000 back in my pocket "if I just found a Regus and I just work from home." I said, "That's always a possibility." And I said, "You got to think about it, "if you look at our industry," and I talked about this 15 years ago, "What do we do?" What's our deliverables? And I want you to think about this for a second. It's information and intellectual capital, slash intellectual property, right? Your recommendations, your IP, and information. All that's digitized. All that's virtualized, right? There's no real physical requirement to be in the presence of a financial advisor. There is not. As long as you can do digital signatures and you're paperless, you're ready to go, right? So what would hold an advisor back? Just obsolete thinking. Reading an article in InvestmentNews a couple weeks ago that if there's advisors, and, like my group, we're growing our businesses, we're adapting, we're seeing where the opportunities are, and we're stepping into that. And then I read about these other advisors who are like, "Well, I can't see anybody. "Nobody can come to the office, "I can't go see them, we can't do seminars, "so we're out of business, right?" That is a fixed mindset, not a flexible mindset. So, the game in our world right now is flexible mindset. If you're operating with a fixed mindset, which you can't change, or don't want to, look, I'll be blunt, you're gonna be obsolete. And you may not wanna hear that, that may cause some of you to unsubscribe from what I'm doing, and I appreciate that, and I totally respect it, but I'm not gonna sit here and blow smoke because you guys wanna hear something different. I've been predicting, not because of COVID-19, but I've been predicting the virtualization of our industry, because economically, it has to happen. It's too overhead dependent. And so, this is just now forcing the biggest beta test in the history of our industry with virtualization. And guess what? It works. Yes, there's some nuances, but let me share with you, so getting back to my client. So, we're coming up with a game plan where we're going to not renew the lease in the office, and I'll tell you this, if you're in the commercial real estate business, that and the travel game, I don't want to be around for decades, right? Gonna get rid of the office, we're gonna get a Regus, we'll get a Regus thing, we can pop around all the boroughs now, right, if we need to. We'll save 80% of our overhead. And then we're talking about the assistant now, his assistant's over six figures, right, in New York City, things like that. So when they retire, like what are we going to do? He's thinking kind of this way, which is very, kind of, "Well, "we gotta find some way around locally," and I go, "Well wait, we're virtual, why do we need to do that? "Why can't we go find somebody in Oklahoma, "or Nebraska, or South Dakota "who's very good at what they do, "or maybe a military spouse "who gets the chance to travel, right? "We can probably get a highly capable person for half." And then, all of a sudden, you know, we're putting $100,000 back in the black ink on the P&L. Interesting, right? And we're just talking about this and I can hear the gears turning, right? The light bulbs are coming on, things like that, and I think that's what's really important in our industry. You could look at this as, "Oh my gosh," or you can look at this as, "You know what, "here's maybe an opportunity to do a real shift pivot." And I know there'll be advisors who are gonna be stuck in the legacy models, and I think there'll be organizations, that are gonna be fixed in their thinking, but look, I'm always gonna be an honest person here. I always back up what I what I want to talk about, and I don't really care who I upset or who I piss off, that's never been my marching water. But here's what I really, truly believe. I think the model of the future, and look, there's three practice models, right? There's the lifestyle model, the ensemble model and the enterprise model, and I'll explain all three real quick. So the lifestyle model is the easiest one to virtualize, I've got clients who are virtualized now, you know, work from home, part time virtual assistant. You know, we won't get into taxation or anything like that, but, typically, profits before tax, 80-85%. Where's your overhead, right? You're doing everything virtual, you work on by referrals, I mean, it's a beautiful model. You know, there there are entities, that gross $1-$2 million a year, POPLINE, but by the time to get them paying the overhead, the marketing, all the (imitates going down list), the founder owner's making three to five hundred thousand dollars. Well, I can have a guy make three to five hundred thousand dollars with 150 households working part time with 80% less BS, right? Interesting. So the ensemble model looks like, again, looks like the lifestyle model, but it has maybe a junior advisor, maybe another professional, again, it could be virtual, it could be 1099 Outsourcers, right. You can do a million to two million dollar top line again with some really good profitability there and you get a lot less BS, right? Very good. Now both those also have the prerequisite that they're independent, and you cannot do this in a wirehouse. They won't let you. They'll tell you that you can do it, but really, you're going to be under the thumb, and why would I give half my top line away when I'm not getting anything forward? What, some crappy technology and some behind the times compliance? Where's the value prop in that? It just doesn't exist. So then we get into it. So the one model I was always interested in is the enterprise model, right, which is, you know, multiple partners, multiple advisors, half a billion to a billion, two, three, four billion dollars under management. Does that always have to be bricks and mortars, or can you virtualize that? It's been interesting, the last six weeks we've had to trial by fire, and I've got some clients that have those level of enterprises, and what we're finding is that yes, it is possible to build an enterprise level organization, multi billion dollars, with a very small footprint, everybody working remotely. And that, to me, has been the game changer. Because now I sit there and say, "Okay, "so what do you really need?" And you know, it goes back to what we do as advisors, right? So what is our deliverables, right? And think about this, you provide information and intellectual property, i.e. you're consulting your recommendations, and you provide relationship, right? That's what we do, three things, right? All could be virtualized, because they've had to be with everything going on. And I am not under any illusion that this thing's gonna go magically back to the way it was. I don't think there is going back, I think there's just the way it is, right? Plus or minus. And I think the advisors who can adapt to it are going to have-- Because look, the boomers are still retiring. Advisors are gonna retire. I think they retire at a higher level, and I think some of the advisors were fixed mindset, been at this thing for a while, they're not gonna want to adapt, they're not gonna know how to adapt, they're not gonna want to go through the energy of an adaptation, and they're going to call it a career. Fine, great, but this is a seminal event in our industry. Make no mistake about this. I've been doing a lot of research at other industries, I follow investment banking anyway, cause I like following that, and, you know, I'm looking at how investment bankers and leaders are talking about how their organizations are going to transform, like, the Barclays CEO said, you know, "Why would I want to have 4000 people when building? "It makes no sense to me." Investment bankers are not jumping on airplanes to visit clients, they're doing things with Zoom calls, and they're being with their children and their families and they got balance. You know, most of us bankers burn out. It's a pretty intense industry, and you burn out pretty quick, you make your money and hopefully you don't get a heart attack, and you live ever after. Now you can stretch that career out because the game is going to change, right, going forward. So I started looking at all these other things, telemedicine, great example there, with virtual doctor appointments. I mean, there's things that are happening that you would never, never see, well, how that how's that gonna work? Are professionals perfectly suited for it? I mean, Dentists have to, you know, I mean, you're gonna have to go physically see a dentist right now. Lawyers, you know, if you're in litigation, right now until the courts become virtual, right, you know, if the courts aren't open, it's hard to practice, right? Unless you're doing another things. Our game? Ubiquitous. Just, we're there. Just gotta embrace it. But there will be fallout. There'll be winners and losers in this game, make no mistake about that. Who isn't gonna win? The advisors who embraced virtualization, again, whether your a lifestyle model, ensemble model, or enterprise model, doesn't matter, virtualization and profitability are where it's at. Now, some of you're sitting there saying, "Well, "how do you how do you develop business," right? Take everything you've done and put it in the Cloud, right? So, for example, I've got clients, instead of doing rollover workshops with dinner and all that jazz, right, were doing either Zoom webinars or were doing Evergreen, where the content's recorded, and it's like a funnel, and people watch it, and then they go and get an opportunity to have a Zoom meeting with the advisor. Hundred percent virtual, digital marketing, hundred percent, right? And that's where the game is going to be. You can get a referral. Look, I've operated on interesting, so my practice. When I left New Jersey 20 years ago, I literally had a bricks and mortars game. I had, like, a Regus style office and I used to go visit my clients first when I first started out, then I got smart and I got a Regus and made people come to me, then after a while, people don't want to come, they said, "Hey, I don't want to come back. "Can we just do it over the phone?" This is, like, 1995, 1996. I remember cause I had a small computer and AOL, I remember the ding dings in my office, that's how long I've been at this thing. And when I moved to Florida, I lost one client, maybe two, everybody was already used to me working virtually, and so for 20 some odd years, we built this house, I built this office. It hasn't affected, other than the fact that I can't travel, I can't go to my favorite restaurants right now, my gyms closed. My business really hasn't been affected at all, with everything. And it serves as a model for many of my clients, the way I operate, right? Virtual team, everything. So that's where our industry is going. And I know some of you are cynical, "Yeah, but I like the office," or "I've got little kids at home," or "I don't want to be home." Look, I get that, so maybe you're gonna maintain a small suite, right, for you, so the place to go do your thing, fine. But you don't need also overhead, is my point. And here's the other thing it does. It gives you locational independence. I want you to think about this. So if you're doing your game in a place where if you live anywhere in the United States, or maybe anywhere in the world, where would you live, right? And if you say, "Where I am right now," then you're good. But chances are, most people would say "I want to live there," or at least "I want to spend more time there," right? This gives you the opportunity to do that. This gives you the opportunity to do that. Where if you're, like, in Chicago, right, and hey, I like Chicago, I'm in Chicago. I like it in the summer, too. Who wants to be set foot in that sucker in the winter, right? So what do you do? Hey, I do my thing in Chicago where it's nice and then in the winter, I go to Arizona, I go to Naples I go wherever I want, I take my game to wherever I want to take it to, right, and I go rent a house or whatever I want to do, maybe I'll buy a second home, and maybe at some point even domicile in a low tax state, right, do some tax arbitrage, which is great, and you go do that. Right, and and you have your lifestyle, you have your game, you have your business, you have your net worth, you have everything the way you want it. These are not hypotheticals, by the way. I have clients who are doing this today, they've done this before all this. This is not a hypothetical conversation. This is what's going on. So then you got to sit there and say to yourself, and I think this is also very important. For last several weeks, a lot of us have been in scarcity survival mode, right? You're like, "I just wanna get through this thing." And I want to now offer you a different possibility, a different viewpoint. What would happen if you use this as a way to redesign what you do? You take this, this terrible situation, and you say, "You know what? "I'm learning how to virtualize everything. "I'm learning how to lead, virtually, my team, "communicate with my clients, get new clients, "I'm looking at everything "without bricks and mortar," right? And I'm not saying maybe you don't have a small, you know, like a Regus type thing to go meet with clients, renew, but clients don't care. Here's the funny thing. I think clients have finally come to the conclusion that they don't care how big your office is, or what building it's in, or how you dress, or anything like that. I mean, not that you can't be, you know, sloppy, but what they care about, do you act as a fiduciary? Do you have their back? That's what they care about. Period. So, these are things that we all as an industry need to go ahead and understand, going forward. That this is the way the game is going to be played, you know, forever. And so you got to start looking at things and say, "Okay, how's my technology," right? "How are my business partners," right, and look, for some of you men or women in larger firms, look, you're gonna have a moment of reckoning. And for some of you leaders who might get a hand on this, may get a copy of this, you have a choice to make. Either you're gonna find a way to serve advisors in a virtual manner, but at different cost structure, by the way, in different economic deal, or you're gonna cease to exist in 10 or 20 years. Period. Maybe even sooner. Our industry now is going to shift because it has to. I am looking forward to that for the new world. Because we've been building it here inside of Magellan Network for over a decade, and now it's here. So if any of this made sense to you, number one, share it with your colleagues. Let's talk about this. Number two, ask yourself, "What would happen if "I was never allowed to go back in my office, "for whatever reason, "just wasn't allowed back in, done, forever, "what would I do?" Next question, "Am I living the life and lifestyle in the location "that I always would want? "Or would I want to go somewhere else, "or spend more time somewhere else "So I can have more of my ultimate life and lifestyle?" You know, I've always said, being a financial advisor is like a platform. It's a vehicle to create the ultimate life and lifestyle. But it's only a vehicle, it's only a platform. It does not happen automatically. You have to be able to shift, change, do the work, and make it happen. So, thank you for listening. Thank you for watching this episode of the Magellan Network Show. I look forward to seeing you on future episodes and like I said, please like this podcast. Follow me on YouTube if you like, get the word out, and if you have any questions, reach out. Thank you.