Episode 3: Tom Mingone 1/2: Generates >$1m annually - insights and ideas.

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Todd Taskey: Tom Mingone, thank you for being with us today. I'd like to jump right in and get a little bit of background on who you are and the production of your practice, a little thumbnail sketch, if you will. So, if you can jump right in and tell us a little bit about who are, that would be terrific.

Tom Mingone: No problem, Todd. I've been in the business for 18 years now. I started right out of college. I am 40 years old. Our practice is the New Capital Management Group. We are in New City, New York. We have four full-time and two part-time staff people who support myself and three other advisors. My production in the last couple of years has been about $1,250, 000 of GDCs. Two years ago and last year we were at about $1,350,000 GDC. The practice in the aggregate with the junior associates as well, does over $2,000,000 of gross dealer concessions (GDCs).

Todd Taskey: So, the $1.2 million and $1.35 million, that's your personal production.

Tom Mingone: That's just my piece, yes.

Todd Taskey: Got it. And to create that type of production, you said you have a support staff of four full-time and two part-time?

Tom Mingone: Yes.

Todd Taskey: Good. There are a lot of really interesting things about what you're doing in you practice, I wanted to get in... Just take us back a little bit to the early years. How you got started, what was it like during those first years, how much you struggled, if you struggled, that type of thing.

Tom Mingone: No problem. I was very fortunate in this business in that I got off to a pretty quick start and really never looked back. And I attributed that to two things. First of all, I was fortunate to have grown up in a family business locally, where my father owned a restaurant and I met a lot of people through the years from the community. So I had doors opened for me that might not have been open to a stranger. However, having a door opened and being able to convert are two different things. People will see you out of courtesy, they will not do business with you out of courtesy, you have to bring value.

I was fortunate also to be in a branch that had a very good trainer and mentor for me who taught me early on that our product is our process. So we were never a product-oriented firm in our philosophy and at the time it was just me by myself, so that when I met with someone early on, I would always walk them through a process. I did not have the securities license at the time, but even just doing the insurance, I would never go in with a yellow pad and just start selling a policy. I would ask them a lot of questions about their goals, we would come back with a full analysis about the financial state if something were to happen. We asked about the budget, showed them alternatives, so it was very consultative and as part of that process, it was also taught to tell them the two ways that I get paid.

That was really my whole marketing plan. I would say, "Look, the first way I get paid is a result of the work we do together, we cover a need and you decide to act on it and I just ask you to place the business with me since I am going to do all the work. The second way is whether or not we uncover any needs or do any business together this time, if you find the process to be of value, I would just ask for a favorable introduction to two or three people who might also benefit from my services."

That was very well received and if we just left it at that, probably not much would have come of it. But we then had again a process to say, "Ok, at the end of the first meeting I had a referral sheet, and I put on the top, favorable introductions and I number it one through ten." By doing that, you had them a little bit nervous because they had to come up with ten, but at least if you got two or three, you felt like it was successful and they felt like they might have cheated you a little bit.

I would hand it to them at the end of the first meeting and I would say, "Listen, I am going to go back, crunch some number, do my homework. When we meet next week, I'll come back and lay out some recommendations, to try to fulfill the needs we discussed within t he budget that you gave me. And what I'd like you to do while I am doing my homework is start to think about some people that you could put on this list that I might be able to contact, if you felt that this is valuable. If you feel more comfortable reaching out to them to tell them that I might be calling, that will be fine. The other thing I want you to understand is how I am going to approach these people..." Because I think most people when they think about giving recommendations or referrals get nervous that they are going to get some backlash from their friends or family members saying "Geez, why'd you stick this guy on me..."

Sometimes the person I was speaking to was referred themselves. So, I'd say, "if you recall the way I approached you...", and then I would go on with what I would say, and if they were people that I got through some other means, I would explain to them, "Ok, here is how I will approach the other person. I will call them and say, "Hey listen, I got your name from Todd and although Todd knew nothing of your financial situation and did not suggest in any way you needed my services, he was impressed with the process and thought it was of value, so I'd like to spend 15 minutes with you, introduce myself, tell you a little bit about what we do, so that if now or at some time in the future, you or anyone you know may have a need, you will know who I am and how to reach me and have the faith to go with the name. Would that be ok?"

Todd Taskey: I would imagine it was a lot easier getting referrals from people that you were referred to already.

Tom Mingone: That's true. That is definitely true because they already went through that process and knew that it was innocuous and they were comfortable with that.

Todd Taskey: Did letting people know Tom what you were going to say to people help making them more comfortable giving you more referrals?

Tom Mingone: It did because I think that they sensed that I wasn't going to be aggressive with them, and I reassured them that, look if they say they're interested, we'll set a date. If they say, call me back in two weeks, I will call them back in two weeks. If, however, they say, "I'm not interested, thank you very much", I'll say thank you for your time and I'll hang up. I will not persist. So, I am not going to push these people into it. That takes a lot of pressure off of people.

The other thing is by saying "If now or at some point in the future, you or anyone you know has a need for my services, " this takes away the feeling that "This person is coming over and I am going to need to buy something." I was saying "maybe it's not now, but I just want you to know me."

Todd Taskey: I guess the great question that always comes up... and we are going back about 15 years or so in your career. Do you still focus as much on the referrals as you did back in your early days?

Tom Mingone: I am embarrassed to say that the way we are in our business, when something works well, sometimes you stop doing it. I really don't do it that way as much anymore and part of the reason is that when you are early in your career, it's all about activity. You start to get more focused on the right type of activity, not just activity for activity's sake because you have more clients to serve, you have fewer hours in your day, and you really want to sharpen your accents, decide which trees you want to cut down, but you are not out there just talking to anyone and everyone.

When you go through referrals, you have very little control over the client that that client referred to you. Although people tend to flock with similar people, it's not always the case. Now, our referral practice comes more from relationships with other professionals. They understand the type of client we look for, they understand how we can help that client, and more formally we have a relationship with three different accounting firms where we are partners in business, they have their licenses, and we share the revenue. And that's been not just a referral like a casual referral, but a very formal business process. We are partners in business and they take it very seriously, so that's been really where a large piece of our new business has come from now.

Todd Taskey: Good, and we're going to spend a lot of time, before we're done, on the CPA relationships because I know a lot of people would like to duplicate the success you had there. If I could just wind back for a second and focus, you mentioned the process part. Just so we have an understanding as we're listening, do you charge a fee for your process or for your planning, number one, and how much of the $1.2 million and change of revenue that you have is coming from fees, how much is coming from, let's call it, commissions or revenues from the industry, and then regardless of what those answers are, how much of your total revenue is not in fees, but caused because of the process that you take clients through?

Tom Mingone: Those are all good questions. The first answer is, yes, we charge fees. I did not charge fees early in my career and part of it was just the state of the industry back then, it was not customary to charge fees. Although some people did it, it was a little bit less widely accepted, shall we say. And part of it is just when you are new, your lack of confidence that you can bring value to someone that's worth paying for. As you become experienced in business, you start to understand that you can add tremendous value to people's lives and that's worth money. You also learn that people are happy to sit there and talk about free advice for as long as you are willing to give it, but at the end of the day, they may not be motivated to take action.

If someone is not willing to pay the fee for the answers to their problems, they are probably not willing to take the action steps that you are going to propose at the end to the client anyway. So, we believe very strongly in fee-based planning. Now, having said that, the fee itself represents a very small percentage of our annual revenue. I would say that out of $1,350,000 last year, $75,000 of that was planning fees. It's not a big revenue source, but to answer your other question, certainly we do a lot of repeat business because the client base is large, but on the new clients, I would say 85% of our new business was generated from the financial plan that we did. Because when you sit down and do a plan for people, start to finish, you start to take control of their entire financial picture and with one client you are going to do the investments, you are going to do life insurance if they needed it, the long term care insurance, disability insurance, you name it. You're going to control that client's financial life to the extent that they have things that are transferable over to you.

So we find that when people pay for advice, they are more apt to take it and that they want it in its entirety. And that's always has been our philosophy at our firm, is to look at the whole picture. We feel that that differentiates us because most people are strong in one discipline or another, but they rarely are good at pulling it all together for the client, including estate planning, the investment management, and the insurance. We pride ourselves on being balanced enough in our expertise to quarterback that for the client.

Todd Taskey: So, if I can restate what I think I'm hearing, it helped you to weed out the not so serious clients earlier on in your process and the folks that are paying you a fee, a large percentage of them sound as though they are implementing just about everything you recommend in the plan.

Tom Mingone: Absolutely. That's exactly correct.

Todd Taskey: Why don't you take me back, Tom. You were a typical' either insurance guy, or brokerage guy, or planner guy in the business and getting paid because you got commissions from products and referrals. What was the impetus that caused you to say "I'm going to start charging fees", and what was it like? Emotionally, were you scared of doing that? Take us back to the early times you were charging fees, maybe tell us how much you were charging in fees, what that process was like for people that wanted to start it down that road.

Tom Mingone: I'm smiling as I you're saying this because I'm remembering back at what a chicken I was. What really prompted it was, our firm really grew the first time in a big way when I started doing retirement planning seminars. At the retirement planning seminar, the giveaway, if you will, was that the folks were entitled to a complimentary financial plan and a visit for an hour at our office. We did a good job of framing that up, people were excited to take advantage of it. We positioned it as sort of a fifth session of the class, which was four classroom sessions and a one-on-one consultation. We were getting probably 90% of the people who come in for an appointment after I got better at it, probably early on it was 50%.

The people would come in, take advantage of the free consultation, and then we would come with some various needs that they had and say "Ok here's how I could help you, and let's meet again and I'll lay out some ideas". Either one of two things would happen. The people would be very ambitious and make their next appointment, come in, listen to everything you had to say, because it was free and they were just happy to listen. The second thing, they would say, "Well, how much will this cost?" And you explain, "Well, it does not cost anything, but in the end we will do some business together..." And it was ironic because people almost became uncomfortable that they were not going to pay for the advice where they almost expected to.

Todd Taskey: So, they were sensing that something else was going on that made them uncomfortable because they were not going to write a check.

Tom Mingone: Right. Most people start to say, "Well, this sounds too good to be true, what's the catch? How do you get paid?", and then "Well, if you buy something...", they would respond, "Well, what if I don't need something? Are you going to be compelled to want to recommend something just because that is the only way you can make money?". They would sense a conflict that I said well we could solve this by at least if I charge enough for maybe my time and my staff's time to do the plan, at least we are breaking even, so the people do not feel like I am using it as a loss leader.

Also, I just did not have time to see all these people, which is a nice problem to have and I think that evolves in someone's practice where, again, early on, you're happy to see anybody and then it's a question of am I seeing the right people and how much time do I have in my day, so we got very busy very quickly. A lot of these people are spinning my wheels and we wouldn't find that out until we made all of our recommendations and then we would follow up with them and "Oh yeah I'm interested, call me back". There was just no sense of urgency on their part.

So we started charging fees to weed those folks out. I was all too brave if I could muster up the courage to say, "Can I have $350?" It cost $350 for a plan. Then I would just sort of just close my eyes and wait for the answer... thinking "Oh, they're going to kill me." Now, we routinely charge $2500 or $4000 and $5000 because over time...

Todd Taskey: You have to start somewhere...

Tom Mingone: You have to start somewhere and just to give them a little bit of something to write a small check to commit is certainly a huge step in the right direction. And then over time, you will start to sense... that's something that it's very hard to say how to price a fee. When you do a plan for someone if you're working with someone worth $5 million dollars and you quote him a $500 planning fee, there is a good chance that the client is going to perceive that to have a very little value. And unfortunately, people perceive sometimes that if it costs more, it must be better. Sometimes, there is a reverse psychology when you are trying to price it high enough, not too high so that the client backs off, but high enough that they say, "Well this is probably going to be worth my time if it costs that much", and this person will probably spend a lot of time with me.

Todd Taskey: With $75,000 worth of revenue last year, although it isn't a large percentage, it certainly does offset a good portion of your overhead or at least some of your overhead.

Tom Mingone: Absolutely. It's a huge help and it is work that we would have been happy to do to get to the products anyway. It just takes the burden off the client. We tell the client that there are two parts to the process: the planning phase and the implementation phase. In the planning phase you are going to pay me for advice and we're going to tell you what's good, what's not good, and you can do with the advice which you choose. If you choose to implement the advice, you can implement that with us or the guy down the street. If you brother-in-law does what we do, that's fine. You would have paid me for my advice and my time, but more often than not, 95% to 99% of the time. The client, after you've been that far down the road, that many meetings down the road, doesn't want to go to someone else and then explain what needs to get done. They just want it done.

Todd Taskey: But giving them the option to do that enhances their comfort level.

Tom Mingone: Absolutely. Because they feel again that the pressure is lifted. We don't like to push people, we like to pull them. And I think that's been our business philosophy for years and I think that we find it useful. Think about yourself going into a store or a car dealership, or somewhere where you expect to be sold. And just how uncomfortable you are, inside your stomach saying "I hope they're not going to come over to you, I hope they don't talk to me". Whereas, if you're working with someone who, you feel, is educating you, presenting ideas and solutions to your problems, and you together deciding on which solutions best fit you. It's a whole different process and feeling. That's kind of what we build our business on.

Todd Taskey: I want to focus for a second on one comment you made. You said, "We made very busy very quickly" and you were attributed that to the seminars. We always see these seminar systems advertised. A lot of people talk about them. Can you tell us a little bit about how you got into them, what program that you used, and the most important question, is the seminar process of generating business & gathering new clients, can that still be effective today, in today's marketplace?

Tom Mingone: Well when we started, we used "Financial Strategies for Success over Time" which was a successful money management seminar system. I was introduced to it by some of the marketing folks at our firm. Basically I went out for some training and they told us exactly how to structure a business plan, exactly how to implement it. What was great about this particular seminar system is that it was completely turn-key.

A lot of people had the same seminar in my firm and a lot of people, but nobody else did as well as we did, and people used to ask me all the time, "What's your secret? I have the same system, it's sitting on my shelf." Or, "I have the same system, but we are not having the same success. What are you doing that is so unique?" And I said, "I'm doing exactly what they told me to and I am not trying to second-guess what I was taught or to think I know better. I am doing what they told me to because they are experts in seminar marketing." If you do what they tell you, it works.

I'd love to take credit for this grand scheme that I came up with, but all I did was follow exactly what I was taught to do. At the time, the climate was right for this type of marketing. People were paying $49 a couple to come to the seminar, which again, gives them that little bit of paying, so that you know that if they are giving up four nights of their time, two and a half hours a piece, and they are writing a check for $49, these are motivated people.

Todd Taskey: Yeah, they're committed.

Tom Mingone: That worked very well and it still can work well. I'd still say, though, that the seminar marketing opportunities are more limited today than they were at that point in time. We were on the front edge of the wave. Since then, you have a lot of competition with free dinner seminars and different things like that. I've never been a good enough salesman to get up an hour over free dinner and get someone motivated to come and see me. It's probably just because I am a little bit more laid back in my style. I am not able to communicate quickly and concisely what makes us so great over dinner. Whereas in the four two-and-a-half hour sessions, you really get a chance for your expertise to shine and the client seek you out as the structure and the professor, and they've paid and it was sponsored by a local college.

Moving forward, we still do some seminars. We have found that one of my junior associates who is out in Connecticut, where that market was not nearly as tapped as ours was, he is having better success with seminars than we are locally because I was in this market for ten years doing ten thousand pieces a month in mailings and there's just...

Todd Taskey: Invitations to the seminar?

Tom Mingone: Yeah, so I would say everyone in my small community has either come or decided that they don't want to. So, we're giving them a little time to cool off and we do maybe two a year now, and we get decent attendance, but it's not like the old days, I'll tell you that much.

Todd Taskey: And let me ask you, I know it was a turn-key system like you said but this, if I remember was a time for you, that you really started to incur some significant expenses, you really invested in the marketing of your business. In your mind, so maybe you can comment on that. And my fall question is, in your mind, is this the time in your career when you stopped being an advisor in business and really grew into a business, a structured business?

Tom Mingone: Yes, I think, to answer the second question first, absolutely. Going back to the first part, of when I first got into it, what became clear to me as I listened to these folks doing the training out there in Portland, Oregon. They laid out, ok you need to schedule one seminar session a month because it lasts four weeks. And here's how you go about it, here's how much it costs, and here's the lead-time. So and then they gave us some projections on how much business would come from each seminar. So I figured if they were like most people selling something, they're going to slightly exaggerate the back end, so I figured I would take their projections and cut them in half, which proves to be accurate. And so, they were, what made them so great is that they laid it all out for you and they allowed you to see the business plan, and I remember calling my wife from a hotel out there and saying this thing is going to be great, but I foresee that between not only the investment, because it's about $ 4,000 a seminar, but if someone's with you for four weeks, that means, and you have to advertise that seminar, you start paying for the mailings two months in advance, and it's a month to the seminar, and then you see the client for the first time, and then after you see them for the first time, they come back maybe a second time, which might be a month later, and then maybe you close them, and then you got to get paid. So, it's really like in my mind it was going to be a six month lead time from the time I paid for a seminar, to the time I actually got money in my pocket. So I did some math and I said to my wife you know what? I think we're going to go $50,000 in the hole here, out of our own money in order to make this thing fly. But here's the opportunity I see, and she said "Look, you've done a good job making decisions in your business in the past, and this time will probably no different. So whatever you think is best for us then, go for it."

And that's exactly the way it played out. We had to dig into our own pockets, for $50,000 to invest in the business. And it really did create the climate of a business, where most people think of our business as something you don't have to invest in. Sometimes to grow it you do. Then from the volume we started generating, early on I would get fifty households into a session, and I would get about thirty appointments from that. So, you're getting...

Todd Taskey: Fifty households Tom, you had what, seventy or eighty people in a seminar?

Tom Mingone: That's right. It was actually we would give them two choices, a Tuesday and a Thursday, and actually we would have like forty to fifty people in each class, but each class was a repeat of like the Tuesday class we did the same on Thursday. So basically we did it twice over the month, and had half as many in each class so it was a little bit more manageable. But yeah, we had that many people and we would get thirty appointments, and then from those appointments you know, it's nice to have thirty appointments, it's a great problem to have, but those are just opening appointments. Then you have to see the people again, someone's got to do the work in between, someone's got to make the follow up calls and schedule the next meeting and I started to see that this is physically not possible without, at the time I had one secretary. I said this is not going to work, we need someone preparing the cases, we need someone to be following up on this stuff, we need people to help with the paperwork if the business starts coming in. So it was what we call an elegant problem to have, where you go from not enough people to see, to how am I going to manage this flow of work. It forced me to start thinking about what jobs needed to be filled, and start going out and getting the people to do that. But it was extremely scary, you know...

Todd Taskey: I guess it's a little bit easy now as a listener to almost dismiss the $50,000 in the hole you went, because last year you made a $1.3 million in revenues. But it really was a big step for you at the time, wasn't it? A scary step.

Tom Mingone: It was, I was probably making you know $150,000 to $200,000 at that time. So you're talking about taking a quarter, I mean that would be the equivalent of me making $350,000 investment today in the business. So your point is valid, I mean those numbers were huge to me at the time. But I was confident that, and I think most of us feel good about the work we do when we are in front of the client. And once you feel good about the fact that that problem will be solved, you start to see that the sky is the limit.

Because as you learn early in the business, activity is what it's all about I mean I consider myself good in front of a client, but I don't consider my success to have come from how good I am in front of a client. My success comes from being in front of enough clients, just getting up to bat enough times, And I think that...

Todd Taskey: I guess that will probably always be a truth in our business.

Tom Mingone: I think so, definitely.

Todd Taskey: So let me follow up on this concept, I'd like to understand, if you can maybe just take us through the evolution of the infrastructure of your office. And maybe if you can, take us back to the first assistant that you hired, you know, what your revenue was, how far in the business you were, and maybe just kind of rapid fire into where you are today, And if you could, take us through a little bit about what the office process is like for a producer that generates you know, the type of revenue that you do.

Tom Mingone: In the beginning, I would say that I was doing about a $100,000 in revenue when I decided that I needed my first full time person, I had started with some part time people just helping out, you know you get someone for a few hours a day, And so I hired my first full time person and again your scared because you say "Geez, I have to pay the salary", and you know if your paying someone at that time, maybe it's twenty-five or thirty thousand dollars for the year, you think that's such a large chunk, but it helped me to think in terms of the fact that if it's 24 thousand dollars, that's $2,000 a month, and I'm not committed to the full year. If it's not working I could always lay that person off, so I tried to think of it in monthly increments instead of annual, just for my own sanity.

Todd Taskey: I think that that is very, for somebody that's had a few office personnel, I think that's a very helpful concept, that if you go out and hire good administrative talent today, they could be thirty-five, forty, or forty-five thousand dollars a year, and it becomes very intimidating, but as you say, if it's a seven or eight thousand dollar commitment to give this a try for three months, it makes it a lot more manageable to take that step.

Tom Mingone: Exactly, and I think that's key. So, again, if you're sitting there doing $100,000 in revenue, it's hard to think about a new expense that represents 30%, 25%, maybe today it's 45% of last year's revenue, it takes a lot of belief that this person is going to allow you to do more of what you do in order to make up that difference and maybe still come out ahead, because at the end of the day, you have a person to manage, and if you break even, well, that's not really gross, because you have more headaches and the same income. So you want to end up...

Todd Taskey: I'm sorry. What happened when you hired your first person in terms of income and what did you have them do for you?

Tom Mingone: Well, it was funny, when she came in, she had been in more formal arrangements before, and she said, "What's my job description?" and I said, "Pretty much everything I don't like to do." [laughs] Including watering the plants.

Todd Taskey: That must be a broad description.

Tom Mingone: Yeah, it was. So we did try to refine that for her, so she knew what she was in for, but basically, early on, the key function of staff was to get paperwork off my desk, and to follow up, like so. If we wrote an application for an IRA and the money was in transit, it shouldn't be me following up to see where the money was, it shouldn't be me interfacing with the broker/dealer to say the social security number is missing, can you get the client to sign a new one or whatever it might be. So anything that was just, you know... People in our business that have heard the Kinder[sp] brothers speak, they refer to it as green time. You start to say, which part of my day earns me money? Which part of my day stops me from earning money? If you think about that, a lot of us are all to happy to go home busy at the end of the day, feeling like you put in an honest day's work, and you sit there and say, "But how much revenue producing activity did I do today?" and revenue producing activities is calling clients and seeing clients, and that's it. I mean there's nothing else we do that generates revenue. So, you start by taking the most menial jobs and delegating them, and I was still responsible at that time for the thinking roles. So I still had to do my own financial plans, I still had to make my own recommendations to the client, run all my own illustrations, because I didn't have anybody at that time that was in a position to start deciding how my clients need to be positioned.

So we started out with just an administrative type of person, next step was to get someone to help me on just inputting financial plans, because that was really data processing, when you think about it. So I actually hired my sister-in-law for $20 a plan to input all the data. She did not know how to manipulate the data or to affect the outcome of the plans, or even what it all meant, but she knew how to type, so that was helpful. So I had her inputting the plans, and then I would manipulate them and do the recommendations, and when we got too busy for that, the next step was to get someone who understood enough about our business to at least come up with some preliminary recommendations, and so I hired someone that had very good computer expertise, she was actually a computer consultant for me first, and then she went into the business, and was struggling a bit with the business. But she had all the tools, she just didn't have enough people to see, so I said, well, if she understands the process, she's licensed in all of what we do, let me have her at least start with some recommendations and some [xx] allocation modeling, and these different things. She was good on the computer, so she could make spreadsheets, and show different things, and now we've gotten it to the point where that role is full time planner, and that person really gives me the file pretty much complete unless is it's a particularly complex case, and everything is the way I want it after nine years of working together, so right now if we fast forward to the staff, we're sort of broken into departments. We have the marketing department, which is my personal assistant, who reaches out and makes all the appointments, and does all the follow up with clients that don't say yes the first time, so I don't pursue, unless on a rare occasion she thinks that the call requires my attention, I don't call on those clients to say "When are you coming back in?", she'll do that. She will not try to sell them on why they should come in, if she feels like they're losing interest, then I might get them involved. But it's just simply the administrative part of "When are we going to get together next?" or "Geez, you had to cancel last week, when would you like to reschedule?" Just someone to stay after the clients is very valuable. So that's her role. Then we have...

Todd Taskey: To follow up on the concept of the 'green time' you had mentioned before, you aren't even calling existing clients to get them to come back in for reviews and for that kind of stuff, you actually have someone in your office doing that for you?

Tom Mingone: Yeah, that would be the person we just discussed. So we have certain clients that are entitled to annual reviews. Certain clients, quarterly. Certain clients, semi-annually. Those clients are all grade one through 4, like an A, B, C, and D type of structure. It's a very systematized process of when it's time to call people in for next meetings. Of course, if a client calls in between, we just set up a date, that's not a problem. So, that's her role. Then we have the planning role that I described earlier. Someone that does all the case design, all the pretty printouts we stick in front of a client, records of their current holdings, besides what's not performing, where they're underweighed, overweighed, so she'll do all that sort of thing. Run all of the illustrations for the insurance products, interface with the attorneys on the advanced underwriting department. If we're working on a case that's particularly complex in the estate planning arena, in those cases I will get more involved with input prior to their meeting, but that's about the only time I'm involved with case design anymore. And I have a securities department, and insurance department, and each one is a full time person. Jeff's on the investment department. They're responsible for opening accounts, they're responsible for executing the trades, all my people are licensed. They do the exchanges, they do all the service. A client needs to take some money out, or distribution, you name it. Anything to do with securities account, brokerage account, is all handled by a full time person supported by an intern, and then I have another full time person that just handles insurance and annuity products, all the ten thirty-five exchanges, in New York we have regulation 60, which is complex when there is a replacement involved. She's in charge of making sure that goes smoothly, making all the follow up calls on the underwriting process, depending on position statements, and then she's also supported by a part time person. So that's sort of the infrastructure that we have in place now.

Todd Taskey: Which helps to explain, I guess, to me, why you're able to produce the level of production that you have. If you were to, in just a ballpark, Tom, give us a percentage breakdown in terms of how you're spending your time, if you were to allocate, what percentage of your time roughly, do you think are you in front of clients personally or face to face? What percentage of your time do you spend marketing you and the firm? And what percentage of your time do you think is on administration and junk and miscellaneous stuff?

Tom Mingone: Start with the easy one, administration, junk and miscellaneous, no more than 5%. I only get involved in that where it just can't be fixed by a staff person, so that one's easy. Marketing the firm, if you add in the time of training with CPAs and really visiting with other producers that you might be doing work with, I consider that marketing. With that all added up, maybe it's another 10 or 15%. The majority of my time is spent in front of clients, I average 15 to 20 meetings a week, probably each one averages 90 minutes. On a 20-meeting week, that's going to be, on average, an hour and a half times twenty, that's thirty hours a week just sitting with clients, talking about their life and their financial picture.

Todd Taskey: Larger than what it was a couple of years ago, and is that what's largely responsible for the increase that you've had production-wise?

Tom Mingone: Oh, yeah. The amount of money you make is directly proportional to the amount of time you spend in front of clients. The time you spend getting business, the less time you spend on the stuff, all the stuff that bogs you down. There's no magic to it, the only way you can do, in my mind... I mean, there's two ways to do this kind of production. One way is to be in very affluent markets, I know people that their numbers significantly exceed my numbers and they do five cases a year on ultra wealthy people, and they have a very sophisticated business model and so forth, and I've just been not suited for that, my market is not suited for that, and it's not who we are. We have a relatively good volume sort of practice with, for the most part, middle class folks. For me, the only way I can do more business is to just spend more face time with the client. I think if you go to industry studies, I think, some of the studies I've seen say that, for every staff person that you have, you increase your revenue at least $100,000 on average, and then I've also heard other studies having to do with people at the top of our profession spend a minimum of 20 hours face-to-face with clients during the week. It really is the only way that I can see to get the business where it needs to be. Now If that evolves, we're starting to see that, I maximize my time in front of clients, now I have to make sure that all those 30 hours are in front of the right clients, and making sure that I'm not taking every lead that comes my way.

Todd Taskey: I think this is a really good point to interject, Tom, because it sounds from the basis of our conversation, that to get the kind of production that you're doing and all that you're working all the time, but I know that you also spend a great deal of personal time and family time and vacation time. Give us a quick breakdown on what that's like.

Tom Mingone: I average about 12 weeks off a year, which includes most Fridays. I try not to work Fridays, it's just always been a rule that I've had, that if I felt that I was set up for the next week, there's no reason to kill myself on Friday, and for me I'd rather go in short spurts and be very intense. I like the time off. I think that I could certainly do more business if I was willing to work more hours. I could work more in the evening, I could give some weekend days from time to time, but I just am pretty strict about the fact that I want to be there for my kids. I go to my kids and their sports, I go to their games, I've never missed a school event or happening, and my clients understand that that's a stage I'm at in my life, and I'm here to work as hard as I can for them, but when there's a family function, that takes precedent over everything. If they can't respect that, then they're not the type of clients I want to do business with. Because most of the clients that are your best clients are the ones that care about people that they love, so they respect what you do as well. I think we get nervous sometimes, trying to let the client dictate which terms will do business, and sometimes, they respect you more if you lay out the terms in which you'll do business.

Todd Taskey: It's a great point. What ballpark is your overhead percentage?

Tom Mingone: Right now, it's interesting. Last year it was about 38%, which I was a bit concerned by, I like it to be closer to the 30% range. We do have a financial planning practice, which is labor intensive, some folks that I know that have just an insurance practice, the servicing of that is much less rigorous, because you don't have to account for performance on a quarterly basis, and so forth, but if I related our expenses to the revenue of the firm, they'd probably come down to probably around 15 to 20% of the firm's overall revenue. The problem is that I've been responsible for those expenses. Now my firm has recognized the firm that I'm affiliated with, has recognized us as a firm, and I will be receiving a payout differential between a junior producer and my production scale, and that will certainly help cover the overhead of the office, and that's what it's designed to do, and now I suspect that my expense ratios will look a lot better next year.

Todd Taskey: Wow, those are just great insights from Tom, who I've known personally for some time now. He's got a great practice, a wonderful lifestyle, clients seem to love him, and he generates over $100,000 a month in revenues. I know you're going to want to hear Tom's thoughts on these two ways to generate a million dollars a year, plus, in your practice. In addition to that, he's going to give us specific answers to my questions that go directly to the heart of his success. I think you'll be surprised how transferable what he's doing may be to your own business. So be sure to join us next week for the second half of this big producer interview.

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