RETIREMENT PLANNING

Building success with retirement buckets, with Joe Schoenhardt and Jim Hinchsliff

32 MIN PODCAST

Do one thing, and do it well. For advisors Joe Schoenhardt and James Hinchsliff, that one thing is retirement distribution. The two partnered more than 30 years ago with the goal of becoming retirement specialists without a lot of prospecting. They focused their outreach on a few corporations, offering to educate employees about time-release retirement funding. This model has led to strong bonds with organizations, even stronger client relationships and steady practice growth without marketing. Today, their Chicago-area firm, Infinity Financial Concepts, manages more than $330 million and gets up to four referrals a week.

 

In this episode, hear Joe and Jim describe their unique business model, the “aha!” moment that investors have in their seminars and why Joe gets to play Santa Claus a lot. They also share tips for advisors just starting out.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

 

Hello! And welcome to the PracticeLab podcast, where we talk to top advisors about what makes them successful, so that you can apply those lessons in your own business.

 

I’m your host, Melissa Phipps, and today we are joined by Joe Schoenhardt and Jim Hinchsliff, who run Infinity Financial Concepts, a financial planning firm  in the Chicagoland area with more than $330 million under management. These two almost define the concept of having a niche. The firm specializes in retirement distribution planning using time-released funding. And they have focused their acquisition efforts on one or two corporations, helping employees navigate the complicated benefits and pension details as they have evolved over time. Because they know the benefits inside and out, Schoenhardt and Hinchsliff often surprise people with retirement savings they never knew they had. It feels a little like playing Santa Claus, they say.

 

In this episode, we talk to Joe and Jim about how they honed this particular niche, and how their “Bozo buckets” strategy and other unique ways of doing things resonate with clients. (Get ready for some laughs with these two.) The guys also share their top advice for advisors just starting out in the profession.

 

So with that, let’s jump into this episode of the PracticeLab podcast.

 

Melissa Phipps: All right, Joe Schoenhardt and Jim Hinchsliff, welcome to PracticeLab.

 

Jim Hinchsliff: Thanks, Melissa.

 

Melissa Phipps: So let's start off with an outline of your practice. Can you describe your practice and what you offer?

 

Joe Schoenhardt: The best way I could describe it is we’re retirement distribution specialists.

 

Melissa Phipps: OK.

 

Jim Hinchsliff: That’s our focus more than anything else, right. That's 90% of what we do for everybody is help them put a plan together to distribute money back to them.

 

Joe Schoenhardt: Right. And the distinction there is a lot of our colleagues are in retirement business at this point. But you know, the distribution is so different. It's just a way to spend the retirement assets down once they retire. So when somebody comes in, where we distinguish ourselves is the fact of how to spend the money down when they're retired. That's what they want to hear. They know they got retirement assets, but they want to know how they're going to spend them down. So with that, we distinguish ourselves, call it time-release funding. That's the concept: time-release funding.

 

Melissa Phipps: Can you tell me a little bit about time-release funding and how you guys do it in particular?

 

Joe Schoenhardt: There's a couple things that we tell people when they're in here to help set this time-release funding up. We tell clients that it's not up and to retirement, that it's up and through retirement. That it's not, in this office, it really has nothing to do with how old they are. It has to do with when they're going to spend that segment of money.

 

So then we break it down into different buckets. And that's just different time frames of when they're going to spend money in retirement. So again, coming back to the time release funding, we always spend clients' money out of a cash bucket. And when that cash bucket is empty, we then relinquish money that's in the investments down into that cash bucket. So money releases from that particular bucket into cash. And then we spend that bucket down until it's empty, then the next bucket is relinquished to cash. And we spend that down. So the whole concept is the money releases to the cash bucket to be spent when it's time. OK? So then that helps us to segment the investment buckets and put it in different funds.

 

Jim Hinchsliff: And again, it's different (at least from what we've learned), it's different from what most advisors are doing, right? Somebody retires and let's say they want $2,500 a month. What most advisors are trying to do is find assets that will deliver, in dividends, $2,500 a month to their clients. And we just think that's a fool's game. We just think, have it in cash, some $30,000 to start with. Just start giving them $2,500 and let the investments do their job. And so it's just a different.

 

Joe Schoenhardt: And each investment’s doing a different job based on when it's going to be up to be spent.

 

Jim Hinchsliff: Right.

 

Joe Schoenhardt: For an example, if somebody retires at 65, and their life expectancy, we do it till 90. So then there's 25 years there. So then the buckets—five buckets are split up into five different time frames. So if there's $250,000 that goes in bucket number five, and that's, we have a financial blueprint, we do that software that helps us determine what goes into each bucket. But if there's $250,000, it goes into bucket number five, and that bucket's for [age] 84 to 90. Then we know there's two decades before that money is going to be released. So that money can be the most growth-y of any asset that they have, because it's the last money that's going to be spent.

 

And so then we just fill each bucket up based on the length of time. So bucket one is cash because that's being spent. Bucket number two is, let's call it three to seven years. So that's real conservative assets because they're up next. Then bucket three is more in growth and income. Bucket four is more growth. And bucket five is called global growth.

 

Jim Hinchsliff: Global growth and small cap.

 

Joe Schoenhardt:  Right.

 

Melissa Phipps: And bucket one is, let's say one to three years, or zero to three years?

 

Jim Hinchsliff: Well, Melissa, this system, which obviously we've kind of fine-tuned but we didn't develop, was a lot easier when the money markets were paying 4%.

 

Melissa Phipps: I'm sure.

 

Jim Hinchsliff: 2005-06, right in there, you put three years’ worth of cash in the bucket, and you let Capital manage the rest of it. And we wouldn't have to worry, because we've got 36 months of cash when they were making 4% on their money. Now that they're making 20 basis points, there's a little bit more tactical stuff that we got to do. But it’s still the same concept.

 

Melissa Phipps: And what do clients think of the strategy? Does it help with emotional detachment when the markets are volatile?

 

Joe Schoenhardt:  That's where this system really excels. Because it allows us to explain to them exactly what they're doing. And the client understands when these assets are going to be spent. So they can understand that the money that's going to fluctuate the most is money they're not going to spend for 15 or 20 years. So when the markets are moving around, we may have to just remind them that they've got the cash and they've got the conservative stuff that's not moving around as much. And the stuff that might be fluctuating the most is money they're going to not touch for a decade or longer. So just let time take care of it.

 

And again, there've been some teachable moments for us, and last year was a good one. I used the example: If you were retired in January of last year, and the pandemic hit in March, your buckets three, four and five were significantly down. You know, yes, we're conservative for retirees, but yet we were still in the market. But again, we said, "Listen, you've got cash, and you've got the second bucket. You know, we'll work through this."

 

Then nine months later, buckets three, four and five, not only were they back, they were way above where they started. So Jim and I use that as a teachable moment when we talk to clients to say, again, “This is why you didn't panic. You had plenty of time on money that wasn't going be touched for 10 to 20 years, and in nine months, those monies are back and are even higher.” So when we have these adjustments, once we have that teachable moment with a new client, we don't hear much from them. Because they understand it. They understand that the cash bucket is always there. And they know how that money is going to be reduced down. So they don't really worry about buckets three, four and five. So when we have colleagues saying, "Oh your phone has got to be ringing off the hook," it really doesn't, because we've done a really good job of educating them on how this system works and to let time take care of it and not worry about their age.

 

Melissa Phipps: You described that you do a lot of educational seminars, and you work with a lot of investors, and that you have this sort of "aha!” moment. Even the most sophisticated folks sort of have an “aha!” moment. Is that really what you're describing?

 

Joe Schoenhardt:  Well, it is. And I think there are a couple things with that “aha!” moment. When we say that it's based on time, not age, a lot of people are like, "Well, I haven't really thought about it that way. But it makes sense." And then when we add to it that their mindset shouldn't be up and to retirement, it should be up and through retirement, because the game's not over once they retire. So to set up the bucket approach, those two pieces really helped them kind of compartmentalize it and say, "Well, that makes sense based on time, not age. And again, it's up and through retirement."

 

Then we go on to explain the whole time-release funding bucket approach. And the “aha!” moment is that they can kind of see it in each segment, and understand what each one is doing. And a good example of that, Melissa, is that we we've had quite a few clients referred to us that, you know, have come in and they have other advisors. And they have perhaps, maybe fee-based accounts. But they said "Listen, our accounts went way down, and we want to get out. We're nervous on the market." And the one thing that we notice when we look at their accounts is that their investments are usually in pretty good shape.  But their advisors have grouped it in one big pot. So the client whose retired looks at their assets that's a million dollars and now it's worth $750,000. They panic because they see it as one pot of money. Where, under the bucket approach, the same scenario would be we had a million bucks in the market went down, and we're at 750. But they understand what part of the money is down: money they're not going to spend for 10, 15 to 20 years. So the angst has been reduced because they understand when they're going to spend the money. But when it's in one big pot, they panic because they don't understand when they're going to spend what money.

 

Jim Hinchsliff: And again, like I was saying earlier, that one big pot, most advisory groups are trying to drive the dividend to pay that monthly income. We just tell them, “No you've got 10 months’ worth of cash! We'll figure it out in the next nine months, right? And reload the cash bucket. So  it's just a different way of thinking about the whole process.

 

Joe Schoenhardt:  But because it is different, that's the “aha!” moment. And we had a client this morning who said, "I really like this because I'm not technical, but I understand having my money divided up in buckets and when I'm going to spend it." And it's as simple as that.

 

Melissa Phipps: That's great. So did you guys start off with this focus? Can you tell me a little bit about  how you guys met and joined up and how the practice has evolved over time?

 

Joe Schoenhardt:  Sure.

 

Jim Hinchsliff: Joe was under a streetlamp, I think... (laughs).

 

Joe Schoenhardt:  We both started in the insurance business: The Active Insurance Agency. So I started in 1984, and Jim started 1987.

 

Jim Hinchsliff: Yeah, but it was it was different. I mean, I have to give them ... this insurance agency was, they were a little bit ahead of themselves in that they had a pension department, they had a P&C. There was more planning, but the financial planning was skewed towards insurance.

 

Joe Schoenhardt:  Right. So, you know, Jim and I had the same philosophy of what we saw our practice to look like. So in 1990-ish, we partnered up, and we've been partners ever since. And, again, neither one of us like the grind of reaching out for clients. So we decided, hey, let's specialize in retirement while we're young so when we get to this age that we are now, people may view us as knowing what we're doing in the retirement end of it. And so that's what we did. And we said, “What's the best way to do that?” And we said, “We think it was corporate workshops.” The individual dinners, that that was kind of being saturated.

 

Jim Hinchsliff: Well, everybody was doing it.

 

Joe Schoenhardt:  Well, everybody was doing it, right. And we felt the corporate made more sense from a couple different perspectives. One was, if we were doing corporate workshops, we knew what the benefits were for everybody there. It didn't change.

 

Jim Hinchsliff: It was also during the day, during work hours.

 

Joe Schoenhardt:  That's true. That is true. But it just simplified it for us. Because then when we're working with somebody from that corporation, we weren't reinventing the wheel and trying to figure out what they had. We knew what they had. And with a couple different corporations over the years, we don't come out and say this, but we're deemed as being specialists in their benefits. And that's just implied, we don't tell him that. But being with these corporations for the last 30 years, they perceive it that way. Because we know, we really know what we're doing.

 

So we just worked hard in the early years to get these connections. They weren't easy, but we just were kind of out there and just got lucky on a couple of the different companies, and just really tried to penetrate that and work it really hard and cultivate it. And it's paid off over the years.

 

Jim Hinchsliff: And one thing we did do is, when we were relatively young, so I'm going to say 32 or whatever we were, we took an AARP-based retirement corporate retirement plan that they had. I don't know, was that a weeklong process?

 

Joe Schoenhardt:  It was a weeklong retirement seminar, which certified us to teach AARP retirement classes.

 

Jim Hinchsliff: Right.

 

Melissa Phipps: Wow.

 

Joe Schoenhardt:  And from there, Melissa, one of the companies that we work with today reached out to them, because they were having downsizing. And they were having issues with the retirees not understanding whether they shouldn't take the package or not. We were very fortunate to get in there then.

 

Jim Hinchsliff: Right. We were asked by this organization. They asked for a referral from AARP. And AARP said, "Oh, we got these guys that are just graduated from our class. Give them a call."

 

Joe Schoenhardt: And so we were asked to do their retirement seminar, or workshop, and we've never left. And we do workshops every couple of weeks. And we've done it on behalf of the HR departments, because there's two of them there. And then about 20 years ago, we were able to develop (since we were in there) a relationship with their credit union. And so we do retirement workshops pretty much exclusively now with the credit union every couple of weeks, in their conference room, to their members and employees, anybody who wants to come. And that message has grown over the years, because as this corporation has been sold, and benefits have changed ... the employees really haven't but the benefits have, and we've been along for the ride. So we know all the benefits, all the ins and outs from 40 years ago to current. So with that, the word has gotten out that we are the people that know the benefits inside and out. And that's paying dividends off today.

 

Melissa Phipps: That's great. And so you work with (I would assume) a handful of corporations. In that case, you're not working with many, many corporations. Is that the case?

 

Joe Schoenhardt: Right. Now, it's probably down to really two, right? I'm just going hold down the two, and they've served us well.

 

Melissa Phipps: And I think you guys were telling me that you had a radio show for a while. Tell me about that. And was that sort of a way to kind of get known as you know, specialize in retirement or develop an audience? What, tell me a little bit about that?

 

Joe Schoenhardt: Well, again (Jim's smiling over there). It was a small radio station, but it was to an older crowd. So we thought it made some sense to get our name out there. What I think helped us the most was we recorded all the shows that we did, Melissa, and then we put them on (and they're still on) our website. So, you know, people could go back and listen to them.

 

Jim Hinchsliff: It's kind of like doing the podcast right now.

 

Joe Schoenhardt: Well, exactly. Right. So again, Would I say that we get a lot of clients from the radio show? I'd probably say not. But it gave us credence, in the sense that we had a radio show, and that we had some shows that they can listen to on things that we talked about.

 

Jim Hinchsliff: Well, it was an oldies station. And so, in retirement, that's what they were listening to. And so we thought it was it was a good fun marketing idea for a while, and then they changed the format. And we were gone.

 

Joe Schoenhardt: We introduced the bucket approach as the "Bozo buckets" for those that know WGE in Chicago, the Chicagoland area, and it was syndicated around the country. So again, that's kind of how we introduced the buckets for the "Bozo buckets," and that seemed to work. Because that was just a TV show where they, at the end, they can throw balls into six buckets. And we have five buckets plus a surplus bucket, so it worked. So it's just a matter of doing something different for our clients to perceive that we had other areas that we're working on.

 

Melissa Phipps: Yeah, that sounds like a lot of fun. Well, then let's turn it over to marketing, because I know that you guys have said that you sort of proudly don't do much marketing at all. So what does your marketing look like? And how are you bringing in new clients? Is it mostly through the corporate workshops? Tell me a little bit about that.

 

Joe Schoenhardt: I would say it's 100% the corporate workshop. And again, that's the old adage: Build it, they will come. So that was our marketing program. We said, “This is what we want to do.” And so we said, "Listen, we may get lumps in our early years, and may not be as quick to get all the business, but we're going to do it right." And that's what we did.

 

So we, ourselves focused on the retirement side of it right away out of the gate, Melissa, the retirement distribution system. Again, we were very fortunate a colleague of ours developed that software back in the early 90s that we've used ever since. And so again, we built our whole marketing around that, because we knew when we did the corporate workshops that people really gravitated towards and said, "Wow, this is something different." So we said, “Well, let's concentrate on it.” So that's what we did. We worked real hard to develop the corporate workshops, and just focus on the time-release funding strategy. And then with that, the marketing really came down to just marketing ourselves in these corporations that we knew their benefits inside and out. And I would say that the biggest marketing thing we have going for us today is that people know a couple things. One is we make their retirement process seamless. We know the benefits; we know the time frames. So we sit with our clients and reduce the angst that they have on retiring because they don't know what they need to do. And because we do it all the time, we can sit with them. And I kind of joke with them and tell them, "Listen, this is like a driver's ed car. We're taking over now." And we'll help you coast into retirement, and we'll tell you the timelines, we’ll tell you what paperwork you need to bring in, we'll help you fill the paperwork out, we'll help you fax it in. We do all that. So we do the little things that I think they perceive as big things.

 

And on the other side of that, too, is we're very cost-efficient in what we do. We're very lean and mean with the buckets. Again, that's where the Capital Group comes in for us. Because again, we're old-fashioned, we're A shares, low expenses. But with the whole bucket approach, once again, that computes with them. Because we tell them, "Listen, the money that's going to be invested for a long period of time should have the least amount of fees possible on that." And again, that fits well with us. So that's, where the American Funds come in as well performance and the cost, because we don't charge an advisor fee. We're going to let the professionals do their job over time, and we'll move those accounts down as needed. Other than that, we're not going to micromanage it. We're going to let the professionals do their job.

 

All of this kind of put together is really our marketing program. I mean, people know us, that we're fair and equitable from a cost perspective, that we're detail-oriented. It's kind of seamless. We do the little things that I think, again, that they perceive as the big things. And then we kind of tie it all in with that time-release funding. So that's where it's at. And it's kind of evolved to where we get three or four calls a week now, with clients that are that are retiring from these corporations. And we haven't asked for a referral in 30 years.

 

Jim Hinchsliff: Well, we're not really good at asking for referrals.

 

Joe Schoenhardt: No. So that's why we kind of built it and said we're going to work really hard to have it be holistic. They call us because the word is out that we will take care of them, and it's a fair way to do it.

 

Melissa Phipps: That's great. Do clients come to you within five to 10 years of retirement, or as they're very close to retirement? What does the client base generally look like?

 

Jim Hinchsliff: Well, we'd hope we develop a relationship three, four years before we retire, but sometimes you get the phone call, and it's like, "Hey, I heard you guys are really good. I retired last month."

 

Joe Schoenhardt: Right. So we have those circumstances. And we can get it done, but they're not fun. Because they're all ramped up that they've retired and they don't know what to do. And then they're just getting introduced to us for the first time. But we can work through it.

 

But listen, to answer your question with the workshops, we get a variety of people in there. The word's out, so some people might be 10 years out, some people are five years out. Again, some people are retiring in six months, and some people are saying I'm retiring next week. But we work with everybody. And that's what's helped us though to get to this point, is we have worked with a lot of folks that are 10 or 15 years out. So it's kind of like inventory; we would do the workshops. Jim and I, we do what we call retirement blueprints and say, “Hey, here's how it looks. This is what you need to do. But based on our bucket approach, this is what you got to be putting away and where you should have it with your investments at the 401(k).” And then when they're ready to retire, they come back. So the shelf life of our workshops are very long. I mean, I think the longest 15 years. We had a client that came to one of our workshops, and he called us up and said, "Hey, I went to your workshop 15 years ago, and I'm ready to retire. And I love your buckets, let's talk." We'd like to have people coming in that are five, 10, 15 years out, because then they get to know us. We can help educate them on what they should be doing with their corporate benefits to be lined up for retirement.

 

And then you do some business with some people along the way, because they had some family things that changed — inherited money or something — and then the people that are retiring. So that's why we do the workshops, to kind of keep that column filled up.

 

Melissa Phipps: And would you liken the retirement blueprint ... is that sort of like the financial plan that you do with every client initially? And sort of build off of that?

 

Joe Schoenhardt: That's correct. But what's different about it, though, is it that financial blueprint incorporates the bucket software, the time-release funding. So not only is it doing the financial plan for all their corporate benefits and personal benefits, but then it's incorporating the buckets in, and telling them do they have enough to fill the buckets the day they retire. And if not, what do we need to do to get there? So it gives them a game plan. And then it also gets them acclimated to what we're teaching them about the buckets.

 

Melissa Phipps: OK, so far we have heard about how Joe and Jim’s singular focus on time-release funding in retirement at one or two corporations have really helped them systematize their practice and become true specialists in helping the clients they serve. Next, we are going to talk about how that focus helps them provide a unique level of client service that generates a steady stream of referrals. We will also discuss how they keep operations efficient, and they will share some tips for other advisors just starting out.

 

Melissa Phipps: I wanted to follow up on one thing, because when we were talking about the referral marketing, you said you get about three to four referrals a week. Is that right?

 

Joe Schoenhardt: The corporation we work with is a hospital and university, the one that we do a lot of work with. And so it may be a group of nurses. So, they're retiring, they come in and work with us, or getting ready to retire. They go back and talk to their colleagues, they're working on the floor, then they tell their colleagues that are going to first shift that they need to come see us. And so there's so many pockets throughout the hospital in the university that our name has resonated with over the years that they come back, and they really know we know what we're doing. And they're very confident that we can handle that. So they promote us, and that's why I say that when I get a phone call, they're like, “All I hear is Joe and Jim, Joe and Jim.” Because we've been there for so long, it comes at us from different angles. It could be their colleagues, it could be another person in another department getting ready to retire who says, “Oh, talk to Joe and Jim.”

 

Melissa Phipps:  You were saying that you get to play Santa Claus, or you get to feel like Santa Claus every day for clients. Talk to me about that. Maybe if there's a story or two that you can share of a particularly successful client engagement, something that you guys are really proud of?

 

Jim Hinchsliff: Well, look, the biggest problem with the whole thing is the main corporation that we work with. They've had so many changes in the last two decades that people lose sight of different benefits. And the playing Santa Claus for Joe is that some of the numbers are relatively similar or close, right? And he'll gather the data and say, "Oh, you got $257,000 in this 403(b). And then what's in here, it's like, $260." "Oh it's the same thing." No, it's not the same thing. But it was poorly communicated by that corporation.

 

Joe Schoenhardt: Correct. So a funny story for me was we did one of the workshops. And this happened before, but it's never happened this quick. When this particular lady came in and she was shaking her head. She said, "I'm not going to be able to retire until I'm 70 to 75. Or, I don't know if I'm ever going to retire." And we said, “Well, this is why you're here. Let's go through the benefits. Let's gather all the benefits for you, so you can see what you and your husband have together. And we'll run the retirement blueprint. And then we'll talk from there.”

 

So we did retirement blueprint. We reviewed it with her and her husband, she was 62 now, right? And we reviewed all the benefits. She didn't realize that she had half the benefits that she had, because they just haven't done a very good job of communicating them over the years.

 

Jim Hinchsliff: And these are pensions.

 

Joe Schoenhardt: Yeah, these are pensions, right. And she retired three weeks later.

 

Melissa Phipps:  Wow.

 

Joe Schoenhardt: She wasn't... she didn't think she was ever going to retire. She came in with her head down. But she didn't know half the benefits that she had. And that's what we tell everybody when they come to the workshops: "Let us share this with you." So, that happens all the time.

 

And then the other funny story is, a lot of the people don't believe they have this second pension until the check is actually cashed and put into their account. Then they believe that they have it. That's because, as Jim said, it's very similar to their 403(b)s, so they get mixed up thinking that's what it is. And it's not. It's a totally separate benefit.

 

Jim Hinchsliff: We had a client come in, and he had an over $300,000 check...

 

Joe Schoenhardt: $360,000.

 

Jim Hinchsliff: Three hundred and sixty, and it had to go to his IRA, obviously, in the rollover. And he still didn't believe, as he was giving us the check to put in the account, that it was real,  because he had another account that was worth, like, $350,000 that we rolled over.

 

Joe Schoenhardt: And he thought they were the same thing. And they're not.

 

Jim Hinchsliff: And they're not. So there's the Santa Claus story.

 

Joe Schoenhardt: Yeah, the Santa Claus story. Because  we're lucky in the fact that there's the two different benefits, and we're like, we understand it, and we can play Santa Claus. And that happens almost on a daily basis. So that kind of puts us on a pedestal, too, just because they come in kind of all depressed and they walk out with a bounce in their step because they have more money than they ever thought they had.

 

Melissa Phipps:  I'm sure! And I think you were saying that the little things … that your attention to detail is such that you'll call and let them know that the check is in their mailbox right now. You know when exactly the check is going to hit their mailbox, and you can call them and let them know.

 

Joe Schoenhardt: Well, that is correct. And I think a lot of advisors probably make those calls. But because we've worked this corporation so much, I know exactly when, unless the mailman lets me down.

 

Jim Hinchsliff: But we could also tell him that it could look like junk mail. It's just, it's going to be a $300,000 check. But you may just toss it out, because...

 

Joe Schoenhardt: It comes in a very small, inconspicuous envelope.

 

Jim Hinchsliff: Right? It's not like they're announcing, hey, there's a $300,000 pension here, so be careful on the mail you throw out.

 

Melissa Phipps:  It's interesting hearing from you guys, because there's so much that can go wrong with the benefits within a corporation. It seems that if advisors aren't working closely with specific corporations, they probably aren't aware on that level. So I think you guys are discovering something in your work that maybe people aren't aware of: how complicated it can be coordinating benefits.

 

Joe Schoenhardt: No, you're right. And if I could share a story with you regarding that, there was a client that came in, and they already had an established account with the American Funds with another advisor. But he said, "I know you know the benefits here where my wife works, so most of the benefits will come to you. But," he said, "I already committed this block to my current advisor." And I said, that's fine. And he said "Well, he's already taken care of the paperwork. So you just do this piece, and he'll take care of that piece." I said, that's fine.

 

Well, come to find out, that piece got messed up, because that paperwork is extremely complicated. And this advisor didn't work with this institution very much. So it got all messed up. And he called me all frustrated, the client, and I said, “Listen, we'll make the phone call where you're going to reorder the paperwork, bring the paperwork in. Jim and I will help you complete it, then you can send it to your advisor, and he can fax it in. And the money will roll over.” And we did it. It was like clockwork.

 

Jim Hinchsliff: And it went over to the other advisor.

 

Joe Schoenhardt: Yeah, it went to the other advisor. But he really appreciated the fact that, one, we would help them, but, two, we knew exactly what to do, and we got it done immediately. And there was no issues. So to your point, Melissa, you're right. It really helps because these forms can be complicated. And our clients say all the time: There's absolutely no way I can do it without you. And I'm sure that's throughout with advice.

 

Jim Hinchsliff: They're getting better at retiring people because I just, we just moved $600,000, and we did it over the phone. Right? But this organization happens to have a lot of excess paperwork, because of their pensions.

 

Joe Schoenhardt: The other thing that's helped us be successful in taking care of these clients, there's two of us. It's Jim and myself and one assistant. And then we've got about 500 retiree clients with about $330 million under management. But we're able to kind of handle that, because we've systematized all of our way of doing business. You know, everything is systematized, so we don't reinvent the wheel. And anything that we do, it's very repeatable, because we're working with the same client base, same type of benefits. And that helps us be more efficient.

 

Melissa Phipps:  Do the two of you divide up the duties in some way?

 

Jim Hinchsliff: Oh, yeah.

 

Joe Schoenhardt: Yeah. And so I would say this: We did strategic Strategic Coach years ago. And so I would throw it out to everybody that some type of coaching really helps. That helped us in our early years in the practice. We did Strategic Coach. And that just kind of taught us on how to do these different things. And one of the things that came out of that was: Concentrate on your unique ability. So that's what we've done. So my unique ability, as people have probably figured out already, is that I can talk. And so I'm a relationship person. So I kind of develop and bring people into the system and do the retirement blueprint. And then Jim's unique ability is on the investment side, the expertise on how we're going to load the buckets and how we're going to do that.

 

Jim Hinchsliff: And then what to backfill into cash and just, you know, more structured from the business side of things, what each account has.

 

Joe Schoenhardt: Right. So I think our clients like it, because even though we're partners, they perceive us as doing two different things. I'm concentrating on my unique ability; Joe's concentrating on his.

 

Melissa Phipps:  That's great. So one of the things that we like to do on the podcast is to offer some advice to advisors, either who are just starting out or in the growth mode of their business. And since you guys have been in the industry for so long, do you have any advice you would share with fellow advisors for ways they can improve their business?

 

Joe Schoenhardt: Well, again, I would say some type of coaching. Repeatable systems. Go above and beyond what's expected to do, again, do the little things...

 

Jim Hinchsliff: Customer service, yeah, contact, contact, contact.

 

Joe Schoenhardt: And provide a feel-good experience. And that's kind of what we do. So that would be the only advice. It's the little things, but they seem to really add up over time, over a long period of time.

 

Jim Hinchsliff: I guess the only thing I would suggest is find a really good assistant, or two. Right? Because the amount of work our assistant does is phenomenal. Phenomenal! But she knows it's all computerized, and she knows the computer systems so well. You know?

 

Joe Schoenhardt: And she's been with us for 30 years.

 

Jim Hinchsliff: You know, and all the paperwork. I miss a box or two every time, and now we've got more requirements. But she's like, "Oh, yeah, you forgot this form? I'll get it tomorrow." Right? But you know she's on it. So find a good assistant, pay them well. It really helps the practice.

 

Melissa Phipps:  And you guys don't have any plans to expand your team. You've really got a good system going, would you say?

 

Joe Schoenhardt: Yes, though...

 

Jim Hinchsliff: Well, we'd like to expand, because we'd like to get some people in underneath us, so we could teach them...

 

Joe Schoenhardt: Right, the system, and to transfer our practice to them ultimately. So, you know, again, to add advisors and supervise them? No. But to add juniors underneath us to eventually take our practice over? Yes. Under the systems that we run under, and the cost structure that we run on it. Obviously, not everybody does it that way anymore. But we feel that it's fair and equitable, we've presented that to our clients, and we'd like to keep that going with whoever would take our practice over. So we feel the best way to do that is to bring a junior or two in, and have them build their practice up, and then ultimately, and learn the systems in that and then take their practice over.

 

Melissa Phipps:  That's great. Well, thank you guys, so much, Jim and Joe, for talking to me. This has been really a lot of fun. It's been great. So thanks for taking the time to join us on PracticeLab.

 

Joe Schoenhardt: Well, thanks, Melissa, for inviting us.

 

Jim Hinchsliff: Yeah, appreciate the invite.

 

Melissa Phipps:  OK, so that wraps up this episode of the PracticeLab podcast. Special thanks to Joe Schoenhardt and Jim Hichsliff for coming on the show, and thanks also to my colleague, Joe Cronin, for making the introduction.

 

Melissa Phipps:  If you liked what you heard today, please hit the subscribe button and consider leaving a rating and review, since that helps other advisors discover the program.

 

PracticeLab is brought to you by Capital Group. You can find all our episodes and more at practicelab.com.

 

I hope you enjoyed what you heard today, and I look forward to joining you on the next episode of the PracticeLab podcast.

 

 

American Funds Distributors, Inc., member FINRA.

 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.

 

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This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.

 

This podcast is intended for U.S.-based financial professionals.

Retirement distribution specialists

 

The firm distinguishes itself with its approach to time-release funding, or segmenting client portfolios based on different time frames for spending the assets in retirement. The first segment (or “bucket”) is cash, used for immediate and short-term needs. This bucket is replenished over time with the four others, which are invested in conservative funds; growth and income funds; growth funds; and global growth and small-cap funds, respectively.

 

“The whole concept is the money releases to the cash bucket to be spent when it's time,” Joe says. “And that helps us to segment the investment buckets and put in different funds.” Software helps them determine what goes into each.

 

“It's different from what most advisors are doing,” says Jim. “Somebody retires, and let's say they want $2,500 a month. What most advisors are trying to do is find assets that will deliver, in dividends, $2,500 a month to their clients. And we just think that's a fool's game. We just think, have it in cash, some $30,000 to start with. Just start giving them $2,500 and let the investments do their job.”

 

Joe offers an example of someone who retires at 65 with a life expectancy of 90, meaning 25 years of retirement. “Five buckets are split up into five different time frames,” he says. The final bucket, number five, is marked to spend between the age of 84 and 90. “Then we know there's two decades before that money is going to be released. So that money can be the most growth-[oriented] of any asset that they have, because it's the last money that's going to be spent,” says Joe.

Bozo buckets and “aha!” moments

 

Explaining the buckets concept to investors has been a marketing driver from the start. In fact, leading corporate seminars is the only marketing the firm participates in. “Jim and I had the same philosophy of what we saw our practice to look like. Neither one of us liked the grind of reaching out for clients,” Joe says. So they decided to specialize in retirement and to do it through corporate workshops.  Early on, the two participated in an AARP certification program to teach investors about retirement planning, which led to one of the corporate relationships they still have today. “They asked for a referral from AARP. And AARP said, ‘Oh, we got these guys that are just graduated from our class. Give them a call.’"

 

The partners describe a sort of “aha!” moment that investors have when they take part in their corporate workshops. It starts with challenging certain perceptions: “We tell clients that it’s not up and to retirement but up and through retirement,” says Joe. “And it really has nothing to do with how old they are. It has to do with when they're going to spend that segment of money. “ This sets up the bucket approach and helps investors see retirement income in a way that suddenly makes sense, Joe says.

 

To help investors further understand the concept, the two sometimes use Bozo the Clown, a popular childhood favorite among baby boomers, and his “Bozo buckets” as a means of illustration. As part of a brief foray into marketing years ago, the two even hosted a radio show on a local oldies station, using the character’s “Bozo buckets” as a fun way to get listeners excited about retirement distribution.

Fewer client conversations

 

Having easily repeatable mantras provides an added benefit: It reduces the amount of client conversations that advisors typically have during times of market volatility. “That's where this system really excels,” says Joe, “because it allows us to explain to them exactly what we’re doing. The client understands when these assets are going to be spent. So when the markets are moving around, we may have to…remind them that they've got the cash and they've got the conservative stuff that's not moving around as much. And the stuff that might be fluctuating the most is money they're going to not touch for a decade or longer. “

 

The early days of the pandemic helped to illustrate this, he says. “If you were retired in January of last year, and the pandemic hit in March, your buckets three, four and five were significantly down,” Joe says.  He would remind clients, "You've got cash, and you've got the second bucket. We’ll work through this." Nine months later, buckets three, four and five had not only regained their value but significantly increased in value. Jim and I use that as a teachable moment when we talk to clients. This is why you didn't panic.”

 

“We have colleagues saying, ‘Oh your phone has got to be ringing off the hook.’ It really doesn't,” Joe says, “because we've done a really good job of educating them on how this system works and to let time take care of it and not worry about their age.”

The Santa Claus of benefits

 

Because of their close connection to a few corporations, Joe and Jim have many decades of institutional knowledge about their clients’ corporate benefits. They understand the retiree plans inside and out, which helps them spot flaws in clients’ assumptions about retirement in a way that’s not only surprising but sometimes feels like  a gift. Joe tells a story of a woman who walked into the office at age 62, convinced she would be unable to retire until at least age 70 or 75, if ever. After going through the firm’s retirement blueprint and reviewing the benefits she had, she was able to retire three weeks later.

 

“She didn't realize that she had half the benefits that she had, because they just haven't done a very good job of communicating them over the years,” he says.

 

This kind of thing happens so often, Joe thinks of himself as getting to play Santa Claus all year round. For example, clients commonly confuse two separate accounts and think of them as a single asset. They are bowled over when they realize they have more saved than they’d realized. “A lot of the people don't believe they have this second pension until the check is actually cashed and put into their account,” Joe says. “That’s the Santa Claus story.”

Advice for new advisors

 

When asked what they would suggest to those just starting out in the profession, the two had a few ideas to share:

 

Consider coaching – Having participated in Strategic Coach years ago, Joe and Jim found it extremely helpful in figuring out the strengths and weaknesses of each team member. Joe does much of the client-facing communications and new client onboarding; Jim handles the back-end details. This has helped maintain practice efficiency over time.

 

Develop repeatable systems – Many firms understand the importance of standard operating procedures. By focusing on clients whose benefits they know well and sticking to the simple message of time-release funding, Joe and Jim have repeatable systems down to a science.  They are also able to keep the operation lean, relying on only one other team member to handle administrative tasks.

 

Improve customer service – The two work hard to provide a feel-good experience for clients. But this manifests in ways that are different from what most advisors are doing. For example, Joe regularly calls clients to tell them exactly when a pension check is about to hit their mailbox, just in case they might miss it. Joe says that little things like this feel big to clients, so no effort is too small. “Go above and beyond what's expected,” he says.  “Contact, contact, contact,” adds Jim.

 

Hire great people – Jim points out that this piece of advice has been crucial to their success. Their third team member has been with the firm for more than 20 years and is integral to understanding the paperwork and benefits that the firm’s repeatable systems are built on. When hiring in any capacity, finding the right person counts. 

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