Meeting a Need That Keeps Prospects Up at Night

Editor’s note: In this edition of What’s Working Now, an AdvisorRADIO feature in which Horsesmouth members tell us about recent success they have had running and growing their business, we hear from advisor Jack Shinn, who grows his business by offering college planning workshops that bring in clients who stay with him. You can hear the full interview by clicking the audio file below. The following article includes edited excerpts of Jack’s comments.

I’ve been an advisor since 1995. After graduation college in 1982, I worked on Wall Street for several major banks and for one of the largest insurance companies. But eventually I left New York City and wondered what else I could do with my degree. I had a major in business, a minor in finance. By 1995, I had gotten licensed and trained, and I’ve been an advisor ever since, except for a few years after 2008 when the market went south. Now I’m in Bergen County, N.J., a pretty well-heeled community.

Why college planning?

If someone at a party or in an elevator or wherever asks me what a financial planner has to do with college planning, I tell them, “We’re presenting workshops so that folks can figure out how to best minimize the costs of going to college and understand what the process is to achieve that end.” From that, we may get into the bits and the bytes and all those kinds of things, but I think the bottom line is, when you say to a parents, “Our main focus is showing you how to minimize college expenses,” you’ve got their attention right from the beginning.

Becoming the local college planning expert

Like a lot of other independents, when the market went south in 2008, it had a dramatic effect on my business and my clients. I dropped out for a couple of years, and when I decided it was time to come back in, in about 2010 or 2011, I was really back at the beginning, trying to rebuild the book.

So I started to look around for different opportunities that I felt I could reasonably accomplish, given my knowledge base. I started hearing quite a bit about college planning. I joined Horsesmouth, and started following Lynn O’Shaughnessy, Horsesmouth’s college planning expert. Eventually I decided that it was going to be one of the niche markets I would occupy.

It seemed like I was reading more and seeing more advertisements for college planning, and I talked to parents with kids ready to go to college who had no idea what was going on. Nobody seemed to know how to go about the process. They just did whatever the guidance counselor told them to do. So, going back to Lynn, I became a member of Savvy College Planning and read the manual front to back, studying it like a textbook. I learned a lot and decided that moving forward I would be the local college planning expert.

I didn’t want to invent too much myself, so I looked at the two seminars on the Savvy College Planning website and chose the one I felt gave me the best foundation to present the information. The first presentation was a little rough, as you would expect. I basically did the seminar by rote. First I memorized it, making some parts my own, but following the script completely. I had no reason to do anything else.

Since then, we’ve come up with some different strategies and tools. At first I just went with the seminar and started talking. Now I spend a little time upfront explaining the EFC—expected family contribution, or a calculated amount that most colleges look at to decide what a family can afford—and asking what types of information they are looking for. I want them to see the process that they can anticipate going through. The first 10 or 15 minutes is to get their stress level down, getting them to see that there is a funding process, a step one, step two, step three. It eases a lot of angst about, “What am I going to do?”

Relaxing the room

The first question I always ask, just to get in the swing of things, is, “How many parents here have seniors and how many have juniors?” I don’t know what it is, but asking about their kids is like a magic button that relaxes the room. Then I ask, “How many people have heard of the FAFSA [Federal Application for Student Aid]?” Every hand in the room goes up. They all know what the FAFSA is and they’ve all been educated to fear it for the majority of their adult life. Then I ask them, “Who knows what an EFC is?” and nobody ever knows. It sets it up for me to get started into the process.

I find the College Board EFC calculator to be very reliable. It’s a good estimator of what the family can actually afford, given their entire financial circumstances. I tell attendees that this is the number they need to go shopping for colleges. I also stop at this point and explain that there is a difference between need-based and non-need-based aid. If you make half a million dollars a year, no, you’re not qualified for need-based financial aid. But you are qualified to get grants and scholarships based on your child’s academics, interests, and sports. It has nothing to do with income. Nobody can say up front, “I can never get financial aid,” because there’s no limit to the non-need-based aid.

I go through this explanation so that they understand that no matter what your situation is, there’s a chance that we can help you reduce your expenses by following the process and filling out your financial information correctly. We offer an EFC as part of the workshop. I tell them it’s a two-part workshop. Tonight’s portion is the educational part, the second part is meeting with you and getting your financial information, so we can get your EFC.

Success is in the timing

We did a workshop in May and the response was bad, because in May nobody cares about college. It was a timing problem, so I decided to pick it up again in August. In the fall, we do as many as we can schedule, about three a month. I don’t like doing more than that because we need time for the follow-up that goes along with it.

When I first thought about marketing I really didn’t know what to do. I talked to friends and my broker-dealer. The first time I think I sent seven or eight thousand mailers. Then I started checking around and my local library was interested in sponsoring the workshop. We’ve done three at the library now, and it’s great because they promote it for us. They have a network of contacts, they advertise in the local paper, they put it on a sign in front of the library. I had to agree to not do a mass mailing, but I think that will work out fine.

We’re getting about 10 or 15 attendees per workshop. The only problem is that the library executives don’t like to have too many of the same kind of workshop at the same library, so in the not-too-distant future we’re going to have to find different libraries or locations.

I did one in August, as vacation season was ending, and three in September. As far as participation, there was no difference between the two months. People were just as willing to deal with college planning in August as they were in September. I’ve been surprised at the high demand. The accepted rule is to do workshops on Wednesday, Thursday, or on a Saturday morning. I unwillingly did one on a Monday morning and also on a Monday night—and had the same number of people! In this area, 95% of the kids go to college, and everybody needs money.

In October it’s just berserk, seven days a week. My plan going forward is to have a workshop in December, but after that to start winding down because most colleges cut off their admissions on January 1^st or thereabouts. Once you get into December, you’re dealing with people who are really, really late in the process for whatever reason. I’ll probably continue for a bit through the first quarter of next year dealing with applications and letters and appeals and all that.

Earlier on it’s about 50-50 parents of seniors and parents of juniors, but that shifts to mostly seniors as the year goes on. Those are the people who are stressed-out, with no plan. I tell people at the workshop, “You don’t need a workshop to get into this. If you talk to other parents who sound like they’re in the same boat you were before this workshop, give them my phone number.” We’re at the point now where we’re getting referrals at the workshops from the previous workshop. It’s working the way I thought it would.

Signing up for consultations

I continually remind attendees, about four or five times during the presentation, that they get a free EFC consultation. I have people stationed at the back of the room at a table with calendars and consultation forms. I always say, “My people will tackle you if you try to leave the room without making an appointment, so don’t make them do that.” I got the idea of offering an EFC as an enticement from one of Lynn O’Shaughnessy’s newsletters.

At the end of the presentation, I tell people that in order for us to create their EFC, we’re going to need to see their tax return, investments, cash, savings, and those kinds of things. There’s nothing I can do without sitting with you first and looking over your financial statements. The hook is, “I can help you, but we’ve got to do a face-to-face meeting.” We use an evaluation sheet that tells people in several different places to stop at the back table to make the appointment. By the time we’re done with the workshop, most people are eager for the appointment.

We get about 100% of the parents of seniors signing up. It’s crunch time for them, as Lynn calls it, “late-stage college planning.” It’s rare that you get somebody who has been working at it for years and feels like they have everything under control. The workshop achieves its purpose: giving enough information so that people understand we can help them, we are here to help them, and that they should reach out to us. We really don’t have to do a lot of chasing. They’re desperate, looking for anybody to help them out.

In the workshop, I’ll show samples of the kind of grid I create for all the families I work with. It has the colleges they are looking at across the top of the page, then down the page information about the student—interests, athletics, SAT scores, etc. At the bottom of the sheet I have the college price off the website, then “Your Price.” These are great examples to show in the workshops. If you look at a grid that says it costs $70,000 to go to Notre Dame, but for this family it might be $10,000 a year. That gets their attention. They understand that I’ve got access to information that will help them, and at the end of the day I will show them how to reduce costs.

Helping with FAFSA

A major benefit that I can offer people is going through the FAFSA with them. There’s no editing or validation with the system, so if you make a mistake, there’s no one to tell you that. If you have a lot of assets, you might not read the directions that say not to include retirement accounts in the FAFSA. Then you will be judged on false information, and you will never know it. Even if you use the data retrieval tool, it pulls information off your tax return, but you can’t see what that information is. I had one gentleman who had six million dollars in assets, and three-quarters of those were IRAs. He input them into the FAFSA, and guess who didn’t get any financial aid? The line on the form says “assets, investment accounts, yada yada,” and you’re supposed to somehow magically know that you don’t include retirement accounts. I make sure that only good information goes in, because the FAFSA won’t tell you.

Helping parents realize they can cut costs

I emphasize that timing is a factor, and that getting in early gives you the best chance of getting better awards. When I’m doing the workshop, I can actually see the light bulb go on when I’m talking about need versus non-need, because all of a sudden they realize, “It doesn’t matter what I make or what my assets are. I might still be able to reduce the cost.” You make it personal and everybody in the room realizes there is something for them. I tell people, “Rich people got rich by not wasting money.” If you don’t spend as much on college as you thought you were going to, that gives you more when it’s time to retire. And when you start bringing real world experiences to people, they get it. They understand.

I tell the story of a family who came to me who were looking at Duke. They thought their child could never go there because it costs $70,000 a year. I took their financial information and did the analysis to find the EFC. They’re not a really high-income family, so there was a lot of need-based aid that was going to be coming at them. I almost knocked the mother off the chair when we met a couple of days later. Their price for Duke looked like it was going to be six or seven thousand a year. The next week I got an email that they were visiting Duke on the weekend.

Another example is a kid I’ve been working with who was offered a Presidential scholarship at Fairleigh Dickinson. She said, “I’m thinking about Fairleigh Dickinson,” so I ran her numbers through the net price calculator to show the family it was possible, and she decided to look into it more. Now she’s got a scholarship offer. I’ve been working with this girl for six months, and she is invested in the process. . She even named me as an advisor on her common application so that I can review documents with her. If I had 10 of these kids, this would be an easy business.

Converting to clients

It’s almost automatic that the parents who come to me for help college planning become clients. Even on the first visit, we’re already looking at their assets and accounts. I tell them, “I’m licensed to do this stuff, so if in the course of creating your EFC I see opportunities for you to do things a bit differently in order to drop your EFC, do I have your permission to follow up in that respect?” I haven’t had anybody say “No” yet.

I had a family that had a million dollars in assets, but $300,000 of that was in non-retirement accounts. By converting those to life insurance, for example, their EFC could drop by as much as a third. Cash-basis life insurance is not included in a FAFSA. There are ways to move money around so that you get a better deal on college expenses.

Now this only works if you have time to prepare. It seems like the big push should really be to get junior parents at the workshops. But to them, next year seems like a hundred years away. I haven’t found a good way to get the parents of juniors interested enough. Even getting them to the consultation is difficult. The seniors say, “I need your help, I need your help,” but the juniors just aren’t ready to jump in. I can stand there all day and talk about all the assets that count on a FAFSA, and why don’t we talk about things you might be able to do to lessen the blow? But they don’t get it.

The workshops are just a way to get in front of people, and as soon as they make that commitment to meet with you, they’re already buyers of what you do. You’ve gained their trust in the workshop. The EFC is a great way to show them that you know what you’re doing and that you care about their family. I’d say probably northward of 90% of the families who come to me don’t have an advisor. We deal with the college stuff, looking at accounts and assets, and it’s sort of a natural progression for them to ask, “You take care of other things, right?” I’ve built up their trust by taking care of the kids, and once you’ve got their trust, there’s no discussion you can’t have. I’d say that 75% of the people who come in end up becoming clients. And all of them are preretirees, so they’re ready for a discussion in that area, too.

Advice for others

A really good starting point is to look at Lynn’s articles on Horsesmouth. She’s got some excellent material. I use her reports all the time, and save all of her email newsletters for future reference. She really helps people to become local experts. I’m becoming known as “that college funding guy.”

I think advisors hold back because they feel like they don’t have a good enough grasp of the information. I’m telling you, if you spend any time at all looking into this, you’re going to know more than your audience does. That’s the key. As long as they can look at you and feel like you know more than they know, they’re going to lean on you for your opinion. I didn’t know much when I got into this and now I’m shocked at the things that come out of my mouth.

I do this because I love it. I do it because we deal with families and you see immediately the impact you’re having. The bottom line is, they pay me to do this stuff, but you don’t have to pay me to do this, because you can actually see the goodness of what we’re doing. I spent a long time wondering about whether or not I should do this, and now that I’ve done it, I’m wondering why it took me so long.