Founder of Hoskin Capital on Growing a Financial Planning Business | builders podcast

0:00My finances went from being very, very simple to suddenly being kind of overwhelming. And so that usually pulls the cork for someone who's like, all right, I need an expert to tell me exactly what to do so that I can put this on autopilot and focus on the things that fulfill me.

0:22Today I'm talking with Nate Hoskin of Hoskin Capital. Nate is an entrepreneur. He started his business in 2020 doing financial planning, taxes, and investments for Gen Z and millennials in a new way. I think you're going to love Nate's pragmatic and thoughtful approach to life and to building a business. We also talk a touch at the end about financial planning on a personal level if you're interested in doing something a bit different with how you plan. And then in our first segment, as always, I speak with Marty Beckerman about the stories he's covering for business.com, including an anthropomorphic pop tart and compostable diapers.

1:03Yes, it's true. It's not the same old business content. Thanks.

1:13I'm with Marty Beckerman, as I am each week, to discuss three stories in the B newsletter. Sign up for free at business.com. Hi, Marty. How are you? Hey, John. How's it going? It's going good. One of the articles your team has written about is about electric vehicles. I have one. I got one about 18 months ago. I love it. I can't imagine not having an electric car. I feel like where I live in Seattle, you can't throw a rock without hitting two or three electric cars. But sales haven't been what a lot were expecting. Isn't that true? Right. I still have a Prius personally, so I haven't caught up.

1:53But the car industry expected EVs to grow by 100 % this year. They only grew by 50%, which in any other product category, 50 % year-over-year growth would be great. But this fell so short of expectations that now car manufacturers are really shrinking production on EVs. Ford is curtailing its electric truck. Hertz, the car rental company, is selling off its Tesla fleet. People don't even want to rent them, apparently. Elon Musk seems a little distracted lately from running Tesla with his other endeavors. And it's strange timing because California, which has power over so much of the domestic car market, has mandated that all new vehicles be electric only by 2035.

2:50So you would think that the manufacturers would be ramping up for this, but things are actually seem to be pulling back right now. That's really interesting. I know you get into it more in depth in the newsletter as a, as a personal anecdote, if you're thinking about renting from Hertz, I've done it a couple of times. I've rented electric cars recently. Actually the experience for me has been great. They've been fairly equivalent prices. And, um, and if you return the electric vehicle, basically empty, it's like 25 bucks or 35 bucks, way cheaper than it would be. If you returned it empty, empty for gas.

3:28You don't even really have to recharge it. Okay, well, we'll keep tabs on that one. Marty, you have a young child. And maybe on your registry, did you put one of those like, did you do a diaper genie or did you do some type of diaper collection apparatus? We have the diaper genie, sure. One of the things that I was reading is that when a baby is out of diapers, he or she has gone through thousands of them. And there's a company looking to make it greener. The average baby goes through 4 ,000 diapers by the time they are toilet trained. It adds up to millions of pounds, not per baby, but in all the babies in society are creating millions of pounds weekly.

4:18One company called Diaper with a Y is trying to make diapers greener by basically resuscitating the World War II era diaper service. For$20, they will come in a truck, pick up your dirty diapers, recycle them, and give you new clean diapers. So it's kind of looking to the past for a way to make things more sustainable in the present. So we said in the newsletter, you know, electric vehicles maybe aren't going to save the world, but maybe the diaper pickup people will, those poor delivery people. Yeah, well, it sounds like it's totally compostable. You ship them, which is interesting to me. And I like it.

5:03Hopefully they're successful in reducing that kind of waste. Well, if the first two stories had a bit of an environmental bent to them, this last one's more in the category of ritual sacrifice, which is not something you always cover in the Bee newsletter, but you do cover experiential marketing. Talk about this interesting story. Yeah, this was in our mind-blown marketing segment. Last month at the football game between Kansas State and North Carolina State at the Pop-Tart Stadium, Pop-Tarts had their mascot come on the field. The mascot's name was Frosted Strawberry, a person in a Pop-Tart suit, an anthropomorphic Pop-Tart, got into a toaster, a gigantic toaster, waving and smiling.

5:55And then a crispy Pop-Tart comes out the bottom and the players started eating the mascot that had just been dancing moments before. We were saying, you know, Tony the Tiger, Lucky the Leprechaun, Toucan Sam, Count Chocula, so many beloved cereal mascots. But this is the first time a company has had the courage to execute theirs publicly. So, wow, that's so funny. Were you a Pop-Tarts kid? Yeah, I haven't had a Pop-Tart in years, but Pop-Tarts director of marketing said, we sacrifice everything for flavor and why should we end it? Our mascot also saying that, telling NPR that this kind of bold conversation starting moment they felt was on par with the Super Bowl commercial for how much viral hype they got.

6:44So, you know, I think the Trix rabbit might wind up in a delectable tomato ragu next. I don't know. Ooh. All right. Another blast from the past. Thanks, Marty. Good to see you. Thanks, John.

7:03Hi, Nate. How are you? Good to see you. I'm doing well, John. Good to see you too. Thanks for having me on. My pleasure. I'm really excited to talk with you today. We all need financial planning. And I can think about how my dad has done it. He has someone he went to college with who manages his finances. He talks to on the phone, email occasionally. And I think that that's probably his generation's way of doing financial planning. You've surveyed the market. You're a financial planner. What unmet needs do you think are in the market for younger generations like Gen Z or millennials? Yeah, I think at a high level, the unmet need for younger generations is just the availability of financial planning and wealth management.

7:55Because I think that so much of the industry, whether you are calling your broker on the phone to place trades like so many previous generations have done, or you're managing it on your own and you're using your own brokerage accounts and doing your research because personal finance is something that interests you, most of the services are geared either towards the complete DIY or for the already wealthy. And those are really the only two lines that you can walk. I think the unmet market and the unmet need are the people who would really like help from an expert, but don't necessarily have$250 ,000,$500 ,000 yet and can in most cases do most of it themselves.

8:34They just need that one push, that one financial plan or that one meeting to really clarify things for them. That makes a lot of sense. That's really clear how you articulated it. I mean, I'm thinking, you know, if I just have a little bit of money and I'm doing some DIY stuff, I probably just should be like day trading. And then if I have a ton of money, then it's probably worth it where I can get somebody on the bat phone to talk to me anytime I want. You actually coined a phrase, I don't know if you coined it, but anyway, it was the first time I had seen it on your site, which is the acronym Henry.

9:11What is this? And what led you to believe you could start a new business serving this market? Yeah, I can't claim Henry. That's definitely been around. There are a couple. Yeah, there are Henry's, there are Dink's. And so Henry's are - I know what dinks are. Okay. Yeah. Double income, no kids, right? Yeah. Exactly. Yeah. So you've got your dinks and then you also have your Henry's, which are high earners, not rich yet. And so those are people who are making really good money. We're often talking about engineers, salespeople, that sort of thing who are making more than $120 ,000,$150 ,000, but they're very early in their career or they are currently paying off student loans from their education.

9:55things that are really inhibiting their ability to make money work for them, even though they're making it. I see. And so, um, and so what are some of the attributes of this, of this, uh, of this crowd? Like what, what are the, the top things that they, that they want or they crave at this point in their life or journey? I think the first two defining features of Henry's are drive and specialization, because they're very, very driven, very, very successful. They are people who are very, very committed to the work that they do and are very excited about the work that they do, but they are often extremely specialized because to become so skilled in one thing that you can command such a high salary, it sometimes happens at the occlusion of everything else because you are just a software engineer.

10:47You are just a salesperson, whatever it happens to be. And so the other component, I think, is the time constraint and the distractibility, where they're very, very constrained on time, because they are extremely busy, they just have so much going on. And they also don't necessarily want to be distracted, because what they're doing is working so, so well. And so the thing that I've found that they want or the thing that I can help them with is I can be the expert in the room to just remove the learning curve, teach them what they need to know in a very concise fashion so that they can implement it and then forget about it as much as possible and go back to doing what has been so successful for them.

11:31And probably specialization. If you are specialized, you recognize the importance of specialization. So you might be a great software engineer and you don't know much about finances or trading or investments or making the money work for you. You want somebody who's as specialized as you are. But maybe to get back to the problem statement that you were talking to at the get-go, there may be a bunch of options if you've got$5 or$10 million, but maybe not so many that are obvious. If you're not yet rich, you can't put that much money to work. So you had this insight, you recognized it. And during COVID, what happened?

12:12Maybe tell the origin story of your business. COVID was an adventure for all of us. And I think it facilitated a lot of change for a lot of people. A lot of people were side hustlers. They started something new. They had a realization that something in their life was important that they maybe weren't giving credence to. And I absolutely had that happen. And I was very much shoved into it because I was working for an RIA, a registered investment advisor. That's very often what you see as the companies that are serving multimillionaires and billionaires. And I was working as an intro financial advisor.

12:52I had come over from a hedge fund because I was super into data science. That's my major is finance and quantitative analytics. And so that was really where I was leaning, but decided, and there's, there's more to this that we can dig into if we'd like, but decided that I wanted to work directly with people. And so I chose to be a financial advisor. And I was very much just getting my start. I had just learned the ropes. I was starting to build my own book. I was starting to interact with clients and actually take on the entire aspect of their financial life from investment management to the planning to the relationship management.

13:28And then COVID struck and the person that I was working for decided that he was ready to retire. That was the last market crash and the last recession that he could really bear. And so I was laid off in March, no, it was April of 2020. And I graduated college in May of 2020. And so after being fully employed for years and having such a good career lined up for me, I really felt like I was ahead of the game. I graduated without a job and the inability to go outside. Wow. And all that happened, And you're probably, how did graduation happen? It was all virtual. Everybody was shut down. So you couldn't even really go out for coffee with anybody and talk about this.

14:11Yeah, I heard that our graduation happened virtually. I was not there. I was not going to make that happen. Luckily, they did do it the next year. So I was able to go back down and do the ceremony, which felt good. But yeah, there was not much in terms of fanfare when it came to me graduating college. Okay, so you're getting your degree, you're looking for a job or thinking about what's happening next. What gave you the confidence to start your own thing? confidence might be a strong word. I think that it was more a really nice exit strategy because the only people hiring were people who needed insurance salespeople.

14:57And I was not necessarily in a place where I wanted to sell life insurance. I didn't want to go down that sort of route. And so much of what I was being pitched by all of these companies was that I would get to own my own business, quote unquote. I would get to have my own book. All of the revenue would be mine, except for the 40, 50 % that they would take for all the administrative things. And so I started to wonder if I'm going to be building my own business anyways, and I'm going to be given so much ownership, why not just actually do it myself? And so I was studying for my certified financial planner exam at the time.

15:35And while I was doing that, I was like, I might as well just try it because I have at least another year where I'm not really going to be going outside. I'm not necessarily in a place where the jobs that I would like to have are hiring. If this doesn't work, I can always talk to my clients and bring them in to the next place that I end up and still be able to serve them. And so it very much felt like a plan B at the beginning where I just might as well, because I have nothing to do and I'm stuck inside and see if it works. That's amazing. And so take me through those first couple of months. Like, were you, what did you think yourself at first, I'm going to go after the multimillionaires and billionaires?

16:14Or did you, did you have a, did you have a specific business goal in mind when you were germinating it? I totally had a split and it proved to be the bane of my existence over the next two years because I knew and still know just deep down in my core that the people that I wanted to work with are young people. I believe that those are the people who need financial advice. Those are the people who can make small percentage changes and see massive outsized results. Those are the people that will see the highest impact from financial planning. But the only thing that I knew of the industry was one way to charge for the work that I did, which was a percentage fee, where whatever someone invests with you, that you charge them maybe 1 % of whatever that lump sum is per year.

17:04That's your fee. Well, I immediately hit this problem where I really wanted to work with young people, but they maybe had$30 ,000 that I could manage,$40 ,000. And so financially, it just didn't make sense for me. And it also didn't make financial sense for them because Because when you're that young, paying a 1 % fee can cost you between 17 % and 30 % of your net worth between now and when you die. And so it was going to be a huge burden on them. And it wasn't going to be worth it for me. And so I immediately started looking for young clients. Those are the people that I wanted to work with. And I figured I would figure out the finances later.

17:46Explain to me what you mean about that 17 % to 30 % because that's a pretty staggering number. Are you saying that as someone grows from$30 ,000 to a lot more in the future and it's always 1%, that kind of like compounding 1 % ends up being a very nice amount of money for the financial planner? Is that what you're saying? Yes. And I wish that was the only case. Because if the financial advisor kept 100 % of the money that they took from their clients, at least then someone would be benefiting seriously financially from that change of hands. but there's a whole chunk of that money that doesn't go to the client and doesn't go to the advisor because the whole magic of investing is that it compounds.

18:36You don't just make money on what you save. You make money on whatever your investments made the previous year. And so if you make 10 % a year, every single year, you're actually making more money because you're making more money or you're making money on a larger pot. That 10 % is on a larger sum, right? and the power of compounding is the eighth wonder of the world. But when you get a 1 % hit every single year, not only does that 1 % go to the advisor, but the next year your returns are not as impactful. And so that exponential curve that everyone shows when they talk about how investments perform over time, that is what gets shortened.

19:18That's what slows down. Instead of it's like a kind of a corollary to opportunity cost is what you're saying. Yeah, the money would be better left invested than paid to someone else. That being said, I would hope that my financial planner was investing in a similar way to what he or she was recommending to me. But I totally get the point. So I want to kind of start with where your business is. Maybe you could describe your business today, who you serve specifically, how does somebody pay for your services, what they get, just to kind of like a lay of the land. then I want to work backwards into what's happened over the last two years, like steps along the way.

19:59Absolutely. So as of today, I am a financial planner. So that is different from an investment manager. That is different from a salesperson. And that is in many ways different from a wealth manager. And what I mean by that is that when someone comes to me, I will spend three or four weeks with them and I will write a financial plan that they can do themselves. They don't necessarily need me every single year to perpetuate that plan. Some people love to have that oversight. They love to have me manage their money and do their taxes for them. And we include all of that for the people who find it easier, the people who would like to have the experts.

20:38But really what we do at its core is we write those financial plans. And the people that we work with are usually between the ages of 24 and 40, give or take. And they are people who have just experienced a large life change. So they might have just received an inheritance, they might suddenly be making far more money than their expenses. They might have just started a family or they are considering starting a family and buying a house, those sorts of things, things that add to financial complexity very, very simply, very quickly. And so, and I don't know if you experienced this, but I certainly did.

21:18It felt like overnight in my early twenties, my finances went from being very, very simple to suddenly being kind of overwhelming. Did you have that? Yeah. Yeah, for sure. I mean, within, you know 36 48 months um marriage uh wife went back to school um bought a house had kids like yeah i mean maybe you're thinking of other complexities but for me there was like this window late 20s to early 30s where complexity just just went went nuts for me yeah it just gets crazy. And it becomes really overwhelming because then not only did you add a financial complexity, you added a life complexity. Now you have to be a father and you have to have a financial plan.

22:09And so that usually pulls the cork for someone who's like, all right, I need an expert to tell me exactly what to do so that I can put this on autopilot and focus on the things that fulfill me, like being a parent, like being a homeowner, like traveling. Those are the things and like my job and whatever the career happens to be. Those are the things that they should be focusing on. And so having me in their back pocket to say, okay, if I have a financial question, it's gonna be a 30 minute meeting, not a six hour endeavor. That feels much better to someone who just leveled up that complexity. Yeah, and I remember at that time, as I was sort of thinking long-term, wondering, would anyone actually wanna talk to me?

22:53because I don't have that much money. And so who's going to be one to incentivize to sit down and really plan with me? So I didn't get started in that real financial planning journey with an expert right away. And probably when you would recommend that people do that. Yeah, it gets delayed. And in that delay, you lose out on a lot of opportunities to make really good decisions with your money. The simplest example is that you can only put a certain amount of money in an IRA every year. And so if you don't, you just lose that. And never again in your life can you make that contribution. You can catch up a little bit after you turn 50.

23:33But those are the sorts of opportunities that people can miss out on for decades until they finally hit a point where they can sort of commission an advisor that needs more money to manage or something of that sort to make it worth their while to take the meeting. So who else is on your team besides you? I mean, at first it was just you, and now you have a team of folks. Maybe describe the scope of your business. Absolutely. So our main three points of focus are financial planning, investment management, and taxes. And so myself and my colleague, Brian, who is a CPA, we are the people who manage the tax side as well as the investment portfolios and the financial planning.

24:15We are what I would call the face of the business were the people that you would see in a meeting, actually giving you the advice. And then on the backside, we have para planners, we also have people who help us with sales development, as well as at this point, a team of video editors just to help me create content, because it definitely got to be a little bit much. And then also on the PR side and the publicity side, that's very much where we've focused our time, because we don't need, and this might be a hot take. I don't know how far out of left field I'm going to be coming, but I don't necessarily think that we need a massive team of investment experts and that sort of thing for someone's portfolio.

24:59Really, most of the ETFs and other vehicles that people can invest in are already managed by teams and teams of people with multi-decade experience in investment management. And so it's not necessarily my place to be that manager when I can put them into something that will really benefit them and give them access to those experts. I get that. I mean, for me, I get a report every so often that's like a pie chart. And it's like, here's how much is invested in this, here's how much is invested in that and kind of like asset classes and it's like a distribution of risk and you know risk versus um versus a reward i guess uh yeah that makes that makes sense i want to talk about the content marketing engine your marketing engine how you're growing your business you're thinking about growing your business in a minute but thinking back over i guess your business is now almost four years old three and a half three something like that.

26:02Two questions, I guess, two-part questions. One, do you feel like you had always wanted to be an entrepreneur, like an intentional entrepreneur, or are you an accidental entrepreneur? That's one part of it. And then what's one thing like challenge or things that you just did not expect along the way as you've been growing your business, adding to your team, etc. I always knew that I wanted to be an entrepreneur. I knew that that was my end goal. It was very much at the end of my five or 10 year plan. The original plan was to go and get a job and learn the ropes and study under experts for five to 10 years and then make the leap.

26:44So I very much felt like I was accidentally thrust into entrepreneurship. But I knew that it was my end goal. And I knew that it was something that I would do at some point. Okay, so the second question was something you didn't expect. So it sounds like you always wanted to be an entrepreneur. You had at some point, and you had an idea that you wanted to build a business. What's a stumble you had along the way, or what's a big surprise you had over the last couple of years that you've had to overcome? I think the biggest thing with being an entrepreneur that I just did not understand was the affection for my business.

27:28Particularly in the early years, I didn't really care. And I think it was because I had built it out of need and necessity rather than like as something that I really wanted to make my own. And so I was never very attached to it. I wanted it to grow, but I didn't really care if it lived or died. I knew that I could go and find something else. I knew that I could go and get a job. I always cared about the clients. They were the ones who really, really mattered. I really didn't care what Hoskin Capital was or what it made me look like. I really cared about was I doing a good job for the people who entrusted me with their life savings.