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It Starts Here Podcast | Ep. 7: Pat McClain of Hanson McClain Advisors

It Starts Here Podcast Ep. 7 | Pat McClainMH: Hello, I'm Mike Hackard. I'm the chair of Hackard Law, a law firm focusing on estate, trust, and elder financial abuse litigation, in California's major urban areas. This is Hackard Law's podcast, It Starts Here. This is an August 2017 podcast featuring Pat McClain, and I'll give you a little background on Pat, but you may already know it but he is the Co-Founder and Senior Partner of Hanson McClain Advisors. He has been in business for more than 24 years, has over 2 billion under management. He is listed as one of the Top 100 Barron's wealth advisors, he has been the co-host of Money Matters radio show for over 20 years. And it's one of the longest, if not the longest-running financial talk radio show in the country. And he is the chairman of the board of Sacramento Food Bank, and for many years he has led that effort and Run to Feed the Hungry on Thanksgiving Day, so thank you, Pat.

PM: Thanks, Michael, thanks for having me here.

MH: It's great to have you here. There are a lot of areas we can cover, but let's start with; what have you been doing lately? I know that you've had a few recent things going on.

PM: In the last month or so we actually took some private equity money, which means we sold part of our firm to a private equity firm, to allow us to grow the firm, both organically and inorganically. So Hanson McClain still runs the firm, we're still responsible for the day to day operations, but we're engaged in conversations with other like-minded firms for them to come into the fold. So, hopefully, in the next six, seven, or eight months, we'll be announcing the firm getting larger through inorganic growth or acquisitions through smaller firms than ourselves.

MH: And do you have any particular geographic focus on doing that?

PM: Yeah, the geographic focus is mostly the western United States, we're in some pretty deep conversations with some firms right now in the Midwest and the western United States. So, it's exciting, I think what we do is important, I think we do it pretty well. And so the idea that we could grow this and serve more people is important to us.

MH: The other thing that you're known for is charity work such as the Run to Feed the Hungry, tell me when did that start? What got you into that?

PM: Oh, so my relationship with the Sacramento Foodbank and Family Services, when you talk about the Run to Feed the Hungry, go back to when I was in college and I had a business class and I had a case that in end we chose the Sacramento Foodbank and Family Services. I did a case study on that in a business class... How long ago was that? 32 years ago, and that was my first introduction, and then once I started doing okay in business, I started giving them some money, and where the money goes, the heart sometimes follows, and so I joined the board and anyway...

MH: And now that you're the chair of that whole effort?

PM: For a period of time.

MH: Okay, and last ... Well, this ... Last year how many people ran?

PM: Oh, I don't even remember the number - 20,000 or 24,000, or it's a large number of people, it's the biggest fundraiser of the year.

MH: Yeah, that's fabulous. So, you know you've got the radio show, you've had it for so many years, you have podcasting, you speak at hundreds of conventions; so all of this came out of something. What originally inspired you in this field?

PM: So, I bought my first stock when I was 17, Roseville Telephone stock. You could send in $10, and they send you a share. So, I bought my first stock when I was in high school. But as I went to college, I actually realized how little people actually know about money and financial matters, including what you do for a living, which is estate planning. Some people have a more of an aptitude to understand number and money and how it relates. So as I was going through college, I realized what a gap there was in the average American as to what money means, and what it represents, and how to use it.

MH: Yeah.

PM: And that's what drove me into the industry.

MH: And where did you start in the industry?

PM: Oh, I started for a large broker dealer/life insurance company as many of us did back in the day. Although I did the investment fairly well, I wasn't that good on the life insurance side of it, but...

MH: So, and then you started your own company with Scott, is that right?

PM: Yeah, Scott Hanson and I started the company, I think 24 years ago or so. It's been good fun.

MH: Yeah, well, you're a wonder at marketing, and you guys must have gotten together and said, "We're great at what we do but we have to let people know that." Something like that?

PM: Yeah, so yeah any good firm as a component of firm has a marketing department. As we do, so we have I think 19 advisors, two chartered financial analysts. Most of our advisors they are CFP's, or CHF's. Most of them with the exception of a few; we have a finance department, IT department, marketing department, just like any other big corporation. And even if that one department starts with an individual, they were responsible for marketing. And I think you're doing the same thing.

MH: We're doing it.

PM: Because what you do, Michael, is you're a great estate trust litigator but, you know, how do people find you? Because most people hope to never employ someone like you.

MH: Right.

PM: Right? No one wakes up in the morning and says, "Boy, I hope that I to hire an estate trust litigator sometime this year".

MH: Yeah, "I really wanna talk about a lawsuit today." Yeah, usually people don't have the big smile on their face when they are doing it. But the...

PM: Yeah, they find you by mistake or on purpose or..?

MH: Well, no they find us on usually on Google or other similar search engines or Youtube. And our attitude with that is probably like yours. I have done this a long time, 41 years now. But people have to know about it.

PM: Yeah.

MH: You can be great and I know I've looked you got all these fabulous ratings, but people don't know about those things unless someone gets them out. As you say, it's the marketing people that need to get them out.

PM: Yeah, yeah.

MH: The other thing that I think is terrific about things like marketing is social media, and I know you with all the things you do the speaking, radio shows writing, meeting with clients; I think that your clients teach you a great deal, and of course the more. You have over 7,000 clients, and it seems like the more that you talk to your clients, the more you learn. So I'd ask you about that; what do you think that you really learned from people?

PM: So I learned that end of the day every situation is unique; they might look similar but every, every situation is 100% unique. Never be surprised by what people would do, both good and bad. And that people wanna be responsible; they just wanna know why they should be responsible. No one wants to exert some energy unless it's got value at the end. And so clients wanna be engaged in the financial planning process, but they need to be assured that it's actually worth the time and energy expended in a process.

MH: Right.

PM: Which is very similar to what you do.

MH: It's very similar. You need to establish the goal; you need to want the goal; to be somewhat emotionally committed to the goal, because if that doesn't happen, it doesn't work very well.

PM: Yeah.

MH: Yeah. So, I wanted... One thing that you had said, as an aside, was that lawyers really don't know how to do marketing. And so give me some insight on that because you deal with, you've probably dealt with thousands of lawyers.

PM: So, first of all, I should say that I probably don't know how to do marketing, but I'm smart... The firm - my partner and I are smart enough to know that marketing is a component of the firm that's important, so we have a marketing department and have had someone in marketing for years and years and years. So, it may not be that lawyers don't know how, it's just that they don't place an importance on it.

MH: That makes sense.

PM: Right? So it's most ... I may or may not understand marketing completely, but it's a part of what you do, and it's a hard thing in business because marketing is a proactive event. And most businesses act on, you know, in a reactive manner.

MH: Right.

PM: So it's a hard thing, marketing plus you're spending money hoping something good happens.

MH: Yeah. It takes a while.

PM: Sometimes it doesn't work at all, and sometimes it works incredibly.

MH: That's right, sometimes you have a perfect failure, and other times it's terrific.

PM: Yeah.

MH: So, you deal with trusts all the time because people invest with their trusts and they have retirement trusts and all kinds of trusts. And because I deal with the meltdown of trusts, I'd love to hear some stories from you as to what you've seen in trust kind of meltdowns or things that you've seen that seem to be a common problem.

PM: So, in the state of California, if you have any sort of net worth whatsoever, we encourage a trust. And strongly encourage them for our clients, because someone will come in giving you the life savings and we say, "Okay, you should do a trust and trust..." Well, it isn't unusual, it's not unusual at all to get a phone call that says, "My mom or day or my husband or wife is close to the end we'd like to do a trust." I've had some of them done three days before death.

MH: Yeah.

PM: A few days before death.

MH: True.

PM: One day before death.

MH: Yeah.

PM: Where the attorneys actually go now, making sure they are of the right mind. That isn't a great time for estate planning, by the way. There is not a whole lot of thought and energy that goes into that.

MH: Right.

PM: And as a result of that, you see that mistakes are being made. People are inadvertently disinherited. You see that past trusts aren't either properly set up. You see children from previous marriages disinherited. Which is the end result is what you see.

MH: Right.

PM: Right?

MH: Right.

PM: And if you think putting the trust together is a pain in the butt, just think what happens what you're doing to your family if the trust is done poorly. Because it ends up in law offices like yours.

MH: Right.

PM: Also what we see is these poorly constructed trusts - they get them from trust mills.

MH: Right.

PM: You've probably litigated one of those.

MH: Well, I've seen it and they are amazingly bad, and even the trust mail can't explain what it really does. And usually, it says it does one thing and does another, yeah.

PM: Yeah.

MH: It's amazing.

PM: And so for the rest of the listeners, the trust mill is where you'll see those, you know, "Come to coffee at Coco's this morning," or you know, Denny's, and we're gonna buy you breakfast. Oh, and by the way, you know, if you invest $10,000 or $20,000 in this annuity, you get a free trust. What they are trying to do is to get a look at your assets to try to manage them.

MH: Right.

PM: That's what we see, and it's really terrible because families come together at a death in the family or break apart. Sometimes they come together then break apart because of someone feeling slighted one way or the other because of how someone who has passed away treated them or didn't treat them.

MH: Yep.

PM: Or maybe it just an oversight.

MH: Absolutely, sometimes just an oversight.

PM: And it's just an oversight and they didn't mean anything, or maybe it was poor legal advice.

MH: Right.

PM: So that's what we see in the trusts and we think that trusts are quite important, quite, quite important.

MH: You know the other part of the trust is that your firm goes about helping people with financial advice and making them money and setting aside their retirement. And people at times, the lawyers preparing these things, at times forget to transfer securities and other kinds of assets into the trust. Now that may not completely destroy all the positive aspects of the trusts, but it certainly delays administration.

PM: Yeah.

MH: And it costs money.

PM: Yeah, because then they get... Hopefully they get picked up by some sort of pour-over will or whatever the name for it is today.

MH: Right, no that's what it is, yeah.

PM: And then dump it back into the trust.

MH: Yeah.

PM: That's pretty common.

MH: Yeah, we have to file lawsuits to get them back in the trust. They are not really adverse lawsuits, but it takes time and money.

PM: Yeah, yeah and just slows down the process. So, that's why a trust that is done properly with the help of if some one has any assets to make sure they are transferred in is really, really important.

MH: Yeah, well, Pat, I really think you're a visionary. I've known you a long time, I've seen great things that you do. So, I'm going to use the Walt Disney quote, "If you can dream it, you can do it." You've done lots, so dream it. What are you looking out for in the next 5 years?

PM: Oh, I just hope that our firm grows to the point that we can give holistic, completely holistic advice to a client. Which means possibly in-house accounting and legal services. We're exploring that right now. And that we grow it at least into a large, large regional firm. Probably the reason why is, we're a fairly decent-sized firm; you like us or don't like us. We try to do the right thing for our clients, and we see the aftermath of really bad advice on a weekly basis, on a weekly basis. If you come to Hanson and McClain, know that we're gonna do our best to serve you, versus if you go some place else, we have no idea whats gonna happen. And our industry is filled with bad people.

MH: Yeah.

PM: Financial services industry.

MH: That's well said. If you come to Hanson McClain, you're gonna do the best you can to serve them.

PM: Yes, I'm sure you do the same.

MH: That's an example for all of us.

PM: I'm sure you do as well.

MH: Yeah, I thank you, Pat.

PM: Thanks.

It Starts Here Podcast | Ep. 7: Pat McClain of Hanson McClain Advisors from Hackard Law on Vimeo.

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