Managing Your Practice Podcast Series

Managing Your Practice is a podcast series from Dimensional Fund Advisors that delivers insights based on our history of industry-leading financial advisor benchmark studies and client surveys. We help advisors leverage those insights when making the critical business decisions successful firms face every day. This series is dedicated to providing financial professionals with best practices in key areas such as driving growth, business efficiency, and the client experience.

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Episode 6 - Four Strategies for Becoming an Elite Financial Advisor

Episode 6 - Four Strategies for Becoming an Elite Financial Advisor

A conversation around business development strategies that all elite advisors should follow.

As founder and CEO of CEG Worldwide, John Bowen has spent decades coaching thousands of elite advisors. So what separates top financial advisors from the rest? In this conversation with Catherine Williams, Dimensional’s Head of Practice Management, John shares the four business development strategies that he believes all elite advisors should follow. As an added bonus, you can visit to receive a complimentary copy of John’s book “Become the Expert the Wealthy Want,” and to arrange a business development strategy call with his team.



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Catherine Williams: Hi, everyone, and thank you for joining us today. I'm Catherine Williams, Head of Practice Management for Dimensional Fund Advisors. Today, I want to talk about what is probably the number one question me and my team receive as we engage with advisors around the world. How do I grow? And probably then shortly followed by the question of, what are faster growing advisors are doing? We see in our annual advisor benchmark study, which includes nearly a thousand advisors this year, that there are in fact some unique behaviors and characteristics these top advisors demonstrate both in their business and how they live their lives and certainly how they engage with clients. So that's what we're going to talk about today. And joining me to share his unique and expert perspective on this topic is John Bowen, founder and CEO of CEG Worldwide. Hi, John. Thanks for joining us today.


John Bowen: Well, Catherine, thank you for having me.


Catherine Williams: I want to give a little bit of a background for the few folks out there that may not know your name or be familiar with CEG, you founded CEG nearly 20 years ago and your organization, I will be so bold as to say, is absolutely one of the world's leading coaching firms when it comes to financial advisors. You focus on coaching elite advisors thinking about their business, their personal lives, their legacies, and you and your team have delivered hundreds of workshops and presentations to thousands of advisors around the world. So just an incredible body of work and deep knowledge in the areas we're going to talk about today. I also want to mention that you are the author of a book about a dozen books, including “Elite Wealth Planning: Lessons for the Super Rich” and “Breaking Through: Building a World Class Wealth Management Business.” So really happy to have you with us today. And I'm looking forward to our discussion.


John Bowen: No, I'm excited to be here, and one of the reasons I'm so excited is Catherine, I had the opportunity to work with Dimensional as an advisor. I think I was number two to work with and Dimensional had under five billion in assets. And today, I think it’s higher, I'm not sure the exact number, but it's a little bit higher. And when we're talking about growth, the experience that we've all had, particularly some of the advisors that were early on, I had the privilege of, with two partners, building a business to $2 billion. We sold that and it became Loring Ward, and now Buckingham. I’ve got a lot of history of not only working with the firm, but also as an advisor, but also had the privilege of working with many of your top advisors as well as top advisors around the world. So I'm really excited sharing what's working now in these unprecedented times and really unprecedented opportunities out there.


Catherine Williams: So to start, let's, I guess, kind of level set the landscape, if you will. But when you think of where financial advisors are today and how they're doing today, what comes to mind?


John Bowen: You know, I really think of why I started CEG nearly 20 years ago and there's a lot of frustration, Catherine, that, you know, I was seeing myself really in an entrepreneurial fog for too much of my career. It just seemed like I had to figure out too much on my own of how to build a practice and really grow it and serve clients well. And as I look around today, it's really not that much better. Certainly there's a lot of very successful advisors. But in our research, what we find over and over again is that so many advisors earning less than half the net income they should, and they're working twice as hard as they need to. And I've got to tell you, this is a shame. It shouldn't be this way. And one of the things we do at CEG, you know, every single advisor can build an amazing life of significance and we define it as taking care of the people you love, causes you to care about making a difference in the world. And you can do it by working with fewer but wealthier clients and do it faster and with less effort than you ever thought possible. And what's so great is the ability that you can build this amazing life of significance and you can do it for your clients as well. And, you know, unfortunately, it's a small percentage of advisors doing it.


Catherine Williams: So what separates the top financial advisors from the rest, when you think about that elite advisor, what makes them elite?


John Bowen: Yeah, and it's so, I'd love to tell you it's the technical skills that they understand the wealth planning, taxes, and estate planning, and they really they understand being cross covariance of optimization and all that. But there's really only one thing that separates the elite advisor, and let me define elite advisors to us, it’s someone who's netting consistently, and that our research has to be at least three years in a row, earning over a million dollars a year of net income and doing a great job with their clients. And what we find is there's only one thing separating them, and it's their ability to source wealthy clients. That they can have a consistent stream of prequalified, and pre-endorsed is a key thing, wealthy clients coming to get them. They're no longer concerned where their next client is coming from. They have that quiet confidence. So the big thing I really want to get across in our podcast today, and I'm going to share a couple of bonuses to help along the way, but you've got to get good at sourcing a consistent stream of prequalified, pre-endorsed wealthy clients.


Catherine Williams: You make a really great point, and we see this as well in our work with advisors in our particularly in our advisor benchmark study, that it's not just enough to have a full pipeline, but the quality of that pipeline. And I know that for you and for CEG, you do think about some core disciplines around some core strategies, if you will. Can you speak a little bit about what you focus on? I think it's four core business development strategies as you think about building a true elite wealth manager.


John Bowen: Yeah, if you really want to be at the top, you know, and consistently earning that type of income, a million or more and, you know, we have advisors earning several million dollars. I mean, this is what in today's world, particularly where many of us are locked down, I'm in Silicon Valley and we get the time of the recording, we're really locked down. The pandemic has changed things. So our ability to scale up now using technology has never been greater. It's no longer just geographic. And so all the things that made elite advisors elite now can be even more powerful. And there's four business development strategies that we focus on. And this is from our research of really over 10,000 advisors. And that, number one, they become thought leaders, their position as the go to advisor in their community, their niche, who they're going to be a hero to, they've mastered framing. This is something that will go into a little bit more because most advisors don't think of it. But what we have is if we don't structure our conversations well, what happens so much is we compete with the noise out there and with everything going on politically, economically, and socially, the noise level is so high. In addition, we maximize client relationships. And this is so important. We're in business to serve our clients. So sourcing clients is important, but we've got to deliver a great experience so that they become, they want to share you with the people they care about. But the most important one, if you're going to be at the top level, is building strategic partnerships with the right centers of influence. So the big four; becoming a thought leader, mastering framing, maximizing client relationships, and really building strategic partnerships with the right COIs.


Catherine Williams: So let's dig into each of those, if you don't mind, for a few minutes, and really I'd love to share with our audience this question of how. So when we think about that thought leadership piece, how do financial advisors become a thought leader to the affluent clients they most want to work with?


John Bowen: You know, it's one of those that I've been really fortunate. I found this out early in my career, and that's one of the reasons why I've written so many books and so many white papers and so many different things that we publish, and the videos and so on. One of the things we all want to be is perceived as the expert. And to do that, you've got to be a thought leader, and you've got to be able to monetize that. It's kind of two parts that you have to do. 


And so because there's certainly no shortage of people who have written a lot of content and haven't made it work. But I want you to think most financial advisors we think of are hidden talent. And I know the quality of advisors that you're working with, Catherine, that they're, they are extremely good. And they know if they sat down with a right fit, affluent client, whether it's over zoom or physically together, that they could do a discovery meeting and really get clear where they are, where they want to go, and how they could add tremendous value. And we call these advisors hidden talents. You know, they're talented, but they're hidden. People don't know. And I know for most of my career, certainly in many of the early years, I felt like I was a hidden talent. What I found was there's a bridge to becoming the talented expert. Clients have a choice, and particularly as you move more and more upmarket, they've got a lot of choices of who they can work with. So they want to work with someone that they perceive as an expert. And one of the best ways to do that is through thought leadership. That's the bridge from being a hidden talent to a talented expert. 


And so the elite advisors, those earning over a million dollars or more, have learned that's very powerful. Now, one of the things that's become really a huge opportunity is to recognize that you don't have to go out, write all the books that I've written or my partner. I've done over 20 books. My partner, Russ Allan Prince, has done over 60. I feel like a little bit of a slacker here. But the idea that for what we've done in our research, we found if you curate content. So I know certainly Dimensional publishes a lot of content, they’re a thought leader, you know, there's content the advisors can use, but also working with other groups for more the wealth management, the practice management. And it's not only on the, it's both the technical things, we all want to use things that are going to inspire clients to immediately move assets, but you want to help them build an amazing life of significance. So it's thought leadership on those things that the clients you want to work with are interested in. A lot of times it's about having a better life, but that's really that thought leadership you can curate. It has to be consistent. You should be doing that on a steady stream. So you're out there. And one of the easiest ways to do it is on video because you can provide your unique perspective on these different areas. 


Catherine Williams: It's interesting, I'm thinking a little bit about some of the recent findings from our advisor benchmark study. And again, sort of looking at those characteristics of those faster growing top firms in the study, when it comes to what we often talk about is that that ideal client profile, top quartile firms are two times more likely to not only account for interest and understanding different elements of the clients they want to work with, but they absolutely have dialed in around the values and the behaviors more so than bottom quartile firms. They really think very carefully, very purposely about the kinds of clients they want to work with. And then in certainly in that digital landscape, it informs where they show up and how they show up.


John Bowen: I totally agree, I mean, it's you know, and we call it being a hero. You've got to decide who you want to be a hero to. And then that means you really need to understand their unique needs and wants. And by communicating that effectively in the thought leadership, you so differentiate yourself. And when you give your own perspective, particularly like video, when you're going over previously written material, what you can do is you can connect with them and share your perspective. And that makes you the you really become the expert they want to work with.


Catherine Williams: So we talked about the thought leadership, you've also mentioned being master framers, if you will, and elite advisors really executing that. How do elite advisors master that framing piece? That's that second of the four strategies you mentioned.


John Bowen: Sure. And this is something that I don't think most of us get initially when we're an advisor, you know, as we start, you know, we just we really want to just share what we know. And it's not structured very well. It's not. And we overshare, and particularly some of the advisors that are attracted, including me, to Dimensional, you know, the technical stuff gets so exciting and we forget we're a little weird. Clients don't want that much knowledge in this. The vast majority, we find that 84 percent in our studies, don't want to get very knowledgeable on this. They want to connect with you emotionally first and then justify engaging you with logic. And so we all want to go to logic right away. And so one of the things we want to do is really think through on framing that words matter. And if you just start talking and it's not structured, you know, prospective clients, clients are going to hear you, but it's really going to come out as noise and you're not going to differentiate yourself. Elite advisors really understand that if they organize it, they create structural access, it's in the words that the clients are going that are going to resonate with a client. They get it and it becomes believable. So, for example, in our research, I always talk about a good example of mastering framing would be, there's five key concerns that the affluent have.


John Bowen: Our definition of an affluent is over a million dollars of investable assets. So when we, if I'm talking with a client, I want to or prospective client, I want to really share with them. And it could be with a COI, accountant or attorney or other professional. I want to share with them what I do. Well, there are really five things. If I'm an advisor, an elite advisor, I'm going to say something like this. We help our clients make smart decisions about their money. Number one. Number two, we mitigate taxes. Number three, we go ahead and take care of the errors, help our clients, take care of the errors. Fourth is protect their assets from being unjustly taken through litigation or divorce. And fifth is to the extent they're charitable, we help them magnify the gifts. Those are our five key focuses. Now, why is that so important? Well, clients want to understand and we get into talking about regression analysis, and Monte Carlo simulations, and this and the Sharpe ratios, and this kind of stuff. The more we can talk in their language and have it structured. So the three points, five points, certainly no more than seven, usually three to five, and have it clear, it's repeatable. And particularly if you're building a larger firm that everyone in the firm is able to communicate, that becomes very, very powerful.


Catherine Williams: Absolutely, and I have to think, tell me if you've observed this, that when an advisor can, with three to five clear, concise points, convey and give those examples, that I would think makes it easier then for those clients as well to communicate to someone that they think should work with the advisor as well. In other words, making referrals, they can now speak very clearly. These are the ways that my advisor shows up and helps me. I have to think that that makes that process much, I don't know if easier is the right word, but opens that up as well.


John Bowen: It really does, Catherine. It's a great point because, you know, if I'm at a cocktail party and somebody asks me, let's say I'm not a financial advisor, I'm a fellow executive or a fellow entrepreneur or whatever the setting is, and they go ahead and say, you know, I need some help in my financial side, you know, who are you working with? And I go, I've got a financial advisor. And what's the next question they're going to ask? Are they any good?


And the most common reaction is he's OK, she's OK. And you know what they're going to ask about the sport game or what do you think about this or that? They're not going to ask. What we want to do is create really marketing apostles, raving fans, whatever term you want to use. And for that you have to provide the framing so they know they're getting a wow experience. You know, I like the term, I trademarked it when I was at our advisory firm, Personal Chief Financial Officer. And this whole concept that, you know, what you want is your story to proceed you. So imagine you're at the cocktail party and they ask you as a financial advisor, what do you do? OK, this is your value promise. You know, you want to be able to say who you work with and what is the benefit. I was in Silicon Valley, so I talked about I work with successful high-tech executives making work optional. They were very independent. They wanted to achieve a number that whenever they achieved the number, they wanted the next number to fund their lifestyle and their retirement and all that. But if they were not a high-tech executive, successful one, they changed the conversation. If they were, they said, how do you do that? Well, I act as their personal chief financial officer, and I help them make smart decisions about their money, mitigate taxes, take care of the errors, protect their assets from being unjustly taken through litigation or divorce. And then to the extent they're charitable, and I know from research, 70 percent of this audience is, that we help them magnify those charitable gifts. And I do this with a professional network of other professionals so we can make, help you make, really smart decisions.


Catherine Williams: So let's pivot a little bit. And you mentioned in terms of those strategies that the client relationship, the experience that financial advisors are delivering is absolutely a core strategy. How do elite advisors differentiate themselves by maximizing their client relationships, really thinking about the experience they're delivering?


John Bowen: You know, it's interesting, I just came off a video conference where we just went over this kind of planning for 2021 with some of our top clients, our coaching clients. And, you know, there's just so much opportunity right now to provide the leadership. And again, I repeat myself, but this concept, the markets at the time of this recording, the markets are doing phenomenally well. We're near highs, and there's so much uncertainty out there. And normally when the markets have done as well as they've certainly done recently, you know, it's very hard to get good clients to switch. That is not the case now. That is not the case. So one of the things that's really important is for you to make sure you're delivering a world class client experience so that some of our coaching clients are reaching out to your clients. How can we do that? But we want to define what a world class client experience is. And one of the most important parts is to really understand who your client is and to do a review. And I would have it structured. So whenever you're listening to this podcast, you start going through systematically and schedule to check in, and particularly now using Zoom and other video conferencing tools. You can do it more frequently. It's easier for the client then and really think of it as a four part. You're going to go ahead and you're going to get yourself prepared, you know, with the technology and all that. But the main thing is you're going to do impactful listening. We call tuning it. And one of the things I want you to write down if you're not driving a car is 10 percent. In this meeting, you should not talk more than 10 percent. It's all about asking them great questions and then the discovery. And so this is your rediscovery or checking in with them. And certainly, if you're listening to this, I hope some people are listening to it when the pandemic is over. It's no longer a concern, but we're in the middle of it right now. 


And so the very first thing you should be asking about is how are they doing now? I know you did it in March of 2020. You checked in with them in April. But you know what? It's still there. And not only how they're doing, but how the people they love, their spouses, their partners, their kids, their grandkids, how are they weathering the storm? And then if they're entrepreneurs, you want to ask them about their business. If they're professionals, you want to ask them about their practice. If they're employees, you ask them about their job. And how are they doing and what are their concerns? And notice, I didn't ask them about their investments. I asked them about themselves and the people they love. And I got to tell you, so many opportunities for you to serve are going to be there.


It's very likely there's assets away from you, even though you don't think there is. I mean, if you're going at the higher-level clients at five million or more, when we survey them, they on average, and this is five million to about 100 million, have 5.7 advisors. Your ability to consolidate by doing having that conversation and hearing they're concerned with the future and offering to do a second opinion, a diagnostic, whatever term you want to use, and take a look at their investments. And as you deliver this great experience, you offer them what you provide to your top clients, the ability to have the people they care about get a second opinion as well. And we find these elite advisors, they're having 20 percent growth just doing that, Catherine, by providing second opinions for the people that their top clients care about and doing that review. It just makes a huge difference.


Catherine Williams: And do you also see where elite advisors in particular have developed other ways that clients can feel that they're getting cared for in regard or having interactions, if you will, with the business, even if they're not directly sitting on, in this case, a Zoom call or meeting with the advisor. In other words, are they leveraging digital? What are they doing other things as well that just continue to sort of wrap their arms around clients even when they're not on a live conversation with them?


John Bowen: Well, and that's where the thought leadership, having a consistent stream of thought leadership that you're doing, so you're in front of them. And it's not only emails, more and more emails aren't being opened, even, you know, even when it's your top clients. But video is becoming really powerful. A short video sharing your perspective. And I'm not talking about sharing your perspective on investments, talking about sharing your perspective on really building and helping your clients build an amazing life of significance. And they open those up. What video can do, unlike printed material, it can create emotion. And people want to connect with you emotionally. 


Catherine Williams: I recorded a podcast a couple weeks ago with Dave Welty of Avier Wealth, and he talks about grabbing the camera, the tripod and the Labrador and just going down to the dock on the lake that he lives in the Seattle area and doing quick videos and how those have just really reached a lot of both existing clients and prospective clients. But like you said, he's making a very real quick, concise connection, if you will, with clients. And that's been really powerful. 


John Bowen: It's amazing the impact this is having and so few advisors are doing even just take the tripod down to the lake type thing. But if you do it systematically, it's pretty amazing what you can do. But I do want to make sure we get the last one because it's the biggest one of the four.


When we survey these elite advisors, we ask where they got their five best clients, the super majority in every single study we've ever done say they got it through accountants and attorneys. When we survey affluent clients, 54 percent told us that they found their primary financial advisor, who has a vast majority of their assets, through their accountant and attorney. To the extent that you want to be successful on purpose, you have to incorporate this, this is just such an important part of making it work. And the mistake I think we see over and over again that so many advisors do, is they think that, you know, I'll go talk to the accountant and attorney, and I'll tell him how good a service I do. Well, the reality is that is not going to do it, because they can't tell the difference. Much like you can't tell an accountant or attorney service. And they're going to just assume that, you know, that's table stakes. So one of the things I want you to think about is, you know, it's all any conversation you're having is what's in it for them. I mean we've all, I can't in my early in my career, Catherine, I took out more accountants and attorneys to lunch, dinners, breakfasts, and they would promise you we're going to start referring to each other. We'll trade clients type thing. And the only thing for sure that always happened, I picked up the bill.


Catherine Williams: Right.


John Bowen: And then the vast majority of time there was almost nothing. I would salt the mine, if you will, by giving them some referrals. And nothing ever happened. Hardly. Now, what we've learned at CEG, the elite advisors are doing, and at the end of my career I did this well, and I had one CPA that referred me in that one year, over 200 million dollars of business, and that was multiple clients. And I learned the power of economic glue. And it's not revenue share. In the past, at CEG we did a lot of revenue sharing. What we've really found, what they want is guidance. Matter of fact, we have a program that we do for our coaching clients that we can do now with the world changing that we will have next month. We're running one Accelerating Your Alliance. We'll have 150 of our coaching clients, probably maybe 200, and they'll bring 400 COIs to it. And we will walk them through four things that we have found that create economic glue. And the big premise of the economic glue is we're going to show them how to make 20 percent more net income over in 2021, the next 12 months. And if you think about that, the estate planning attorneys have really they've been hit pretty hard. They don't have the reoccurring revenue that many of the advisors have. And the accountants, because of PPP and the Cares Act, they've been OK, but they're scared to death of the future.


John Bowen: And they were already scared before the pandemic. You know, when you talk with them, they're all going to tell you that they have been really busy. But when you, and they've done OK, but almost everyone's off their high of 2019 income. So they're really interested, if you can share with them how to grow their business, their revenue, and you can do it through, in our case, what we do is we help them identify opportunities in their existing client base. We show them how to use thought leadership. It's the same things we're talking about where this works with everyone. And then we show them how to do webinars with the financial advisor partner. And lastly, we actually create some national events that they can speak at and bring their clients to generate business. We call it a virtual family office forum, but we are finding unbelievable interest. One of the early ones we did, I was just talking with an advisor in follow up. He ended up getting 10 clients over 10 million dollars. I mean, that makes a career for a lot of people. So they already have your clients. You it's you need to put the framing right to work with them.


Catherine Williams: I think you made a really great point. It's all about helping them see how you can help them and engage with them, illuminate them, help them look great with their clients as well, and vice versa. And how do you open up that conversation taking a different approach? Because certainly we know from many of the advisors we work with, that when they call when they talk to an accountant, the accountant is saying, hey, you know what? I've got 10 or 15 or 20 of you knocking on my door. So how do you really over time differentiate yourself with that, with that potential partner? I think there's some excellent points there.


John Bowen: Well, and what you picked the right partner, I mean, it's important to work with people that want to grow their business, they're committed to building a business with the clients that you want to work with, and that they've referred not necessarily to you, but to any financial advisor. And they understand the importance of being perceived as an expert, a thought leader, and they want to do group presentations. And if they have that and they share with you about their practice, I got to tell you, I have yet to meet anyone who hasn't told us that they're not interested in growing their business in 2021. And when you tell them, you know, if you can help them grow their business by 20 percent or more in 2021, would you have any problem referring the appropriate clients to me for my expertise?


John Bowen: It's a resounding yes. And that's the power there.


Catherine Williams: We have just a few remaining moments, and I want to ask, I think probably a question that's on the minds of everyone who’s listening to this podcast, which is, you know, especially if they're an advisor, how can advisors make sure they are on the fast track moving up the hierarchy for ultimate success?


John Bowen: Well, and we have you know, in our research, we've created a hierarchy of advisors success and, you know, if you're going to build an amazing life of significance working with fewer but wealthier clients, we want you to do it faster with less effort than you ever thought possible. And one of the questions I get is, John, can you take a look at our practice and see what we should do to accelerate our success even more, and to hit that elite level or if you are already at the elite level, continue up or that million dollars or more of net income delivering a great experience. And I'm going to tell you the answer is a resounding yes. We're happy to do it. Every day, our team is working with financial advisors just like you to show you the specific actions that we would take if we were you to accelerate the success even more.


John Bowen: We'll take a look at where you are now on this hierarchy of success and create a mind map of where you are now and where you want to go and where the gaps and that huge value there. And then they'll set up a second meeting where they'll review with a strategist. So you'll get together with one of our consultants, and they'll actually show you the nine accelerators that we're seeing these elite wealth managers do. And they'll actually help you see where your focus should be in 2021. And we'll also let you know if we could help you make it happen faster and easier than you ever thought possible. 


Catherine Williams: John, I want to thank you for your time today and the generosity of sharing your knowledge and expertise, certainly these resources are incredibly valuable. And I really want to encourage everyone listening today to check them out and absolutely consider what you want for your own business as an advisor in the kinds of clients you want to work with. Thanks, everyone, for your time and for listening today. And we will catch you on the next podcast.



Thank you for joining us today for Dimensional Fund Advisors Practice Management Podcast. For more information, please visit


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More Episodes

Episode 5 - Applying Lessons from 2020 to Grow Your Business Today

Episode 5 - Applying Lessons from 2020 to Grow Your Business Today

A discussion around how to approach unique market niches and use social media and other tools to drive growth.

In 2020, we learned the importance of developing a team that can deliver value to your clients while implementing a systematic growth plan to guide the future of your business. Catherine Williams, Dimensional’s Head of Practice Management, is joined by Stacy Francis of Francis Financial and Dave Welty of Avier Wealth Advisors to discuss how they approach their unique market niches and use social media and other tools to drive growth in their businesses.

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Catherine Williams: Hi, everyone, and thank you for joining us today. I'm Catherine Williams, Head of Practice Management for Dimensional Fund Advisors. 2020 has required remarkable change and adjustment for most advisors and firms in our industry. But a few constants have remained, including the need to grow, whether to stay ahead of the headwinds coming at most firms or to execute on a long-term strategy. And that's really what we're going to focus our conversation today. How do we continue to grow in the remainder of 2020 as we begin pivoting and looking at 2021? What can that look like? And how can we continue to drive growth and value in our businesses? To join me in this discussion, it is my pleasure to welcome Stacy Francis and Dave Welty. Stacy and Dave, welcome to the podcast.

Dave Welty: Thanks, Catherine.

Stacy Francis: Thank you, excited.


Catherine Williams: I want to tell our audience a little bit about both of you and then we'll get into the heart of our conversation today. Stacy is president and CEO of Francis Financial, based in New York City. Stacy and her team are focused on helping women in transition in particular, speaking of areas of divorce and widowhood and really helping women think about what their future looks like from a financial and lifestyle perspective. Francis Financial managers over $300 million in assets. And Stacy is also the founder of Savvy Ladies, which is a nonprofit focused on helping women take control of their finances. You can also find Stacy on her own podcast, “Financially Ever After,” as well. So a veteran relative to the podcast landscape.

Dave, great to have you with us today. Founder and managing director of Avier Wealth Advisors, located in Bellevue, Washington, my old stomping ground. And Avier is currently managing over $450 million in assets. He very much likens his job to that of an air traffic controller. I think that's a perfect analogy. I think many of us can relate to that, really focusing on not only developing the team that is driving growth and delivering value to their clients, but also working on what the future growth looks like for Avier Wealth. Dave is also a veteran around podcast, and you can currently find him really tearing up the YouTube scene with several videos out there as well.

So, Stacy and Dave, anything you'd like to add relative to your firms and a little bit about what you're focused on?

Stacy Francis: I have to say, you made us both sound pretty darn amazing, but I also want to say I'm really excited about this podcast and especially to share the mic with you, Dave, because all of you listeners, you're going to hear that there are so many similarities between our firms, but at the same time, very different populations we serve. So I'm really excited about today.


Dave Welty: And I'm in complete agreement, thanks Stacy.

Catherine Williams: That's definitely why I'm excited to have both of you on our podcast today. At Dimensional here, we work with firms of all different sizes and shapes, all different growth objectives, if you will. And so I think hearing from very unique perspectives where we have common ground and also how you're very uniquely deploying the strategies within your own organizations. I'm really excited to sort of dive into that today. And so with that, I'd love to start. And I will start with you, Stacey, if you can just talk a little bit about your firm's overall strategy. What are your objectives, whether it's looking currently here in 2020, which is certainly been a unique year or on a go forward basis. Can you share a little bit about what that looks like for Francis Financial?


Stacy Francis: Thank you. So we use “Traction” and it's a great book for any of you who haven't read that, but we use their system for our three year picture, our 10 year picture of where we want to be. So we've really gone through the numbers to be able to pinpoint where we want to be in the future. So our three year picture, and this is by December 31st, 2022. So you can see that we did this even before the pandemic. Our revenue goal was to be at five million, our profit at 30 percent. 210 clients, $500 million under management with an average AUM per client of $2.3 million, and by then expected to also need to hire potentially two additional hires.

Catherine Williams: And Dave for Avier Wealth, talk a little bit about what the strategy is, the vision that you have for the business currently.


Dave Welty: We are what I would consider to be laser focused on who we are and who we serve. And, you know, being up in the Pacific Northwest, I live down in Issaquah, Washington, out on Lake Sammamish. And at the other end of the lake is a little company called Microsoft. And it is our niche. It is who we serve. And we were just talking the other day, kind of a big picture perspective that there's 156,000 employees at Microsoft today. There's probably five percent of them that are level 65 or greater, which is our target market within Microsoft. That breaks it down to 7,500 potential prospects and we're looking at 50 per year. So when I think about who we are, where we're going, everything that we do is, you had mentioned YouTube and we do do a lot of video, a lot of video. We do a lot of education. We do a lot of LinkedIn posting. But that's our world. Our world is the what we call the upper left tech community. And again, I would just say that we're laser focused on that.

Catherine Williams: So I think both of you touched on a really important look, we'll call it a characteristic, if you will, that we also see in the top quartile faster growing firms within the Dimensional benchmark study. And that is they've absolutely taken the time to map out a plan and Stacy to your comment whether it's a year out, two years, three years. Nonetheless, they've applied a discipline to building that out. And Dave, as you just mentioned, even particularly with a niche client, really thinking about who they want to work with, how they want to go about that. Has that always been in play for your firms or was that an evolutionary process? Because I think a lot of advisors listening today might be thinking, wait a second, I do want to develop a strategy. How do I go about formulating where I can bring the best value, the kinds of clients I want to work with? Stacy, can you talk a little bit about that, even from a historical perspective?


Stacy Francis: Happy to and Catherine, I'm glad you asked this question, because a lot of newer advisors, at least I know I found when I was a newer advisor, I was quite intimidated. You know, everyone seemed like they had everything put together, so buttoned up on track, no questions. And I know for me we sound that way. But bless that journey. And I started the firm back in 2002. I started for Savvy Ladies the year before. So I started the nonprofit first and then started my wealth management firm. We've always been laser focused, particularly on our area of work, which is women going through divorce or women who unfortunately have lost their spouse. Over 70 percent of our clients, that is her. But while we've been very laser focused on who we serve and how we do it, we have tried everything under the sun that you can imagine about getting that message out, being able to attract those clients, developing a system and a process with a lot of wonderful progress, but also some mistakes along the way. And it's definitely been in the last decade that we have been able to matched system and process on top of our marketing program, on top of our new client experience and on top of the ongoing client experience. But it definitely was not there from the beginning. But I'd love to hear from you, Dave. I know I fumbled a lot in the beginning.

Dave Welty: I think we all do, right? It's, I think, it's just part of growing. I'm actually on my second niche, which is kind of fun to say. So I when I first got into the wealth advisory business, my niche was retiring telecom workers from up and down the West Coast. And it was a great niche. It worked well, wonderful people. I can't speak enough about them. I call them gray collar America, hardworking people that save. But the reality of it was, is that the demographics of the way the phone companies hired back in the mid-70s, in the early 80s, the vast majority of the people that we could best serve were going to retire out. And about five years ago, our offices downtown Bellevue, Washington, on Northeast 4th, on the fifth floor of one of the older buildings in the city, now surrounded by Amazon buildings and buildings that have Microsoft folks and Google. And five years ago, we had somebody come in and say, oh, I think I'm in the wrong place. Well, why is that? Well, because the name of the firm, and maybe this is six or seven years ago, was Retirement Asset Management. They said, well, I was referred to you. I'm a Microsoft employee, and I'm not here to retire. And it was an eye-opening moment for us as the firm. We said this is nutty right. We're surrounded by the folks that are in a community where it's growing quickly. Incomes are great, needs are great, and we need to rethink our focus. And about five years ago, we really pivoted hard and said, who do we want to be? Who do we want to serve? And it was at that point in time that we said, look, let's clearly identify who it is that we do want to serve.


And again, it's out of every one of our office windows, out of every building has somebody in it from Microsoft, Google, Amazon, Expedia was next door. So we're a niche number two. I love this niche. I hope it's my last niche. I'm 59. I don't know if I want to do this for 15 more years and find niche number three, but I truly believe, and I use that word niche a lot. I think if you want to be successful in this business, you better be laser focused, you better have a niche. And one of my favorite people in the industry that I follow is Samantha Russell from Twenty Over Ten. And she had a, one of her tweets the other morning was if you chase two rabbits, you'll never catch one. And I think everybody's got to figure out what that rabbit is that they want to chase. Because if you do, you're going to catch the rabbit, you're going to be successful.


Catherine Williams: Dave, talk a little bit more about that, because when we talk with advisors who are thinking about getting really focused in around a particular niche client, sometimes that happens organically, sort of put your head up and realize, oh, I've got five or ten of this particular type of client. So that must be a niche, I'm going to go after that. But it's one thing to decide you're going to focus on a particular group, either by profession or background or culture. It's another thing to truly be able to articulate and define your value prop for that. Why should they choose to work with you over another advisor?

Dave Welty: Like all good relationships, it's got to be one that makes sense for both parties. And I am fortunate enough, as I know Stacy is, to have an absolutely wonderful team of folks surrounding me. You know, people congratulate me, you know, I wouldn’t say often, but occasionally I get people say, gosh, what a great job you guys are doing. And it's really not Dave. It's this, it's this amazing team of people that are 25 to 35 years of age. And when I think about it, it's like, who can they do their best work for? And so I've got four folks that are CFA charter holders. I've got five or six that are CFPs and so I’ve got this extremely analytical group. So if I want to think about if we want to really leverage that expertise and the commitment they've made to themselves and their professions, who is it that's best matched for? Well, it's probably where we're at and this isn't true of everywhere in the country, but it's probably that tech executive who's got executive benefits, compensation benefits that are they get more complex as you move up the food chain. And so we're able to take at Avier, a group of very talented young folks here and match them up with a demographic of people that really need their help. And I mean, when you start talking about managing deferred comp at Microsoft, it is not an easy task. And so we've been fortunate to have a kind of a demographic of folks, and a very large one thank goodness, with this unbelievable need that oddly enough, most of them don't even know they have the need. They don't have the need until it's almost like you don't know what you don't know. Right. And our big mission right now is getting that information out like it's November is we call deferred comp season because the window open on November 1st it closes on November 30th. Our job right now at Avier is not to close and bring on new clients. Our job is to educate, educate everybody at Microsoft that we possibly can about this unbelievable benefit, the complexities around it, why the decision is such an important one. And so, again, I think when it comes down to it, you've got to have the right group of people serving the right group of people.


Catherine Williams: Excellent point. And as you said then, ultimately, where you can position yourself as a true resource, if not subject matter expert can absolutely realize why hone in on those on those niche clients for sure. Stacy, I want to go back to something you talked about. We talked about sort of the evolution of your strategy and the focus of Francis Financial. When you think back, you mentioned there were maybe a few learning moments along the way. Is that what we'll call them for opportunities, if you will? They may not have felt that at the time. Right. But with that in mind, anything to stand out to you that you tried you thought about and really in the end had to make a decision. This is not going to work or not the direction we want to head.

Stacy Francis: That's a really, really good question, and I think my first thing is when I started the firm, I, I felt that clients would just come to us, you know, put our shingle out there. What we do is so unique, so passionate about helping women. And the reason I do this and the clients didn't come and that was a that was a big mistake. Something I learned very, very early in my career is that you can be the best financial advisor, you can have the most altruistic intentions and want to help. But if you're not, if you don't have clients, you're not helping anyone. And that was a big learning experience where I realized if I don't get clients, I'm not going to be able to stay in business. And who am I helping then? And so I got completely educated about everything with regards to marketing and that if you go to my website,, you'll see a lot of our marketing efforts. And the first thing we did is we got ourselves on the Today Show and we've been, you know, we've probably had, I don't know, a thousand press hits since we average anywhere from three to four a week. And that has been helpful in gaining our credibility.


I started the firm at 27. I am now 47, so I'm still quite young and it took me some time to be able to put some credibility behind my name. Of course I have three different designations, but that still doesn't mean anything if you look like you're 16. So that was a big learning piece for me of learning to have confidence in myself, learning to become a thought leader. And similar to Dave, I love his approach to where it's really about education. And the more education that you put out there, the more support, the more people will come to you. And, you know, the second piece I learned very quickly is how important a team is. So it was me and an intern, my maternity leave with my son was three days. My daughter was a little better, three weeks. But that was a mistake. And while I felt like I couldn't afford staff, I really needed staff. And so I then quickly realized that that was going to be very important for us to become a firm where we have teams of individuals to be able to support the clients, which has been the most wonderful blessing. There's 13 of us now, and I get to leave the office at 2:30. Or I could say I'm working from home or in New York City. So it's not easy to get to the office in a safe manner right now. But I leave by 2:30 on Mondays and Fridays, and it's been wonderful to have a group of people who are greater than whatever I could do on my own.


Catherine Williams: I want to stay with that for just a moment, and Dave, I'm going to ask you the same question because you talked about this as well in terms of having the right people, the right teams around you. Certainly when as we engage with many advisors, they are wrestling with this question of do I add to my team, how do I build the kind of mindset, almost the culture that we want to see an organization that fosters growth, that fosters great care of our existing clients? It sounds wonderful and in some cases might even sound easy, but I think and in its application, it can be really challenging. But as you look at your respective teams, and Stacy I'll start with you, how have you gone about fostering the mindset around the firm's strategy to grow, especially for those that weren't there, maybe in those early days when you were really kind of trying to figure out what that might look like?


Stacy Francis: Catherine, that's a great question. We have a quarterly retreat and it's an entire day where we review our personal and business goals and how close we came to achieve them. And then we also go through the goals of the firm. Many of those goals that I just outlined in the beginning and where we are on track to those, and we have key targets of how many prospects we talked to in a quarter, how many come on as clients, how much in assets under management, how much in revenue they bring, how many referrals we're getting from referral partners versus clients versus the media and the press. So these are all things that we track and every one of the team members are responsible for a number even if it's not up to them solely to achieve it. So one of our staff members, one of our financial advisors, a newer financial advisor, is responsible for how many referrals we get from clients. And we're trying to increase that by the end of the year to 22 percent of all clients being referred by our current client base. And we're on track. But there are some weeks that she doesn't hit it. And we go back to do we put this on the issues list? Is there an issue? Do we need to make changes? So they are part of this and they know the three year picture. They know the vision because we're going through it step by step every quarter. And they were the ones who set these visions and these targets. They were the ones, who we each got one vote, including me, who I own 100 percent of the firm. I got one vote, and everybody else, including the intern, got a vote, too. And so they live this, they breathe this and they're excited. They want the firm to grow because they also know when the firm grows, it means that there is career progression, that there's more monetary compensation potentially coming down the line. And we're creating a partnership plan where eventually there's going to be ownership opportunities. So it's all really exciting things that they know they're contributing to and that they're really making a difference.

Catherine Williams: Dave, how does that compare? How does that look with regard to Avier? Is that similar or some differences?


Dave Welty: You know, there's, I think there are similarities in everything and there's differences with everything, I might be the only CFP in the country whose undergrad is in geology. I'm a pretty simple guy. I believe in you know, you work hard, you stay consistent, true to yourself, and good things happen. You know, it's kind of like Zig Ziglar used to say, the harder you work, the luckier you get. You know, we take this approach and Lars Phillips, who's one of my partners in the firm and for those of you that have never seen Lars on video, go to YouTube channel or just Google Lars Phillips, you'll see he's everywhere. It was interesting the other day he came to me because, Dave, I've got something great for you. I said what’s that and he goes, how many hours do you think I've worked year to date? And this is a couple of months ago. I'm like, well, heck Lars I don't know. And he goes Dave for discussion it was about 1,200. So he says, Dave, how many hours do you think virtual Lars has worked? And I’m like who’s virtual Lars? And he said, Dave, you know, our videos, our YouTube content. Just my videos. And I’m like Lars I have no idea. Real Lars, the physical Lars, has worked 1,200 hours. Virtual Lars has worked 1,600 hours this year. And his point was, is that, you know by us creating this content, this educational content that we put out there and it's for Microsoft. It's for Amazon, as one would surmise, being in the Northwest, you're able to leverage yourself. And we've been consistent, predictable in this process about building the business through messaging, through education, et cetera.


The other day on Sunday, lo and behold, I received a beep on my phone. That was a message from somebody who's coming into Microsoft at a very high level wanting to speak and why? It's because we were consistent. We've got video content out there. We've got ads running on LinkedIn, on Facebook, et cetera. But I would like to kind of touch on something about the teams and visions. And I think Stacy brought up a really a great point, and that is that the people that work for you need to know, you know, who the firm is that they're working for, what are their values, what's their value proposition, where they fit in both short term, mid-term and long term. And we just got done doing employee reviews, compensation reviews, et cetera. And my goal at any of these reviews is for every single person in our firm when they go home for the holidays. I'll take Alex as an example. Alex is a young guy who's been there for a couple of years. But if he goes home at Thanksgiving and his mom and dad say, Alex, how are things going to work? One on one, obviously got to say they're going great. Hey, Alex, where do you think you’ll be at the firm in three years? And what's that career track look like? Where could you be in five years? I want Alex to be able to articulate that without question based on who we are as a firm, the rate at which we're growing, the career tracks that we set for everybody. Because if you're going to be successful in this business, it can't be just the vision of Stacy or the vision of Dave Welty. It's got to be this collective group of individuals that have all bought in to what it is that you're trying to accomplish.


Catherine Williams: And so let's pivot a little bit into 2020 and the remarkable year that it's been. And I guess what I really, I'm curious to know, what have you had to change the way you go about thinking around your growth strategy for 2020? Where have you had to pivot and will some of this continue on into 2021? So as you think about 2020 in particular, Stacy what changes, if any, came about relative to your strategy and how you went about implementing it?

Stacy Francis: That's a great question, boy, have there been changes, Catherine. So we're in the heart of New York City. Our office is right down by Wall Street, actually, the famous bull that you see in postcards, our office is literally about 20 feet from there. And we were the first to be hit by the pandemic. And it unfortunately hit New York very hard. We are not back in the office. The office is socially distanced. We have four new offices within it so anyone can return, but most people can't because they can't get to the office in a safe way, because living in a big city, the only way you can get there is mass transportation. So we have moved all of our meetings on Zoom. Many were there already, but we had some holdouts, people who wouldn't embrace it, even though we very much wanted them to do so. And it has been fabulous and so much so, someone going forward that wants to meet in person, that is going to have to be a request. It's not going to be assumed that we're meeting with them in person. And this has given us some wonderful insights into how we can operate more efficiently and also how we can expand the clients that we serve to be not necessarily just in the tri-state area, but continue to grow our clients that we have throughout the United States.


And so we've been doing this and we've also moved all of our networking, all of our client events online. We just had a beautiful wine tasting with the vineyard down in South Africa that zoomed in from South Africa. And we have money circles that we have done training through Dimensional. Thank you very much. And we're doing these every other month. And it's been a wonderful, seamless transition to doing just that. As far as our approach to marketing. When the pandemic hit during February, March, April, May and June, it was truly about just education. And we did not really grow in during that time with the number of new clients. But what we have seen is that there has been a pickup in clients are starting to come on board. And so we actually already hit our revenue goal and our goal of assets under management, and we increased it from 300 million to 360 million over the last couple of months. So we're doing well. We're embracing the change, but I think that this is also going to be a change that we have not just in 2020 and 2021. These are changes in the way we operate that will be there most likely for the long term.


Catherine Williams: And Stacy, would you say that I mean, it's one thing to have the structure, have a strategy, as we've been talking about, but would you say that the frequency with which you and your team are looking at that strategy, holding each other accountable, adjusting, if you will, has served you in this 2020 environment, or do you feel that it may have played out pretty much the same regardless?

Stacy Francis: We check in and we go through our key metrics once a week, and we have a separate meeting for our marketing client relations team, and we have another meeting for our finance team, and then we have another meeting for the leadership team. That system really got its traction this year. And I guess I kind of a giggle that I say traction, because that's the program that we use is Traction, the EOS model. But it has served us so well because what gets measured gets done. And I know that I've found myself with certain goals, maybe not coming up to par and not wanting to let my team down and working that much harder. And the other piece that's been so helpful is that as an owner, sometimes you can feel a little bit like you're all alone. But I've not felt that way this year because everybody sees those numbers and everybody is rowing in the same direction. So this once a week, reviewing everything, seeing if we need to pivot, which we have pivoted a few times, and knowing that everybody has your back and that we're all trying to do the best we can.


Catherine Williams: And Dave, almost starting there, I think I'd love to ask you, certainly want to hear around 2020, and as we do start pivoting towards 2021, I'll ask a couple of questions with regard to that. What's your biggest focus going into 2021. And, what are you thinking about sort of measuring success for the next 12 to 18 months.


Dave Welty: You know, we've gotten a lot of people have reached out to us over the last couple of years, especially with the YouTube videos and, you know, the stuff that we do on LinkedIn that we've been building this base on LinkedIn for years, but it was up until four months ago. People go, oh, tell me about your marketing department. And I say, it's called chicken wire and duct tape, alright. Because it was just it was all of us collectively. It was Lars. It was JP. It was Nick. It was Alex Castañeda who is a client service associate doing the video editing and all of us doing the best we can. I mean, and luckily, I've got a group of folks at Avier that there are no barriers. You know, we joke around about that 30 second video looked really cool. It must’ve taken you two minutes. Well, it actually took us about an hour because you have to shoot at 25 times to get it the way you want it. But we were doing pretty darn good. But in June of this year, I had the opportunity, and from my window I'm sitting up in my house on Lake Sammamish and I can literally see the place on the lake where in June I was on a kayak on my kayak early in the morning, and I was talking to Christine Sylvester. And Chris Sylvester was a is a marketing professional that was looking for a new opportunity and we were connected. And in June of this year, literally, I was on my kayak talking about, gosh, we're not quite ready to hire a full time director of marketing, but I'd really love to explore some opportunities with you and see if we can make this work. And she started with us in July on a, I think we had a five-month commitment between us. And in four months, what we've accomplished has been absolutely remarkable. And I'm happy to also say that she's now a full-time director of marketing. And I mean, it's worked out that well.

So 2021 is quite simple. Take what we've learned in 2020, which has been a remarkably good year. Take a hard look at it. What do we do right? What didn't we do? We've started LinkedIn carousel ads with a digital marketing firm. We learned a lot in the last eight weeks. It's been successful, but what would we do differently? So it's one of those sit back and reflect a little bit, but 2021 we're just marching forward. There will be more video content. There will be more LinkedIn advertising. There will be more, I put a little note on my pad here and I put content, content, content, because if you want to get your word out, if you want to get that brand out, you've got to, to Stacy's point, right? I mean, Stacy's been on television. She's been in the news. She gets asked all the time, and we don't have that. But what we do have is we've got this ability to produce content, because the other day, as an example, Microsoft launched a new benefit within their 401K plan. And there was a big blurb and we had five or six of our clients immediately email us, is this is something good? We looked at it went, no, don't do that. And so within an hour, I had the tripod out on the dock and I did it like a 60 second video of “hey Microsoft just announced a new provision in the 401K plan. Is it right for you? We'll tell you why we don't think it is for the majority of you. Let me kind of talk about who that could be. The one in ten It might be good for.” We got the video within a day of it being announced, put it out on LinkedIn and the number of views, it just continues to go up, up and up. And so 2021 is going to be just carry on from 2020, continue to do what we're doing again, video, blogging, LinkedIn, LinkedIn advertising, Facebook ads, that type of thing. So I'm super excited for 2021.


Catherine Williams: So if you're an advisor listening today that is thinking about, OK, what's my first step? You've mentioned a lot of different options and areas to focus on, even from the standpoint of pushing out content. If there was a place to start, if you've not ever ventured into that digital landscape or really thinking about how you put yourself out there, what comes to mind?


Dave Welty: Again, I would take a step back and say, really try to understand as a firm, who are you and who do you want to serve? Because it's all about who, you can't, and everything else is irrelevant if you don't know who you are as a firm and who you think you can best serve. And we all have a limited amount of capacity. Right. And so you want to say, who do we want to serve? And then once you identify that, you've got to build out a network of those people. We spent two years, I mean, literally two years building out a network of Microsoft folks that are of a particular level. And now that we have this audience, we have a captive audience for content. So I would say one, first and foremost, identify who it is you are and who do you want to serve. Then start making those connections, and then once you start making those connections, put out relevant content. I watched a YouTube video last night of a of a marketing conference. And there's a bunch of advisors who were putting out, I thought, content that was just totally irrelevant. I mean, like a link to something like, well, why is this important to me? So, know who you are and where you're going, and then put out content that is both educational. It's fun. I mean, I post weekly to something from kind of my house. Right? I did one, I do a series called Wealth Lab. It's me and my yellow lab, June. And we do a question from a Microsoft employee about once or every two weeks or something. And it's kind of me in June, we're having fun, but we posted on Friday just June and I sitting on the front porch in front of the pumpkin saying, hey, happy Halloween to everybody. Right. You've got to make that real connection with people. And then you've also got to have the content that is valuable for them.


Catherine Williams: And you cannot go wrong with the yellow lab. I mean, that's like the perfect.

Dave Welty: I mean, the amount of feedback I've gotten from that, from marketing professionals in the country. It is, it's it was overwhelmingly positive, and I had no idea. Right. And I had no idea, I guess babies and yellow labs.


Catherine Williams: Stacy, for Francis Financial, what are you bringing forward from 2020 into 2021 as you think about your strategy?


Stacy Francis: We're really focusing on technology becoming more efficient within the firm with our reporting, our financial planning. That's been a big push for us. You know, we brag that we have an amazing high client to, you know, to team ratio. A team of two people are supporting 55 clients. While that's great, we know that we need to increase that capacity. And so we're looking at technology to be able to use as a tool. So really then the technology that we're always already using and also look at some others to see where we can fill in some of the holes. You know, and as we look at 2021 for where we are in COVID, for us, this is the new normal, the new normal. And we're moving forward in that manner. And so we're continuing to increase our marketing, increase our networking. And when I say that the things that we focus on as we focus on events, both for clients but also for referral partners, focusing on the press, also focusing on SEO, our website, media, and continuing to streamline the process for potential clients. And this year, already we've moved it from a three-meeting process before someone comes on board to a one-meeting process. And interestingly enough, our close ratio has gone up, even though we're now we moved it down to a one meeting. So, again, I don't have all the answers, but we're continuing to look at how can we get better, how can we streamline, how can we make our process even better for clients? And, you know, have some fun, too, because that's the biggest piece of particularly in the beginning, we forced everyone to take as an extra day off. We just gave them an extra day each month just to take off, so that it didn't come out of their vacation. Because that's a big part of what we're dealing with, too, is making sure that people have that time to have their downtime and that they come to the job enjoying it. And what we have found is that working from home, our team is working longer, they're working harder, and they weren't taking as many vacation days as they normally would. And that trend has reversed. And I'm helping out by taking a lot of vacation to be a good role model. So we'll see.

Catherine Williams: Such good advice and go ahead, Dave.


Dave Welty: I just want to kind of add to what was just said, and that is it's interesting, we get asked a lot about where’d that lead come from, you know. And I don't think there's any one place. And, you know, to Stacy's point, and that is you've got to be doing a lot of different things, you know. So you mentioned client referrals. You talk about whether it's advertising, media, blog, post video. I believe that it's really hard to track back to exactly where that client came from. I think it's a mosaic of different ways that you're trying to reach out to people. So we do blogs. We do videos, we do the wealth lab stuff. We do the carousel ads. I think it ultimately gets down to where a client or prospective clients sees, I watched that video on Microsoft benefits. I've seen the wealth lab post. I see this carousel ad. I saw the carousel ad again. I think I'm going to finally push that button that says schedule a call with Avier. And so I would encourage everybody, don't just lean on one thing, really you've got to lean in from a multitude of ways. I give you just a quick example. That is, I was going to buy a new gas grill. And of course, you look up something once on your phone and then you get advertised over and over again. Right? I mean, it's like they know everything about you. And it wasn't until I saw my fifth ad on this one particular Webber gas grill that I finally said, I think I’m going to buy the grill. Was it the last ad that I saw that got me to push the button, or was it the first ad that really piqued my interest? And that was the second or third ad that really continued got me to continue down this path of maybe this three burner Weber Grill was the right grill for the Welty's. So I encourage everybody, you know, like was just said earlier, that is, try to get out there in a number of ways, get in front of people, get your name out there, et cetera.


Catherine Williams: It's such great advice and both of you are examples of how to go about that, ways that you can think that you've carefully thought about what works best for your own organizations, which is key to that. You can be everywhere and that's fine. But have a strategy, as you were saying, Dave, earlier, one of the key takeaways from our conversation today for me is really taking the time to understand who do you want to be? Who do you want to serve? What is your true value proposition, which Stacy you were describing earlier, can take some time to evolve and to really formulate and come together and to sort of be unafraid of that, be unafraid to try things, if you will, because it will come together. And once you do, then you can absolutely get it out there in so many different avenues, as you both describe today, lots of different options, more so than ever for the advisory business, which is a really cool thing.

I want to thank you both for joining us today. Really great conversation. I think you've given some wonderful examples and ideas and perspective on the environment we're operating in today. For our audience, you can absolutely find Stacy and Dave in their podcasts, on YouTube, LinkedIn. Check them out for sure. Great content there. Thank you for your time and thanks, everyone, for listening.


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Episode 4 - Creating Long-Term Value in Your Business Through Human Capital

Episode 4 - Creating Long-Term Value in Your Business Through Human Capital

A discussion around how to successfully manage human capital.

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Catherine Williams: Hi, everyone, and thank you for joining us today. I'm Catherine Williams, head of practice management for Dimensional Fund Advisors. Around the globe in our work with advisors, we know that your people are your top priority and often where there's the greatest opportunity and certainly in 2020, where there have been some challenges. Whether through our long-standing benchmarks study or our direct engagements, attracting, retaining and developing people within an advisory firm are top priorities for many of the advisors we work with. Today, we're going to focus on how you achieve the cultural mindset to drive that development, to drive the value of your business long term. And to help me with that conversation, it's my pleasure to introduce J.D. Bruce and Stacey McKinnon. Hi, Stacey and J.D.

Stacey McKinnon: Hello.

J.D. Bruce: Hello.

Catherine Williams: I'll do a quick introduction, and then I'll ask each of you to share a little bit more about your firm. J.D. is president of Abacus Wealth based in Santa Monica. They are a 65-member firm with over $18 million in revenue. And J.D. I'd love for you to share with our audience a little bit about the Abacus philosophy and how you approach business.

J.D. Bruce: Well, I think at Abacus we have a very intentional and longstanding approach where we focus on both our values and the values of our clients. Everything we do is around our core values. Everything we do with our clients is on their values, whether that's working with our clients’ values and matching those to the right kind of investments, or it's incorporating those values in their financial planning, or just in our general hiring practices. Make sure we're hiring people who share our values. For us, values is everything.

Catherine Williams: I love it. That's great. And Stacey, as chief operating officer of Morton Capital, which is a $13 plus million revenue firm, and you have 45 team members, so absolutely a great size organization. Tell us a little bit about your key areas of focus at Morton and how that translates with your people in particular.

Stacey McKinnon: Yes, in my role as COO, my main responsibility is over the client experience and the employee experience and how those two things have to work together to create the best output or result for the people that we serve. But in terms of Morton Capital and just who we are as an organization, we really have three different pillars of our organization, our purposes. The first one is to help our clients get the most life out of their wealth. And we really believe that life should come before wealth and the focus should be on that, similar to what J.D. was sharing earlier. The second one is that we believe investing starts with investing in yourself. We have a huge focus on education, both for the team members that work in our organization and for our clients. And then the last one is we believe that there's untold truths of investing, meaning that investing doesn't just have to be traditional, it can also be alternative. So we kind of think of ourselves as a farm to table restaurant versus the traditional steakhouse. And we design our menu. We go out to market, we see what's in season, and that's what we give to our clients. The end result of these three pillars are purpose statements that we want to empower families to enjoy their lives, and that is both our firm families and the people that work for us.

Catherine Williams: And I think as we focus on our time today and as I mentioned, really zeroing in on the DNA of your organization and how that informs who you hire, once you've brought them into the organization, what that development looks like. And even as we were talking the other day, what has 2020 meant for some of that? For sure. I'd love to understand from you Stacey with Morton Capital, was that the case from day one or has it been an evolutionary process? Can you tell us a little bit about that?

Stacey McKinnon: Yeah, our firm’s actually changed a lot over the years, so we were founded in the 80s and really on the basis of kind of our investment philosophy, and that was what was most important to us. But as our firm has evolved, when I joined in 2014 to today, we've really kind of taken it from an investment only shop to more of that full service for our clients. But then internally we realized in order to do that, we had to make a lot of changes. So going from kind of a firm that was all about the investments and specifically kind of how the clients work with us to a firm that kind of redirected our attention to the employees and the team experience. I went to a Pershing conference and saw Mark Tibergien speak and he put this picture up on the screen where two people were holding a tight rope and they said, what's more important, the employee or the client? And at the conference, I think I was shocked by it and taken back and said, oh, no, where is he going with this? But where he went with it is, he actually made the statement that, of course, the client's best interest comes first. But at the end of the day, if your employee experience isn’t on point, is the client going to get the best experience. And so I would say that the biggest area of growth for us as an organization is really adapting that employee first mentality and how we lead our organization. And the result of that has been such an amazing client experience. So that's probably the way that we've evolved over the years the most.

Catherine Williams: J.D. for Abacus, and as you look at over the history of the firm, has this been an evolutionary or really was it something that from day one you had a vision for how the organization was going to evolve, particularly around its people?

J.D. Bruce: I think we've gone through a tremendous amount of evolution, but I think we've held very, very tight to our original vision and goal in terms of where we wanted to go. We've always wanted to be a very values-based organization. We've always wanted to be a very team-based organization. We always wanted to be a place where people felt like they were already at home. I'm not a big proponent of work life balance because inherent in work life balance is that life is somehow better than work. And I want to create a work situation for our entire team that feels like part of their life, that it's as good as the rest of their life, that they not so that they work more, but so they enjoy the work when they are working and that they have the flexibility to work at the best times for them and the best place for them and make it something that's very much a place that is home. And we try and do that for our clients as well. We want our clients to feel like they're part of the family. My best clients are ones who I know just intimately. And they, you know, they send me presents or they invite me to Thanksgiving, and I do the same for them, and we become all part of the same family.

Catherine Williams: So what does 2020 look like for you all then, relative to is already having this very much part of the DNA of the organization as you've pivoted and had to potentially adjust or not adjust even for 2020, what's been the impact on the culture and the mindset in the organization? And I'll put the question to J.D. and then Stacey.

J.D. Bruce: Ok, perfect. So we were already really set up to work remotely and separately, we have six offices already. A lot of people already worked at home many days a week. And some people just work remote inherently because they're not living near an office. So logistically, everything. When we went into lockdown and we closed all of our offices and they remain closed for the most part, it was pretty easy, at least logistically. I think emotionally it's very hard for people. I think some of our staff had a much harder time. Those with little kids, those who have roommates or in whatever way aren't set up. So some of us have had a really easy time. And some of us, it's been a little harder. I would say that overall, a lot of us have grown much closer, certainly with people who are in other offices, because now we're working with people on really a level playing field that someone in Philadelphia or someone in San Francisco and someone in L.A. are effectively in the same place as everyone else. Whereas before, if I worked at a Santa Monica, I'm going to have my closest relationships there. And that's opened up a lot of relationships and a lot of interesting new innovations and teams that really like working with each other, even though they're not in the same place. So while it's very traumatic what we're dealing with, it definitely opened up some doors that probably wouldn't have gotten opened up if we hadn't been forced into this.

Stacey McKinnon: For us, the biggest challenge of 2020 has actually been the test on culture. I think it's really easy for anyone to default to all of our people, being together equals we have a really great culture. And then once that's stripped away, I think that it really shows the true stripes of how an organization is built and how they're able to kind of continue rowing in the boat together. And so I would say that for 2020, logistically similar to J.D., it is very simple to go to a remote work environment. But I think that emotionally and mentally it was challenging for people because they didn't really have that energy source that they get from other people walking down the hallways, smiling, laughing, having collaborative conversations. Now, it kind of had the hey, can I do a zoom call right now? I'm not sure if my coworker is watching their kids and all of a sudden you lost some of the ease of connectivity. And so I would say that this year we've had to really focus and be more intentional on how we build relationships. I think of it similar to like friends that you had in college or maybe your parents or relatives. I mean, you have to intentionally call them.

Stacey McKinnon: You have to intentionally know what's happening in their life. And you have to care a lot about both their work and their personal lives. And so this year, I think, has been a lot of us figuring out how we can be more intentional throughout our organization. And then the second component of it that we really changed is trying to go to more of a peer accountability model versus a boss accountability model. I think that it's challenging for anyone in the leadership role to be kind of the boss behind the screen, really easy for intentions to be misunderstood and miscommunications to happen. So we've been really trying to push our team members to be more collaborative with each other and be more accountable to one another, sharing their goals with one another, helping them to make sure they stay on track. And even our advisory teams—we actually broke them down into three person teams and they meet weekly to just talk about where they are and how they're going forward. So it's been challenging, but I think that we've actually come up with some really nice solutions. And all in all, we're really happy with how our team members have kept up the culture, even though they're not together anymore.

Catherine Williams: Tell us a little bit more about how you've really deepened that engagement with your people, when as J.D. was saying you're not you're not across the hall from each other. So you really have to get much more purposeful about that. I know both of you, both of your organizations leverage those diamond teams. And so when it comes to the sort of the day to day construct of engaging with clients and really making that work, but when it comes to just engaging with your people, the word morale is often used. Right. We were talking about that a lot with advisors these days because certainly we're not on the other side of this. And so the long term focus of how you continue to keep employee morale high, can you share some examples of how you've navigated that at Morton? And then J.D. would love to hear how Abacus is thinking about that as well.

Stacey McKinnon: Well, just as a starting point, I think there's two different versions of the answers to this question. I am a big follower of Simon Sinek. And he defines culture as the way that leadership treats its people. So I think that one area where we've had to keep morale high is just in being very thoughtful and intentional about how we treat our people. So about a month ago, we gave everyone in the organization the day off and said, hey, paid day off, you go enjoy time with your family. Earlier this summer, we gave everyone iTunes gift cards and said, enjoy a movie with your family this summer. I think that as leaders of the organization, we've had to be a lot more thoughtful to our people and what they're actually experiencing outside of working hours and making sure that they know that we care just as much about their lives outside of work as they do in work. And I think J.D. put it well earlier that work life balance isn't necessarily the right phrase for any organization to try to achieve, because I think when you say that automatically, you put work and life at odds with one another. And so we want to very intentionally make sure that our people know that we value their lives just as much as we value the work that they output for us.

Stacey McKinnon: And then I think internally in the organization, both the kind of the peer accountability groups that I mentioned earlier, but also just being a lot more intentional on being a little bit more goal based in our leadership style versus presence based. I think it's really easy for leaders to be presence based in their management style because you see people in there working and so you're happy with their work. Now, I think we've really put a lot more energy and effort into career development, being clear with our expectations. How do you do goal setting, making sure people have a lot of inspiration and hope in how they move forward in the organization, how they better the lives for themselves and for the purpose that we serve. So I think those are the areas where we've really focused on to increase morale, because if somebody is happy and excited about their career developing and they know they're supported on a personal level by their leader, I think that's really where positive morale comes from.

Catherine Williams: And I would offer at the end of the day, it's good business because we know you can see the results from our 2020 study this year that in terms of even just losing clients, whereas death was the number one answer in prior years, the loss of an advisor actually came out as one of the top reasons for firms losing clients. So just in terms of what's good business or not good business, really paying attention to career development, making sure that that all members of the organization can see themselves long term, being a part of the team and what that can look like for them. So that absolutely makes sense for sure.

J.D., what are you thinking about the most when it comes to your people and not just even taking the 2020 environment off the table, but you know what's top of mind for you in terms of developing, retaining, even attracting new talent to your organization? How are you thinking about that?

J.D. Bruce: Well, in times of crisis and in times of non-crisis, we do the same thing we always do, which is fall back on our core values and our purpose. So as we look at this year, not just about how do we deal with the crisis, but how we deal with the growth of our firm and how much we focus on innovation versus taking care of our core, how much we focus on our current people versus recruiting. We look back at what we're here for and what Abacas is here for is to expand what's possible with money, which means we need to be consistently innovating. It means we need to find new ways of doing things. It means we need to work with clients who've never been a target for advisors before. You want to help people who otherwise haven't been able to be financially successful. And for us to do that, we focus on those core values. Right now, we're spending a lot of time focusing on enjoy because everyone is obviously having a very hard time out in the world. So whether that's holding tee times or happy hours across Zoom or sending people little presents or forcing them to take a week off when they seem stressed out. That's where we're that's where we're focused. When we think about the future, and we put all our hiring on hold at the beginning of the of this lockdown, and we're now opening it up. And I think we have six people that we're currently starting to post for and thinking about how you onboard people remotely is challenging. And in order to do it right, we just sit down and say, OK, how can we do this in a different kind of logistics with the same cultural experience and the same focus on our values. And if we do that, we kind of can't go wrong.

Catherine Williams: What are some of the ways that you are for the new hires, the new onboarding, what are some of the ways that you are translating your culture and making that happen in what would have traditionally been more in person in the office sort of experience?

J.D. Bruce: Well, we haven't onboarded one yet, so I'm going to have to let you know in terms of how it's going to go, but I think what we've learned over the last six months is a lot about how you can work remotely and maintain relationships. And we've practiced that inside of our diamond teams. We've practiced that inside of our executive teams and our operational teams. And all of these people have experimented and have learned how you work with someone remotely. We have a couple of people who are fully remote. At least three of our employees never come into the office, and they've been getting a lot of attention and a lot of questions and asking them, the people who become expert at this, because it's their life, how they want it to work and how everything would have been great for them. And we're going to try and take those lessons where we've worked with people remotely into onboarding remotely. And I have I have high, high hopes and a lot of confidence that we'll be just fine.

Catherine Williams: Stacey, I know you've onboarded a couple of people, I believe, if I recall correctly.

Stacey McKinnon: Yeah, we've onboarded about five people in the last six months.

Catherine Williams: We know we have advisors that came into this year with an idea of the head count they wanted to add. They've got to move forward with getting the kind of talent they need in the organization. The onboarding piece is a little intimidating if they've not done it. Any perspective from your experience at Morton for that?

Stacey McKinnon: Well, I don't always like to approach problem solving this way, but in this case, I think the question is what's the worst that could happen, onboarding someone remote and then solving for those worst-case scenarios. So you onboard someone remote and they don't work the hours that you want them to work. Well, then you've got to set specific goals and have them achieve things in specific times and be more comfortable as a leader with that goal-based management versus presence-based management and be more intentional and asking them questions about what they're able to accomplish and get done. Or the other challenge is, hey, how are they going to fit into the culture if they're remote? So you set up an onboarding program where they have 30 minute coffee date, virtual coffee dates with everybody in the organization and they really get to know one another on a personal level. I think that connecting with one another, communicating well with one another, collaborating with one another will really solve for some of those challenges that exist. So I would just encourage anybody that's considering hiring remote to really actually write down what your fears are about it and then solve for those fears using communication, connection, or collaboration.

Catherine Williams: What do you think about 2020 that has maybe permanently changed the landscape and how firms attract, hire, and retain people going forward? I'll start with J.D. on that. As you think about this year, looking forward, what do you think will remain, so to speak, or be a game changer?

J.D. Bruce: What I hope actually remains is exactly what Stacey just said, which is the death of presence-based management, because presence-based management is like a shortcut and a cheat, it's easy to make sure someone's going to do something if you just watch them. But that's not real management. That doesn't take skill. That just takes presence. And so the people who haven't already learned those skills of how to manage people without needing to watch them all the time don't have to do anything differently. And this just took the ability to take that shortcut away. And so there are some people in some firms that are just going to have to learn how to do it, as I would say it the right way and as other people would say, a better way. Once that happens, then I think the idea of remote work becomes simple, because if you're not having to watch someone, it doesn't matter where they are. And I think that allows us to really expand who we can hire and allows us to tap talent pools that were inaccessible to us in the past.

J.D. Bruce: If I can hire anyone anywhere, I'm going to find better people than people who need them to live in Santa Monica. My number of people I can hire are almost so large that I'm going to be overwhelmed by the number of people as opposed to worried that I can't find the right one. And I think that changes a lot of things for a lot of people. It allows people to live where they need to live in order to have good work life integration and feel like they are living their best life because they can live anywhere. They can go live where their mom needs them to live, who might who might need help and caretaking. They can go have their family lives next to their best friend or their sibling or their cousin or someone who they can raise kids with, but otherwise would have to live far away from because of work. That's going to fundamentally change the way families and individuals live in this country. If they could work at any company anywhere, no matter where they live, fundamentally game changing.

Catherine Williams: Stacey, do you think that firms that want to, as J.D. was saying, or want to go back more toward that bricks and mortar, everyone in the office sort of approach, and there's certainly a divided camp in our industry on that for sure. Does that potentially put them at a disadvantage when it comes to attracting talent long term to their business, or do you think we'll figure out how to balance it?

Stacey McKinnon: I think that will be really challenging for firms. It's kind of unfortunately, to put it this way. I think you're standing still instead of moving forward if you do that and maybe even going backwards. So I had an opportunity with Matt Sonnen in June this year to publish a research paper on the new RIA workplace where I explored traditional office versus work from home and proposed a hybrid working environment. And then as a follow up on Michael Kitsis blog this week, I actually published another article that was more of a how to execute in the hybrid work environment. And I'm a big fan of the hybrid work environment. I actually believe it's not going to go one way or the other. I think that the biggest change we're going to make is we're going to individualize the employee experience instead of it being like, you need to come here and be in our office or to J.D.’s point, you need to be present to manage. I think it's going to be like, let us meet you where you're at. Let us look at your skill set, how you bring your best self to an organization. And if that looks like remote, it looks like remote. If it looks like in the office, it's in the office. If it's two to three days a week, then that's awesome, too. And so I think organizations are really going to have to individualize the employee experience much more than they ever have before.

Stacey McKinnon: I love the comments J.D. made earlier about values and everything being centered around that. One of the others is if somebody is not comfortable with values because they feel like it's too soft. Think about how values can actually turn into a measurable. So we have our values, which are our five Es: excellence, empowerment, empathy, ethical, and enjoyment. Now, everything we do, we can measure against them. If I'm interviewing someone, hey, do they hit all five of these targets or do they have potential to hit them? In my career path workbooks, we actually list out for every position in the organization, how they best can be a reflection of those core values. So I think in just talking through values of an organization, it's more than just words on a wall. It has to be actually integrated into the culture. And in many ways it can be used as a measurement tool for your people and for your leadership.

J.D. Bruce: Yeah, I mean, it's interesting you said that, you know, people think that thinking about values is soft. When you really think about it, the only thing that will harden you is when your values are being broken. That's the one thing that you will never compromise your values, because if you compromise your values, it wasn't really a value, then you just misunderstood your values because you don't compromise your values. And the more you state them, the stronger they become. And if you are not stating your values or you aren't using those values to better your organization, then I think your most core strength is being ignored. And the way to future success is to figure out what those values are and then lean on because it is the one thing you have is the most and the strongest and the least able to change. So if you don't focus on just making those better, then you're missing something fundamentally about your organization.

Stacey McKinnon: I think that sometimes values get misstated as something that you are versus something that you aspire to be, and that idea of values being an aspirational aspect of your life, it causes you to be on the pursuit to be better all the time. And so I would just say that potentially values could change. But some part of that makes me feel like I have achieved something. And I think that the pursuit is actually a little bit more important sometimes in thinking about how your values are reflected.

J.D. Bruce: It's a really important distinction.

Catherine Williams: It is. How do you, for lack of a better phrase, how do you flesh that out with a candidate, with a potential hire? It can feel like they've got a great set of values. Someone shows up really well and then when they come into the organization, not so much. I'm just curious how you've addressed that.

J.D. Bruce: So much of this is about instinct and gut when you're talking about values, the easiest way is to interrogate them on what they think about our values, talk to them about your values. People who are excited about our values are more likely to have them or at least aspire to them. Fundamentally, I think you highlighted a problem that sometimes you think you've got it right and people come in and then they don't have those core values that you think they do or they thought they wanted to have them, but they don't really. And so they don't go and do those things. When I say we hire and fire based on our core values, that's how you handle it. At the end of the day, you're going to get it wrong. And focusing on a low turnover rate sometimes is the enemy of core values that you want to make sure you do your best to pick people who are going to match your core values. And when you're looking at people's performance, focusing on values over productivity and values over skill, because we can teach people to be more productive and we can teach people skills. But it's hard to teach people values. That's an internal thing. And if they haven't bought into all our values and they may not have the values, we're not looking for people who already share our core values.

J.D. Bruce: We're looking for people who will adopt our core values as the underlying driver of their behavior while they're at Abacas. Everyone has different values. We have lots of people with lots of different values and organization. My wife and I have different values about lots of things, and yet we're able to come together as a couple and as a family and say, I have values and you have values, but what are our family values? And everyone in a marriage experiences that no one's marrying someone who is exactly the same. And if we can take that same idea of two people with different values, creating core values for our family, then the idea of doing that at a company is exactly the same.

Catherine Williams: It's an excellent point, and particularly as organizations are thinking more around diversity, inclusion, how might that look like for the talent that they continue to hire, being aware of the fact that our value system does come together by nature of different sets of values. How do we bring that all together? And as you said, for Abacas, how you operate within the Abacas structure along that value system, you still do want that diversity. You don't necessarily want a single Kool-Aid flavor, so to speak, at least to get you under way. I heard a quote a number of years ago that has really stuck with me. The longest period of time in business is when you know, you have the wrong person and you do something about it. And I think you made a really good point J.D. in terms of being willing to, as both of you are, continually assess and apply, reinforce the values of the organization. And if that changes for someone or if it's no longer a fit with where they're at in their life, then that may be a business decision that has to be made. And sometimes I think organizations are wary of that or not willing to make those decisions. They can be tough, but I think important. So adhering to that as you said, both the hiring and the firing.

Stacey McKinnon: I think what's really challenging on the firing side is that it's easy for you to think that you're doing something against someone else, but when you're firing someone that doesn't align with your core values, you're actually doing something for your people, for your organization, for those that are going to show up and come to work and be a part of those core values. So if anyone is ever struggling with a firing decision, focus on your people and what the end result is going to be for them. And I think then you'll make the best decision possible.

J.D. Bruce: And it's not that you're not just serving the people who are staying, you're serving the person who's going as well. If they're in a place that they aren't enjoying themselves and aren't in a place where they fit the value structure, their life is not fun. They're not enjoying themselves. This is not a good experience for them either. And by having the fortitude to make that call and to make it be something that's better for everyone, you're really being of service to yourself, your firm, and the person who is unfortunately getting fired, which obviously isn't fun, but ultimately is the best solution for everyone.

Catherine Williams: So we've talked about values, we've talked about firm culture, we've even talked a little bit around employee morale, as we think about for both of you in your organizations and looking forward as we head into 2021, what's particularly top of mind for you when it comes to your people and some of the areas that you're focusing on? I'm thinking about the fact that we have advisors listening today that are feeling like, wow, I've really got to make sure I've got my arms around my people and that they are absolutely on board, not looking to leave in any way. And so what can they do? What should they be thinking about? I'd be curious to know what's top of mind for the two of you in that area.

Stacey McKinnon: I think what's top of mind for me is really trying to figure out how we're going to be executing our goals-based leadership approach. So in the last three months, we've brought our leadership team from three people to five. We're doing more leadership training. We're helping people practice goal-setting techniques. I actually think it's incredibly harder than it sounds to go to a goals-based management approach because you have to be even more prepared. It's kind of like any athlete will tell you that when they actually did, the race wasn't where the work came in. The work came in in preparing for the race. And I think that's what leadership and management is going to have to do. They're going to have to spend so much more time in preparation and really thinking through their goals and what they want to do, innovating for the future and then communicating those goals regularly, checking in, making sure expectations are met. So in preparing for 2021, I think we're even just thinking about how we think about leadership in the organization, how do we expand our leadership team. And one of the things that I think that we had an area of improvement in is that when we bring on leaders in our organization, do they have the power that comes along with that? And so really working through transferring that power to our people and our managers so that they have more autonomy in how they lead people and how that leadership matches to the strategy and goals and vision of the organization.

J.D. Bruce: Abacas got really lucky this year, actually, we had set as a goal for this year to focus almost entirely on the consistency of our employee and client experience. We were doing really good work for people, but we were doing work and a bunch of different ways. And we grew to the point where that became a little bit petrifying. And by petrifying I mean it just forced us to stay still, and we couldn't grow because everyone was doing everything differently. So we couldn't make improvements. Everyone had to make individual improvements instead of organizational improvements. So we spent an entire year was our plan to focus on a consistent experience. Well, lo and behold, we all suddenly can't work in the office together and are all having to work in a new way. And it has created an environment where typically it's hard to get people to change their behavior and now they're a little bit hungry for it and hungry for new tools and new ways of working. And so all of our time has been spent finding the people in the organization who can make innovations at the grassroots level and supporting those innovations so that those people feel like their contributions are valuable and then rolling those contributions out to the entire staff as appropriate and diversifying our innovation as opposed to it all coming from the top. And that was a big shift for us. Our innovation has historically been very top led. Our leadership is very change focused and we really like change, at least most of us. And the people at the bottom took what we gave them. They ran with it and we shifted that script this year at just the right time, which actually made it very easy for us to do some of these innovations because people had a little bit more time in their day because they weren't commuting and because they didn’t have water cooler conversations.

J.D. Bruce: Everyone's a lot more efficient at home, at least for us, than they are in the office. And that's created the opportunity for a lot of leadership training on the job. Right. So we have a lot of people who are running projects and some of them have really, really been shiny in a way that we weren't expecting. And other ones that we expected would be the best at this have been slow because they were dealing with other things. But for us, developing that leadership is about giving people the opportunity to lead and giving them the actual autonomy and authority to make changes on their own without having to ask for permission. Because ultimately, if you want to develop a leader, you have to just let them lead and you have to let them make mistakes because leadership is hard and you're going to make the wrong call a good percentage of the time, even once you're skilled and at the best of times. And so getting people to have the fortitude and the courage to make those choices, even though they know it might be wrong, is really difficult. It's difficult for us as the people who are letting them do it. It's difficult for the people who are doing it. And so finding a way to do that where you're gentle and it's safe to make mistakes is really hard for a lot of organizations. And it's one that we constantly struggle with. But ultimately, freedom to make mistakes is the best thing I think you can do to create future leaders.

Catherine Williams: It's great advice, how are you rewarding the leadership that you're seeing, the initiative for those employees, how are they rewarded for that?

J.D. Bruce: There's a level to which you don't actually have to if you give someone autonomy and authority over their own life and give them a lot of freedom to implement the ideas that they have and have recognition for those ideas where they know and are recognized publicly for what they've done. It's not about a reward, that is rewarding. We want to reward our people for their successes for sure. But that's not remotely the most important thing or even close to it, if you just give them the experience of success. It's cheesy to say success is its own reward because it's not even the success, it's the trust. If you can give someone that level of trust that they know that even if they make a mistake that they're still good, then the rewards are irrelevant. So it's not saying you shouldn't reward them for that. You should. But it's not what motivates them.

Catherine Williams: You're absolutely right, and at its core, that behavior creates all the new habits, the enhanced habits that you're looking for in the organization, and so then people are even more motivated and just almost do it. I don't want to say without thinking, but it's absolutely become so much more entrenched in what they're doing minute to minute. I love it. Stacey, how about you on as you think about that and you think about the leadership driving that level of autonomy within the organization, developing those leaders. How are you thinking about that at Morton?

Stacey McKinnon: I love what J.D. said, first of all. I read a book, the 15 Commitments of Conscious Leadership, and I think I'm quoting this right, but don't hold me to it. I think there's five different general motivators for people. They're motivated by the financial aspect. Some people are motivated by fear. Others are intrinsically motivated. Others are motivated by how their impact is on other people. And then some people are motivated by love. So you take those kind of five different areas of motivation and you think about your people and who they are. And are you hitting all of those as an organization? I think our best leaders actually have more of that. They're more motivated intrinsically and by helping others than any really of the other ones and actually love to. So I think that the old method of rewarding people, the carrot or the stick, is really antiquated and should be avoided as much as possible. I think you really have to focus on developing leaders who are going to be motivated and excited to push the organization forward to better the lives of our people, to better the lives of our clients without needing someone there to reward them every step along the way.

Catherine Williams: You know, I think so much of what we're talking about here is really foundational for so many firms and as we have advisors that are potentially listening to the podcast that might be looking at their own organization and realizing, wow, we really need to implement some changes here, whether it's to attract and keep the people we have, inform the decisions we make around the business and our clients. So just wanted to make sure and ask if there's anything else that I've not asked about that comes to mind when you think about that.

Stacey McKinnon: I would just encourage everyone to also just be patient with yourself. This has been a big year. A lot has happened, I think, in our organization the realization that health, finances, social justice, corporate responsibility, all of these things that have happened this year, they're big. And I think recognizing how big it is, the transition to work from home, the transition of your people, the fears they might have, you might not even know about, I think, as the starting point. Just find out what's most important to your people. Better understand and take time to ask questions and really understand the individual perspective before you demand any more of them. Make sure that you know what they want and what they're most passionate about and start with that. I think that's where you'll get the most success long term. It is really by having that listening ear and focusing on your people.

Catherine Williams: We will end on that note. And I really appreciate both of you taking the time to participate today. I think we all absolutely agree that this is fundamental to just good business. But it can be a difficult subject for firms to tackle. And 2020 is certainly presented some challenges as well. So I just want to thank you both J.D. and Stacey for joining us today.


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Episode 3 - Five Actions Advisors Can Take Today to Position Their Firms for a Successful Merger, Acquisition, or Sale

Episode 3 - Five Actions Advisors Can Take Today to Position Their Firms for a Successful Merger, Acquisition, or Sale

A discussion around M&A trends and best practices in the industry.


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Catherine Williams: [00:00:35] Hi, everyone, and thanks for joining us. Today, we're going to talk about developing and deploying an M&A strategy for your business. Whether you're looking at acquiring or selling, understanding the industry landscape and how it's evolving rapidly is key. Joining me for our discussion is someone who really focuses in on the M&A space and has great perspective across the industry in general: Scott Slater of Fidelity. Hi, Scott. It's great to have you with us today.

Scott Slater: [00:01:02] Well, great to be here, Catherine.

Catherine Williams: [00:01:04] I want to give the audience just a little bit of background on you and your role with Fidelity to sort of level set our conversation today. For those of you that are not familiar with Scott and his work, he is Vice President of Practice Management and Consulting at Fidelity, works really closely with advisors around the United States helping them identify and address strategic challenges critical to growth, driving value, all the things we're going to talk about today, and certainly how mergers and acquisitions could fit into that strategy. Scott's a frequent speaker on practice management issues at industry conferences. And, he leads Fidelity’s M&A Leaders Forum, as well as hosts a Fidelity podcast series titled, “Future Ready Through M&A.” So, with that, great to have Scott on board. I'm going to add that he's particularly close to our hearts, and that he also earned his MBA from the University of Chicago's Booth School of Management. So, we really appreciate that nice connection there. So, Scott, let's get under way. I'd love to start with sort of the why. Why think about M&A for your business if you're an advisor listening to this today?

Scott Slater: [00:02:14] Well, Catherine, again, it's great to be here, and I think that's a great question to start on. What I find is a lot of times when I when I talk to firms about M&A, they come to me because they received a phone call from someone who is interested in buying their practice or they have an opportunity to buy a book of business or a firm. And they were more interested in the how. How do I get it done? What's the process? Who do I need to talk to? And what are the mechanics? And I very quickly, for years, my bigger question is, well, what are you trying to create? What's the outcome that you're looking for as an enterprise, and why are you doing it personally? And what do you want for your employees and your colleagues as well as particularly for your clients? Because ultimately this is really a strategic business decision, and I would say is a means to an end. And this is, frankly, why Fidelity invested in this several years ago and asked me to help lead this initiative, is that it is such a strategic issue for our industry when we're at a highly fragmented environment, particularly in the RIA space, and we're seeing a lot of activity going. But getting more specific to your question, I would say that too often advisors and firms tend to, as I said, approach this issue reactively and opportunistically, which frankly, that's not any different than any other industry. And I think it's helpful to step back and understand why you're doing it. So, let's look at it from two perspectives. First, from a buyer's perspective, why are buyers so interested in this now? It's not just the capitals there.

Scott Slater: [00:03:48] That's the means to making this happen. They're really looking for scale on the one hand. And in an industry that's a personal services industry. And what do we mean by scale? Well, ultimately, it's going to be about functional specialization, being able to deliver how people specialize in certain areas of, say, estate planning or certain types of investment management, or certain types of planning. I would say, secondly, from service capabilities, frankly, they may just find that certain clients need certain things. We have talked for years at Fidelity about the advice value stack, which is modeled after Maslow's hierarchy, meaning that the investment management and managing the money is at the bottom. And then you go up to achieving goals, which is really financial planning at the next level. But then you start, as you move up the hierarchy of needs, you really start to get into more behavioral finance type issues, more specialized issues. So a lot of times M&A allows the firm to be able to achieve that by enhancing service capabilities. Another major reason why buyers are doing this is, frankly, to acquire talent They're looking for good advisors and good leadership. And that is a competitive dynamic right now. And M&A is often a means to make that happen. And then finally, I would say just frankly, brand and market share are becoming increasingly important. It doesn't mean you have to be a national player, but you need to have more of a presence and a collective ability to deliver that.

Scott Slater: [00:05:17] From a seller's perspective, there are several key reasons, some of which are probably kind of obvious to many of our listeners. One would be it's just in a time of what seems to be peak valuation. It's a great opportunity for a seller to de-risk what's probably one of their most valuable assets, which is their business. Take some chips off the table. Some or all of it, create a liquidity event. And there is a lot of buyer demand right now, and that's why the sellers are thinking about it. But there are also reasons that many sellers, and I think we've just seen this happen regardless of the pandemic we've experienced and everything else this year, is that sellers also realize that they want to get back to the part that they do best. They don't really want to be running the business or handling the operations, or they also know that they need a stronger operating and technology platform. It's getting more complicated with all the fintech to bring that together. So they're wrestling with those challenges and the integration and they feel like they're getting away from what they started doing and would like to get back to that and get to a better platform. And then I'd say the last reason for sellers, it's just succession. They need a plan to where's the firm going to go. And frankly, this is often the best option. And maybe not doing it internally is the reason. So there are a lot of reasons that are driving it to give you a sense of that.

Catherine Williams: [00:06:38] And Scott, on that succession piece, if you could sort of wave a magic wand and every firm that that you engage with that needs to solve for succession, talk a little bit about an ideal timeline. And I realize that's a kind of a tricky question. But this idea of when should you start thinking about your succession plan? Do you have a sense of sort of an ideal runway, so to speak, whether you're looking to do something internally or externally? We get that question a lot. And unfortunately, we're often asked when someone really only has a year or two in their mind left in the business, which is essentially a little bit of a fire sale. So how do you answer that question in terms of all things being equal? When should someone really be thinking about that succession plan?

Scott Slater: [00:07:22] You know, you raise a good point, Catherine. Human nature is pretty consistent, I would say, for many of our listeners that are deeply involved in planning. How many times I'd ask you have you had clients come in, say they want to retire within the next two years? And in part of the process, you can do something for them, but you say, you know, if only you'd come in three years ago. There’re so many more things we could do from a tax and a planning standpoint that we just don't have the time for now. We would have made different decisions. Well, I would say take that same approach as you consider your own business. What I have found for the 14 plus years that I've worked with RIAs, let's just say there are three partners together. And they may have worked together at a wirehouse and then started their business. And they've been 15 years out there. And now they're at the point where they've got three different ideas of what they want to do, but they've never talked about it. And I'm the one that comes in and asks the question, well, where are you going to be in three to five years? And one person wants out altogether. The other person is perfectly happy at the pace they're going, but doesn't want to accelerate it.

Scott Slater: [00:08:28] And another has a vision for wanting to really build it. But they've never shared that together. So more specific to when do you start on succession, I would say the sooner the better. I think it's even doing things like listening to this podcast and getting educated, and going to conferences, such as the events that you hosted, and the things that we do at Fidelity. Those are great ways and many others. Those are great ways to at least get engaged with what's going on. And what does this all mean so that you're getting ahead of it. The other thing I would say is a lot of times it's interesting if you look at the benchmarking data that's been out there for years, 90 percent of firms that have traditionally said I'd like to consider internal succession, well, that's the one that takes the most time and still has quite a bit of risk to it. So if you're really serious about that, you've got to decide, do I have someone that could lead this firm? Do they want to lead this firm? Are they willing to take the risk to buy it? Do I have a plan to kind of transition the equity, which that's not, like you said, that doesn't happen in two years.

Catherine Williams: [00:09:31] Can you talk for just a little bit more on that, and then I definitely want to pivot to out to sort of if you are thinking you might be more on the acquisition side, what that can look like. But this idea of even an advisor potentially listening today that is thinking, I really do want to do an internal succession. That could still require, if you will, or create opportunity for an external partner of some kind to help with that, whether it's on the financing side or to help position the organization so that up and coming talent, maybe they need a little bit more time to evolve. Do you see that in place? Sort of almost a hybrid, if you will. It's not this idea that if I'm going to do the internal succession, I must do it alone, so to speak. But it's a completely internal endeavor versus there are some partners out there that could help me again, either on the financing, the planning, or scale side. Is that something that you see out there and can speak a little bit about?

Scott Slater: [00:10:28] So you're speaking more about the M&A ecosystem to use the business buzz word of the decade here?

Catherine Williams: [00:10:35] Yeah. Exactly. And so even if you're an advisor who's sitting here thinking today, you know, I really do ultimately want an internal succession. You talked a moment ago about acquiring talent, which could sort of feed that pipeline, so to speak, of an internal succession. That could be one path. But just this idea that you still may need an external partner or want an external partner to help bring some of that to fruition.

Scott Slater: [00:10:59] Well, first of all, for most of us, we haven't done these transactions. You've been building a business and it's not something you've had experience with. So working with people that see these deals, see the pitfalls of something that's likely for many people listening to this, the most important transaction they've done in their career, really, in terms of their impact for themselves and their business. I think it really behooves them to talk to people and engage people who are experienced with this. I think one statistic I find interesting, I think this is probably still pretty accurate, but the vast majority of sellers, and I'm talking maybe smaller enterprises here, they really only consider a couple of buyers, and they don't really explore it and they aren't really necessarily looking at are we a good fit together or is it just because I know somebody and I've been approached. And this really opens up the door to a better focus on who is a better fit. And I think the term I would use here is around alignment of interests between parties. What is the buyer looking for? What are those most important things? And if you're considering selling, maybe you don't want to get out yet. You want a partner that you want to be around for five or 10 more years. But what kind of partner do you want and how does that work? Or is it just simply I want to be out in the next two to three years, and I want to transition the business as fast as possible, so I don't want to take on a managerial role. I think it's getting aligned around what do you want? And I think a third party can do a lot. A banker, transition consultant can do a lot to really help you plan that more effectively.

Catherine Williams: [00:12:36] Well, and certainly we saw at the M&A workshop we did last year in Charlotte, we'll be doing a virtual one in February, upcoming in 2021, but also through our advisor benchmark study and the M&A module in particular, we do see that there's a strong appetite, but also hear from advisors that maybe they even embark on a strategy that puts them in a position of acquiring. But in the end, they realize, wow, I'm actually probably a seller. How might I go about that? How do I, as you said, how do I make sure that it's great for my clients? It's also great for my existing team. But that realization, and you can really only get there by getting yourself out there, talking to others, really understanding the landscape and kind of having sort of honest conversations with yourself about what that what your appetite really is for a M&A strategy.

Scott Slater: [00:13:33] Well, you know, what I would say to that, too, is we started out by at the beginning of this conversation, talking about how so often people react to opportunities: A, they don't understand what the process is going to look like here.

Catherine Williams: [00:13:47] Right.

Scott Slater: [00:13:47] And, B, they just don't really know what they want to do. In fact, just this the summer we created a tool for to help advisors who haven't figured this out that we call “Control Your Destiny.” And it's really trying to take a look at three tracks of: Am I a buyer? You must match this. Am I a buyer, or am I a seller, or am I neither? Am I what we would call a sustainer, and within that they're really 8 possible paths. And frankly, those are really the all the strategy options that are available to you. But it's weighing what does it take to be successful as a buyer? And if I'm a buyer, am I a serial acquirer, which means I'm going to need a lot of capital and people dedicated to this and a post deal integration strategy. And this is where I'm spending my time, or am I more of an opportunistic buyer? Where I'm prepared, I know how I'm going to get the deal done, but I'm just going to do a few that are more selective because I'm filling in some gaps, or I'm trying to create some market share, things like that going forward. On a seller’s standpoint, a lot of times where I end up these conversations with advisors, they're happy doing what they're doing. So you know what Scott, I'm going to sell three, five years down the road. And what I want to help firms understand, it's like, well, would you be better off selling today not to leave the business, but maybe you need a better platform. Maybe you're going to maximize the valuation that you get out of your firm.

Scott Slater: [00:15:15] And what are the tradeoffs if you don't sell for three to five years? The market's not waiting for you. The market is changing all around us. And we've seen that. Look at the consolidation in the independent broker dealer space. It's much more concentrated now after a series of acquisitions. Or do I need a partner? And that's frankly, I'm not leaving at all. But I need a better platform like I talked about earlier. Or do I want to do internal succession? So really, it's sell now, sell later, sell internally, or sell to a partner in some form so I can have a better operating platform. Each of those dynamics asks you what matters to you most. And I guess the way I'd summarize it is, I think it's important for everyone to understand what are your top three biggest priorities? Is it really about getting the most value for your firm financially? And that may be fine. Is it really that I want to find a better technology platform? I need other skill sets. I need more talent. What is it that you're looking for? And really be clear and be willing to give up on the things that maybe I don't run the firm anymore, but I have a clear role for this region. I mean, it's getting clarity around what matters to you most. And I think that's what this tool “Control Your Destiny,” which you can find in the Fidelity website on our M&A resources, is that is a great way to get started.

Catherine Williams: [00:16:36] What's one area that advisors in doing that assessment, if you will, they kind of get hung up on? Is it the idea of giving up control? Is it where they're spending their time in the business? Any particular areas that as you work with advisors around the country, that tends to be the place where they kind of get a little stuck in that analysis?

Scott Slater: [00:16:57] I think the easy answer is for a lot of advisors haven't really thought it all through yet. They want it all. They want to be able to get the liquidity. They still want to be able to make the decisions when they either have a majority or a minority investor in the business who's got a seat at the table, and they haven't really figured out what is it that they want out of. And they don't realize that doing a transaction does imply that there will be change. Now, understanding what those changes are, and that's why I say getting aligned around what does each party want, I think helps you kind of address that challenge. But I think that's the key thing. And I think what's built this industry, independence and autonomy, and I think it's coming to terms with what does that really mean? Which has been a theme of mine for the last couple of years. What does it really mean to give up direct controlling decision making and what decisions do I make? Maybe I'm even part of the new management team and maybe this is going to accelerate what I'm able to do at a better level for my clients off a better platform. But I've got to redefine what my role is and what I want to do. And I think that's very personal for each individual and for each business. But I think it's also not engaging on it is by itself a decision. I think it's important to engage on these topics.

Catherine Williams: [00:18:21] Going to ask you to put yourself in the shoes of what we often refer to as a serial acquirer, a strategic acquirer, and they, as you and I both know, they certainly run that national gauntlet, but there is also some regional acquirers as well. For those folks, what are they looking for when they pick up the phone, they get an advisor engaged in a potential conversation. In your opinion, what are they most looking for, at least initially looking for when they talk to those firms?

Scott Slater: [00:18:53] Well, you know, I just updated a report that we've had for a number of years, I think is helpful on this, that we call “Maximizing the Value of Your Firm,” and it talks through eight value drivers. Most of these acquirers are looking for, first of all, a profitable business. And we did an analysis on kind of valuation and deal structure last year and the firms that are growing organically are much more attractive to buyers than firms that aren't. And likewise, they're looking for firms that have a diversity of a client base in terms of the mix. So it's not concentrated that 40 percent of the revenue is tied to 10 clients. That's much riskier. They are looking for talent too, they're looking for and often it's advisor talent, next generation talent. And even if the principals are planning to leave or they're looking at what's behind that because they're not just buying the way 10 years ago, they might have a book of business. Particularly in the RIA space, they are buying talent that's going to be able to bring these relationships and continue to lead these relationships. So they want to find people who have a vision for where they would like to be and maybe what their what's the problem that the seller is trying to solve for what aren't they able to do? And the clearer the seller can be about that. And talking to the buyer, what are you looking for? What am I solving for? Buyer and seller have a better chance to start to move in that direction. They're not just looking for assets. They're not just looking for revenue by any means. They are looking for individuals and firms that fit and they're trying to build a well-integrated enterprise. That's what I see with the serial acquirers out there.

Catherine Williams: [00:20:35] But I think you touched on something that's really important. I'm reminded of a webcast we did recently, and I had an opportunity to talk to Jim Hurd of True Wealth, who sold a large Atlanta RIA to Creative Planning. They were a highly desirable firm, for many acquirers. But ultimately, one thing that was important to Jim and his team is this idea of what can Creative Planning add to the client experience, the services we deliver, what can help differentiate? And part of that is so that you can also have something that you can sort of speak in a tangible way about with clients. Right. When you're explaining to them why you've done this deal, how their lives or if you will, are going to be better, but also internally helping their teams get on board with this idea of selling the organization. As you talked about, there's tons of change that comes with that. And he talked about that being very important.

Scott Slater: [00:22:13] Without question, I think one of the things that in a competitive market where it's arguably a seller's market right now, buyers have to set themselves apart. How is my life going to be different and better if I join your organization? And by the way, that's another good reason if you're trying to be a buyer, why you should use a third party to help you, because they see all that. They know where you can fit within the competitive set and they can challenge you when you really aren’t setting yourself apart. But, Catherine, I would I'd like to put it on the other side, too, because I hear this from buyers all the time, sellers, because they have been a little bit of the catbird seat right now, aren't generally doing a very good job of articulating what do they bring to the table to a buyer. And for those listening, I really think that's an important element to get clear on. That I think sometimes very, very well capitalized smart sellers don't get a feel for what am I getting with this firm? What are you going to bring to it? Why do you want to be part of this organization? And frankly, if you want to enhance your perceived value and very tangibly, I think this is an important step that you're paying attention to that and that ties back to that theme I said before about alignment of interests. What is it that you bring to the table? How are you going to help the larger enterprise grow more aggressively? Really will set you apart..

Catherine Williams: [00:23:37] It's such an excellent point and one worth reinforcing, you talked a few minutes ago about essentially kind of those deal breakers, which is not seven or 10 or 12 things. Right. It's really those top few things that you most care about that you're sort of that hill you're willing to die on, if you will, relative to doing any kind of a transaction. And so it's spot on. And I would agree with you. It's an area that when I ask advisors on both sides, but certainly on that selling side, they sometimes, either they haven't fully thought about it or to the alignment comment there is a multi-partner environment, and they're out of alignment.

Scott Slater: [00:24:34] Well, one of the things, Catherine, that everybody in this industry talks about, and they're right, that cultural alignment and fit is really important, but I would challenge people to put that down on paper. So a lot of times, if you've done strategic planning, you've articulated what are our core values, what are the non-negotiable behaviors that are expected in this firm, whether they're spoken or unspoken, get them on paper. The likewise, I would say what are the three to five or six characteristics or behaviors or qualities that are critical to you that you do not want to lose, that you want to retain? And that's the way to start looking for the kind of partner that you will fit with. And that works on both sides. Buyer and seller.

Catherine Williams: [00:25:18] Absolutely, in our 2020 advisors study, we saw among our fastest growing firms in the study, which are firms that on average grew about 22 to 23 percent, we see very consistently characteristics around solid mission vision and values in place. They've gotten their house in order, so to speak. They can speak with clarity about not only their value prop, but how the business is run, their org structure. Everyone in the organization has great real clarity. So I often say to advisors, whether you think you'll actually execute on M&A or not, those are all things that are characteristics of faster growing firms in our study that you should shore up, that they will absolutely serve you in your conversations and in some ways may help illuminate those deal breakers. Right. When you're getting your house in order. Things around technology, the client experience, that cultural fit is really key. We know in our study that the top two reasons why deals either do not happen, or even worse, fall apart on the other side, is that lack of cultural alignment and lack of investment philosophy alignment, which of course introduces a lot of risk conversations and different things like that.

Catherine Williams: [00:26:43] So really appreciate you reinforcing that because we definitely see that in our study. Well, let's pivot a little bit and look at the environment that we've been operating in over the last, we’ll even say, 12 months and heading into a new year. I think you and I both saw a brief period of time in early 2020 when folks were understandably and rightly so, focused on retaining clients, shoring up their people, making sure their businesses were still operating. But absolutely the activity has resumed. And there's lots of interesting things happening around just the M&A landscape in general. So lots of things there to unpack, if you will. Being mindful of as we're sitting here in late 2020, this will likely be a podcast we will share in early 2021. What are some of your as you sort of reflect, and think about these last 12 months, what sticks out for you and then, absolutely, we'd love to get your perspective on kind of going forward what that might look like.

Scott Slater: [00:27:49] Well, Catherine as a bit of background. Five years ago, I began leading what we call the Fidelity M&A Leaders Forum, and really two things came out of that. The first was tracking of activity, because we want to create more transparency of where that's happening. And the second was around education between buyer and seller. And that we've talked about a number of those elements already about how to close that gap so that both sides are more confident in how they engage. But on that first one, on tracking, we've been tracking now for five years on a monthly basis, all of the RIA M&A activity that's publicly disclosed, majority investments, for, as I said, five years. We also track that larger a lot of the broker dealer, independent broker dealer activity too. This year, it's amazing. It's kind of a little bit of a tale of two cities. So we had a record year at the end of last year with in the RIA space $150 million in, and I think it was 114 transactions, something like that. I don't have that right in front of me, excuse me $150 billion in assets under management transacted last year. So in the beginning of January, February, that activity continued at that same run rate. And then we hit the pandemic. And March, April and May, remember the numbers I just told, $150 billion. March, April and May saw a combined 10 transactions totaling $4.1 billion. That's the lowest three-month period in the five years we've done it. But then June, that immediately turned around. Some of those deals might have been delayed, start happening. But from June through the end of November, the last six months, we have seen an unprecedented level of activity.

Scott Slater: [00:29:31] In fact, November is the largest single month of a transaction activity in the time of doing this, with 115 deals with $45.3 billion in the month of November alone. In the last six months have almost eclipsed all of the record 2019 year, where we see we've seen 112 transactions and $170 billion, $169.7 billion in assets transacted year to date. We still have the rest of December as we record this to complete. So what's that tell you? There's a lot of activity. About two thirds of that approximately is driven by serial acquirers. As a matter of fact, over the last two years, I think the firms that have done, 13 firms have completed four or more deals. That's like 61 percent of the deals in the last two years. And you mentioned Creative Planning. There’s CI Financial, there are a lot of new players that are coming into the space now. So what's that all mean? I think there's going to be continued accelerating activity as we go forward and I think faster as a result of the pandemic, getting people's attention around the value of their firm and not just the valuations, but also what do they need? What do they need from a business and operating standpoint like you've been talking about, and that they really realize for the future I'm better off doing that. So that's why you're seeing, we're also seeing, record numbers of billion dollar plus firms selling. It's really happening much more quickly.

Catherine Williams: [00:31:00] Any trends or anything that you're seeing when it comes to valuation in this landscape or some of the deal structure pieces? It's a loaded question we get every time we do a M&A webcast. Many people want to know what valuations are out there. So I'm not necessarily going to ask for that number, so to speak. But as you look at these deals and how they're being constructed, if you will, which can get a little bit to the motivation, right, why are folks doing the deals? But anything sticks out to you that might even be either cautionary or more of, hey, pay attention to this if you're going to get into the space and be aware of it?

Scott Slater: [00:31:37] Well, I think this is true of any industry, so I'll preface it by that, that every entrepreneur thinks their business is more valuable than maybe it is on the open market. We did a survey of strategic acquirers a year ago where we looked at all the deals of the over the prior two years that were represented, about half the deals in our transaction report. And I would say roughly two thirds of those multiples were between four and eight times. Okay, again, we're talking a wide range of sizes and all that, but four to eight times. But where do those buyers say that sellers are looking for? Seven to nine times. So there's a gap there. And I think an unrealistic gap. And what happens is it's easy to read about a particular multiple that's in the mid to high teens for one transaction. That is a strategic specialty transaction, a specialized transaction. And they want that multiple and yet they are a $200 million firm. And I think it's just trying to get a realistic understanding. The other thing, buyers will tell you this all the time too, a lot of unsophisticated first-time sellers, pay attention to multiples and valuation. And I get why, because that’s what their firm’s worth, but they don't pay attention to deal structure, but they're both related. So in other words, how much are you getting up front? In what form? What's required for the earn out period? How long is that earn out period? So deal structure, which is where buyers manage their risk, is just as important as what the valuation is. And it's important to look at both sides as an integrated package of what that looks like. And one last thing I'd point out, you mentioned trends that I think is an interesting one..

Scott Slater: [00:33:17] There's been a growing level of, with all the capital flowing into the independent wealth management space, to an awful lot of minority investment transactions. So that allows some well-run firms that may not be ready to sell out the firm. They still want to lead it, but they know they need capital to execute on maybe their own inorganic strategy, but have a partner to help them do that and be a better run firm. There's a lot more of that, both from a financial standpoint and private equity, as well as a strategic and operating standpoint. And that's a trend that we've been seeing accelerate on a very significant basis over the last number of years. So it all means that, again, coming back to the very beginning of this, it's really important to understand with clarity what do I really want? Because it's like walking into, I use this analogy sometimes, Home Depot on a Saturday with a vague idea that I like all the stuff in here and then start buying tools and things that are on the end aisle display because I might use that cordless drill, but I don't have a plan for what I want to build. So don't just start talking transactions, start thinking about what do I want, and then I can think about the different business models and how I might achieve that. And frankly, there are some brilliant people out there across this industry who are building some very creative and very different models and solutions. So I think everyone can find right now what they're looking for.

Catherine Williams: [00:34:40] Well, you remind me I had the opportunity to participate in an industry leading M&A conference and many of the strategic acquirers that we're referencing here today were a part of that. And I think a couple of things that really that stood out to me in their comments. Number one, they can pretty much spot if someone has sort of scrubbed the business or adjusted it for a short period of time to sort of drive up that operating profit, for example, or something like that, that they to your comment earlier, they really do want to see sustained ongoing organic growth. They definitely want to see the business has been operating in a certain manner, if you will, and they can pretty much sniff that out pretty quickly. And then the question of, okay, so if there is sort of this range of valuations that we hear about, as you said often, that's the highest ones that hit the news. Some of those hit essentially premium level. And what does it take if I really do believe that my firm is worth at the highest premium? What is that? And they were very candid. Like obviously from a buyer standpoint, they're going to have a certain perspective around that, but that it is hard to really think about your business being so much more valuable than many others out there. But, ah, and maybe this is a question for you in terms of if you really want to get a premium for your business, are there a couple of things to really look at that could at least help drive the conversation? Whether it'll actually happen or not might be a different conversation. But how do you think about that? Because certainly this idea of maximizing the value of this business that you have built from scratch is really important for advisors. So when you think about that premium piece, anything in particular come to mind?

Scott Slater: [00:36:29] Well, I mentioned earlier we've had a paper that I think is a very valuable one to frame it called “Maximizing the Value of your Firm,” and it really talks about this. But what would you really ask? What are buyers most interested in? And it is an artful mix of a number of things. First of all, it does depend on what kind of market are you in and do they want that market? And are you dealing with a strategic or an operating buyer? An operating buyer may very well want to be in Memphis because they're not there, as an example. They might be in Chicago or the mid-Atlantic and they're trying to get to that market for some reason. So that might be one thing. Number two is they are looking for the mix of your client base. If your clients, let's just say the rule of thumb I tend to use is if more than 30 percent of your clients are over age 70, essentially you have, to be a little extreme, but a wasting asset, I mean, because people are drawing down on those assets. Are you bringing in younger clients? And third, are you growing organically or are you at least showing a desire to grow organically but are struggling with it? And this is a firm that may be able to solve it for it.

Scott Slater: [00:37:42] Third and fourth is probably really looking at the talent you have. Do you have advisors that are kind of mid-career motivated, want to become, have the energy and drive to build it to the next level, but they're already pretty established, knowledgeable? Do you have talent that could be on the professional services side of the organization, the leadership side excuse me, the C-level? They're looking for that kind of talent, too. And then maybe you have a specialization. I would say that's further down the list, but maybe you have a particular specialization that a particular firm needs. But that's more of a niche opportunity. But I really think it's, are you profitable now? Have you been consistently? Are you able to grow organically? And is it dependent on more than just the principal of the firm or others driving that growth? You have a business development process. What's the mix of your client base look like? Is there something unique about your offer? Do you have talent?

Catherine Williams: [00:38:40] And that client piece, I'm so glad you mentioned that, I mean, we know from our study that over 50 percent when it comes to that, the demographics of the clients advisors are working with that. They are in that 60 plus range. They are aging clients and advisors in our study this year, which we had nearly a thousand advisors globally, they reported about 33 percent of their clients are decumulating. And likewise, when we look at these faster growing firms and including some of the M&A activity, they're capturing the accumulators, they're offsetting that. They're going after those younger clients. They're figuring out a business model that makes those profitable so that one day when they are that ideal target client, sort of the traditional client, and may be shifting toward decumulating, it's still a profitable business for them. So I appreciate you mentioning that. That's a real headwind for a lot of the advisors we work with.

Scott Slater: [00:39:52] You know, one other thing I'd add, and maybe you've talked about this on some of your other episodes, but how you do your marketing is increasingly something that they're starting to really investigate and look to. In other words, in you know, I'm in the baby boomer crowd. We're very much into the relationship and the network and all that stuff. And that's worked very effectively. But that model is not what's going to get the next generation. So how digital are you in terms of your ability to attract and retain clients and build and to get new clients, build connections with centers of influence? Because the investors of tomorrow, the ones who are now valuable today, are doing it in a very different way. And they look at advice, they value it in a different way. And I think it's important to figure that one out.

Catherine Williams: [00:40:37] Absolutely, and we have done a couple of podcasts already that we really get into that growth piece and then we'll be doing some more in the new year for sure as well. So, yeah, great point there. Well, let's pivot a little bit and let's do a little forward looking, if you will. When you think about the next 12 to 18 months, what does that environment look like? It's still a seller's environment. Are there new entrants into the space that maybe we're not seeing just yet? What comes to mind when I ask you that question?

Scott Slater: [00:41:11] Well, you know, I think our human nature, again, is that the way the pattern is will always be the same. So I'm going to enter that with a little bit of humility and trepidation. But I would say all the fundamental forces suggest that we're going to see a continued acceleration in that activity. And more and more sellers or potential sellers are realizing both from their valuation and for what they need to run the business in terms of better platform and the available capital that's there. And that's all going to drive in an increasing level of activity. I frankly think the pandemic forced people. A trigger event like that forces people to consider their options more carefully, and I think more firms are engaged in that.

Catherine Williams: [00:42:52] Absolutely. So, Scott, if you're an advisor listening today and you're ready to go or at least you want to start developing a plan around this, talk about some key next steps, whether you're a buyer or seller in the space. Maybe that's it. Maybe there's two answers there.

Scott Slater: [00:43:10] Sure. Well, as I said at the outset, I think the vast majority of us tend to operate either reactively to an opportunity that presents itself or there's just inertia where we don't do it at all until that trigger event happens. So here are five things your listeners could consider. First, I encourage people just like you're listening to this podcast, become a student of M&A to put yourself in a better position. I mentioned Control Your Destiny, which you can find it out on the Fidelity institutional site to define what is your clearly preferred option and then determine whether you have the necessary resources to execute on that option. Second, Catherine mentioned the transaction reports. We do have a monthly transaction report available at the Fidelity site. Look at that to see who is selling, who is buying, what are the trends, and how do you see it? Third, listen to podcasts just like this one, or the one I hosted for Fidelity called “Future Ready through M&A” that you can find on iTunes or the Fidelity site, and listen to how different experienced acquirers and ecosystem players approach the different challenges. Fourth, look at your own business and assess how you're doing today. Regardless of what your M&A plan is, you'll end up in a better place if you pay attention to the things that Catherine brought up that drive high valuations. Growth, strong talent which is being developed, client engagement and retention, investing in your technology and your service platform, and moving your service model up that value stack we talked about towards those stickier behavioral finance type of concerns. So running your business. And then finally, I think this is a good way to force you to do this a little more, get a professional valuation by an enterprise that understands independent wealth management. That's a great place to start to assess where you are now and what your options really are. I think if you do some of those things, you'll be a long way ahead of the vast majority of the other interested parties out there and put you in a better position for what you want.

Catherine Williams: [00:45:11] I couldn't agree more, and that is the perfect sort of punch list, if you will, to end our time today, great actions there that advisors can take in their business to move forward. Scott, thank you so much for joining us today. I look forward to connecting with you later in 2021, and we'll see how the landscape continues to evolve and some of the activity that we see going on. And absolutely for those listening today, I would check out the resources that Scott has mentioned. Fidelity is an industry thought leader around the space. So great tools and resources to access there. You can certainly find Scott on LinkedIn as well. I want to thank everyone for listening to our podcast today, and we'll catch you on the next one.

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Episode 2 - Keeping Employees Happy and Engaged in a Virtual Environment

Episode 2 - Keeping Employees Happy and Engaged in a Virtual Environment

A discussion around employee engagement and morale and how this impacts the overall client experience.


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Catherine Williams: [00:00:00] Hi, everyone, and thank you for joining us today. I’m Catherine Williams, Head of Practice Management for Dimensional Fund Advisors. You know, here in 2020 more than ever, leaders have had to really pivot and think differently about how they develop their employees, how they give and receive feedback, and certainly how they maintain high employee morale. Whether having virtual or remote employees is new for your organization or you’re part of a firm where that’s very much been in play for quite some time, I think you'll come away from our discussion today with some new ideas, recognizing that in this virtual environment, all the things that I just mentioned have taken on a slightly different form and function even. So we’re going to share some, I think, some ideas, some perspective on how you can think about engaging with your employees, continue their development even in this virtual environment. So to join me in this discussion, it is my pleasure to welcome Shannon O'Toole of Shannon O’Toole Coaching. Shannon, it’s great to have you with us today.

Shannon O'Toole: [00:01:00] Thank you so much, Catherine, I’m happy to be with you.

Catherine Williams: [00:01:03] I’d love to start, if you don't mind, sharing a little bit about your background and where you focus in your coaching business with advisors. You have a really interesting, long tenured background in this industry. And then, as I mentioned, we’ll dive into some of our topics. So with that, can you tell us a little bit about yourself?

Shannon O'Toole: [00:01:25] Yeah, happy to share, so for the last 16 years, I’ve been in the wealth management space and I’ve spent about 20 years in recruiting in talent management. For the last 12 years, I’ve actually served as a board member and the leader of talent in human resources for a large St. Louis based RIA by the name of Buckingham Wealth Partners. I started at Buckingham 12 years ago, and we had about 75 people in our headquarters office here in St. Louis and a human resources team of just two of us. When I departed from Buckingham earlier this year, we had done over 40 mergers and acquisitions, which took us to right around probably 500 people in 40 different offices across the United States. So by the time of early 2020, that human resources team had grown from two people to 10 people. And I had had the opportunity to work with many smaller RIAs, where I definitely realized that there is a big need for owners and advisors with help in engaging their people. Any time when you’re managing people, there’s a need to engage them and certainly retain them to their teams. And I think certainly what happens with a lot of advisors is that they get into the business because they love working with their clients.

Shannon O'Toole: [00:02:50] They want to help their clients reach their financial dreams. And as they get larger, they need a staff to help them to leverage their time, to allow them to me to work with more clients. And what comes with a staff and hiring of people, but people management challenges and the need for things such as feedback programs and team building initiatives and talent alignment and all of the many things that come with having a team of colleagues. And so what I have been doing for the last couple of months in Shannon O’ Toole Coaching is really serving as a talent strategy coach to help move those advisors and owners into the results that they’re looking for when it comes to engagement and retention strategies and really working to have successful teams. Because at the end of the day, we all know successful teams really make successful firms. So I’ve been part of this DFA community for the last 12 years, and I have made some great friends and had some amazing education opportunities. And I am just really honored to be a part of this podcast. So, thank you, Catherine.

Catherine Williams: [00:04:02] You're welcome. It’s great to have you with us, and as I mentioned with your- particularly with your background of experience, you have seen what this can look like or does look like in what would be by in this industry’s standards, a behemoth firm, but also how it plays out in smaller firms, whether including teams that may only be three or four people at the very most. And so I’m really looking forward to diving in around that and recognizing that. I think for a lot of our listeners today, they’re probably sitting one of those camps, if you will, one of those buckets, but that the idea of how you engage your people, even if it's just a couple of folks on your team, how important that can be. And with so many firms still having folks that are working from home either 100 percent of the time, depending on where you might be geographically or even still part of the time. And quite honestly, even from our covid-19 survey that we conducted in July, the many firms are absolutely considering and working to continue to offer work from home flexibility. So in some element of that, in the business, that all creates, I think, some unique challenges and opportunities around employee engagement. Why is it important to keep that high and the morale that comes around with that, that there's a business element to that, but there's also just this element of making sure that your people are really optimized and working at the highest level. But let's start with just a question. So when you think about employee engagement in your experience, why is this important to pay attention to regardless of the size of your organization?

Shannon O'Toole: [00:05:51] Yeah, I think that's such a great place to start, because I think it's easy to just underestimate the importance of engagement. And it is interesting if you just look at research, I mean, you're going to see that the organizations that have high employee engagement, they have higher level of retention, they have higher level of those people in higher likelihood of those people staying around their firm, which is incredibly important. Specifically in the wealth management business right now with potentially some talent transition, as we have a great number of our advisors are baby boomers and looking for retirement options. And so making sure that your employees want to stay and stay working for you is incredibly important. They also see that with higher engagement, you're going to have better outcomes. They are more likely to treat your clients better and attract new ones. It's just that positive spirit that is magnetic and brings people and keeps them and then they're healthier. You want people who are healthy, who are lower stress, who are not burnt out on their jobs. And so I think it's incredibly important. I mean, we have seen this year that employee stress is up and their well-being is probably not as high as it's been in years past. But the interesting thing about people who have engaging work is it's almost serving as a distraction and a constant. Something that is consistent in terms of a little bit of what's going on in the world around them. It's actually serving as a great buffer. And so we're still seeing a high level as it relates to how employees are engaged in the work that they do and in their teams.

Catherine Williams: [00:07:37] So you touched on this on the fact people are getting their jobs done. In fact, a lot of the firms that I talk with, they say, look, are people are busier than ever and things are going OK. We were able to pivot into this technology from a technology standpoint, a workflow standpoint, into this remote environment. But are they engaged in the firm, the mission, why we're here each day? What causes us to show up, if you will? What are you seeing or hearing around this? Even as we recognize there might be someone listening to this is wondering why people are getting their job done, right? Isn't that enough?

Shannon O'Toole: [00:08:17] Absolutely, and it's certainly important and we want them to continue getting their jobs done and working at a high level, but I think it's also important to make sure that they are still feeling that connection with the greater firm and certainly with the firm's mission. I've talked with a lot of leaders at firms who have been very honest with me and saying, listen, I don't even really know what to do. I've never navigated anything like this before. And now I have a whole team of people who are looking to me for guidance. And, honestly, I'm not really sure if this is going to work out or how this is going to work out. And I think there's comfort in the fact that we're all in the same situation, that there is a lot of newness and change going on. But what I've coached those leaders is that it goes really far with your people, to just be honest with them, acknowledge, yeah, this is new for all of us and we are going to have to try some things out and see what works and the things that don't work we'll have to move past. But I think that acknowledgment and that honesty really shows the employees, yes, they're dialed in. They're not just acting like the world is rapidly changing around us. I think it's important to- I love the analogy of the flight attendant. I think your people always look to you to see, like, OK, are you calm? Like, there's bumps. 

Catherine Williams: [00:09:48] Turbulence.

Shannon O'Toole: [00:09:51] There's turbulence

Catherine Williams: [00:09:52] It's been so long since anybody's been on an airplane

Shannon O'Toole: [00:09:55] See, that's the problem. So there's turbulence. But I'm going to look at the flight attendant and, you know, if he or she is calm, then I'm going to feel better. And I think that's the key. You might not have the answers. You might not know exactly what the next year is going to look like. But if you can remain calm and show them that you are all in this together and that, yes, your puppy might be barking in the background during a Zoom call or your kids might come running through the background. But I think if the leader can show calmness and to show some grace as it relates to things just aren't normal right now, that gives your people so much peace also and helps keep them feeling like I'm in the right place. I'm in a company that cares about its clients but also really cares about me and is really dialed into that.

Catherine Williams: [00:10:46] And so with that, if an advisor listening today is thinking, how can I increase individual engagement? We're going to talk about the team in a moment. But I'd love to get your perspective on what are some things that you're seeing advisors do that you recommend they do to really check in and drive that individual engagement?

Shannon O'Toole: [00:11:37] Yeah, I mean, I think it's really simple, but it does have to be purposefully done and it's the mere fact that your people are going to feel more engaged in their jobs if they feel truly needed and that they truly feel like the talents that they offer are being utilized by you as the adviser, by your clients, by the firm. And sometimes if you're not purposeful in taking the time to acknowledge those things, it can completely get lost in translation. And so I think it really can be just as simple as setting up check-ins. Make sure that on your calendar you have some dedicated time with each of your team members just to say how are you? Or has anything changed in the past two weeks or months that is making it more difficult for you to do your job from home? And I would really recommend that that check-in and those questions not be sandwiched in the midst of the 50 things that have to be done for clients that week. But really, really focus time on how is that person doing. And there's going to be things that they respond with that you aren't necessarily going to be able to fix.

Shannon O'Toole: [00:12:51] You can't open up somebody's daycare for their children to go to again. But you can acknowledge the fact that that's something that they're experiencing right now and maybe give some flexibility to talk about prioritization or maybe it is something you can fix. Maybe all of a sudden they're like, you know what? At the office, I print off all of these documents to review them and make sure that they are perfect to go back to you. But I don't have a printer at my house, so I can't do that. I mean, that's something that like, yeah, you can solve for, you can get them a printer and help them do their jobs better. But I really find that if you're not taking the time to ask those questions and be purposeful about them, one, they're going to just assume you don't care. And two, it's not going to give you the opportunity to really engage and potentially help them do their jobs better.

Catherine Williams: [00:13:39] I think you made a really interesting point in terms of carving off time to have this kind of conversation and sort of not sandwiching it in there or doing a part of a phone call around a particular work product of some kind. I think that's really valuable. And it does add more Zoom meetings. And I think we should just acknowledge that. But certainly the nature of those meetings, I think is really important.

Shannon O'Toole: [00:15:00] I would just- I would say the amount of time to replace that person if you don't take the time upfront to make sure that they're engaged. If you think of the hours of sorting through resumes and interviewing and onboarding something, sometimes it's really worth it to take the time to keep the people that you have as long as they're great contributors.

Catherine Williams: [00:15:24] And talent is moving around right now. There's long been a war on talent in this industry, particularly top talent, which so many of the firms listening today have. And that's picked back up, if you will. Firms are interviewing, onboarding, and building clients into the work, their employees into organizations, even in this remote environment. So I think your point is a valid one. It's much more costly if you've got to go find a replacement for that role. 

Shannon O'Toole: [00:16:33] Absolutely.

Catherine Williams: [00:16:34] So we've talked about- we've talked about the individual. But for many of these many of the organizations that you and I both work with, we've got very much that team engagement, which is the team could be the entire organization or it could be an immediate work team. But in the spirit of either one of those, how so? How do you approach engaging, increasing that team engagement piece?

Shannon O'Toole: [00:17:00] Yeah, I think this this is where I've really seen some great creativity this year. I think 2020 has offered us an opportunity to really have to think outside of the box and think creatively, because the ways in the procedures and programs we were doing before just couldn't work in a virtual environment. And so it has forced us to step outside a little bit. And I've just heard some great examples of things people are doing to ensure that their teams still feel connected when they aren't having lunch in the lunchroom or they're not taking their coffee breaks to be able to catch up about the weekend and what's going on. And I think it's interesting because one of the things I've heard from a number of companies is that it feels more efficient to be on Zoom calls because there isn't as much of the chit chat when individuals walk into a meeting room that sometimes can take the first 10 minutes of a meeting just getting caught up. And while that's good, too long going without some of the things that connect us as people can start to lead to people not feeling engaged in their team. And that can be the beginning of a downward spiral to somebody wanting to leave and also to your clients not being served at the level that you want and need them to be.

Shannon O'Toole: [00:18:19] And so a couple, again, like little things that can be done is to schedule virtual coffees or virtual happy hours. And I think it's one thing to put that on the calendar and say, like, this is great, we're all going to be on the Zoom call together and grab your coffee or grab your cocktail. But I really would suggest that you need to have a topic or some type of game. So I've heard people play two truths and one lie or a variation of an apples to apples game, which my kids love. But there's adult versions, too, or even just something as simple as a starter question, like along the lines of, hey, what's everyone watching on Netflix right now? Just so it brings that connection. Typically, those types of conversations or games make people laugh, they make people take a breath and just truly enjoy spending that time together. So that's one easy way. Another thing that I'm a big fan of and it really goes to kind of setting people's mindsets is to either start meetings or have meetings where the only topic of conversation going round robin is to name something you're grateful for. And sometimes people talk about things that they're grateful for in the business and sometimes it's outside of the business.

Shannon O'Toole: [00:19:39] But it really just gives you a sense of what's going on in those employees’ lives and is just a great way to start a meeting or to start a week on a really positive foot, which is proven to if people have a positive mindset, they're going to show up with a more positive spirit. So those are a couple of things. I think if you want to take it to the next step, I have a client right now that has a really fun tokens of appreciation that they used to do in the office with actual wooden tokens that they had branded for their company. But they're now taking it to the virtual platform and they have a fun PowerPoint screen. Every employee gets three tokens for the quarter, and every Monday morning at the meeting, they have the opportunity to give a token to somebody based upon something great that that employee has done. Or maybe they see an employee that's really living the values of the company. And once somebody gets three tokens, they get to turn it in for an Amazon gift card, which everyone is using Amazon right now.

Catherine Williams: [00:20:38] Right.

Shannon O'Toole: [00:20:39] So it's just if you talk to those employees, they say it just means a lot to them. It is public recognition. It's the recognition that they are doing a great job. And again, it just brings connection amongst the team that isn't physically in the same room anymore for those Monday morning meetings. And so those are all simple little things. But I would just keep reiterating they have to be purposeful, and you actually have to schedule them and stick to actually making them happen.

Catherine Williams: [00:21:10] I like that tokens of appreciation idea because it also empowers others on the team. As leaders, we've all we've got a lot going on. And so where you can even share the opportunity out into the team so that they are maybe leading some of these activities. But also it really requires that they think about the team for like those tokens of appreciation. I think that's a great suggestion. I think the one activity that's resonated the most with my team has been the virtual scavenger hunt, which can be really fun when it's that 10th Zoom meeting of the day.

Catherine Williams: [00:21:57] As a facilitator, it's so fun to watch everybody sort of scatter to go get that roll of toilet paper or the adult beverage or the logo item or whatever it is that you might ask for and bring it back to the to the screen, if you will. And again, and we're pretty competitive bunch here. But I think, like you said, at the heart of all this is don't give up on these things. So we've talked about individuals, and then the teams. How can someone listening today who's also thinking about the overall firm and the success of engaging everyone across the organization regardless of that size, what comes to mind when I put that out as a question for you?

Shannon O'Toole: [00:23:21] I think this is where we get to a point where it's important to start talking about the mission, the vision, the values, the goals of the company. What are those overarching things that really keep everyone, for lack of a better term, marching in the same direction? I very much encourage that firms have firm-level yearly goals, and those goals might speak to the amount of new revenue that you're bringing in, maybe the number of new clients that you want to get in that year. Something along the lines of, you know, we have our retention percentage. We want to make sure that we retain this percentage of our current clients, those types of metrics that you really can use of as benchmarks for success, and also that everyone in the organization can see themselves. And it's hard to talk about retention and without everyone in the entire organization saying, I have a piece of making sure that we retain our clients no matter what my role is in the organization. And so when I'm talking with firms about those goals and those overarching goals for the firm, I really, really want to just encourage that. They have to be clear. People have to be able to understand what they mean and how they relate to the business. I would encourage that they get communicated in the beginning as kind of a rollout or an announcement of this is what the goals are.

Shannon O'Toole: [00:24:57] But then I would encourage ongoing communication and updates about those goals. And then certainly another important component to goals is being able to reinforce them, repeat them, and reward them. There has to be celebration at the firm level of reaching those goals. I really believe that the power of winning together and sometimes losing together are some of the things that most bring individuals together and being able to have those benchmarks for success throughout the year. I think that's really important. And another component to that would be linking each of your people to those goals. So certainly if you have wealth managers or wealth advisors that are out there doing business development and they're bringing in new revenue or they're bringing in new clients, really giving them kudos for how they're contributing to those goals and to the overall success of the firm, just like maybe your client service associates are contributing to the retention of clients, that, again, just keeps everyone focused on where are we going and has that higher level of connection to the greater firm and not just their team or their individual job.

Catherine Williams: [00:26:28] I love the idea of reinforce, repeat, reward, right. Following those three “Rs”, if you will, when it comes to your goals and establishing them is really critical, which we absolutely see within our advisor benchmarks study that we run each year, and this year had nearly a thousand advisors from around the globe participate. And we ask some questions about do you have a strategic plan? If you do, how often do you communicate with your team about around it? And when we look at faster-growing firms versus slower-growing firms in our study, we do see some characteristics with those faster-growing firms. They are more likely to have a strategic plan of at least three years, although even if it's only a year out, they've put it down. Right. It is not just running around in someone's head. They really have put pen to paper around that. And they are absolutely, as you just described, not only doing an initial reveal and sharing, if not actually asking folks to help build the plan, but they revisit on a regular basis. And that can run the gamut in our study. I think quarterly was the most common time frame or cadence, if you will. But absolutely, we see organizations that maybe it's a subset or certain area of the plan where they're getting together weekly.

Catherine Williams: [00:27:49] And certainly we see lots of usage around dashboards and within CRMs and all those kinds of things. And I would offer those are all great mechanisms for tracking your pipeline. Did clients refer? Did you lose any clients? But also think about that dashboard as a potential way to demonstrate how many meetings did we have. Is there a spot where we can drop in a comment? If a client sends us a thank you note, we can share that. Just thinking about ways that you're reinforcing and as you said, helping folks, even both as part of a large organization, but also individually, how they can move the goals forward within the organization. And I think you and I would both agree you've got to set goals at every level and every role in the organization, and you have to be very careful to make sure there are goals that they can actually influence. Right, that they can actually complete. They may need to work with colleagues in the large organization to get them done. But there's got to be elements of it that they can really move the needle and have control over so they can kind of see and feel that they are making that impact.

Shannon O'Toole: [00:28:54] Yes, that's the specific, measurable, and attainable when we talk about goals. Those are all very key components, and on the attainable part, if somebody has a goal that at the beginning of the year they already believe they're never going to meet, it's really not serving anyone any good to have that goal. So the specificity, the ability to measure and that ability to be attained are really key and good goal writing.

Catherine Williams: [00:29:20] We're also seeing a little bit more chatter, if you will, with some of the firms that we work with around this idea of client retention and how that can impact or relate to the compensation plan. We're seeing some things around that compensation plans, as you mentioned, are often in terms of incentive pay, are often geared around the new business brought in, which is great. And as you said, you need to pay. If that's the behavior you're looking for, you need to pay for that. You need to reward that when that happens.

Shannon O'Toole: [00:29:52] Absolutely.

Catherine Williams: [00:29:53] That you have so many folks in your organization where, whether directly or maybe one or two removed, it's about retention. It's about delivering the client experience, retaining those assets. You worked really hard to get through the door, maybe even increase your wallet over time. And so one way that we're hearing a few firms are really dialing that up and putting some compensation around it is even as they measure NPS (net promoter scores) with their clients. And if those NPS scores are at a certain level, a certain amount of money becomes available within a pool to recognize the team. So there are lots of ways for sure to provide equal incentive in terms of the mindset may not be the exact dollar amounts. But having that mindset even in those client retention roles, as much as you might have in the prospecting roles.

Shannon O'Toole: [00:30:43] I agree with that, and I would I would add often I hear I don't know how to measure the goals. It's easy with wealth advisors to measure their business development, but what do I do with the rest of my team? And I think that brings up a great point, that there are metrics like retention that are easily tracked, that directly relate to those individuals goals and make them feel included in those metrics that are so important on a yearly and monthly basis to the firm.

Catherine Williams: [00:31:10] Great point, that's a great point. So let's pivot just a little bit and think and talk a little bit more around your team members. And again, even if you're a small organization, helping your employees see themselves long term in your business is so critical. And I'm really excited to talk a little bit about this with you today as sort of this career pathing question. because as if anything, we are also seeing in our benchmark study that really for the first time when it came to this question of if you lost clients, why did you lose clients? And death is definitely one of the top reasons. We do have an aging client base out there that that's definitely showing up in a lot of organizations. But the loss of clients because they lost an advisor or certainly if that client went to a competitor. but that loss of an advisor who then, as you can do the math, subsequently took clients with them, I mean, talk about hitting your bottom line. It's painful enough to lose that talent. But then when they take revenue with them or after they leave, that is really challenging. And so we're having lots of conversations with advisors, right. With the firms right now to say look carefully and where you can as much as you can think about career pathing. And so as someone who spends a lot of time working with advisors, developing career paths, even in a small team, maybe a little bit of the why question of from your perspective, is it is it important to have a formal career path plan, in your opinion?

Shannon O'Toole: [00:32:46] I think it's important to not necessarily have a document that shows like in one to three years, you're going to do this in three to five years, you're going to do this. But what is important is that there needs to be a conversation, a consistent, ongoing conversation about expectations. And those expectations have to be those of the owner of the firm, the wealth advisors, and of the employees. Because what we're seeing happening and if you ask a lot of more junior advisors like, well, why did you leave your firm? The reason they're leaving the firm is because they're not seeing a future for themselves in that firm. They see somebody maybe who is the lead wealth advisor who has talked about retirement, but isn't having any of the behaviors or the actions that look like that that person might be retiring and having the more junior advisors step into that role. And so sooner or later, the junior advisor just thinks, OK, well, this isn't going to happen. And so my career’s stalling out and it really just takes one phone call from a great recruiter to get that person to potentially walk out your door and go take another opportunity. And what could have solved for that is something just as simple as an expectation setting conversation to say, you know what, this is my plan as it relates to either my personal retirement or my transition out of the business, or this is what I'm thinking in terms of your growth and your career development. And I think people shy away from those conversations because they can't guarantee that everything is in stone. Right. It's like, oh, I don't really want to have that conversation because I might say that it's going to be in three years, but then I don't do it for six years. I would say let go of the concerns about the black and white logistics and still have the conversation because there's just you know, people make up stories, they make up what they think is going to happen in the void of information. And so the only way to keep that from occurring is to provide information and to have some of those discussions. 

The other part, Catherine, I would probably add to that, is also just the commitment to people's development. That is also something that I think especially some of our younger generations are looking for, is an organization that not only commits to them in terms of their professional development, but also their personal development and being able to be with an organization that maybe is putting resources, whether that's money, time, people power behind things like paying for getting CFPs or offering time to study for your CFP or getting them an outside coach. And maybe that coach is focused on helping with business development or sales coaching, or maybe that coach is helping that junior advisor with some behaviors that need to be a little bit tailored or altered to make them a better player or better manager within the organization. I think firms that are willing to put up the resources to continue that development of their associates are the ones that are going to really hold on and retain the talent that they need.

Catherine Williams: [00:36:32] I think this is a really important point as well for firms that are also thinking about the future leadership of their organization talent so that they're there when the time comes, whether it's an outright succession or just needing to have folks step up in a more leadership way. But the building a path, building those skill sets and you know, you mentioned a couple of really great ways, whether it's for advisory skills or just developing personal development on ways to go about that. It's really important. There's lots of great programs out there. Even I think about the G2 Leadership Institute, things like that, that are absolutely designed to help develop the next generation for the potential of actually leading or being in a leadership role in the future. So it's not just to help them move through their current role or their current path. Maybe they're an associate advisor, and they want to become a lead advisor. But really, that long term vision of your organization, I know this is really coming to the forefront for a lot of firms right now. So you make a really good point around that. So part of this, as you mentioned, it's about having conversations and conversations, as we all know, is feedback.

Catherine Williams: [00:37:54]. One of the questions that is often presented is this idea of, well, I want to do that. And I, I have people that are anxious to get feedback from me. Aren't these really time consuming? Like how do I think about a process, a program of feedback that maybe it doesn't feel as labor intensive as we often think about when we do think about a more formal feedback process?

Shannon O'Toole: [00:39:03] I think one of my favorite comments from a leader that I've heard so many times in my career is, well, they're just not meeting my expectations. And my first comment back whenever I hear that is, well, did you clearly state your expectations? Because it's really hard for someone to meet them if they don't know what they are. And I will tell you 90 percent of the time, the answer is maybe I didn't clearly state them and I need to go back and do that. And so that is where it all starts. The simplicity of expectations and goals and having conversation is the key. I mean, just like we all talk about communication is the key to any relationship that is very much the same when it comes to the people that work for you. And so oftentimes I hear, well, we don't do a feedback process or we don't do a performance review process because it's just so time consuming. And I don't even know where to start with that. I don't want to have to build the whole process in a system. And my response often to that is that it doesn't have to be labor intensive. It doesn't have to be something that is, again, the most perfect and pretty form and program out there. But what it does have to be is it needs to be dedicated time that is set aside to just have a conversation about how your employees talents are valued in the organization and potentially what else you'd like to see them to do in the future with those talents. And I think the best feedback meetings are the ones where your employees are talking about their strengths, the highlights of the things that have gone really well for them, and then also about the things that they want to improve in and the areas that they want to develop in.

Shannon O'Toole: [00:40:58] And then you're able to also share your insights and feedback on those topics. And it really becomes a conversation and that it's not this scary meeting where someone's going to find out something about themselves or they're going to get a rating that they weren't expecting. And so they spend their whole time worrying in the meeting as opposed to just actually listening and feeling like someone is their advocate and helping them to continue to get better and use their talents for the good of the clients and good of the firm. So it can be just as simple as a few questions along the lines of the topics that I just talked about with strengths and areas of opportunity. But at the end of a feedback meeting or the goal of a feedback meeting is for that employee to know that you really value the talents that you're sharing with the clients and with the firm. And that has really never been, at least in my lifetime, as important as it is right now. People want to feel connected. They want to feel like they have purpose driven jobs. And ultimately that is engagement. That is what keeps associates, employees in your firm. Is the idea that, like I am cared about, I am needed and I'm going to show up here to do my best, my best job for clients on a daily basis.

Catherine Williams: [00:42:27] It's interesting, you've essentially described a feedback initiative that we've been implementing here at Dimensional very much as you just described Shannon, sort of this quick, fast, real time feedback. It's very concise.
But the idea is that very quickly, after a client meeting, an internal meeting, whatever the engagement might be, you can share some feedback. You can get a sense of first and foremost, the great thing you did and where you might do something differently. Of course, if that feedback becomes recurring or someone really adamantly disagrees with that and you, that can become a slightly different conversation. But the framework that as I think very much as you just described, it's quick, it's fast, it's real time. And it's definitely been interesting, it's been a game changer here, I would say, at Dimensional. 

Shannon O'Toole: [00:44:51] What I love about that, Catherine, is that those are the types of things that start to build a culture of feedback. The best organizations are ones that honestly they don't even really have to have a performance review or feedback process because their culture is one that is just so rich in feedback and people are continuously telling their co-workers what's one thing they did well and what's one thing they should do different. That's what starts to build that out. My feeling is that that always needs to start at the top and that the best leaders are the ones that are offering feedback on an ongoing basis about what their team has done really well and what they want to continue to get better in, and who are also sharing that information about themselves and able to say, that team meeting we just had, I wasn't as prepared as I would have liked to have been. But next time I'm going to be more prepared and have an agenda for it. But, gosh, it really was nice that we spent 10 minutes of the time together talking about what we're grateful for. And that worked really well. I mean, though, if you're constantly in an environment where feedback is a part of it, then it really just gets to that ideal place of essentially 360 feedback happening all the time. And where people truly are feeling like feedback is a gift and it's a gift that I'm excited to receive because that makes me realize that that person cares about me getting better and growing as a person in a professional.

Catherine Williams: [00:46:27] Such a great point, excellent perspective, and as leaders, particularly this year, we've often found ourselves focused on preserving revenue and making sure the lights are on and that you mentioned this earlier, what equipment do folks need to get their jobs done. And those are all really important. Obviously, if you don't have clients, you don't have revenue. You're probably struggling to have a business. But taking the time and setting the example as a leader is, I think, a really critical component. And to your point, being able to not only give feedback, but receive that feedback and sort of demonstrate that behavior, I think can be really powerful. I really want to thank you for joining us today. And it's been a great conversation. I think hopefully our listeners today have come away with a few ideas about how they can, if not get started, maybe refine some of their processes to date. So thank you so much for coming and sharing your expertise with us.

Shannon O'Toole: [00:47:27] Thank you so much, Catherine. It was a pleasure to be with you all today.

Catherine Williams: [00:47:31] Definitely look up Shannon O’Toole Coaching online. You can find Shannon on LinkedIn as well. And for those of you listening today that would like more information about Dimensional and how we work with advisors and investment professionals, check us out at And with that, we'll catch you on the next podcast.

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Episode 1 - Buying, Selling or Merging: Advisors’ Perspectives on Mergers and Acquisitions

Episode 1 - Buying, Selling or Merging: Advisors’ Perspectives on Mergers and Acquisitions

A conversation about finding the right external partner for the future of your firm.


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Catherine Williams: Hi, everyone, and thank you for joining us today. I'm Catherine Williams, head of practice management for Dimensional Fund Advisors. And today I want to talk about the idea of seeking external partners to help you either consider your succession planning or if, in fact, you're looking to continue to grow how an external partner might be a resource for you. We know from our advisor benchmark study that only about forty four percent of firms and it is good to see that number does continue to go up each year. But still only about forty four percent of firms indicate they have a succession plan in place. Likewise, for many advisors we work with they’re in a place in their business where they're needing to make really crucial decisions about how they get to that next level of growth. And do they build it? Do they buy it? Do they partner with someone to help them achieve the next five, 10, 15 years of growth that they'd like to see in their own business? So it's in the spirit of really both of those veins, if you will, that the idea of engaging with an external partner, what that could look like being in that seller seat, if you will, which it certainly has been a sellers environment for a lot the last few years. What does that look like? What does that process look like? And what are some of the decisions that may need to be made along the way. To help me with this discussion, I'm really excited and looking forward to hearing the unique perspective of Susan Strasbaugh of Buckingham Strategic Wealth and Karen Keatley of Modera. Susan and Karen, it's great to have you with us today.


Susan Strasbaugh: Thanks, Catherine. It's great to be here.


Karen Keatley: Thank you.


Catherine Williams: So I'd love to start by giving our audience just an understanding of your background, a little bit about what your business look like prior to joining Buckingham and Modera and really how you think about engaging with clients. I think that tells a lot about an organization. And so as we sort of level set for each of you, Susan, I'd love to start with you, if you could, just to give us a of sense on your background and what the businesses look like.


Susan Strasbaugh: Sure, happy to do that, so I started my business in 1998. Got my CFP and my husband and I decided to make a lifestyle change, moved to Colorado to raise our daughter. At that point there weren't a lot of fee only firms around, so I decided to launch a firm from scratch not knowing any better. I just leaped in with both feet, didn't know any people in the area and just really got out in the community, got to know people. And I was fortunate enough to get connected with Dimensional. Being in Colorado Springs, we have quite a large military presence here. And so I fell into a niche working with retired officers, retired colonels primarily, who were launching a second career in their late forties, early fifties and had significant cash flow for the first time of their lives, have been good savers and built up a nest egg. So helping them through those years leading up to retirement. Also, it's a natural fit for me to be working with women. So we have a lot of women clients, both widows and executive women, breadwinner women. So those were kind of the niches we worked with. After I'd been in business for five years, we were growing really well. And so my husband left his corporate job and came and joined the business and he took care of everything behind the scenes, H.R., technology, compliance, everything, so that I could really focus on being client facing. And that worked really well for us as we built until 2018 when we entered into the merger agreement with Buckingham.


Catherine Williams: I feel like we could probably do a whole podcast on working with spouses and family members. It's not for the for the faint of heart and can be a really wonderful thing.


Susan Strasbaugh: Absolutely.


Catherine Williams: Yeah, that’s great.


Susan Strasbaugh: Yes, all of that is absolutely true.


Catherine Williams: Karen, tell us about your path and your background prior to joining Modera.


Karen Keatley: So it's a similar story maybe to Susan's my career started in institutional portfolio management in the New York City and then in the New York area, and I moved to Charlotte and took some time off to be home with my kids. During that period of time, my father passed away and my mother needed a financial adviser. So having an MBA and a CFA and knowing a little bit about finance, I dove in to be her quasi financial adviser. And through that process, I gained an understanding of what some people like her need and also the awareness that it really didn't exist, at least not very much of it exists in the marketplace, though. This was in the 90s and the financial advisory world was still dominated pretty much by brokerage firms, certainly in the Charlotte area it was. So at some point I decided that this was the path I wanted to go down. So I took a CFP and got started with my firm and we grew organically. I think much in the way that Susan's did. We really started in 2007. In 2012, I hired an employee, I’d been working out of my house, sort of taking clients when they came. And if I didn't have time to take a new client, I would refer them to one of my competitors. But in 2012, we hired an employee and then we moved into office space and that's when 2013 the growth really started. So from 2013 to the end of 2019, we grew very, very quickly. At the end of 2019, which was when Keatley Wealth Management merged with Modera, we were three full time and two part time people, all women, and we were managing about $200 million in AUM, for about 100 clients. During that time I did sell a 10 percent ownership to my first employee who had been very instrumental in driving some of that growth.


Catherine Williams: Terrific. Susan, I meant to ask where it tell us a little bit about where your AUM was at just prior to Buckingham.


Susan Strasbaugh: Sure, I believe we were right about $160 million with 110 clients when we merged. And if it's helpful to know we're now at about $240 million. So we've grown pretty significantly in those two and a half years.


Catherine Williams: So, Karen, I'd love to start with you. Take us back to that, you'd grown the business to about 200 million. You know, I'm assuming you have some great clients as well. What triggered beginning to think about an external partner? What were some of the reasons or some of the things may be going on in the business that caused you to begin considering that as an option?


Karen Keatley: Started thinking about this a couple of years ago when I was sort of overwhelmed with the burdens of running the business rather than working in the business. There are things that I think I like to do and things I don't like to do. And my strategy for hiring people had always been to hire people to do things I didn't want to do. But I think there's a limit to that. I didn't like being where the buck stopped always. So as you know the compliance burden in our industry has gotten more and more onerous. The other piece of it was I had the back of my mind that I wanted to retire someday, I didn't know when that was going to be, but I needed a pathway to make retirement a possibility for me.


Catherine Williams: We hear that a lot from advisors that are have grown their businesses nicely that are about your size and are beginning to wrestle with those things. Susan, how about for you?


Susan Strasbaugh: As I mentioned before, I had the benefit of my husband being in the business and taking care of all of those administrative duties and compliance. And we were talking more about what our future looks like. And he said, you know, I'm 50. I don't really want to end my career here. I've done this. It's been great for our family. But I want to get back to some of the things I love. I like to joke that if compliance was his passion, I probably wouldn't have been married to him. We really wanted to find the right place for our team and really allow our team more career advancement opportunities and better benefits packages and things like that that a larger firm could do and also find the right fit for our clients. I really wanted to make sure the clients were taken care of in case there was some kind of unplanned transition as the euphemism goes. In my case, if I'm hit by the beer truck, that somebody steps in and is able to really seamlessly transition the clients. And so that's what kind of started us down the path of looking at those options.


Catherine Williams: And where did you start? I mean, the landscape is certainly broadened significantly over the last 10 years. There are lots of different options out there and understanding those options, much less understanding your own strategy. And we're going to talk a little bit with both of you about what was your ultimate strategy, your goals, your deal breakers, as we often talk about. But where did you start in terms of examining your options out there?


Susan Strasbaugh: We had a built in continuity plan that we had put in place in 2014. We've done some looking at different firms at that point and decided on Buckingham. I had gotten to know Buckingham over the years, different conferences and things. And so they were a natural place to start from a continuity plan, meaning they'd be the backup if something unexpected happened. And so we flew to St. Louis to visit in early 2017 and again, our really non-negotiables were we wanted to make sure that our team was taken care of and our clients were taken care of and then it had to make financial sense for us. I wanted to stay involved afterwards and I wanted to make sure the clients and the team were in a good place.


Susan Strasbaugh: We came away, just blown away on quite honestly and thought, what? What are we missing? So I got on the phone and started talking to advisors that had merged with Buckingham and, you know, continually heard just really glowing reviews. And I wanted to ask, OK, what were the problems? Where are the issues? And time and time again, I would hear, well, you know, the profit checks aren't all mine anymore. That's one of the downsides, of course. But I will say choosing a partner is so important and making sure there's a good cultural fit, which we felt when we saw the Midwestern values. And then also just having someone that where when things aren't going right, that you can just say, hey, this doesn't feel right. This isn't working for me. And immediately they said, you're absolutely right, let's change it.


Catherine Williams: That's great, Karen, for you, relative to looking at Modera and examining your options, if you will tell us a little bit about what that process looked like for you.


Karen Keatley: In terms of considering other options, we did consider internal succession and I had sold a 10 percent ownership stake to my first employee, who I mentioned had been very instrumental in helping to grow our business. But as far as bringing in other partners, it takes a long time to find those other partners and to figure out a wonderful employee doesn't necessarily make a great owner. And we needed to figure out who those people would be. And I knew it would take too long. And then while you're taking that time to figure out who your other owners are going to be, the value of the firm is growing quickly and getting more and more expensive. So it just takes more and more financial wherewithal to start buying slices of firms like ours that are growing in value so quickly.


Catherine Williams: So how did you come across Modera and what did that look like when you determined that an internal succession was not likely to be a solution? I'm guessing at that point became critical to think about your own strategy or what was going to be most important for you and then beginning to take a look at the landscape out there, if you will. How did that part look like for you?


Karen Keatley: Well, we had informal conversations and really over the years, I would say I dated a few other firms to see if there was a good fit and just sort of figuring it out as we went. But really, the cultural fit is really important as well as the alignment of goals, alignment of my time frame and their time frame. And so Modera was a firm that I knew through their reputation. I also knew a few of the partners, although I didn't know any of them real well, and reached out to them to kind of start a conversation, not really knowing where it would go, but it seemed like the right organization, the right kind of organization in terms of what I was looking for in a partner.


Karen Keatley: We did our deal before the world of covid. So I think if we'd been in the covid world, it would've been very hard to accomplish what we did because I think that the cultural fit is incredibly important. And for us, having a sense of the integrity and just simply the niceness of the people that we are going to be working with, and there's no substitute for face to face. There's no substitute for being in one another's offices. And it was important for me, but it was also important for them. And they had to determine that I wasn't going to be a bad influence on their culture as well. We have a culture to protect and I have a culture to protect. So I think we really have to be in each other's offices to do that. An important litmus test for me in finding a partner was with this firm that I would take my mother to. I sort of started my firm years ago out of my experience, helping my mother. And I wanted to create the kind of firm that was a place of integrity, a place of kindness, a place of quality planning centric advice. And so my litmus test was, did they check those boxes? Could I leave my mother here in the hands of these people? And ultimately, the answer was yes. And one more thing I guess I would add to that is when I made this transition, I really knew I needed to be able to look at my clients in the eye and our employees in the eye and tell each one of them that their situations were going to be improved as a result of the merger.


Catherine Williams: Talk a little bit about that in terms of that client reaction, I'd love to hear from both of you. What was the conversation? What were some of the ways that you approach helping clients get comfortable? And did all clients get comfortable or some challenges with talking with clients about that? I'll start with Karen. And then Susan would love to get your perspective as well.


Karen Keatley: So the question is, how did the clients react? I think that they reacted really well. I had the expectation that they wouldn't, but I was pleasantly surprised in the opposite direction. No one likes change. I think people don't want change, especially when they don't believe that they're going to benefit from it. So I was prepared for pushback, frankly, but I would say ninety nine percent of our clients were incredibly supportive and positive. They've been asking me for years Karen what happens when you retire? And I had answers, but the answers were not great because I didn't have a great retirement plan in place yet. But when we made the announcement, everybody was really positive and generally excited. I think the only clients that had misgivings or maybe one that had joined us in the months preceding the announcement of the merger, it was a relatively new relationship for us, but I think we were able to get them comfortable. There were other things about our culture that that they were going to miss. They want to know they're still going to get chocolate at the holidays. And I think we've worked that out. I think Modera is going to send out chocolate this year. So it's all been good.


Catherine Williams: Chocolate is critical, we know that from our investor feedback survey. Beer and chocolate. So, Susan, how did it go with your clients having that conversation and introducing this new partner to the relationship?


Susan Strasbaugh: Overall, very well, extremely well, so we had a client advisory board that had been in place for several years and we met with them first. We have an annual wine tasting in January. So those were the first people that we told and got their feedback about how to relay the information to other clients. All of them expressed a little bit of, oh, you know, we've so enjoyed this small boutique firm and we're a little concerned that we're going to lose that. And I reassured them that the goal was to not have that sort of thing change, but that we could bring much more operational strength and teams behind us and, you know, an investment team that was top notch and just really talk to them about what that allowed us to do and to have better resources for our team. That whole thing about better benefits and better career path within the company and telling that story like Karen. Ninety nine percent of the clients were on board very quickly. We did have pushback from a few. One in particular was not happy, said we are here specifically because we didn't want a big national firm.


Susan Strasbaugh: He expressed that his experience with mergers had never been good. It's always good for the owners, but it's not good for the team members and it's not good for the clients. And I listened and said, I hear you. Your experience hasn't been good when you've been an employee in a firm that's merged. And so what I would like to do is just keep this conversation going and especially let's have a specific meeting in a year to talk about what's changed. And if you'll give us a year, let's just see how it's going. And in a year when I ask for that meeting and brought it up, he said, oh, I had completely forgotten about that. The only thing that's changed is the name on the door when we walked in.


Catherine Williams: What a fantastic suggestion as a way to counter that barrier, that resistance to say let's keep this conversation going, let's continue to talk about it, sit down in a very specified period of time. I think that's a fantastic idea to help overcome some of that resistance because change is hard, right. As we've already talked about today. Karen, how long did the total process take for you?


Karen Keatley: We had our first conversation in June of 2018, and we just agreed to talk. We tried to flesh out early, but what the deal breakers might be, but we just talked. Folks from Modera came and visited us at our offices and met with every member of our team individually to really get to know us. And my partner and I were able to travel to a number of different Modera offices and spend time. And we spent time with people in all different parts of the organization from the top to the bottom and all sides. So we really felt that we were able to get a good read on one another. So the conversation started June of 2018. We had a letter of intent, I think, by the end of September of 2019, and then we closed at the end of 2019.


Catherine Williams: When you look back, was there anything that you originally thought this is going to be really, really critical or would at least was high on the list that in the end didn't necessarily factor in, so to speak, did anything change about your what you were looking at or your criteria?


Karen Keatley: You know, I don't think so, I think some of the things that we really liked about our culture we didn't want to let go of. So I think of a pleasant surprise for all of us was how willing Modera was to sort of embrace our culture and embrace our ideas. They told us they would be. But you always think, well, everybody sort of says that. But is that really going to happen? Modera certainly every possibility of saying, why should we listen to you? You all were this little firm. You were a tenth the size of Modera. What could you all possibly bring to the table? But that has not been our experience. I was invited to sit on the Modera board of directors and to be part of two other important committees. And my partner is part of two other important decision making committees. So we've really had a voice in helping set the direction of Modera in a number of different ways. I think I had concerns about some of that. But it's turned out better than my concerns and really been quite fun.


Catherine Williams: Well, I think you make a really interesting point in an area that we know for many advisers there, it is top of mind, and that is in a post transaction environment. How much influence may I have? I may not have even been a medium sized fish, so to speak, coming into the pond. So building confidence and having confidence that you'll still be a place, if you will, in terms of having input, being part of the strategic planning of the organization. So I think that's a really interesting point. And I would say it's one where for advisers to think about how important that is as they began looking at their different options, because in some situations that may not be the case, they may become more of an employee. They're running their book of clients, so to speak. And that's the extent. Whereas in other situations, much like yours, there's a seat at the leadership table in some fashion. Susan, what has been the impact on you and your business since choosing an external partner?


Susan Strasbaugh: Well, some of the big things I would point out, and this was a surprise early on in the first year after we joined Buckingham, my two key employees, our associate, well I had two associate wealth advisors, support advisors on the team. Each one got pregnant. Luckily, not exactly at the same time. So one was out for three months and then she came back in about two weeks later the other was out for three months. That would have been really rough for me as a small firm. And so having the backup and the help from Buckingham, we were able to plug in another associate wealth adviser that was kind of a floater for the firm and was able to plug right in and actually really helped us get up to speed on a lot of the Buckingham systems, too, since she was already so adept in those. And then she was a part time team member for us for those six months. And also merging with a larger firm. I didn't think about this ahead of time, but there was an integration team who was on the ground taking care of everything, helping get our systems set up. We closed on a Thursday evening and were open on Monday morning with everything rolled over and brand new phones.


Susan Strasbaugh: And just also in terms of just helping us get set up on software and everything else, I don't think it would have been possible to do something like that with a merger of equals. And the impact now is I feel like myself and my team really just get to focus on the clients and high client care. And so that's really what I was hoping for. And that's happened that I could focus on the part of the business that I really love. I'm also getting the opportunity to take more of a leadership role in terms of mentoring younger advisors.


Catherine Williams: As you think about any additional perspectives or insights, particularly for an adviser that might be listening today and thinking about looking at external partners to solve for succession or to help them achieve that next level of growth, anything in particular come to mind?


Susan Strasbaugh: Yeah, I think it's really important to conduct a self-examination like Karen talked about and figure out what your non-negotiables are. So mine, where is this going to negatively impact my client experience or my team's experience? And so I really focused on that as things came up, because there's going to be a lot of things that come up. And you know, this was my baby. I built this company over 20 years. And so you have to be willing to let go of some control, especially in a merger with a larger firm. And so when the little things came up, I would just examine them and let them go. If it was something that was going to negatively impact the client experience. For instance, Buckingham suggested a change in software. They used a different software than we did for retirement planning. And we got under the hood and looked at it and just said, this doesn't do what we need it to do. And they came back and said, that's fine, stick with what you have for a year and we'll re-evaluate. Well, in the course of that year, they ended up moving to the software we were using. So having a partner who is really willing to listen and be open to suggestions about how to do things better, I found that just very refreshing. And again, there's going to be just the myriad little things that came up that I had to give up control over.


Susan Strasbaugh: But having that top of mind to say, OK, is this going to affect my non-negotiables? And if the answer was no, then I let it go. And so I think that's really key. And to be self reflective and know that it's going to be different, you're not going to be the one making every decision. And there are challenges with that at times. We lost a key team member recently. She's hopefully coming back before too long, but she's on an unexpected medical leave and has been out for about two months now. And so in the past, I would have just immediately hired a temp to take care of the admin work. Well, that's more complex when you're dealing with a larger firm. You can't immediately do that. Plus, we're in the midst of covid. So that complicates things. But I have a partner willing to work with us and we've figured out other solutions. We've got people with capacity because of working from home. And so we've plugged in a few different people to handle different parts of her position. So just knowing that it's going to be different, but it can be better than ever if you find the right partner.


Catherine Williams: And you make an interesting point. We see this in our advisor benchmarks study when we ask about deal breakers, the strategy for pursuing in what is, in essence, the M&A. Right. Some sort of merger activity behavior. The majority of firms do not have a defined strategy about that. And I think you and I would both agree there is an opportunistic nature to M&A. But when you're really thinking about a true partner and what is most important for you, you make such a great point in terms of absolutely identify that. Be willing to use that as the filter through which decisions are made is absolutely characteristic for firms that are successful, either on the sell or the buy side. They've really built that up. So I really appreciate you commenting on that. We see that loud and clear in our study. We also see that the top two reasons why a deal either doesn't succeed or fails on the other side, lack of investment philosophy alignment and lack of cultural fit. And I would say the culture also even gets to experience your clients are having. So we it's absolutely key areas. And to your point, identify what you need that to look like, what needs to stay the same, what needs to get enhanced and use those as your guideposts when you're making your decisions. Those are excellent points on your part.


Susan Strasbaugh: You bring up a couple of other really good points. I mean, we went in knowing the investment philosophy had to be the same, and Buckingham shared our investment philosophy, working with Dimensional and belief in evidence based investing and then the cultural fit. That's what we really nailed down, I think, when we were able to visit the office in St. Louis. And to Karen's point, it is more difficult right now in the midst of covid, you can't show up somewhere and just walk around and talk to people. And so it may be the process is going to take longer. You're going to be doing a lot of Zoom meetings and talking to individuals and gathering information, but I think it still can go forward in the midst of these challenging times we find ourselves in. It's just going to take a different approach.


Catherine Williams: Agree, and in fact, we are absolutely seeing activity happening on both the buy on the sell side in this environment and it's absolutely been critical for organizations to pivot and where they can't get together face to face, break bread, meet people, all those things that help you identify that they're finding other ways to do it. And you're right, it's a little bit longer process. Lots of Zoom calls, but also getting creative and finding ways to get to know not just the leadership of an organization, but the folks that you would be engaging with day to day. We're definitely seeing organizations figure that out in this covid environment for sure.


Well, Susan and Karen, I want to thank you for joining us today. Really appreciate your very unique perspectives around what an external partner can provide in terms of succession planning, in terms of resources to allow you to focus on the areas of the business that you most want to be engaged around to help you achieve the growth and value you're looking for. Just really appreciate your time. And I would encourage our audience. They can find both Susan and Karen on LinkedIn if they'd like to reach out for any follow up questions. And of course, welcome to reach out to Dimensional as well. Thank you, everyone.



Thank you for joining us today for Dimensional Fund Advisors Practice Management Podcast. For more information, please visit


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