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Ep. 18: Derek Bruton: Bringing in New Assets Beyond Market Growth
13 Plays3 months ago
While not new, the conversation about the need for growth beyond what the market creates seems to be gaining more and more attention based on recent headlines in the wealth management trade pubs. That may be because the financial services industry seems to be on the threshold of what could be the most significant wealth transfer in generations.1 And what’s running in parallel could be considered an emerging crisis: a shrinking advisor population ─ largely due to the expectation that 37% of advisors are expected to retire by 2032 ─ combined with 1 in 4 of those advisors lacking a defined succession plan.2 In this episode, Derek Bruton, Senior Managing Director of the Gladstone Group Inc. joins hosts Bill Coppel, Chief Client Growth Officer at TradePMR, and Ryan Neal, Senior Editor at TradePMR, to share his perspective on the potential opportunity this could present for financial advisors. Listen as they explore: ∙ Potential solutions to the growth imperative for RIAs today ∙ Why a growth strategy shouldn’t be “Let’s just cross our fingers and hope the market continues to go up.” ∙ What RIAs may want to consider as they strive to remove roadblocks to growth Subscribe now, and connect with us on social media: ∙ YouTube - / tradepmr ∙ LinkedIn - / tradepmr ∙ Facebook - / tradepmr Get the transcript for this episode, with sources, at https://synergizepodcast.com/. About Derek Bruton: Derek leads the Strategic Growth Consulting division of Gladstone Associates and serves as Senior Managing Director of the Gladstone Group where he provides M&A advice and investment banking support. With 30 years of experience in the financial services industry, he previously held executive positions with RIA custodians including Charles Schwab, TD Ameritrade Institutional, and LPL Financial. Derek Bruton and Gladstone Group, Inc. are not affiliates of TradePMR. More About Derek: LinkedIn: / derekjbruton Website:
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Transcript
Introduction to Synergize Podcast
00:00:01
Speaker
Welcome to Synergize, unscripted conversations where we explore the evolving role of the financial advisor in an emerging AI-driven world.
00:00:11
Speaker
Join us as we bring together thought leaders across a range of disciplines and industry experts, sharing insights designed to help RIAs thrive in the industry of tomorrow.
Meet the Hosts: Bill Capell and Ryan Neal
00:00:23
Speaker
Hi, I'm Bill Capell, Chief Client Growth Officer at TradePMR.
00:00:27
Speaker
And I'm Ryan Neal, Senior Editor at Trade BMR, and you're listening to the Synergize Podcast.
00:00:33
Speaker
Ryan, today we're going to be talking about a topic that I think is very important and that I believe growth-oriented RIAs may want to stop and spend some time thinking about what the future holds.
00:00:45
Speaker
And it ties very nicely into the real-life issues we recently covered in our last episode with RIA Tim Whitney.
00:00:54
Speaker
That's right, Bill.
00:00:55
Speaker
Look, the conversation about RAAs needing to grow beyond market returns is nothing new.
00:01:01
Speaker
It's something we've been talking about on this podcast for a while.
00:01:04
Speaker
But it does seem to be getting more attention from the trade publications, at least based on some of the headlines I'm seeing.
Wealth Transfer and Planning for RIAs
00:01:10
Speaker
Maybe that's because the financial services industry seems to be on the threshold of what could be the most significant wealth transfer in generations.
00:01:19
Speaker
So some data I have here from our production team coming from Cerule Associates.
00:01:25
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$124 trillion is set to transfer by 2048, with $105 trillion of that expected to flow to heirs and the remainder of that going to charity.
00:01:36
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Cerule also reports that more than 50% of the overall asset transfer is expected to come from high net worth and ultra high net worth households.
00:01:45
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Millennials are expected to inherit more than $45 trillion over the next 25 years, though I'm a little skeptical of how much of that I'm personally going to see as a millennial, while Gen X is expected to inherit $14 trillion in the next 10 years.
00:02:00
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And we're going to drop links to all these sources so our listeners can check this out for themselves into our show notes.
Crisis: Shrinking Advisor Population
00:02:06
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But what's running in parallel could be considered an emerging crisis, and that's a shrinking advisor population.
00:02:14
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That's largely due to the expectation that 37% of advisors will retire by 2032, and combined with one in four of those advisors lacking any sort of defined succession plan.
00:02:26
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Wow, when you put it that way, with this enormous generational wealth transfer on the horizon and the shrinking advisor population, we might define it as the perfect storm.
00:02:36
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So with this significant growth opportunity on the horizon, it begs the question, is the industry prepared to capture it?
00:02:44
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And are advisors organized appropriately to optimally grow their business during this period?
00:02:51
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I suggest that a well-developed growth strategy can't be, let's just cross our fingers and hope the market continues to go up.
00:02:59
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And even if the market does continue to grow up, advisors still need to be prepared for what the future holds.
00:03:06
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What I'm talking about is they need a succession plan, regardless of where you are in your business.
00:03:11
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You need a strategy.
00:03:12
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You need to make sure the assets you have, the human capital, your operations are well situated to capitalize on the opportunity that sits in front of us.
Growth Insights with Derek Bruton
00:03:22
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Our guest today, Derek Bruton, is an expert in this area, and he's here to share his perspectives on how we as advisors can take advantage of this growth.
00:03:35
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I think the very first thing you should do as an owner and an advisor is sit down with your team and really determine whether you truly want to grow your business.
00:03:47
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And bear in mind that if the answer is no, you don't want to grow, that's not a bad answer.
00:03:52
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It's nothing to be ashamed of.
00:03:54
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But if the answer is yes, that you truly want to grow your business by adding new accounts
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and new assets and perhaps new capabilities to attract those accounts and assets and relationships.
00:04:08
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Then sitting down with your team and strategizing because this is a team effort.
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It's a team sport growth and you need everybody with their hands in and willing to go after this.
00:04:20
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So then sitting down with that group and really understanding what is it going to take to get to the next level?
00:04:29
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Let me tell you a little bit about Derek.
00:04:31
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He leads the Strategic Growth Consulting Division at Gladstone Associates and serves as a Senior Managing Director at Gladstone Group, where he provides M&A advice and investment banking support.
00:04:45
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To learn more about Derek's background and experience, please refer to our show notes.
00:04:50
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So Derek, thanks for joining us today.
00:04:53
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Bill, it's a pleasure being here.
00:04:55
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Great friends with Trade PMR between our two firms and have known you for a long time and know your team for a long time.
00:05:01
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So happy to be joining you today.
00:05:03
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Well, we appreciate that.
00:05:05
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So let me start with this.
00:05:06
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Given some of the fundamental issues that were mentioned in the introduction by Ryan, these can affect a firm's ability to thrive in what we think is this opportunity that sits in front of us.
00:05:21
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We've got this shrinking advisor population.
00:05:23
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We see a lack of succession planning among advisors who are either approaching retirement or even haven't really figured out how that's going to affect the growth of their business down the road.
00:05:36
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So what I'd like to start with is asking you what your thoughts are on the underlying growth opportunity that seems to be presented here and what you're hearing and what you're seeing in the marketplace around it.
00:05:46
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Well, Bill, I've been a fanatical optimist for...
00:05:49
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Well, my whole career, 30 years in this business as it relates to what you and Ryan just talked about, that the need for advice, the demand for advice always seems to exceed the number of people and professionals providing that advice.
00:06:07
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So we've been in a bull market for advice for a long time.
00:06:11
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And that's great for you, me and other people in this industry, particularly advisors.
00:06:15
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who are always looking to grow and add more business.
00:06:19
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There just isn't enough advisors out there.
00:06:21
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And that spawned, obviously, other organizations, the Robin Hoods that you know really well and other different types of advice providing or providing services out there.
00:06:34
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And so it's all good.
00:06:35
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I think, you know, I'm very optimistic about that.
00:06:40
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I do see, however, in our business,
00:06:44
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a real inability, and this is backed by a lot of stats, including the ones Ryan provided, that advisors are generally struggling with growth as it relates to net new assets, net new account growth, not overall AUM growth.
00:07:01
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I'm talking about net new assets, and there's clearly a difference.
00:07:05
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One is adding new accounts and new assets, and the other is if you didn't do the former,
00:07:12
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market performance and market growth in the financial markets can mask any sort of growth or lack thereof.
00:07:20
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And so many advisors today have been riding this bull market and have seen AUM growth and revenue growth and even the growth that goes with it.
00:07:29
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And that's all good.
00:07:31
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But as we as evidence, as what we saw in 2008, 2009, saw a little blip in 2020.
00:07:35
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I mean, when the market pulls back,
00:07:41
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advisors start to look closer at what have they actually done to grow their business?
00:07:47
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And I suspect that we're going to, you know, depending on market performance in 2025, we may see some of that, you know, introspective thinking in this year.
00:07:59
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So Derek, let me jump in there because I know you have a lot of experience both in the consulting space as well as M&A, which I know a lot of firms look at as maybe an answer to the growth question or growth problem.
00:08:12
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You advise firms on how to position themselves to capitalize on the opportunities out there.
00:08:16
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Can you tell us a little bit about potential solutions to the problem you just laid out and maybe how M&A can play a
Exploring M&A Opportunities
00:08:23
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role there?
00:08:23
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Yeah, Ryan, M&A has become certainly a route for many owners of RIAs and financial advisory firms out there.
00:08:33
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That's a route they can take if they believe that they've kind of hit a ceiling, that they...
00:08:39
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cannot figure out either through hiring of additional personnel or using the multitude of resources that firms like Trade PMR and other firms have out there to help advisors grow.
00:08:53
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Oftentimes they look at that route of selling their business.
00:08:56
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And why?
00:08:57
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Because valuations are through the roof and still are through the roof on RA businesses.
00:09:03
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And it's a good option, particularly if you're at the point in your career where
00:09:07
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You might recognize that you want to grow your business, but you're not sure if you want to go through what it takes to grow your business.
00:09:16
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And that's often the conversation Ryan I have with advisors is, okay, now that you've identified either you've got to hire somebody that is growth focused and will go out there and not just close business, but generate leads, which I'll get back to in a second, I feel is a big issue in our industry.
00:09:34
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So they've got to find that person or dedicate some resources, marketing resources, whatever is to it.
00:09:40
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But what it requires, Ryan, is time and money, time and money.
00:09:46
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And oftentimes when you get down to that topic with advisors, do you want to spend the time?
00:09:52
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Do you want to sacrifice that pride?
00:09:54
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Do you focus on growth?
00:09:56
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Do you want to spend money on marketing resources, on branding resources, on people to do these things, whether in-house or outsource?
00:10:05
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When you have those conversations, you start to hear from advisors what their real feelings are about true dedication to growth.
00:10:14
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So you really touched on an important topic, I think, Derek, which is some of the – I'm going to call them roadblocks for a moment that firms need to really wrestle with and confront in order to take advantage of the opportunity and grow.
00:10:32
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Things like do they have a succession plan in place?
00:10:36
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I've seen things like securing human capital, which is a real challenge today, the right kind of people on the team.
00:10:43
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finding opportunities to bring in complementary capabilities that continue to redefine and enhance the value of a firm.
00:10:51
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These are real, real issues.
00:10:53
Speaker
And now you lay on top of that the impact that technology is having and the changing expectations of investors every day presents challenges, to your point, which require a lot of energy and obviously a lot of investment.
Preparing for Sale: Attracting Talent and Investing in Tech
00:11:09
Speaker
As you think about M&A for a moment, in the context of those kinds of assets or those kinds of capabilities firms need, let's say things that can help solve a problem, can you share with us some observations or maybe a story or some experiences you've had around where –
00:11:29
Speaker
a combination of two firms began to address things like human capital or succession planning or adding value to the current value offering that makes them even more attractive to investors.
00:11:42
Speaker
Well, one of the things that, you know, going back a little bit about Ryan said earlier about some of the observations in the market around
00:11:50
Speaker
um around the focus on growth and right now in the m a space and i'm speaking more to the buyers of businesses out there the consolidators aggregators call what you want these days but uh firms especially that are pe backed which many of them are there's a big focus on growth and net new asset growth again not not pure aum growth but net new asset growth
00:12:15
Speaker
And why is there that focus?
00:12:16
Speaker
Well, first of all, some private equity firms and some buyers out there believe that we will see a correction in the market in 2025.
00:12:24
Speaker
So that is driving more focus on firms that really can grow and want to grow their business as potential acquisitions.
00:12:36
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The other thing as well as what we're seeing out there is private equity firms want a return on their investment, obviously.
00:12:44
Speaker
They don't want to buy firms who will take that upfront check and see stagnation in their business because that buyer or maybe buying team sort of mentally checks out of the businesses and focused on growth.
00:12:59
Speaker
So they want to see a firm that is growing, maybe not perhaps as well as they could,
00:13:04
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If they have more resources, but at least they're showing the desire and some sort of plan to grow.
00:13:10
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So that's important too.
00:13:12
Speaker
The other reason these buyers and private equity firms are very focused on growth is because they've acquired firms that have not grown after they bought them.
00:13:21
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in spite of what they thought they might do.
00:13:24
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They haven't grown for a variety of reasons we don't need to get all into today.
00:13:29
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But those factors are leading people and buyers and private equity firms to focus more on firms that show a knack for growth and have the ability to do that.
00:13:41
Speaker
Now, that doesn't mean they wouldn't acquire a firm that isn't growing or perhaps even that principal is looking to retire.
00:13:48
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That's not the case.
00:13:49
Speaker
They'll just pay less for it.
00:13:51
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and de-risk themselves probably in the structure of the deal with longer earnouts or something around those around key terms like that.
00:14:01
Speaker
So, you know, we're really starting to see a focus on on growth.
00:14:05
Speaker
And so sellers, on the other hand, are seeing this as well as they put their toes in the water.
00:14:10
Speaker
They talk to people like me and they're preparing themselves better.
00:14:15
Speaker
to go to market and sell their business.
00:14:18
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That might mean bringing in youth, bringing in younger talent, which kills two birds with one stone in the sense that they're building in a bit of a succession.
00:14:30
Speaker
So when that advisor does phase out after they sell, that they can have a younger advisor to take over for him or her.
00:14:38
Speaker
And so that's important.
00:14:39
Speaker
And secondarily, they're investing in
00:14:43
Speaker
technology and services and other capabilities out there, which as we know, there's so many out there, it's almost become more tough to discern which are the best ones, not where they are.
00:14:56
Speaker
And so there's more effort spent on that.
00:14:59
Speaker
And it's also custodians.
00:15:02
Speaker
And, you know, Bill, you're out there talking to these folks.
00:15:05
Speaker
There's a lot of folks that are doing a very good job in preparing advisors to prepare their businesses for sale or for succession down the road.
00:15:15
Speaker
It just comes down to whether that advisor, he or her, he or she wants to listen to that advice and implement that advice, which I always find interesting.
00:15:25
Speaker
It's not the issue of the abundance of the advice and the quality of it.
00:15:30
Speaker
It's the actual implementation of what somebody learns and hears.
00:15:34
Speaker
Well, Derek, you remind me, I think even what Rob spoke about this at one of Gladstone's events, and I know it's something Rob and Bill and I have talked about at Trade BMR is growth being really important for both sides of the acquisition, right?
00:15:47
Speaker
For the advisor that is looking to sell and hit their succession plan and move on, and then also for the acquirer.
00:15:54
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If you're not organically growing, bringing in those new assets beyond market growth, the value for the seller and the value for the buyer, that ROI, it's going to take an impact.
00:16:04
Speaker
That's what you're saying, right?
00:16:06
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That's correct.
00:16:07
Speaker
I mean, buyers, on the other hand, also need to have a very strong platform because when they're out there competing for an acquisition, they're
00:16:17
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and I saw this as early as yesterday with one of my clients, they want to join a firm that's light gears better than where they are in terms of growth.
00:16:27
Speaker
There's no sense selling yourself to a firm that hasn't cracked that nut.
00:16:33
Speaker
And to the credit of many good RIAs, buying RIAs out there, there are a lot of firms that have
00:16:42
Speaker
very strong marketing platforms.
00:16:44
Speaker
They've hired really good people.
00:16:45
Speaker
They use AI and all the newer technologies and techniques to generate leads for advisors.
00:16:53
Speaker
And that goes to what I was saying earlier, Ryan.
00:16:56
Speaker
Advisors, in my experience, in 30 plus years in this business, are good closers in general.
00:17:02
Speaker
They can close business, but they're not really...
00:17:08
Speaker
strong and oftentimes very weak in generating leads for their business.
00:17:14
Speaker
Oftentimes their best idea is a referral from a good client.
00:17:19
Speaker
But that's not really an active marketing effort, as you know, it's much more passive.
00:17:24
Speaker
And so there are services, there's a lot of social media capabilities, a lot of digital marketing, a number of good services and good people to deliver those out there.
00:17:37
Speaker
But then it comes back to what I was talking about earlier.
00:17:39
Speaker
That's going to take time, no matter what these people do.
00:17:42
Speaker
And they don't come for free.
00:17:44
Speaker
You know, let me follow up with this, Derek.
00:17:48
Speaker
And I've kind of I've heard you say this at conferences, you know, particularly when you're up talking about the M&A space.
Are Advisors Ready to Grow?
00:17:56
Speaker
And again, the topic is organic growth, net new assets, M&A can play a part in that.
00:18:03
Speaker
But what you like to ask at the beginning of many of your presentations is you'll ask the audience, how many of you want to buy a business, right?
00:18:11
Speaker
And my question is, why do you ask that question, I should say, and putting on your consultancy app, how does that inform you or provide you with insight to better understand the mindset of your audience?
00:18:24
Speaker
Well, Bill, if I asked if there was 100 advisors in an audience and I was speaking on stage and I asked that question, who here wants to maybe not buy you a business, but grow your business, either organically or inorganically through acquisition.
00:18:42
Speaker
I think 100 people would raise their heads.
00:18:45
Speaker
It's not kosher to not raise your hand.
00:18:47
Speaker
Okay.
00:18:48
Speaker
So, you know, they would raise their hands.
00:18:51
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But when you ask some qualifying questions,
00:18:54
Speaker
And I've done this before on stage.
00:18:56
Speaker
How many folks have set with, let's say we're in December 24, how many people have set goals for 2025 in terms of specific net new asset revenue and EBITDA or profitability growth?
00:19:11
Speaker
The hands would come down like crazy at that question.
00:19:15
Speaker
But you'd still have some folks out there.
00:19:18
Speaker
And then the next question would be, who's built a true platform around growth?
00:19:23
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In other words, it's not just you deciding to go out there and hit the pavement, but have you put a marketing platform around this?
00:19:30
Speaker
Have you thought about how you're going to scale up this, assuming you do hit those leads and you do have the ability?
00:19:38
Speaker
Who's going to work those leads?
00:19:39
Speaker
How are you going to transition that?
00:19:41
Speaker
And when you start asking these questions, you know, it then dwindles down to a couple of hands.
00:19:47
Speaker
And what I find, Bill, oftentimes in these conferences is when people start hearing from those few people that still have their hands up about what they built to support that growth, what they built and the teams they brought in to handle that growth and maintain and sustain it
00:20:09
Speaker
They flip their hands to the other side of the house, which is, you know what?
00:20:13
Speaker
That sounds like a lot of work.
00:20:15
Speaker
Sounds like a lot of time.
00:20:16
Speaker
I have neither the time, knowledge, nor inclination to do that.
00:20:21
Speaker
And all of a sudden, buyers become sellers, or at least they start thinking about it.
00:20:25
Speaker
Sure, that makes complete sense.
00:20:27
Speaker
And what you've pointed out there with that answer underscores the challenge.
00:20:32
Speaker
And as we sit here today and we talk about what's coming,
00:20:38
Speaker
I think there's a message here that we as an industry and firms that are participating as RIAs have got to stop and seriously take a look at their business is what I'm hearing and make some tough decisions about what they're willing to do or what path they're willing to follow to take advantage of the situation if I've got that right.
00:21:02
Speaker
So what I'm hearing is that maybe M&A isn't a silver bullet for growth.
00:21:08
Speaker
Maybe it's not for everybody out there.
00:21:10
Speaker
I mean, I think you would agree with that.
00:21:14
Speaker
What are some other avenues that advisors can explore?
00:21:17
Speaker
Yeah, M&A is definitely not for everybody, Ryan.
00:21:21
Speaker
You're right.
00:21:22
Speaker
And there's a couple of questions that my colleagues and I
00:21:26
Speaker
often asked to discern to really get down to brass tacks as to whether somebody's ready.
00:21:32
Speaker
The question I always like to ask is, so you know you'll be reporting to X, okay?
00:21:39
Speaker
These folks haven't reported to people in perhaps decades.
00:21:43
Speaker
They're independent advisors.
00:21:44
Speaker
They own their own businesses.
00:21:46
Speaker
They haven't had to report to anybody.
00:21:48
Speaker
Although I always say in life, everyone reports to somebody.
00:21:51
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Somebody always has a boss.
00:21:53
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My wife is certainly my boss.
00:21:55
Speaker
So and so when you ask that question, then you see that you especially want to look at their face on that one.
00:22:03
Speaker
You see the fight, the facial expression of wait, wait, wait a second.
00:22:08
Speaker
I'm going to report into somebody.
00:22:10
Speaker
And so.
00:22:11
Speaker
That just guards a number of other questions to really discern whether they're ready to sell their businesses.
00:22:16
Speaker
But if it's determined that, no, they're really not a good candidate to sell their business, at least now, then what are the other avenues?
00:22:24
Speaker
And like I've talked about,
00:22:26
Speaker
If you go to Michael Kipsis' technology map, for example, or if you go to any custodian conference like Trade PMRs or T3 or some of those, there's just a plethora of services out there.
00:22:42
Speaker
And it used to be just marketing grips.
00:22:45
Speaker
Now, even within marketing, there's different specialties that people from a technology standpoint, consulting, whatever it is, there's plenty of help out there to advisors.
00:22:56
Speaker
to help them grow their businesses and to recognize the fact of what we talked about the start of this podcast, which is that the number of people seeking advice out numbers the number of people providing advice.
00:23:09
Speaker
So there is a market out there, but I will say it's become very competitive.
00:23:15
Speaker
And that's that's a factor and a product or byproduct of all this consolidation we've seen in the industry is the big have gotten bigger.
00:23:24
Speaker
And they've gotten more battle-tested.
00:23:28
Speaker
Their platforms are amazing.
00:23:30
Speaker
You see all the ads.
00:23:31
Speaker
I mean, is there a single NFL game where you don't see a Fisher ad or Creative or Mariner?
00:23:37
Speaker
I mean, they're all out there marketing.
00:23:40
Speaker
And mom-and-pop advisor with $250 million or $200 million in San Diego, California, who doesn't...
00:23:48
Speaker
doesn't have that marketing muscle, doesn't want to spend whatever it is for 30 seconds on a Super Bowl ad or whatever it is, they have to think of other creative ways to get out there and get their name out there.
00:24:02
Speaker
And there's a lot of work in social media.
00:24:05
Speaker
In many ways, it's become inexpensive in some regards to do a lot of these things, but you still need to know how to do them right.
00:24:14
Speaker
You can't send blast emails and then quit after three months because you haven't got a single client.
00:24:20
Speaker
So there's an element of persistence that has to go to these approaches.
00:24:24
Speaker
And some advisors, I should have mentioned this earlier, they lack patience too.
00:24:29
Speaker
So if it's not working and I spent a lot of money, well, I'm not going to spend any more.
00:24:34
Speaker
It didn't work after three months.
00:24:35
Speaker
So I think the best thing somebody can do is really saddle up to your favorite custodian, your favorite consultant that you can find through any one of these conferences or online and ask them how they would prepare you to go to market and grow effectively and organically.
00:24:57
Speaker
You're absolutely right, Derek.
00:24:58
Speaker
I mean, as you pointed out early in the conversation, it's not easy and it requires investment.
00:25:06
Speaker
But you have witnessed and been involved with successful combinations and integrations for a number of years now.
00:25:12
Speaker
And I'm seeing – you've seen some good combinations and you've seen combinations that didn't work out quite as well as we would have hoped.
00:25:21
Speaker
As you think about that, what are some of the attributes that you've seen or the differences you've seen between a positive integration where one plus one equals three and a less positive one where, you know, no one's happy
The Importance of Cultural Fit in Partnerships
00:25:37
Speaker
at the end of the day?
00:25:37
Speaker
What are the key components that really trigger those attributes to be successful or unsuccessful?
00:25:44
Speaker
You know, Bill, I'm going to answer that by starting at a real kind of 30,000-foot level, and that's that this is a people business.
00:25:52
Speaker
We know it's certainly a people business as it relates to the advisor and their clients.
00:26:01
Speaker
We don't need to really get into that, but it's a people business in terms of who you partner with and whether you're going to enjoy partnering with that person, whether there's a good cultural fit there.
00:26:13
Speaker
whether you see it eye to eye and not just on the closing day of a deal, but 365 days later.
00:26:21
Speaker
So that's extremely important.
00:26:23
Speaker
If you don't have that, it doesn't matter what the platforms are, whether somebody has a good platform or not, whether tools and services are top-notch.
00:26:32
Speaker
If you can't get along with the people delivering these things, then it's going to fizzle out pretty quickly.
00:26:40
Speaker
But assuming you do get along with those folks and they do, there is a good cultural match and you can work together, then the next thing you really want to be on the same page with with your new partner is what you as an advisor, assuming you're the seller in this case, what you really enjoy doing.
00:27:04
Speaker
And that's a question that needs to be asked and drilled down into the
00:27:09
Speaker
quite frequently because if an advisor really wants to work with clients and prospects, it really doesn't enjoy the investment management, doesn't enjoy the managing of the business per se.
00:27:24
Speaker
Many buyers out there have great platforms to help people with that.
00:27:27
Speaker
In fact, I talked to a client of mine this morning who, when he sold his business, he, on an average basis, he was generating about a half a million dollars of revenue per quarter.
00:27:41
Speaker
This is about a year and a half he sold it.
00:27:43
Speaker
A year and a half ago, he sold it.
00:27:44
Speaker
Now he's generating $890,000 a quarter.
00:27:48
Speaker
He was very clear when he sold his business that he does not enjoy the investment management.
00:27:54
Speaker
He doesn't think he's good at it.
00:27:56
Speaker
Doesn't really care to do it.
00:27:57
Speaker
Doesn't think that's why clients hire him.
00:28:00
Speaker
They hire him for his overall advice in wealth management.
00:28:04
Speaker
That includes taxes, insurance, estate planning, investor management.
00:28:08
Speaker
And they don't care that he himself does the stock picking or whatever it is.
00:28:14
Speaker
They just want it done.
00:28:15
Speaker
And so he's been able with his new partner to offload that to them.
00:28:20
Speaker
He's offloaded compliance and HR and finance and all the other kind of shared services aspects of the business.
00:28:28
Speaker
And that has freed up several hours in a week for him to focus on growth, which he thinks he's very good at.
00:28:35
Speaker
And in just a short amount of time, 18 months,
00:28:38
Speaker
He's increased his quarterly revenue on average by $400,000 a quarter.
00:28:44
Speaker
I mean, that's amazing.
00:28:48
Speaker
And most importantly, though, Bill, he's happy.
00:28:51
Speaker
So I think it really, to answer your question, really comes down to making sure in a partnership that
00:28:58
Speaker
that the roles and responsibilities in the swim lanes, if you will, are all fairly defined, fairly well defined at the outset so that on day 365, or in this case, you know, 18 months later, that people are still happy, thriving, and getting out of the relationship exactly what they hoped they would.
00:29:20
Speaker
Well, I think the point you're making, which I think is a very valid point and important one I hope our listeners appreciate, is the fact that as you decide about how you want to grow,
00:29:31
Speaker
assuming you want to grow, right?
00:29:33
Speaker
How you want to grow, figuring out, you know, what you like to do, what you're good at, where you think your real value is, a transaction or an integration with another organization can certainly fill the voids for those things that you are either not good at, don't like to do, and don't want to spend your time with.
00:29:52
Speaker
And what you've just described with that story is, in fact,
00:29:56
Speaker
It's like a jigsaw puzzle, right?
00:29:58
Speaker
Two pieces came together that benefited both organizations and created that growth.
00:30:03
Speaker
I appreciate you sharing with that.
00:30:05
Speaker
I think that's the biggest challenge that we face as advisors today is being honest with ourselves as to what are you willing to sacrifice?
00:30:14
Speaker
What are you willing to change, give up?
00:30:16
Speaker
do more of in order to achieve that objective.
00:30:19
Speaker
And that story really framed it nicely where this individual determined what they were best at and entered a situation to maximize that.
00:30:29
Speaker
Right, so I think I'm going to move to wrap our conversation up.
Three Actionable Tips for Advisors
00:30:33
Speaker
You know, we've talked a lot about ideas about growth, M&A, where it makes sense, where it doesn't make sense.
00:30:40
Speaker
So, Derek, what we like to do with these conversations is sort of conclude with three actual advice, something any of our listeners can take home with them and implement if they want to move forward and capitalize on these opportunities.
00:30:54
Speaker
So,
00:30:55
Speaker
Could you share with us three things that you believe firm leaders or advisors out there should focus on to really maximize if they want to go forward and sell and then get the best price they can?
00:31:06
Speaker
Yeah, Ryan, I think the very first thing you should do is as an owner and an advisor is sit down with your team and really determine whether you truly want to grow your business.
00:31:22
Speaker
And bear in mind that if the answer is no, you don't want to grow, that's not a bad answer.
00:31:28
Speaker
It's nothing to be ashamed of.
00:31:31
Speaker
It's nothing, you know, you need not, you shouldn't be upset about it or anything like that.
00:31:38
Speaker
It's just your desire, but it's being true to yourself.
00:31:42
Speaker
But if the answer is yes, that you truly want to grow your business by adding new accounts,
00:31:48
Speaker
and new assets and perhaps new capabilities to attract those accounts and assets and relationships.
00:31:56
Speaker
Then sitting down with your team and strategizing, because this is a team effort.
00:32:03
Speaker
It's a team sport growth and you need everybody with their hands in and willing to go after this.
00:32:10
Speaker
So then sitting down with that group and really understanding what is it gonna take
00:32:16
Speaker
to get to the next level.
00:32:17
Speaker
Listen to the ideas from the other people on the team.
00:32:21
Speaker
They've read, they've seen what's going on in the industry.
00:32:23
Speaker
They have friends in the industry.
00:32:24
Speaker
They've gone to conferences.
00:32:27
Speaker
Your team likely has ideas and some may be shy about sharing those, but really create an openness and a forum to share those ideas and figure out what it's going to take to grow.
00:32:39
Speaker
Do not settle for, let's see what the market does and we'll be fine.
00:32:45
Speaker
That's not a strategy.
00:32:46
Speaker
That's hope, as they say, right?
00:32:48
Speaker
So that's first and foremost.
00:32:50
Speaker
Secondarily, once you've gotten there, figure out as a team what resources that you're aware of immediately that come to mind that can help you generate new business opportunities, new leads,
00:33:05
Speaker
and also the resources or tech or capabilities that you believe in your business it's going to take to get there.
00:33:14
Speaker
Now, there's plenty of people out there.
00:33:18
Speaker
Both of you, myself, there's consultants out there.
00:33:22
Speaker
There's people at your custodians.
00:33:24
Speaker
There's a number of people within the product sponsors of the firms that you work with out there.
00:33:30
Speaker
There's no lack of resources that can help you
00:33:33
Speaker
determine how to build this roadmap for growth.
00:33:37
Speaker
And then thirdly, importantly, because those first two things don't even matter, if you don't hold yourself to an implementation plan and don't set goals and hold yourself to those goals, the rest of the planning is not going to matter if you don't execute.
00:33:53
Speaker
Fantastic.
00:33:54
Speaker
Thank you, Derek.
00:33:55
Speaker
So I'm just going to recap.
00:33:56
Speaker
I'm going to boil those down even quicker.
00:33:59
Speaker
So number one is be honest with yourself.
00:34:02
Speaker
Know if you do want to grow, sit down and strategize how you can do it.
00:34:07
Speaker
And if you really don't want to grow, that's okay too.
00:34:10
Speaker
You don't have to.
00:34:11
Speaker
But if you do, have a strategy in place.
00:34:14
Speaker
Number two is
00:34:15
Speaker
Have that strategy in place and figure out what resources you need to enact that strategy.
00:34:20
Speaker
There's plenty of them out there.
00:34:22
Speaker
Go out and find what it's going to take to generate new business and find new leads.
00:34:26
Speaker
And number three, set goals and hold yourself to those goals.
00:34:30
Speaker
If you don't, none of the planning and none of the resources in the world are going to help you get there.
00:34:35
Speaker
Does that sound right?
00:34:36
Speaker
That's a much more shorter and more concise way to say it.
00:34:40
Speaker
Bill knows that the word short is not in my vocabulary with my height.
00:34:44
Speaker
So you said it much better than me, Ryan.
00:34:47
Speaker
Thank you.
00:34:48
Speaker
Well, thank you very much for joining us.
00:34:49
Speaker
And for everyone listening, we hope you enjoyed today's conversation.
00:34:53
Speaker
If you like what you heard, please take a moment to subscribe, like, follow us on social media, all those great things.
00:35:01
Speaker
It helps get the word out there and we appreciate you.
00:35:03
Speaker
And I'd like to add my thanks, Derek, for you to spend time with us today and sharing your insights and experience, particularly as it relates to this whole topic of organic growth and how M&A can address a lot of the challenges that face that for folks.
00:35:18
Speaker
And I'd also want to thank our listeners and advise you to please watch for our next episode where we'll bring you even more insights and actionable ideas to help you grow your business.
00:35:28
Speaker
And remember, the challenge is yours to capitalize on what the future offers.
00:35:35
Speaker
If you want to join the conversation or connect with us, please visit us at synergizedpodcast.com.
00:35:41
Speaker
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00:35:45
Speaker
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Speaker
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00:36:02
Speaker
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00:36:05
Speaker
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Speaker
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Speaker
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00:36:14
Speaker
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00:36:20
Speaker
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Speaker
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Speaker
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00:36:32
Speaker
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00:36:38
Speaker
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00:36:40
Speaker
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Speaker
For a transcript of this episode with sources, visit SynergizedPodcast.com.