Welcome to the latest episode of our podcast
series for financial advisors.
Today's episode is playing the long game, while
a former warehouse advisor built in sold a
billion and a half dollar independent firm. It's
a conversation with Jeff Brown, president of Strat
private wealth sold I'm Mindy Diamond, and this
is the Diamond podcast for financial advisors.
This podcast is designed for advisors like you,
who are interested in learning more about the
evolving wealth management industry through candid dialogue with
break way advisors,
those from the C suite and industry thought
leaders. It's available on our website, diamond dash
consultants dot com, as well as Apple podcasts
and other major podcast platforms.
So be sure to subscribe and share it
with your colleagues
At Diamond consultants, our mission is to help
advisors live their best business life.
We want every elite adviser to find exactly
the right place for their business and their
clients to thrive,
whether it's at a wire, or regional, boutique
or independent firm. As the industry's leading recruiters
and consultants,
we've transitioned more than a quarter of a
trillion dollars in assets under management in the
past decade.
And each year, 25
percent of transitioning advisors who manage a billion
dollars or more are our clients.
Curious about where why and how advisors like
you are moving,
download the latest advisor transition report to learn
more.
Including intel on recruiting deals and our insight
and analysis on the latest trends in the
wealth management space.
You'll find it, at diamond dash consultants dot
com
forward slash transition report, or if you'd like
to talk, feel free to give us a
call at 09:08
at 8791002.
Some advisor spend their entire career with 1
firm. Others will choose to make 1 well
timed move and other still have experienced many
different corners of the industry landscape.
It's these latter who often make the most
compelling guests on our show because they've truly
seen it all.
Jeff Brown is 1 such adviser.
He started his path in Wealth Management at
the likes of American Express Morgan Stanley and
Wells Fargo advisors.
Then Jeff left the Wire world to start
Brown Wealth Management with the support of Strat
Wealth Partners,
which after a subsequent merger became B
financial.
He built a strong practice, always looking at
ways to grow and serve his clients.
But here's where the story gets really interesting.
A coaching session with Ray Gl,
got him thinking about the future and an
eventual exit strategy.
Not even 50 years old at the time?
He figured he had a good runway ahead,
but what if linger in his head.
That is what if something happened and he
didn't have a clear plan for his firm.
His clients is livelihood and his family.
So after a round of due diligence,
Jeff decided to further cement his relationship with
Strat by selling them a minority
position in his business, in 2020.
But the story doesn't end there. Just last
year, he sold a majority of stake des
strat to take the firm national and in
doing so is now the president of a
much larger entity, Strat private wealth.
In this episode, Jeff shares a candid narrative
with my partner, Jason Diamond, talking about each
step he took along the way with advice
on both what went well and pit pitfalls
to watch for. He shares what it's like
to have worn so many hats in such
a short career time span, his expectations for
the future and much more It's a great
story with lots to learn from, so let's
get to it.
Jeff, thanks so much for joining us today.
Thrilled you're here. Jason, thank you so much
for having me. Absolutely. Let dive right in.
So to start off? Can you tell us
a little bit about yourself and your background?
Sure. I am currently president of Strat, private
wealth. I've been in our industry in the
financial services industry wealth management
since 19 96.
So more or less, I started right out
of, a amassed degree and started in the
briefly at a at a independent firm and
then move to the wire side of things,
and live in San Diego,
to... Where I've lived since I graduated college
with my wife and 4 kids. I don't
know why you'd live there. You're the where...
Weather's terrible. But... Yeah. It's terrible. It is
you're right. I think most people are familiar
with Strat, but maybe remind us to start
what your firm is about the quick value
prop types of clients you serve, we'll start
there.
Yes. It's a little bit of a a
unique story, So Strat Wealth Partners is an
Ra that is a national Ra that started
many years ago. Many years before I joined.
With their initial value prop was helping advisors
break away from an employee model. So that
is the firm that I went and joined,
And and then I left the wire in
order to do that and started Brown Wealth
Management. Over the years, we you talk more
about it, Brown wealth management became B
Financial, and then most recently, we decided to
launch a national brand inside of Strat
called Strat Private Wealth. So you could think
of it this way. Strat helped people like
myself, Brown wealth management, Diamond Wealth management. Everyone
has their own flag in the ground. And
what we've done starting last year is take
that's all those flags and start bringing some
together to create what Joe ran, effectively is
called the Navy. In inside of inside of
a single firm. I love it. So... Yes.
And so what well, my firm originally was
just here in San Diego, and we worked
primarily with people with liquidity event We have
a very deep process.
We view ourselves as financial guides, helping people.
With all the things that they need to
do, but not looking at it like a
financial plan. It's more of a planning
ship, helping people pivot make decisions as their
life changes because it does. And that process
that works so well for us to help
us grow. Yep we decided to take that
process and then repeat it across other firms
nationwide.
Now it makes complete sense. So let's rewind
a little bit. You mentioned Ceo and founder
of B
Financial? Correct me if I'm wrong, but I
believe ultimately you made the decision to sell
equity to Strat. Can you talk a little
bit about that trust, Us and why you
decided. I mean, it's obviously, a pretty crowded
landscape of potential buyers. And even if you
didn't wanna sell support partners and platforms. I
mean, there seems like there's new ones popping
up Every day. Can you talk a little
bit about why strat and what that process
was like... Yeah. There's... Actually... Yeah. There's no
shortage of buyers in our industry these days,
which I... Every Unless I was uneducated. It
seems to have dramatically changed in the last
5 or 6 years. So I'll tell a
little story. I think this might be helpful
to some of your listeners as well as
you consider this. So I get coaching from
race it client wise, and he helps we
do these what we call mastermind groups. Once
a quarter, we all get... Together, and and
they... What he does is he pairs similar
firms of size. So I was in a
room, and we were with all the different
founders Ceos, what have you, about 10 of
us to and we go through an exercise
where you're more or less looking at pieces
of your business or your strategy and then
grading yourself, 1 to 5 how you're doing
on it. 1 is you're doing. Terrible. And
5 is you are crushing it. And then
how important it to this for you? 1
is it's not important. And 5 is... It's
very important. And the last question was around,
I have a clearly defined exit strategy.
And I answered 1 on both of those.
Not important to me and it's not urgent,
and I'm not gonna deal with the right.
So, Ray, in this meeting, he basically sees
this over my shoulder and as what are
you doing Don't you help people with liquidity
events? Yes. I do. Well, what about yourself?
And at the time, I was 49, and
I said, I'm not interested in, like, retiring.
Anytime soon. He's like, that's not what I
meant. He said everybody is going to have
an exit. It's just is it gonna be
planned or not?
And
we had a little bit of bit of
conversation during that meeting and then afterwards.
And I tend to consider myself pretty coach.
So I actually spent... A plain ride home
and the next several weeks, taking a look
at what he suggested idea, which is what
is my business really worth at that time.
The what if something really did happen to
me? And it's an unplanned exit? Well, what
does that mean for my family and the
rest of the firm? And while I've given
this some consideration in our operating agreement like
many of us do, I hadn't really thought
it through because I thought myself somewhat invincible.
Right? So
what that allowed me to do is to
realize how much my business was actually worth
at the time.
And to really think through things. And then
I took the x your added step, and
I went around to some of those firms
that you're talking about. Think of it, like
the dynasties of the world's, the focus. I
mean, all these firms that can help do
minority stakes and businesses.
To solve my succession problem because I own
most of the business at that time, and
my partners at that time were pretty young,
And so if something were to happen to
me, the operating agreement read that they were
gonna buy me out over 10 years.
But that's pretty undefined on that valuation. And
leaves my family a little bit hanging. So
effectively, I went through and I interviewed a
lot of these firms and saw what their
value proposition was saw would it meant to
get a minority stake saw actually the benefits
of what that would mean to me in
terms of growth, taking some chips off the
table, succession planning, etcetera.
So
Then after having collected all that data over
a course of about 6 months and sharing
financials with a lot of these companies, I
approach Strat and Luke Cam, who runs Strat
Wealth enterprises and and Nancy And, who's the
Cfo
and spoke with them about hey, would you
be open to taking a minority stick? I
already was part of their their firm. I
liked them. We got a along well. I
knew they had invested in a couple of
other firms at the time. And so we
crafted a deal at that point. It actually
closed at the very beginning of Covid, which
was timely, I would say based on what
was going on back then. So that was
the beginning of a relationship where we started
with something and then it ultimately
moved into a majority stake last year. When
we came up with the business plan to
grow the firm nationally. They didn't want me
to take an offer or take this business
somewhere else after growing it, So they they
took a... They upped the stake to a
controlling interest effective last year to help me
do the thing that I really have wanted
to do, which is help change the industry
and build a brand that gives people a
unique way to affiliate without having to sell
everything,
which is what a lot of those other
large firms that have all the services that
we want force people to do. Yeah. You
said a whole lot. First of all, Ray
is a longtime friend of the show so
that... Name will sound familiar to a lot
of our audience. But the first thing I
wanna say is the importance of thinking about
glide path, succession planning, retirement. Whatever you wanna
call it and but sooner rather than later,
I can't tell you how much easier and
more enjoyable the process is to try and
solve for when you are not. In a
fire drill situation, meaning, I'm 68 years old
and I wanna retire tomorrow. What do I
do? I would argue that if you're 23
years old, you should start thinking about this
And I'm not saying that means you have
to sell a stake in your business, but
you should at least have a sense of
what do I want this to look like
And, ultimately, what's my plan?
Either for the affectionately what we call I
get hit by a bus scenario or even
just... It's good business practice and good hygiene
to know what your business worth and ultimately
what's your glide path. But I wanna dive
in a little bit. Obviously, to your point,
there are many businesses,
platforms in the like now more than ever
that will buy minority or majority stakes. In
independent practices. It's a crowded field. You have
now seen a few different iterations or a
few different relationships, I should say with Strat
where first You were just on their platform.
Sounds like then into a minority stake which
ultimately became a minority
acquisition. And I think 1 of the things
people worry about. When selling even just a
portion of their business is the idea that
they're losing or ce control. So can you
talk about how your relationship with Strat has
changed through the years as you have gone
through that cascade.
Yes. And I think this is 1 of
the reasons why after looking at some really
fantastic firms.
About taking that initial majority or minority stake,
then I ultimately went back to Strat? Is
the culture of that firm that makes them
very unique. They were built 4 advisors.
While they do have a a capital partner
to some degree pretty low key capital partner
today, they really have approached things with flexibility.
And it's maintained that way. So when I
looked at some of the other firms and
what they were wanting me to do in
order to take a minority stake or a
larger stake. It was pretty disruptive.
Strat when they came in with a minority
stake. They were just buying cash flow. And
it was more just like, continue to run
the business that you're already running.
And do a good job, and we're here
if you need us. So we're gonna bring
additional things to the table that you don't
currently have such as a legal team, and
at the finance department, if you will. Which
would help... Which ultimately helped me do a
deal. After closing the minority stake, I literally
did a tuck in or a merger right
after that, with another internal strat partner. Awesome.
So yeah. It was fantastic. It was great
timing. And I don't think it would happened.
I think it gave me sort of credibility
inside the organization at that time
So when we drafted the documents,
and it still works this way where I
am the manager of the firm and for
those folks out there that know how Llc
operate. We still make the decisions.
Strat now, first is a minority state that
obviously had protections. You can't spend over x
amount of dollars without out approval, but not
once over the entire time frame that they
had been a partner of ours. The... Not
once said they stopped this from doing anything
And really, the only thing they ever called
into question was we were looking to grow
our office and then right at the beginning
of the deal by the first deal. And
Covid happened. And I said, hey, well, we
still plan on getting the extra space and
Jeff c, Jeff Conception. Was like, you know
what? Based on my experience, you just might
wanna wait. And just see how this thing
plays out, and it was good advice. I,
we got the same space for a cheaper
price. So that was the 1 and only
thing
that he ever called into question or they
ever called into question. And I think that's
the key with getting a minority partner. And
eventually, even if you're gonna get have you
have someone take a controlling stake is to
really understand what types of protections that they're
gonna want in place and what their endgame
is.
Because If they're buying cash flow, they don't
wanna disrupt anything. They just wanna let you
continue to grow the business like you have
and just collect their coupon along the way.
I think that's very valid and smart commentary.
And maybe what I would add on to
that is, there's not necessarily a right answer.
To your point, It sounds like when you
sold the minority stake in the business, your
goal and what you wanted was to maintain
control over the day to day operations. But
on the other hand, that obviously doesn't solve
for what some people might need it to
solve for. And to me, that's what's exciting
about the
acquire or partial acquire a landscape today is
that there are capital partners that run the
gamut. Some say, We wanna controlling interest. We
wanna choose who you hire and your investment
process, and others are much more passive and
they say, we're basically gonna leave you alone
and we wanna clip a coupon. Depending upon
what you're looking to solve for, there is
probably a buyer out there. Yes. I agree.
And I, Jason, something for your audience is
to... So is clear as somebody can get
about what they want before they start looking?
I think that's the best thing. What is
the why? What do you want to have
5 and 10 years down the road? And
then back into the... Because there is a
lot more... Even a lot more options today
than when I started that original hunt, call
it in 2019.
Yeah. Absolutely. And beginning with your why is
a line we use around here a lot.
So Shameless was plug. I appreciate that for,
getting some expert guidance. Let's shift gears here
a little bit. 1 of the first thing
that comes to mind personally when I thought,
think or talk about Strat is the relationship
with Lp p. And that may be a
little bit of a misguided, a conception on
my part. Can you talk a little bit
about what that relationship is like? What does
it enable you to do or their drawbacks
to it?
Yes. Well I can't speak as much from
the corporate
level on this. I can speak to my
own experience. When...
And a lot of the your clients might
be folks that are either gonna move from
1 warehouse to another or from a warehouse
to potentially break away,
And what's interesting is how a tad uneducated
I was back then in terms of how
it all worked.
Because I just thought, hey, I was always
recruited by other warehouses with big checks.
But then when going independent in the financial
crisis I looked at going directly to a
custodian.
Just because I was unsure, I well, at
that time, it was W, and we all
know how that all was going down. So
I was looking for, I wanted to land
in a safe place, and I interviewed a
custodian directly, and I realized like, oh my
gosh. There is so much to do here.
And if I want to, I've to also
drop my Series 7 to be able to
deal with the brokerage assets because I didn't
know that at some of those firms, you
don't have the option and some investments are
only gonna be broker. There's no advisory option
there. So even though we were mostly advisory,
we needed to have a brokerage landing placed,
we decided to ultimately move in in 2016.
So we didn't wanna have to completely change
everything while we remove. That was a decision
we made. 1 of the reasons we chose
supported independence instead of just going and doing
it on our own. And the... And Lp
nlp was in our opinion, the best place
to land.
Were completely upgrading their technology.
We knew to had a lot of options,
everything mapped over very clearly from 1 to
the other. They they did provide some small
amount of transition assistance which helped us get
the business going from 0, and it was
a good partner with us. And it and
it gave us a good landing spot. To
be able to make decisions about what's best
for our clients going forward. And 1 of
the reasons we chose Strat is because their
multi custodian. So if Lp p turned out
to not be the best partner long term,
we could eventually make a change and we
still owned the data, which was something that
was unique to us on the independent side.
So ultimately,
many... But several years later, we did drop
our series 7 and we'd completely remove ourselves
from Ci and continue to use Lp as
a platform as a custodian, but then also
had the flexibility to begin using other custodian
like fidelity, where it made sense for the
clients. Yeah, Smart. I'm sure you miss Finra
tremendously, And don't don't answer that.
So I wanted to just hone in a
little bit I think what you're alluding to
is,
especially in the independence space, your partners, and
I don't mean your business partners. I mean,
the firms or the... Because resources you choose
to associate or affiliate with. They really matter.
Like, if you're moving to a wire,
your partner is Morgan Stanley. And you're using
Morgan Stanley technology, their asset custody, their investment
program, their home office, etcetera, and just using
Morgan as an example. When you're independent, though,
each decision you make, I think gets amplified
because the relationship matter for a couple reasons.
Like, on the 1 hand, they need to
do what they say they do. So in
the case of the asset custodian, they need
to keep the asset safe. But then there's
oftentimes also other kind of ancillary benefits, or
reasons to choose a partner. In this case,
it sounds like it support a little bit
of dollar, some know how. I mean, similar
comment you made to the minority investor
And minority investor, on paper, their goal was
to provide you with some liquidity, but it
sounds like they did much more than that
for you. They actually enabled you to go
out and do M and A and they
provided you with support and resources. So I
just wanna highlight that that in the independence
space in particular, I think it's critical each
of those decisions you make because that's ultimately
what makes up the sum total of your
firm. Would you agree with that? I would.
It's something I learned
after the fact is I joined this firm
at Lp p because of a relationship that...
Was introduced to Charles Shapiro through a mutual
friend. I had already looked at going independent
directly with a custodian multi years prior, so
I knew that wasn't the route, but I
didn't do the same type of homework.
That I did when I was looking for
the minority thing. I just said, hey, This
seems like a good fit. I like the
people at Strat. The worst thing that would
have happened,
if I were to leave them, was I
signed a contract, More or less said, hey.
I give them 6 months notice effectively, something
like that. So it wasn't a huge risk
on our decision. And I think going back
in time, like, what would I do differently?
You know, what maybe a shit was plug
for again for a, a firm like yours
is knowing, like, having a better understanding of
what exactly the all the options would be.
I am very fork that I ended up
where I ended up, but I would put
that on part as just the relationship of
getting to know those folks and the luck
of having being introduced to them. Kenneth had
I... There's a lot of other places that
exist today that I've had colleagues work at
that weren't so good or weren't as good
for what I was looking for. So I
think looking at it, it's spending some serious
time on it, but I will say the
standard thing that you hear a lot from
folks that go independent. Is that the 1
thing... What would you have done differently? It's
always, I wish I would have done it
sooner. Is typically the response. Yep absolutely It
is. We've asked just about every breakaway adviser
on our show that question and that is
almost always the answer. You're exactly right. But
let's play devil's advocate here. Absolutely I love
when our guests have started their careers at
a wire or a big firm, which in
fairness, it feels like it's the case a
lot because I think It's probably a little
bit of a gap and we can probably
spend more time talking about this later, but
the wire training programs certainly seem like they're
still the best in the industry. So it's
not uncommon for people to go the route
that you went. Started my career at a
big firm before ultimately realizing some of the
limitations. And we can talk about what those
limitations are and the things you can do
better now. But I'd like to talk about
the opposite side of that coin for a
minute. Is there anything that you miss? About
the wires, There's anything that you think that
traditional big w 2 firms do really well
that an independent firm can't necessarily do. Yeah.
I do. I think that there are some
things. And when you can compare the 2,
I do a a little bit of coaching
for client wise, and I kinda... And we'll
be folks in my group that are independent
and the work in a warehouse.
And while independent sounds great because that's what
I chose to do, it's really... It's definitely
not for everybody, but and I think that
the the wire what they have is they
make it very turnkey.
It is fantastic to be able to have
all of the options that you have. As
an up independent,
but it's also a lot of work to
have all of the options that you have.
The shiny object syndrome is real when new
tech comes out and new things happen and
which planning software do we get? Do we
go to Salesforce? I mean, that... Those are
all
massive
changes that you can make at an instant
that can completely disrupt your organization.
So
knowing out of the gate what to pick
and to be good at it. That is
not for every single person. In addition to
dealing with all of the stuff like Hr
and payroll, and how do you set up
your business? And what type of lease do
you get? All those decisions become cumulative
thing well, I would say a waste of
time, just cumulative time consumption that you didn't
spend before that takes you away from servicing
your clients.
They make it very easy for you, and
they pay pretty reasonably well. And I would
say that is the 1 thing that I've
noticed a lot is that when talking with
folks at the wire houses and the thought
to go independent.
It's this
I can make more money or it's the
taxes I can save because I can write
off more. And it's funny because at the
end of the day, that's not necessarily free.
But there's... You are doing things. So I
would argue that it's not about the payout.
I would take that decision off the table
in terms of I can make more money
because you're gonna probably have to hire more
people. Too. So... Or you're gonna do more
for that amount of money. I think the
wire offers... I mean, I look at Wells
Fargo where I left
And Wells Fargo, they have access to banking.
They have access to Ultra high net worth
services through the private bank. They had access
to incredible lending for their clients. They have
different ways to affiliate with them anywhere from
just being an employee to now all the...
Now recently, like an Ra division. So there's
a lot of good things to say about
the wire. I'm I'm not... By any means
anti. I think it's just for the true
entrepreneur.
So Or most importantly, for the person that
wants to build true enterprise value. And I
think that last piece is the the big
difference, what you get on the independent side,
I think that's what what do you do.
So you really have to have that mindset
of, yes. I want to be the business
owner
instead of just the...
Senior adviser in the business. You totally agree
And the other I would add to your
list of Wire
benefits his brand, There's some advisers, and we
could probably politely poke holes in this or
disagree,
the extent to which brand actually matters to
clients. But there are certainly advisors out there
who perceive that brand matters a great deal.
And there's no question the wires are the
best brands on Wall Street and some of
the best brands in the world. And and
that's... Obviously, they've had some tarnish through the
years due to various
scandals which we won't rehash, but still, I
think safe big brands versus a firm like
Strat.
Probably a little bit more of an unknown.
The other thing I wanted to mention is
when we think about independence, I completely agree,
a better payout,
should not be reason 1234
or 5 for why you're considering independence. I
mean, when I think through... And I have
this conversation a lot, especially with Tap W
2 advisors who are considering independence. To me,
the 2 biggest drivers are the 2 biggest
reasons you might favor opt independence are number
1, the creation of long term enterprise value
that you can monetize. And number 2, more
control and or quality of life. Like, you
just will like your work more and be
a happier adviser in the independence space. I
agree with you completely,
that payout, maybe you'll pick up 05:10 percent
of additional payout, but the delta is probably
not great enough in 99 percent of cases
to justify the extra effort and the extra
work. Is that fair to say? You think
that was a a decent summary of of
your thought there? That's exactly correct. And the
only thing I would add to the list.
Your that is 1 of the reasons that
we actually did leave,
which is the ability to
transition ownership,
to someone outside of the main adviser or
advisors
because it could be totally different now. But
when I was there
it's a... You're splitting a rep rep code.
And if something happens in that partnership, like
it actually did to me early in my
career with a junior partner that decided that
he wanted to go... Work somewhere else and
take his cut. He owned x percent of
those clients, and I could do nothing about
it. So that was the only way to
give ownership in a book.
Now with an operating agreement, you could spell
it all out legally. If somebody does something
like that if they take the client. There's
a lot of different ways to create value
and equity and compensation, for the non founder
of the firm. And I think that... In
my opinion that's the other reason to really
consider it. Absolutely. Unless that existed at the
wire system. No. There's no question. I mean,
the flexibility of
monetization and or succession and or liquidity is
infinitely greater in the independent space. Mean, we've
even seen advisors in the independence space go
so far as to essentially give the business
away to a next gen. The reality is
the world is your oyster. If you can
dream it up then it's legal, you can
do it in the independent space. So I
would say we consider... And this is a
little bit of a gear shift away. From
Wire World, but I wanna talk more about
your experience with independence. We would consider a
firm like Strat as supported independent and it
that seems to jive with how you're describing
it as well. But there are now probably
even more definitely even more so than when
you look. There are a lot of different
versions of... And supported independence? I think you've
touched a little bit upon why you chose
Strat and some of it may have been
just lock and happens dance. But what are
your thoughts on the model as a whole?
Talk about How does somebody reconcile... Do I
opt for a supported version of independence like
Strat or do I just go call up
fidelity and do this myself? That is a...
An exercise that I... Spent a lot of
time on. So remember up upfront, I said
the there was a low risk of joining
Strat. They were fantastic people. And that was
the number 1 thing that just spent Jeff
Con Charles, all the folks that I met
at the beginning, there were really good human
beings, and that's to me that that means
a lot. So the fact that... Okay. I'm
joining this great group, they have what we
need. And if it doesn't work out, I
just have to give them 6 months of
notice. That seemed very reasonable.
So when I did after we moved, but
was very successful and told the folks out
there that move. It it is always another
standard answer, you're gonna get 95 percent of
your clients pretty easily. So that's... We have
the same success within, of a short amount
of time. And then I spent really each
year at the end of the year when
I ran my P and L, same I
looked at the amount of money that we
gave Des strat and the services
that they provided for that money.
So in other words, I could evaluate, hey,
this was what I was paying. And as
I learned more and learned what I didn't
know before, if I was to go do
this on my own, for example,
hire my own chief compliance officer,
you get my own technology
support, which is actually a big thing and
cybersecurity, what would that cost, monitoring everything, billing
everything,
The Hr component, I could put that in
together in either bodies or outsourced solutions, and
come up with how much it would cost
me to do it. And in my calculations,
at the revenue that I was at and
would my... What strat charges
I figure I was giving them about
20 percent profit margin on that stuff
in my pocket. I could save about 20
percent. That is not a lot of money
to have them worry about all of it
and to have them stay on the cutting
edge because and they've done that. As they've
grown. I mean, the cybersecurity alone just I
could see the upgrades over the years, they
are worrying about that. They are worrying about
the new compliance issues that are coming down
and telling us what to do. Instead of
me having to worry about it. Do And
I've seen this as an area as I've
been in the industry longer
that going and doing it on your own.
I have folks that have I've I've done
on their own, they're smaller in size.
But they seem to sometimes cut corners on
some of those things to save some money.
And those are big things.
I mean, Scc comes in and takes a
look at you and then you get on
their watch list or what have you or
there's a breach of your client data. Some
of those things you cannot come back from.
So to me, I think supported independence makes
a lot of sense. And with more and
more options out there, people can take a
look at, hey, what am I getting for
the money that I'm spending out there. And
a lot of firms. Like, even Strat, since
I joined they do things today that they
didn't even come close to doing before. Like,
they will screen my applicants for a job.
They'll put the... Job posting out there. They
have an internal investment management team that we
can get... So there's a lot of good
options, I think. I think at at a
certain size
it makes sense to really consider doing it
all on your own. If you're big enough
because 20 percent on a very large number,
could be a decent size number. But we
grew with them. So we started at a
at a level where it made a lot
of sense. And now as we've morph in,
we've used more and more of their services
to where it still makes sense financially for
us. Yeah. I love everything you just said
I really do. I mean, it's exactly how
I tell the story. It's purely a matter
of
appetite for doing it yourself. Some people are
just maximally
entrepreneurial. And they want control over everything. But
to me, it almost reminds me. I think
it's a buffet quote of, like, there's no
such thing as a bad stock only a
bad price, oh, It's very similar here. Right?
The the platform it's itself... It's like, when
somebody asks the question of is the platform
expensive or is that firm expensive?
Expensive is not really a fair assessment in
a nutshell? It's are they expensive or are
they fair value relative commensurate with what they're
providing for you? And it sounds like in
your case, the answer was certainly yes. I
would agree that as firms grow or as
you get larger, and even when we talk
to some of the biggest firms in the
industry, 5 or 10000000000 in assets, that does
seem to be the space where the scale
just affords you more margin to be able
to do it yourself. Right? You could probably
hire people, to fill a lot of those
seats, but no question. I think the feedback
we get from most of our clients who
have walked this path is during the initial
transition and certainly for the first few years,
the support partner is overwhelmingly when we work
the cost. Because to your point, In addition
to just transitioning client assets and helping you
get off the ground,
mitigating some of those risk is a big
deal. Right? You've been in a world presumably
if you're a breakaway of Adviser your whole
life where mother mer or Morgan Stanley is
telling you exactly what you can and cannot
do. And those guard rails while they may
be annoying, They also are there to protect
you and they go away in some cases
in the independent space, and the right support
partner can help a lot with that. Go
ahead, please. No I no Agree. And I
think it makes it easier. I I just
see so many folks that I've talked to
over the years that want to make a
move.
And they've talked about it for so long.
And the reason they're not doing it is
because of all of the stuff that needs
to be done.
And you can whittle away a lot of
that stuff by choosing a good support partner
and then make the move sooner. So I
would argue that, hey,
Pick a partner, make the move, learn more
about everything. And then if you pick the
wrong partner or you wanna go it on
your own, most of these firms you can
make a change. You're not. You're not in
the same situation that you were before and
you've learned. And I think that's... I think
that would be something I would really encourage
people to do that says, I wanna go
independent, but I'm not sure how to do
it. We'll interview the main support partners, go
that route, make a decision and then just
learn and and and then learn about every
other partner out there, learn about every little
piece of the business that you did know
about before.
And then you can continue to say, hey,
am I still... Doing the right thing for
my firm and my clients. Yeah. I think
that's spot on. Because by then, also, I
mean, just logistically, it's a heck of a
lot easier to go from
a 10 99
adviser on a platform who owns their equity
and who's multi custody to launching your own
R, than it is to go from Wells
Fargo to launching your own R. So I
told her yes.
I might have stolen this next question a
little bit from a press release around the
time. You sold the business. To Strat. You
sold the equity in the business to Strat.
But I love the way it was articulated.
And I think your quote was, your vision
is to offer a more holistic
complete and high touch offering inside of the
broader firm, And that would include things like
tax advice, systematically lead generation and a variety
of other services,
And we're seeing this more and more. And
my term is, I call them ancillary services.
In other words, everybody does planning and investments.
What else can you do for me? Right?
Those things are table stakes. So tell me
a little bit more about your vision and
how you solve for... It's an incredibly crowded
landscape? How do you stand out? Yeah. So
that this actually goes back to...
A few years back. So 1 of the
things that I've been working with Strat on
is getting on the Fidelity custodial referral program.
And that is a... It's a long process.
We spent a a few years doing it.
I was leading the charge as 1 of
the larger
organizations inside with a process and a niche
market, etcetera. So
as we got closer and closer to getting
the program, we're getting making it... Oh, wow,
we're checking the boxes, this is likely going
to happen.
That's when we sat down and crafted what
this looked like.
And I had already talked to a number
of other firms that compete in the space.
And many of them have those services. However,
in order to get access to their platforms,
at least the ones that I talk to,
the advisors
or the firms had to sell
everything to be part of that larger organization.
They needed to to really completely
transform what they look and feel like, to
to look and feel like that organization. 1
of the large... You can look on the
list of top Ra firms, you'll see them
there. So
which is not not about it I thought
it's something different. Look, I believe, like, what
you said,
Jason is that it's all table stakes. What
when I started this business, I I quote
unquote, like, went out there in cold called
on financial planning, and no 1 did that
in the nineties. It was all stocks. So
we were differentiated, and that was new, and
we were able to stay with that for
a long time.
And then Robo advisors came out, and there's
this big discussion around oh, our fees are
gonna have to go down. That's not obviously
not what happened. What actually happened was the
services increased.
And I think that's gonna continue to happen.
We just did it. We did a very
large survey with our clients using absolute engagement
and must them a lot of different questions.
And what they wanted? What do they want?
Well they wanted? They want tax? They want
better estate planning options. They want more differentiated
investments. So that's the clients want. They want
a 1 stop shop or they want to
be more integrated.
The problem is if you're out there, even
us at a billion 5, to be able
to put those pieces into place, is pretty
expensive.
Like a Cpa, and especially if we're gonna
do taxes,
and then it that becomes expensive.
So do you sell to a larger firm
to get those services?
Or do you crush your P and L?
What if there's another option? And our option
is really saying, okay, How about we do
this? How about we go outside what first
in, we started inside a strat to our
partner firms already and said, who wants to
raise their hand? Here's what it's gonna look
like. You're going to... Sell a stake in
your business des strat, but you're not going
to sell everything. You're gonna still be able
to maintain your own P and L, and
own a piece of that business and continue
to own that a piece of that business.
And you'll be able to maintain the culture
of the firm that you love and your
clients love because what most clients want at
these firms, they want that boutique feel, but
they still want the services.
So... But if we can effectively get scale
that way. Through a rebranding and a common
process for new clients going forward
and allow people to control their own local
office and presence. It's unique. And so that's
what the programs is to try to have
the scale of these larger organizations, but without
having all of, like, the employee feel to
it, if you will. And so that's what
we've been doing. We started with... So first
off, we started by building everything, which Everything
takes longer than you expect. So we've rebranded.
We got everything set up from training from
changing from B to Strat Private well. We
made sure all of our processes and everything.
We're clearly articulated. We could train on it.
We put it all into technology. So other
firms can train on it. And then we
started talking to our internal firms. We've had
2 joined so far. We have 2 on
the docket to potentially join thereafter,
And then beginning in q 3 or QQ4
of this year, we're gonna really start going
to the broader public to say, hey, if
you're at... If whether a wire or another
Ra or another advisor at a hybrid. Is
this something of interest to you where you
can have that potential liquidity upsides, solve for
your succession plan and get these services, get
lead generation. And what we want to do
is to be able to offer what I
offered my friend, Robert Meyer, who we
merged with back in 20 20 as part
of Strat says, you're wearing all these hats.
You're trying to solve all these problems.
All these advisors are trying to solve these.
And that's a 1 part about going independent.
If you left a wire to do that.
You're dealing with marketing, you're dealing with career
paths. You're doing with all of these things.
So is everybody else. So how about we
take
the things that we have all agreed upon
that we can solve together or that I
might have already solved, but We mix those
down, you get rid of 3 or 4
of your hats. Now you become a really
good adviser. Again,
about... And you're now you're crafting you're bringing
in clients, you're servicing your clients more you...
You have Au coming to you through referral
channels. You can offer the tax. You can
offer this date, all of these things, but
you still own a piece of your firm,
and you still have a seat at the
table, and you help make decisions on strategy,
but you have someone like myself and an
executive team to go execute that strategy for
you. That's the vision. Super super interesting and
I think it's incredibly smart and and time
way. I mean, it's... It makes a lot
of sense in the face of what we're
seeing in the independence space and what advisers
need to deliver on. You brought up the
concept of hats and wearing many different hats
and to me, you're the poster child for
wearing a lot of different hats. And you've
been a coach. You've been a wire house
advisor. You've been a a business that's sold
a minority stake, a majority stake. To I
believe you have now transitioned a little bit
away from being an adviser to more of
a Ceo and coach. A, is that correct?
And b, even for the most entrepreneurial advisors.
I think that's probably a little bit of
a difficult
prospect for people to think about. I mean,
you've spent your career as an advisor gathering
asset and talking to clients. And to step
away from that, I could imagine people struggling
with that. What has that been like for
you? Yeah. It was a very unique than
situation. Over over the years, I had as
I grew. I had this team where it
was more about me at the beginning. Right?
Those a lot of us do have that.
And then as we grew, I couldn't manage
all the clients. So I was having other
advisors begin to help with the relationships, but
I still have my fingers in them. And
once again getting back to what to client
wise again, in my group, john named Rick
Kent who runs merit financial now. Many years
ago, we were in a breakout session in
that group. And talking through, growing the firm,
and it's, like, I talked wearing all these
hats and rick's like, look. You gotta get
rid of all your clients. And I said,
what? All of them he's said, welcome them.
He that was the best thing I ever
did because Rick was growing like a weed
and, hey, this is what you need to
do. It's the best thing for the clients.
And, you know, they're not gonna complain. Or
at least most of them won't. And sure
enough. Like, I I promised him that, okay.
I'm gonna do it over the next year.
And then once I started,
the clients did cry
They, unfortunately for me. I I guess, they
they found, oh, Pat, but is an example
another, adviser and partner on the team. Oh,
yeah. Pat talked so much. Slower. He's not
as confusing. It's like, wait a second. So
so as it turns out, the clients got
an upgrade, and we've had some clients transition
I mean, between 3 or 4 advisors over
the years. And I think while it sounds
scary, there's obviously a process to doing it.
If you aren't truly built as an ensemble
firm, and you're serving the clients as a
firm instead of in these
adviser solo, The setups where a bunch of
advisors just come together and call it a
firm. The experience is the same. And in
every case, when we're bringing in a new
adviser, they have a specialty above and beyond
what the other adviser didn't have. What you
talk about today, like, planning stable stakes. Right?
But for, you know, we use things like,
holistic plan for tax planning, which a lot
of advisors and and people are gonna know
on this podcast or income lab for distribution
planning. Is your new technology tools,
Sometimes to the advisors that have been doing
it for a long time. They don't wanna
learn the new thing, but you know who
can is the associated adviser. The next adviser
that can come up. So we've built a
process for to be able to have clients
get experience from more than 1 adviser at
the firm and built that into our culture
here it. Worked out very well. And, honestly,
being a Ceo is a full time job.
And it's... You realize how much you really
have to do if you do it right,
but also how much you can get done.
We're How many things when you were an
advisor are just sitting on your desk or
in a pile of ideas that were there
last year because you just didn't have the
time to do it. Now you can make
those things happen. So that was going gonna
be my follow. Is you just spoke about
this from the perspective of your clients and
your team, which I I think is probably
the right place to start. But selfish officially,
what has this enabled you to do? Now
that you've handed off the responsibilities of being
adviser. And I'm sure that was to some
extent bitter sweet for you because that's probably
why you fell in love with the business
to begin with, but are the types of
things you can do now that you just
didn't have the time appetite bandwidth to do
prior? Yeah. I mean, so, like, let's just
took... Take a look at what I'm doing
right this moment. So right this moment, I'm
building a strategic plan for the firm starting
in 20 25, and it's June. So it's
not... December of 20 24, so which is
how it might have worked. So building the
plan for next year for Sp
very detailed oriented. So having a really clear
idea about that, building out workforce planning, How
many people do we need to hire in
various positions to do this. We're building out
a marketing strategy for a new webinar that
gonna be doing and launching a paid strategy.
I'm hiring a marketing team to do Seo
optimization and some other things on the website.
I've been interviewing we're Cpa to add to
our... To build out the tax practice that
we have today. These are very large initiatives
that take a lot of time that there's
no way. That I would've have been able
to do maybe more than 1 of them
if I was still an advisor to the
clients. And joining your favorite industry podcast as
well,
exactly.
We're running up on time. Here, but let's
just wrap as I always like to wrap
with any final wisdom or advice. From any
of those hats that you've worn in your
career that you think would be helpful here
Maybe let's pretend you're talking to your younger
self. What would you share? This is the
advice I've been giving to folks. I've been...
I've been fortunate to get on a couple
of podcasts and Had people reach out to
me and I've this has been a question
that folks have asked. Like, what advice would
you give to me? I I happen to
have, like, I meant, I went to San
diego state. I speak to their finance department.
It is so interesting to me.
How much opportunity that we have in this
business.
It is still a business that I believe
is just going to grow in terms of
the amount of people that it can serve
in the United States. So our... The amount
of supply of clients
is great
And there's so few people entering the business
to accomplish that. So we have a unique
dynamic on a supply demand where we control
our destiny.
So the advice I would give to people
is to think big
to really think like what do you want
to do? I mean, and and maybe it
was my good friend Carl Richards. Says, he
likes having a... He believes in the life
he's a very big believer in the lifestyle
practice. Very low headache, get to live the
life you want. And if that's the goal,
that's the goal. But if the goal is
to really affect as many lives as possible,
whether that's the... Not just the clients, but
the people that work at your firm, And
to be able to enhance their lives and
more and more of them as time goes
on, really think how big you can get
and how you can get there and continue
to have that mindset, and just get fired
up to come to work every day because
I think that... There there'll be a change
in our industry at some point where the
opportunity may not be as great as it
is today. But for those of us that
are in it today, Wow. It's pretty amazing
what we have to look forward to. I
couldn't said it better myself. Well, thank you
so much, Jeff. This was fantastic. I'm so
excited to see what the next chapter holds.
For Strat Was private. We'll have to have
you back in a couple years, and you
can give us the update of your doubling
and tripling of growth. But we really appreciate
your time. And thanks again for joining us.
Jason, thanks so much, rob. It's been fun.
Curious about where why and how advisors like
you are moving,
download the latest advisor transition report to learn
more.
Including intel on recruiting deals and our insight
and analysis on the latest trends in the
wealth management space,
You'll find it at diamond dash consultants dot
com forward slash transition report, or if you'd
like to talk, fill free to give us
a call at 09:08
8791002.