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Welcome to the latest episode of our podcast

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series for financial advisors.

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Today's episode is

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succession and liquidity, key

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considerations and options for founders and next gen.

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It's a conversation with Jeremy Holly, Executive Vice

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President of Strategic business Development and Jared Finger,

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Senior Vice President of Lp p Financial. I'm

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Mindy Dim, and this is the diamond podcast

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for financial advisors.

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This podcast is designed for advisors like you,

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who are interested in learning more about the

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evolving wealth management

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industry through candid dialogue with breakaway advisors,

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those from the C suite and industry thought

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leaders. It's available on our website, Diamond dash

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consultants, dot com, as well as apple podcasts

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and other major podcast platforms. So be sure

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to subscribe and share it with your colleagues.

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At Diamond consultants, our mission is to help

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advisors live their best business life.

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We want every elite advisor to find exactly

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the right place for their business and their

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clients to thrive,

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whether it's at a wire, a regional, boutique

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or independent firm. As the industry's leading recruiters

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and consultants, a we've transitioned more than a

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quarter of a trillion dollars in assets under

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management in the past decade.

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And each year, 25 percent of transitioning advisors

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who manage a billion dollars or more are

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our clients.

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Cure us about where why and how advisors

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like you are moving,

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download the latest advisor transition report to learn

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more,

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including

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hell on recruiting deals and our insight and

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analysis on the latest trends in the wealth

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management space.

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You'll find it at diamond dash consultants dot

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com

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forward slash

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transition report, or if you'd like to talk,

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feel free to give us a call at

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09:08

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8791002.

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There's 1 area in wealth management that seems

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to have trouble keeping locks with the growth

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and evolution of the industry and that's succession

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planning.

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Research studies indicate that less than 30 percent

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of advisors have a succession plan in place.

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And many more who run thriving businesses have

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no strategy at the ready should a worst

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case scenario leave them unable to attend their

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clients needs or even continue their livelihood.

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In a recent episode with Jeff Brown from

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Strat private wealth, It wasn't until a coaching

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session got him thinking about the future that

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planning for succession became a priority.

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And likewise, there are still many other advisers

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who are looking at the equity they've accumulated

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in their firms and wondering how they can

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access it whether it be to monetize their

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life's work or reinvest in the growth of

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the firm.

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While there's a lot for advisors to consider,

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the good news is that there are firms

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that realize that there are great partnership opportunities

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available with these thriving practices.

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In this episode, Lp

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Financials, Jeremy Holly,

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Executive Vice President of Strategic Business Development and

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Jared Finger

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Senior vice President join Lewis Diamond to talk

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about this important topic.

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Jeremy and Jared represent Lp

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liquidity and succession division which provides end to

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end solutions for advisors looking to increase business

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value and monetize the legacy they've built.

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So they're here to share perspectives for both

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business founders and next gen on what they

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need to consider as they grow their business

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and explore both the long term and the

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short term.

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They talk about sunset deals offered by the

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houses and how they might compare to an

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option from a firm like Lp,

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and they dive into valuations, sharing what advisers

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need to know and what steps they need

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to take to maximize the value of their

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business.

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It's a conversation that's relevant to those in

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the wire houses

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independent firms, and everywhere in between, there's a

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lot to discuss, so let's get to it.

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Jared and Jeremy, Thank you very much for

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joining us today. Thanks for having us. Yeah.

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Happy to be here. Let's do Jared and

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then Jeremy. If you can you just walk

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us through your back grounds that led you

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to where you are today. Sure. Well, I

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actually started my career outside of the industry

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and with deloitte in their consulting group and

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after a few years, being in the consulting

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world, I wanted to do something more entrepreneurial.

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I wasn't sure

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exactly what that was going to be, but

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I stumbled into

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a firm called Focus Financial partners. And, Lewis

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actually remember talking to you about this because

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it was the first article that came up,

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when I searched focus was related to Diamond

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consultants.

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That was really my intro into the wealth

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management world specifically into the independent wealth management

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world. I was on focuses M and A

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team, and I was with... The firm through

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its initial public offering and then had a

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really great opportunity to join some former colleagues

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at high powered advisors that were taking that

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firm from the its initial

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evolution into its next phase as an acquire

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room was really part of the build out

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of an M and A team and process

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at high tower advisors.

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Was there for a few years and then

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got a call from Lp p financial about

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coming over and building out a business that

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could compete with... A lot of the firms

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that were acquiring independent advisors in the marketplace,

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but do it in a way that was

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different for many of those firms. And so

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I've been here with at Lp nlp,

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simply put leading our acquisitions of advisors for

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the past 2 and a half years, but

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have been lucky and fortunate to have been

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joined by... Or have been joined by Jeremy

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who came back his past summer and all.

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Kick to Jeremy to give his background.

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Thanks, Jared. Jeremy Holly, My background, I'm... I

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like the say recovering investment banker that my

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first job out of school. Did that for

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3 years, and then was lucky enough to

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find Lp p financial back back in early

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days. Back in 2000, it's too. And so

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as Jared said, I'm a boomerang here at

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Lp. I I spent 19 years working at

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Lp

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in the finance organization and the Nash 2

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sales organization back into the finance organization and

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doing all things related to to to M

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and A and succession along that time.

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Spent 2 years at a private equity backed

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Ra at Uber newport Beach, and then happily

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came back to Lp p last June, and

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so now had Lp Capital Partners get the...

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Privilege of working with Jared and other great

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leaders here at Lp, and happy to be

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back. Very good. Love the backgrounds that seems

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like the right building blocks. For the type

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of work that you're doing today. Jared, I'm

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curious from your perspective. Most people have heard

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of focus and high tower and

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they're by far to the most prolific and

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successful acquire in the industry. So what were

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some of your takeaways regarding the most compelling

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parts of those models. And maybe some of

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those learnings helps guide some of what you're

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doing at Lp nlp. But in in your

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view, even outside of Lp,

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what what do you think resonated about those

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business models in the marketplace?

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Sure.

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So I I think focus

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stuck to their story from the early stages

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as being a firm that wanted to back

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entrepreneurs and recognizing that this independent wealth management

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space had been built by entrepreneurs. And so

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I think for focus, the takeaway was always,

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try to respect the identity and the brand

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and the way that these advisers are servicing

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their clients and don't get in the way

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of that, because if you're disrupting the way

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that they're servicing their end clients, that can

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lead to some pretty negative outcomes, And so

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focus really lived by that story as we

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all know for many years about backing entrepreneurs,

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not turning entrepreneurs into employees, and it was

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really resonated with our industry. I carried that

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over to high tower with a little bit

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of a different spin, and I think the

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takeaway the big thing at High tower was

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building an operating platform that could support entrepreneurs,

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not disrupt their identities, not disrupt their brands,

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but add some he in the back and

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middle office to to make these firms a

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little bit more success. But Lewis, I'll I'll

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close out with an answer to a question

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that you didn't ask me, which was what

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were these firms both missing in my opinion?

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And what was the the thing that actual

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attracted the over to Lp. I think it

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was solving for the next generation of independent

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advisors. And I think that's still a gap.

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They in this ag,

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private equity backed to acquire a space is

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thinking 2 chapters down the line about what

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happens when the founders of the firms that

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sold

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move on, and you have a a lot

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of talented next generation advisers that are within

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these firms that don't have the same

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opportunity. Don't have the same path, that the

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sellers of the Gen 1 did. That's what

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we've tried to address here at Lp is

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what happens next? There's a moment in this

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industry that that's clearly been going on for

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some time, and I think it'll continue in

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terms of M and A activity and folks

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getting a really valuable

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offer for their business, but But what happens

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when the dust settles and you have these

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next generation advisors who wanna know what's in

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it for them, then that's what we're looking

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to solve here at Nlp as well.

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Yeah. 2 things to respond to with what

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you said, Jared, and I think spot on.

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I think the first is just to draw

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an important distinction between focus and high tower

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and Lp, with focus,

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traditionally, they're investing directly into someone's own R.

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We're High tower, you're talking about a central

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operating platform

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is folks joining high towers R and high

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towers broker dealer, which is somewhat similar to

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Lp p. But I think kind of important

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distinctions as far as the responsibilities

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and level of autonomy that an adviser has

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post transaction. The other thing I'll respond to

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is what you're saying about the next generation

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of advisors. I see it the exact same

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way that you do that many of these

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M and A deals our life changing opportunities

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for the founder who may be retiring in

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a few years. They got a huge check

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given where valuations are, they were able to

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set up their clients with a compelling firm,

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but there's a big gap for the next

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generation advisors. I I wrote an article recently

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about what I deem as next big breakaway

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movement, which is breakaway advisors from R. And

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I think ground 0 are these large private

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equity backed roll ups, ag, serial acquire, whatever

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you wanna call them, who have...

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Acquired these amazing firms with great advisors, but

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the advisers no longer have

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ownership or much less ownership They don't have

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a path of taking over the company, and

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they're stuck in many regards. So I'm excited

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to develop more of how Lp nlp is

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solving this concept. And let's kick it over

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to Jeremy. So like you said, you've been

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an Lp nlp for a large portion of

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your career absent the the the short hiatus

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in the Ra world. So you've really seen

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00:10:49,616 --> 00:10:52,712
the firm rapidly grow, Its head count, it's

269
00:10:52,791 --> 00:10:53,291
Au,

270
00:10:53,744 --> 00:10:56,125
it's standing in the marketplace, etcetera. Can you

271
00:10:56,125 --> 00:10:58,285
talk a little bit about... How you've seen

272
00:10:58,364 --> 00:11:00,273
Lp change over the years. And hopefully, you

273
00:11:00,273 --> 00:11:02,262
can be candid about where it was versus

274
00:11:02,262 --> 00:11:03,853
where it is today. It's a very different

275
00:11:03,853 --> 00:11:04,171
company.

276
00:11:04,902 --> 00:11:06,651
Absolutely. A lot of change, a lot of

277
00:11:06,651 --> 00:11:08,877
growth in over 2 decades that I've been

278
00:11:08,877 --> 00:11:10,626
able been a part of this, which was

279
00:11:10,626 --> 00:11:12,694
remarkable. And I think we set out very

280
00:11:12,694 --> 00:11:15,969
early on we had establish some size, and

281
00:11:15,969 --> 00:11:18,116
we saw the benefits of size and scale

282
00:11:18,116 --> 00:11:20,581
early on, and we tried to continue to

283
00:11:20,581 --> 00:11:22,410
use that as our strength of ours and

284
00:11:22,410 --> 00:11:23,682
and I'll talk about how we did that.

285
00:11:23,841 --> 00:11:26,155
But When I began, it was a founder

286
00:11:26,155 --> 00:11:28,771
led founder owned firm, and we did things

287
00:11:28,771 --> 00:11:31,228
a certain way, and we were early on

288
00:11:31,228 --> 00:11:33,546
and just... Determining that fee based business, advisory

289
00:11:33,546 --> 00:11:35,214
business is a really important aspect. And so

290
00:11:35,214 --> 00:11:36,882
we wanna make sure we we attract the

291
00:11:36,882 --> 00:11:38,630
advisors and get support advisors that wanted to

292
00:11:38,630 --> 00:11:40,475
move in that direction, which is a I

293
00:11:40,475 --> 00:11:41,595
thought was pretty early back in there in

294
00:11:41,674 --> 00:11:43,355
The 2 thousands, which was was a great

295
00:11:43,355 --> 00:11:45,754
place to be. We also saw the benefits

296
00:11:45,754 --> 00:11:47,754
of being a self clearing broker dealer in

297
00:11:47,914 --> 00:11:49,843
Custodian, which I think, created a advantage for

298
00:11:49,843 --> 00:11:51,275
us in the marketplace and that we could

299
00:11:51,275 --> 00:11:53,820
generate different economics than others could do and

300
00:11:54,059 --> 00:11:55,491
Get to why that's important because we were

301
00:11:55,491 --> 00:11:58,054
able to reinvest those economics and our sole

302
00:11:58,054 --> 00:11:59,574
business, which is supporting advisors.

303
00:12:00,054 --> 00:12:01,574
And so taking you through the journey from

304
00:12:01,735 --> 00:12:04,294
Founder Led Founder Own, we then became private

305
00:12:04,294 --> 00:12:06,134
equity owned in the mid 2 thousands,

306
00:12:06,866 --> 00:12:08,536
eventually to a public company in 20 10,

307
00:12:08,695 --> 00:12:10,445
and then blast 14 15 years as a

308
00:12:10,445 --> 00:12:12,751
public company. Interesting changes along the way. We

309
00:12:12,751 --> 00:12:14,421
learned a lot. We made mistakes along the

310
00:12:14,421 --> 00:12:16,982
way. We applied those learnings and continued to

311
00:12:16,982 --> 00:12:18,257
get better. We had, you know, highs and

312
00:12:18,257 --> 00:12:20,249
lows throughout that period of time. But the

313
00:12:20,249 --> 00:12:22,320
firm kept growing head count like you said,

314
00:12:22,559 --> 00:12:25,268
kept growing Au. We kept investing in the

315
00:12:25,268 --> 00:12:25,826
underlying business.

316
00:12:26,477 --> 00:12:28,008
Investing in both horizontally

317
00:12:28,380 --> 00:12:30,601
to support advisors wherever they are. I think

318
00:12:30,601 --> 00:12:32,504
you took... Across the spectrum of being able

319
00:12:32,504 --> 00:12:33,852
to support employee advisors,

320
00:12:34,343 --> 00:12:36,564
all the way through our independent R and

321
00:12:36,564 --> 00:12:39,658
everything in between. And we also invested vertically

322
00:12:39,658 --> 00:12:42,371
and really scaled vertically. And that's adding more

323
00:12:42,371 --> 00:12:44,674
capabilities to help advisors run more more run

324
00:12:44,674 --> 00:12:47,533
driving businesses, run more efficient businesses. And so

325
00:12:47,533 --> 00:12:49,201
1 of those examples is what Jared and

326
00:12:49,281 --> 00:12:50,845
I do. We were able to think about

327
00:12:51,123 --> 00:12:54,323
deploying capital differently. And so thinking about different

328
00:12:54,379 --> 00:12:56,548
capabilities we could support advisors in their growth

329
00:12:56,604 --> 00:12:58,351
and their protection of their businesses and their

330
00:12:58,351 --> 00:13:00,178
legacies and being able to help them unlock

331
00:13:00,178 --> 00:13:02,023
value. The of their life's greatest work in

332
00:13:02,023 --> 00:13:03,932
many cases And so that's what we saw

333
00:13:03,932 --> 00:13:05,763
the firm transform and now we're able to

334
00:13:05,763 --> 00:13:07,831
continue to reinvest at levels that a lot

335
00:13:07,831 --> 00:13:10,237
of our competitors probably can't match. And I

336
00:13:10,237 --> 00:13:12,071
think it's gonna help us continue on the

337
00:13:12,071 --> 00:13:13,505
journey we've been on, which is just be

338
00:13:13,505 --> 00:13:16,216
able to support advisors more fully wherever they

339
00:13:16,216 --> 00:13:18,140
are. Yeah. I agree with you, and I'll

340
00:13:18,140 --> 00:13:20,208
give a brown of kudos or props that

341
00:13:20,208 --> 00:13:22,356
everyone wanna call it to how I view

342
00:13:22,515 --> 00:13:23,152
Lp nlp.

343
00:13:24,041 --> 00:13:26,267
Transformation in the industry. To me, Lp p

344
00:13:26,267 --> 00:13:28,572
tends to be typically on the leading edge

345
00:13:28,572 --> 00:13:29,788
of developing

346
00:13:30,242 --> 00:13:33,677
new business models, new affiliation options, and really

347
00:13:33,677 --> 00:13:37,181
figuring out what it is that prospects or

348
00:13:37,181 --> 00:13:40,208
prospective advisers want, but also how to better

349
00:13:40,208 --> 00:13:42,774
support their current slate of advisers. So it's

350
00:13:42,774 --> 00:13:45,809
a... I think a very good segue into

351
00:13:45,809 --> 00:13:47,727
much of what we're talk about, which is

352
00:13:47,727 --> 00:13:51,643
the liquidity and succession program, and I think

353
00:13:51,643 --> 00:13:53,652
you have some other names for other programs

354
00:13:53,946 --> 00:13:55,772
and how Lp nlp is is doing that.

355
00:13:56,011 --> 00:13:57,916
So Germ or Jared, whichever 1 of you

356
00:13:57,916 --> 00:14:00,315
wants to answer, Can you describe the need

357
00:14:00,315 --> 00:14:02,485
that Lp p saw in the marketplace

358
00:14:02,939 --> 00:14:06,040
to launch the liquidity and succession plan? And

359
00:14:06,040 --> 00:14:07,630
maybe to take a step back if 1

360
00:14:07,630 --> 00:14:09,793
of you can even just... Briefly describe the

361
00:14:09,793 --> 00:14:13,531
value proposition of the liquidity and succession program.

362
00:14:14,406 --> 00:14:16,395
Sure. So I'll kick us off. This is

363
00:14:16,634 --> 00:14:18,960
Jared and I'm sure, Jeremy, we'll we'll have

364
00:14:18,960 --> 00:14:19,757
some thoughts too.

365
00:14:20,635 --> 00:14:23,506
Liquidity and succession in short is Lp p

366
00:14:23,506 --> 00:14:25,580
competing with many of the private equity backed,

367
00:14:25,899 --> 00:14:28,541
ag is roll ups, Lewis You use your

368
00:14:28,541 --> 00:14:30,686
words, whatever you wanna call them, competing with

369
00:14:30,686 --> 00:14:32,831
those firms, but in a way that doesn't

370
00:14:32,831 --> 00:14:33,331
compromise

371
00:14:33,705 --> 00:14:36,564
an advisors, identity and advisors brand, the way

372
00:14:36,564 --> 00:14:39,151
that they service clients and keeps that continuity

373
00:14:39,449 --> 00:14:40,826
in an independent practice

374
00:14:41,284 --> 00:14:43,198
for many years to come. And I think

375
00:14:43,198 --> 00:14:45,610
that the really big piece that separates us

376
00:14:45,610 --> 00:14:47,529
from many of our competitors. Not only the

377
00:14:47,529 --> 00:14:49,129
fact that we're not changing the name on

378
00:14:49,129 --> 00:14:51,129
the door and painting the walls a different

379
00:14:51,129 --> 00:14:53,504
color, is the fact that we've actually attached

380
00:14:53,624 --> 00:14:55,221
to the M and A events, and and

381
00:14:55,221 --> 00:14:57,217
this is Lp p using its capital to

382
00:14:57,217 --> 00:14:59,452
acquire an advisors book of business, and they're

383
00:14:59,452 --> 00:15:00,889
staying with Lp p or they're coming to

384
00:15:00,969 --> 00:15:02,247
Lp p to do that. We can talk

385
00:15:02,247 --> 00:15:04,656
more about that later but the really key

386
00:15:04,656 --> 00:15:07,051
differentiator for us is that we don't have

387
00:15:07,051 --> 00:15:09,684
an upcoming liquidity event in 5 to 7

388
00:15:09,684 --> 00:15:12,729
years. We're not pressured by private equity firm

389
00:15:12,729 --> 00:15:14,161
that backs us that is looking to get

390
00:15:14,161 --> 00:15:16,389
some return on its investment. And so we're

391
00:15:16,389 --> 00:15:18,776
really doing this with, and we're we're not

392
00:15:18,776 --> 00:15:20,208
kidding when we say it. We're doing this

393
00:15:20,208 --> 00:15:22,615
with the next 20 plus years in mind.

394
00:15:22,934 --> 00:15:24,371
And we did this and this kind of

395
00:15:24,371 --> 00:15:26,046
segue into what need do we see in

396
00:15:26,046 --> 00:15:26,786
the marketplace.

397
00:15:27,163 --> 00:15:30,134
We did this to protect the independent wealth

398
00:15:30,134 --> 00:15:33,654
management space from what we saw as a

399
00:15:33,654 --> 00:15:36,454
return to conformity. And we saw this trend

400
00:15:36,454 --> 00:15:38,380
over the past, 20 years, it's really benefited

401
00:15:38,459 --> 00:15:41,160
Lp nlp of advisors leaving models where they

402
00:15:41,160 --> 00:15:43,225
were forced to sell proprietary product that they

403
00:15:43,225 --> 00:15:44,734
weren't able to have their own brands or

404
00:15:44,734 --> 00:15:45,925
talk to their clients the way that they

405
00:15:45,925 --> 00:15:47,607
wanted to. And now we're in this place

406
00:15:47,607 --> 00:15:49,670
where advisors are going back to a firm

407
00:15:49,670 --> 00:15:51,495
that controls the way they communicate with clients,

408
00:15:51,733 --> 00:15:53,875
controls the way they brand themselves, controls the

409
00:15:53,875 --> 00:15:54,906
way that they do business.

410
00:15:55,399 --> 00:15:57,559
And so we saw a need to not

411
00:15:57,559 --> 00:15:59,559
only solve for Gen 1 and acquire the

412
00:15:59,559 --> 00:16:01,799
book of business at really competitive market multiples,

413
00:16:02,039 --> 00:16:03,639
but also set it up such that we

414
00:16:03,639 --> 00:16:06,053
were giving economics and equity back to the

415
00:16:06,053 --> 00:16:08,370
next generation. So they could continue on that

416
00:16:08,370 --> 00:16:10,766
legacy of independence. And that is liquidity and

417
00:16:10,766 --> 00:16:12,695
succession in a nutshell is solving for that

418
00:16:12,775 --> 00:16:14,287
M and A event and then giving it

419
00:16:14,287 --> 00:16:16,435
back to the next generation. And the reason

420
00:16:16,435 --> 00:16:18,185
why we got to work and launch this

421
00:16:18,185 --> 00:16:19,935
and have had so much success over the

422
00:16:19,935 --> 00:16:21,863
past couple of years, is that we didn't

423
00:16:21,863 --> 00:16:23,618
see anyone else that was stepping into do

424
00:16:23,618 --> 00:16:25,853
it. Everyone else started to look and feel

425
00:16:25,853 --> 00:16:28,167
very similar to each other, and that's not

426
00:16:28,167 --> 00:16:30,257
a slight at all. Because I think they're

427
00:16:30,257 --> 00:16:33,210
mostly pursuing a very similar strategy, which is

428
00:16:33,210 --> 00:16:35,285
go out and acquire as much Au w

429
00:16:35,285 --> 00:16:38,034
as possible as many businesses as possible. Centralize

430
00:16:38,093 --> 00:16:41,765
the brand, centralize the service organization centralize the

431
00:16:41,765 --> 00:16:44,240
operations, extract as much profit as possible for

432
00:16:44,240 --> 00:16:46,076
the private equity banker that has invested in

433
00:16:46,076 --> 00:16:48,807
the business, and grow at all costs. And

434
00:16:48,807 --> 00:16:50,246
for us, we saw that as not only

435
00:16:50,246 --> 00:16:53,123
a threat to Lp lps business model, because

436
00:16:53,123 --> 00:16:55,041
that's contra to our belief that we should

437
00:16:55,041 --> 00:16:57,606
support independent advisors however, they see fit, so

438
00:16:57,606 --> 00:16:59,514
they can service their clients. But we saw

439
00:16:59,514 --> 00:17:00,945
that as a threat to the industry, and

440
00:17:00,945 --> 00:17:03,329
that's why we've invested so many resources in

441
00:17:03,329 --> 00:17:05,971
growing this... Program and allocating so much capital

442
00:17:05,971 --> 00:17:07,485
to it. We talked about it on earnings

443
00:17:07,485 --> 00:17:08,839
calls. And we're very open about the fact

444
00:17:08,839 --> 00:17:10,990
that we see this as not only something

445
00:17:10,990 --> 00:17:12,765
that's protecting the industry, but it's a real

446
00:17:12,765 --> 00:17:16,045
really big growth lever for Lp. So Jeremy,

447
00:17:16,285 --> 00:17:17,904
I'm not sure if you you wanna add

448
00:17:18,204 --> 00:17:20,531
everything there I would just... It's more of

449
00:17:20,531 --> 00:17:22,758
an emphasis. I think that Jared spot on

450
00:17:22,758 --> 00:17:24,667
and everything he said. I think we we

451
00:17:24,667 --> 00:17:26,992
definitely saw a need. To be different than

452
00:17:26,992 --> 00:17:28,507
what that all the models are out there

453
00:17:28,507 --> 00:17:30,422
in that 1 key distinction that he mentioned,

454
00:17:30,582 --> 00:17:33,469
which is per that independent business model we're

455
00:17:33,469 --> 00:17:35,227
not looking to aggregate integrate all this together

456
00:17:35,227 --> 00:17:36,666
and create a bunch of synergy to to

457
00:17:36,666 --> 00:17:38,584
then resell and and see what happens with

458
00:17:38,584 --> 00:17:40,581
the client experience are they g 2 ex...

459
00:17:40,821 --> 00:17:42,180
Next gen experience with advisors.

460
00:17:42,673 --> 00:17:44,102
We actually have a longer term view, and

461
00:17:44,102 --> 00:17:45,769
we actually wanna get these businesses back to

462
00:17:45,769 --> 00:17:48,072
the next entrepreneur and continue to perpetuate that

463
00:17:48,072 --> 00:17:49,843
model, which I think is a really key

464
00:17:49,898 --> 00:17:51,990
differentiator. Out of the marketplace and the need

465
00:17:51,990 --> 00:17:54,410
that we saw, and it clearly is resonating

466
00:17:54,470 --> 00:17:56,549
with our existing advisors that have gone this

467
00:17:56,549 --> 00:17:58,890
program, as well as those outside of Lp

468
00:17:59,204 --> 00:18:00,799
they're thinking about moving to help be able

469
00:18:00,799 --> 00:18:02,792
to take advantage of this. Yeah. I would

470
00:18:02,792 --> 00:18:04,546
emphasize as well. The really different part of

471
00:18:04,546 --> 00:18:06,880
what you're doing is the fact that after

472
00:18:06,938 --> 00:18:07,815
a certain...

473
00:18:08,228 --> 00:18:10,773
Term or period of time. The next generation,

474
00:18:10,933 --> 00:18:13,398
whether it's a family member, it's a team

475
00:18:13,398 --> 00:18:15,943
member, or it's another adviser that comes into

476
00:18:15,943 --> 00:18:18,349
the business, is able to fully own the

477
00:18:18,349 --> 00:18:20,423
business and can do with it what they

478
00:18:20,423 --> 00:18:22,816
see fit. That is something that we certainly

479
00:18:22,816 --> 00:18:25,209
don't see. I'm curious though, maybe Jared because

480
00:18:25,209 --> 00:18:27,216
you were front row to this. How is

481
00:18:27,216 --> 00:18:30,580
this different from, let's say, focus where focus

482
00:18:30,637 --> 00:18:33,422
is acquiring a portion of a business? And

483
00:18:33,422 --> 00:18:37,181
then there's equity that's granted or distributed or

484
00:18:37,181 --> 00:18:39,650
recycled to the next generation. How is this

485
00:18:39,650 --> 00:18:40,686
a shift from that model?

486
00:18:41,816 --> 00:18:44,207
I think the key difference number 1 is

487
00:18:44,207 --> 00:18:45,663
that equity that's granted

488
00:18:46,039 --> 00:18:48,350
comes with it, a lack of true control.

489
00:18:48,764 --> 00:18:51,244
And so I question in the focus scenario,

490
00:18:51,644 --> 00:18:53,404
whether or not you're ever... And I'm I'm

491
00:18:53,404 --> 00:18:56,857
thinking going back pre last summer. Where focus

492
00:18:56,857 --> 00:18:59,009
had management company equity and most of the

493
00:18:59,009 --> 00:19:01,241
businesses that they acquired. I don't know that

494
00:19:01,241 --> 00:19:03,074
as a next generation person, you really had

495
00:19:03,074 --> 00:19:05,422
an open market to actually monetize

496
00:19:05,800 --> 00:19:07,554
that equity. And so there's a lap of

497
00:19:07,554 --> 00:19:09,628
control of your own destiny in that scenario.

498
00:19:09,788 --> 00:19:11,861
And and maybe that'll change as focus evolves

499
00:19:11,861 --> 00:19:13,536
and we're all watching what happens in the

500
00:19:13,536 --> 00:19:15,778
press But the key difference here is that

501
00:19:15,778 --> 00:19:18,639
we are really seeking to keep independent wealth

502
00:19:18,639 --> 00:19:21,262
management independent. And we are keeping this localized,

503
00:19:21,421 --> 00:19:22,852
and we're doing it on a practice by

504
00:19:22,852 --> 00:19:25,825
practice. Basis where if there's no next generation

505
00:19:25,825 --> 00:19:27,505
advisor existing in the business today, we are

506
00:19:27,505 --> 00:19:29,424
helping find those folks whether it's inside of

507
00:19:29,505 --> 00:19:32,179
Lp or outside of Lp If they're existing

508
00:19:32,319 --> 00:19:34,159
next generation advisors that are in the business,

509
00:19:34,640 --> 00:19:36,399
we are working with them and building a

510
00:19:36,399 --> 00:19:38,559
transition plan such they take over that business.

511
00:19:39,054 --> 00:19:40,971
And it's not having a small piece of

512
00:19:40,971 --> 00:19:43,206
equity in a much larger pie, which can

513
00:19:43,206 --> 00:19:46,000
sound really interesting. It is having equity in

514
00:19:46,000 --> 00:19:47,757
a business that you've been working in for

515
00:19:47,757 --> 00:19:49,444
sometimes 10:15,

516
00:19:49,682 --> 00:19:51,348
20 years, whatever it may be by the

517
00:19:51,348 --> 00:19:53,570
time that the transition is over and really

518
00:19:53,570 --> 00:19:55,156
controlling the destiny on what that looks like.

519
00:19:55,236 --> 00:19:57,194
And our big bet here Lewis is at

520
00:19:57,314 --> 00:19:59,538
as Lp p continues to evolve and grow

521
00:19:59,538 --> 00:20:01,841
and and make itself a more attractive platform

522
00:20:01,841 --> 00:20:03,929
that those advisers are going to rem monetize

523
00:20:04,144 --> 00:20:06,067
with Lp p down the line. That this

524
00:20:06,067 --> 00:20:08,538
becomes a per program. When advisors is ready

525
00:20:08,538 --> 00:20:10,530
to monetize, they go through the liquidity and

526
00:20:10,530 --> 00:20:12,761
succession program, and the next generation comes into

527
00:20:12,761 --> 00:20:15,644
their seat and continues that brand that independence,

528
00:20:15,803 --> 00:20:17,396
and and maybe a little bit different, but

529
00:20:17,396 --> 00:20:20,741
continue servicing clients without the obstruction of a

530
00:20:20,741 --> 00:20:22,825
mother ship entity, if you will. Well said.

531
00:20:23,063 --> 00:20:24,729
Yeah. I think that the point that the

532
00:20:24,729 --> 00:20:27,031
equity that a lot of advisers get from

533
00:20:27,031 --> 00:20:29,649
some of these acquire, there's not an open

534
00:20:29,649 --> 00:20:31,809
or free market for it. And you can

535
00:20:31,809 --> 00:20:33,979
only trade it back to the firm or

536
00:20:34,115 --> 00:20:36,579
perhaps monetize it if there's some sort of

537
00:20:36,579 --> 00:20:38,488
liquidity event. And you don't have any control

538
00:20:38,488 --> 00:20:40,977
over how that is when it is or

539
00:20:40,977 --> 00:20:42,895
who it's 2? So I I think that's

540
00:20:42,895 --> 00:20:45,372
a great point. So in this model, who

541
00:20:45,372 --> 00:20:47,940
is the ideal target? Is there a certain

542
00:20:48,019 --> 00:20:51,124
Au requirement? Like, are the advisors mostly coming

543
00:20:51,124 --> 00:20:53,512
from the outside? Maybe just paint a picture

544
00:20:53,512 --> 00:20:54,706
for who this works for?

545
00:20:55,596 --> 00:20:56,733
Sure. And it started

546
00:20:57,109 --> 00:20:59,417
a little fair, fairly narrow, but we've expanded

547
00:20:59,417 --> 00:21:01,646
the who they were the ideal target could

548
00:21:01,646 --> 00:21:03,493
look like, which is good. But I think

549
00:21:03,493 --> 00:21:06,284
it's largely reserved for the largest practices. It's

550
00:21:06,284 --> 00:21:08,198
initially at within Lp nlp. And so think

551
00:21:08,198 --> 00:21:10,032
about over a hundred million over a hundred

552
00:21:10,032 --> 00:21:11,945
and 50000000 of Au. This tends to make

553
00:21:11,945 --> 00:21:14,025
the most. Sense for the the larger businesses.

554
00:21:14,501 --> 00:21:17,039
And we initially started, we thought that having

555
00:21:17,039 --> 00:21:20,372
g 2 in place identified successor or successors,

556
00:21:20,610 --> 00:21:22,134
sense was a really good place to start.

557
00:21:22,451 --> 00:21:24,358
This created a really interesting bridge for them.

558
00:21:24,596 --> 00:21:26,820
Well, sometimes it was sons or daughters or

559
00:21:26,820 --> 00:21:27,932
just people that been there a long time,

560
00:21:28,090 --> 00:21:29,520
and this was a way for them to

561
00:21:29,520 --> 00:21:31,604
transition the business to the next generation without

562
00:21:31,604 --> 00:21:33,914
that second generation, taken on a bunch of

563
00:21:33,914 --> 00:21:35,667
debt or have for for having the the

564
00:21:35,667 --> 00:21:38,296
principal seller having to con themselves to take

565
00:21:38,296 --> 00:21:40,303
a discount on the valuation to it was

566
00:21:40,303 --> 00:21:41,281
a really interesting

567
00:21:41,658 --> 00:21:43,970
solution for that persona, if you will. But

568
00:21:43,970 --> 00:21:45,963
we've found, in, getting into this. There were

569
00:21:45,963 --> 00:21:48,490
other interesting targets or ideal targets. And so

570
00:21:48,609 --> 00:21:50,125
We've also got a version of this that

571
00:21:50,125 --> 00:21:52,198
works for folks that don't have a definitive

572
00:21:52,198 --> 00:21:54,751
timeline for retirement. And so we... You mentioned

573
00:21:54,751 --> 00:21:56,266
the many names we would call this. We

574
00:21:56,266 --> 00:21:58,260
we call that liquidity and growth, Lewis and

575
00:21:58,260 --> 00:21:59,946
that where the advisor adviser can take advantage

576
00:21:59,946 --> 00:22:01,775
of all of the benefits of a liquidity

577
00:22:01,775 --> 00:22:04,240
succession structure, but maybe doesn't have a retirement

578
00:22:04,240 --> 00:22:07,277
plan yet, timeline for themselves yet. And we

579
00:22:07,277 --> 00:22:08,945
can work with them as Jared said over

580
00:22:08,945 --> 00:22:10,160
time to identify

581
00:22:10,534 --> 00:22:10,931
successors,

582
00:22:11,408 --> 00:22:13,553
to develop those successors train them mentor them

583
00:22:13,553 --> 00:22:15,063
to get them ready for whenever that time

584
00:22:15,063 --> 00:22:15,301
comes.

585
00:22:16,430 --> 00:22:18,737
Interesting. And now that the model is off

586
00:22:18,737 --> 00:22:20,407
the ground and you have some proof of

587
00:22:20,407 --> 00:22:22,609
concept? Are you seeing that there's more interest

588
00:22:22,809 --> 00:22:25,445
from folks outside of Lp or is most

589
00:22:25,445 --> 00:22:26,804
of the focus is still internal?

590
00:22:27,682 --> 00:22:29,360
Yes. We're finding that I think it was

591
00:22:29,360 --> 00:22:32,161
less year last September, October timeframe frame. It

592
00:22:32,161 --> 00:22:34,548
took this externally took this outside our our

593
00:22:34,548 --> 00:22:36,139
walls, and we're finding that this is definitely

594
00:22:36,139 --> 00:22:36,639
resonating.

595
00:22:37,108 --> 00:22:39,573
It's resonating across really 3 major channels. We're

596
00:22:39,573 --> 00:22:41,720
seeing existing Ra that are interested in this.

597
00:22:41,879 --> 00:22:44,185
We're seeing plenty of Ib advisors that are

598
00:22:44,185 --> 00:22:46,030
interested in this. And there's also a really

599
00:22:46,030 --> 00:22:47,942
great application within the wire warehouses, and we've

600
00:22:47,942 --> 00:22:49,854
got a unique solution there, I think as

601
00:22:49,854 --> 00:22:52,085
well that are really good competitors to their

602
00:22:52,085 --> 00:22:54,156
to the existing Sunset programs that exist. So...

603
00:22:54,649 --> 00:22:56,485
And short, I think we're finding that the

604
00:22:56,485 --> 00:22:58,720
story does resonate and is fairly unique out

605
00:22:58,720 --> 00:23:00,237
of the marketplace. Yeah. I would agree.

606
00:23:06,618 --> 00:23:08,284
Can you give an example of how a

607
00:23:08,284 --> 00:23:09,950
deal structured? I mean, if you can use

608
00:23:09,950 --> 00:23:10,268
like a...

609
00:23:11,160 --> 00:23:13,400
Hypothetical example, you can share a multiple if

610
00:23:13,400 --> 00:23:15,500
you want to, but maybe just the overall

611
00:23:15,960 --> 00:23:18,279
methodology or thinking, than being as specific as

612
00:23:18,279 --> 00:23:19,720
you're allowed to be, that would be great.

613
00:23:20,295 --> 00:23:22,295
I'll keep it more high level because as

614
00:23:22,295 --> 00:23:24,055
we've grown Lewis louis, I think our deals

615
00:23:24,055 --> 00:23:25,975
have become more creative and I don't want

616
00:23:25,975 --> 00:23:27,495
anyone to listen to this podcast and come

617
00:23:27,495 --> 00:23:28,695
back and say that's not what you talked

618
00:23:28,695 --> 00:23:30,707
about. There, it's a little bit different. But

619
00:23:30,867 --> 00:23:32,784
I think that the key tenets of a

620
00:23:32,784 --> 00:23:34,462
deal for us are number 1, a hundred

621
00:23:34,462 --> 00:23:36,790
percent cash consideration that we're paying. And that

622
00:23:36,790 --> 00:23:39,120
is very different from most of the marketplace

623
00:23:39,415 --> 00:23:42,120
because Lp publicly traded company, we feel like

624
00:23:42,120 --> 00:23:44,203
if if you want, equity Lp, you can

625
00:23:44,203 --> 00:23:45,714
buy it on the exchange. You can take

626
00:23:45,714 --> 00:23:47,066
the cash that we pay you and go

627
00:23:47,066 --> 00:23:48,975
out and purchase it. Or as an employee

628
00:23:48,975 --> 00:23:51,145
of Lp, you can participate in an Lp

629
00:23:51,202 --> 00:23:53,369
employee stock. Purchase plan. However you you wanna

630
00:23:53,369 --> 00:23:55,363
structure that, but all of our deals are

631
00:23:55,363 --> 00:23:57,675
structured as a hundred percent cash. That's number

632
00:23:57,675 --> 00:24:00,307
1. Number 2 is generally, we keep it

633
00:24:00,307 --> 00:24:02,872
fairly simple. And we're paying in most cases,

634
00:24:03,111 --> 00:24:05,661
3 quarters of the deal proceeds upfront. We

635
00:24:05,661 --> 00:24:08,704
don't have growth earn that are 50 center

636
00:24:08,704 --> 00:24:10,457
of the deal in year 5 or year

637
00:24:10,457 --> 00:24:12,608
7 and, Lp p doesn't have to grow

638
00:24:12,608 --> 00:24:14,042
by a certain amount for you to get

639
00:24:14,042 --> 00:24:16,768
paid. It's fairly straightforward in that 75 to

640
00:24:16,768 --> 00:24:19,721
80 percent of the consideration is paid upfront

641
00:24:19,721 --> 00:24:22,275
at close. And then generally in most deals,

642
00:24:22,435 --> 00:24:24,111
we have a growth earn out that's paid

643
00:24:24,111 --> 00:24:26,510
in year 3, And again, different from most

644
00:24:26,510 --> 00:24:27,327
the marketplace,

645
00:24:27,779 --> 00:24:29,999
generally, that earn out is paid based on

646
00:24:29,999 --> 00:24:32,219
the growth of assets under management on Lp

647
00:24:32,219 --> 00:24:34,306
platform. And that is because in in a

648
00:24:34,306 --> 00:24:37,180
really positive way, we make money as a

649
00:24:37,180 --> 00:24:40,053
firm very differently from most of our competitors

650
00:24:40,053 --> 00:24:41,511
in this acquisition marketplace.

651
00:24:41,984 --> 00:24:43,664
And so we feel like as your assets

652
00:24:43,664 --> 00:24:46,065
grow, Lp nlp grows, we're all winning, and

653
00:24:46,065 --> 00:24:47,825
so we'll actually pay the earn out based

654
00:24:47,825 --> 00:24:49,744
on the the growth of Au on our

655
00:24:49,744 --> 00:24:50,065
platform.

656
00:24:50,955 --> 00:24:53,421
Interesting. And how do you make the economics

657
00:24:53,421 --> 00:24:56,364
work? So if Lp is paying a competitive

658
00:24:56,364 --> 00:24:56,864
multiple

659
00:24:57,334 --> 00:24:58,611
at the end of a certain period of

660
00:24:58,611 --> 00:25:01,166
time, the next generation owns the business? How

661
00:25:01,166 --> 00:25:03,002
do you make money on this? In other

662
00:25:03,002 --> 00:25:05,157
words, what's the give up? Why wouldn't every

663
00:25:05,157 --> 00:25:07,728
single person do this? If there's no trade

664
00:25:07,728 --> 00:25:10,844
off? Like, happens to the the payouts, like,

665
00:25:11,163 --> 00:25:12,761
how's does Lp recoup their investment?

666
00:25:13,320 --> 00:25:15,324
Sure. A good question. Those listen. I think

667
00:25:15,324 --> 00:25:16,753
everyone should do this. Just stuff figured.

668
00:25:18,263 --> 00:25:20,487
It's really a buy down of compensation. Right?

669
00:25:20,726 --> 00:25:21,917
So that's where Lp p makes.

670
00:25:22,647 --> 00:25:24,159
Return on its capital here. So we're buying

671
00:25:24,159 --> 00:25:26,227
the business. We're tuck your our employee model

672
00:25:26,227 --> 00:25:27,182
which just where we're were able to put

673
00:25:27,182 --> 00:25:29,011
the Big Lp bear hug around the business.

674
00:25:29,504 --> 00:25:30,863
Take a lot of things off of the

675
00:25:30,863 --> 00:25:33,281
advisers and their team's plates where we can

676
00:25:33,340 --> 00:25:35,098
have them focus on clients, and we get

677
00:25:35,098 --> 00:25:37,256
our return from keeping those assets on the

678
00:25:37,256 --> 00:25:38,948
platform and grow them because it's Jared said,

679
00:25:39,108 --> 00:25:41,580
we monetize assets as a broker dealer custodian

680
00:25:41,580 --> 00:25:43,734
differently than a lot of the ag we've

681
00:25:43,734 --> 00:25:45,967
talked about, but we also have essentially reduction

682
00:25:45,967 --> 00:25:48,121
in compensation for those advisers. We're buying down

683
00:25:48,121 --> 00:25:50,360
the station, and the the adviser team has

684
00:25:50,360 --> 00:25:52,661
an ongoing pool of variable comp, but at

685
00:25:52,661 --> 00:25:54,804
a lower level Ib and Ra payouts.

686
00:25:55,360 --> 00:25:57,528
That makes sense So is the payout that

687
00:25:57,528 --> 00:26:00,884
the adviser servicing the business or the founder

688
00:26:00,884 --> 00:26:03,041
gets after the deal? Is it similar to

689
00:26:03,041 --> 00:26:06,090
a payout perhaps that? Someone who sold their

690
00:26:06,170 --> 00:26:08,643
Ra would get. Maybe it's a 25, 30,

691
00:26:08,722 --> 00:26:11,673
35 percent payout instead of a 90 percent

692
00:26:11,673 --> 00:26:14,225
payout or 70 percent net of expenses.

693
00:26:14,719 --> 00:26:17,271
That's exactly right. So in in the traditional

694
00:26:17,271 --> 00:26:20,222
deal structure an adviser that sells... And also

695
00:26:20,222 --> 00:26:22,557
any other advisers that are servicing the practice

696
00:26:22,615 --> 00:26:25,024
alongside that adviser, and that's an important distinction

697
00:26:25,024 --> 00:26:27,022
because we do think about that holistically. It's

698
00:26:27,022 --> 00:26:29,019
not just that the seller is paid that

699
00:26:29,019 --> 00:26:31,257
30 percent of top line revenue. It's that

700
00:26:31,257 --> 00:26:34,223
any advisors servicing the clients, can be included

701
00:26:34,223 --> 00:26:36,688
in that that variable payout bucket, but typically,

702
00:26:36,846 --> 00:26:38,993
it's 30 percent of revenue, which we feel

703
00:26:38,993 --> 00:26:41,537
like is generally the minimum if you will

704
00:26:41,537 --> 00:26:43,776
to incentivize folks to come to work each

705
00:26:43,776 --> 00:26:44,331
and every day.

706
00:26:45,045 --> 00:26:47,187
The other interesting point there is that that

707
00:26:47,187 --> 00:26:49,805
30 percent is generally only fixed in the

708
00:26:49,805 --> 00:26:51,808
earn out period for us to and this

709
00:26:51,808 --> 00:26:53,804
is where we start to incentivize the next

710
00:26:53,804 --> 00:26:56,598
generation because we'll actually start to increase that

711
00:26:56,598 --> 00:26:58,753
payout after we've paid the earn out to

712
00:26:58,753 --> 00:27:01,484
incentivize the next generation advisors to continue growing,

713
00:27:01,724 --> 00:27:03,404
and we'll increase it all the way up

714
00:27:03,404 --> 00:27:05,644
to 70 percent, which is the top of

715
00:27:05,644 --> 00:27:08,285
our W 2 payout grid to incentivize them

716
00:27:08,285 --> 00:27:10,615
to continue growing, and again, I think very

717
00:27:10,615 --> 00:27:12,846
different from most of the competition that we've

718
00:27:12,846 --> 00:27:15,078
seen, which is buying a, a stream of

719
00:27:15,078 --> 00:27:16,671
cash flows and fixing that stream of cash

720
00:27:16,671 --> 00:27:18,671
flows. And they're going to pay the advisors,

721
00:27:18,909 --> 00:27:20,257
fix them out based on the deal that

722
00:27:20,257 --> 00:27:22,001
they structure. We don't really view it that

723
00:27:22,001 --> 00:27:23,984
way. We view again, growth as something where

724
00:27:23,984 --> 00:27:26,065
all of us win, and we don't want

725
00:27:26,065 --> 00:27:28,055
to hinder the growth of the business and

726
00:27:28,055 --> 00:27:29,966
own the economics on that forever. And so

727
00:27:29,966 --> 00:27:32,355
we'll actually increase that payout over time for

728
00:27:32,355 --> 00:27:34,365
forever advisors that are in the practice. Very

729
00:27:34,365 --> 00:27:36,525
interesting. So as we're talking more about this,

730
00:27:36,765 --> 00:27:38,445
the best comparison I could think of in

731
00:27:38,445 --> 00:27:39,105
the marketplace

732
00:27:39,565 --> 00:27:42,579
is a warehouse sunset deal, whether it's the

733
00:27:43,019 --> 00:27:44,240
Ups Alpha program,

734
00:27:44,700 --> 00:27:45,599
Merrill Ct,

735
00:27:46,059 --> 00:27:49,954
Morgan Stanley, Sap, Wells Fargo Summit. And most

736
00:27:50,154 --> 00:27:52,547
firms have some sort of derivative of the

737
00:27:52,547 --> 00:27:54,163
same concepts, which is

738
00:27:54,620 --> 00:27:57,890
advisory retire, they're getting a lump sum payout,

739
00:27:58,129 --> 00:27:59,485
typically over a couple of years,

740
00:27:59,978 --> 00:28:03,158
next generation takes reduced payout, and then they're

741
00:28:03,158 --> 00:28:05,702
getting full revenue credit for the business at

742
00:28:05,702 --> 00:28:08,923
days end. I know there's some major differences

743
00:28:09,061 --> 00:28:12,570
with this program, presumably on tax treatment and

744
00:28:12,570 --> 00:28:14,644
the like. But maybe you can just take

745
00:28:14,644 --> 00:28:16,420
a second to compare

746
00:28:16,798 --> 00:28:19,390
this deal that that you all are featuring

747
00:28:19,529 --> 00:28:22,009
to a typical warehouse sunset program.

748
00:28:22,970 --> 00:28:24,890
Sure. I'll take this 1. I'll start off

749
00:28:24,890 --> 00:28:26,659
that So 1, you did hit on the

750
00:28:26,659 --> 00:28:29,312
tax treatment and and disclaimer that we encourage

751
00:28:29,689 --> 00:28:31,443
anyone who sells their business to Lp p

752
00:28:31,443 --> 00:28:33,299
to retain their own tax

753
00:28:33,676 --> 00:28:36,164
representation. To help them sort out the recognition

754
00:28:36,164 --> 00:28:38,159
of the gains that they're being paid. But

755
00:28:38,159 --> 00:28:39,676
that is a really important distinction. I think

756
00:28:39,676 --> 00:28:41,830
that, like, a little bit higher level than

757
00:28:41,830 --> 00:28:44,464
that what we're buying from any adviser that

758
00:28:44,464 --> 00:28:46,288
does a deal with Lp p similar to

759
00:28:46,288 --> 00:28:47,953
everyone else who's in this industry outside of

760
00:28:47,953 --> 00:28:50,905
the is the client relationships. We are buying

761
00:28:50,905 --> 00:28:53,054
the clients a goodwill from the advisors that

762
00:28:53,054 --> 00:28:54,884
have been servicing the clients. And I think

763
00:28:54,884 --> 00:28:57,271
that is quite different from a traditional warehouse

764
00:28:57,271 --> 00:28:59,101
sunset program because in most cases,

765
00:28:59,593 --> 00:29:01,581
on that side. It's just an ordinary income

766
00:29:01,581 --> 00:29:04,206
payment. Right? You're buying down the compensation that's

767
00:29:04,206 --> 00:29:05,717
being paid to you. You don't actually own

768
00:29:05,717 --> 00:29:08,199
the clients in the warehouse constructs. So you

769
00:29:08,199 --> 00:29:10,276
can't really make the case that this should

770
00:29:10,276 --> 00:29:13,072
be a long term capital gains event that

771
00:29:13,072 --> 00:29:15,045
you're selling any kind of goodwill. And so

772
00:29:15,243 --> 00:29:17,622
that's a key differentiator for us. But I

773
00:29:17,622 --> 00:29:20,080
think more importantly than that is just the

774
00:29:20,080 --> 00:29:22,300
ownership of your destiny over the period of

775
00:29:22,300 --> 00:29:24,710
time in which that the next generation participating

776
00:29:24,710 --> 00:29:26,410
in this deal, or even the selling advisors

777
00:29:26,549 --> 00:29:28,630
participating in this deal. Most of those sunset

778
00:29:28,630 --> 00:29:32,077
programs dictate, pretty specific timeline for an advisor

779
00:29:32,077 --> 00:29:33,987
to kinda transition out or take less of

780
00:29:33,987 --> 00:29:37,089
the business after they've quote, unquote, sold to

781
00:29:37,089 --> 00:29:37,859
the mother ship

782
00:29:38,299 --> 00:29:41,740
For us, we recognize that retirement in this

783
00:29:41,740 --> 00:29:43,259
industry is not so black and white. And

784
00:29:43,339 --> 00:29:45,099
I think most advisers would agree with that

785
00:29:45,099 --> 00:29:46,708
that they don't know what they would do

786
00:29:46,708 --> 00:29:49,415
it themselves if they weren't servicing clients. So

787
00:29:49,415 --> 00:29:51,087
maybe they wanna stick around 1 or 2

788
00:29:51,087 --> 00:29:52,202
days a week or just be in more

789
00:29:52,202 --> 00:29:54,448
of a business development capacity, and We have

790
00:29:54,448 --> 00:29:56,922
the flexibility on our side to recognize that

791
00:29:56,922 --> 00:29:58,917
those outcomes can be really positive for a

792
00:29:58,917 --> 00:30:01,551
business where maybe next generation is steering the

793
00:30:01,551 --> 00:30:04,113
ship, but the selling advisor still around building

794
00:30:04,113 --> 00:30:05,942
business, whether it be on the pickle ball

795
00:30:05,942 --> 00:30:07,692
court, which I think is more popular than

796
00:30:07,692 --> 00:30:10,017
golf or the golf port. But in any

797
00:30:10,017 --> 00:30:12,170
case, there's... I think the flexibility that we

798
00:30:12,170 --> 00:30:14,085
have to structure something that really meets both

799
00:30:14,085 --> 00:30:16,717
the selling advisors needs and the next generation

800
00:30:16,717 --> 00:30:18,790
advisors needs is a is a key differentiator

801
00:30:18,790 --> 00:30:21,029
there. And then I think the third piece

802
00:30:21,029 --> 00:30:23,966
is just this successor advisor program component of

803
00:30:23,966 --> 00:30:26,982
what we've come up with is very different

804
00:30:26,982 --> 00:30:29,303
from what a sec... Successor, a next generation

805
00:30:29,303 --> 00:30:32,168
advisor signs up to in the wire in

806
00:30:32,168 --> 00:30:34,317
that, again, we want you to control your

807
00:30:34,317 --> 00:30:36,227
destiny. And as Jeremy mentioned, this is built

808
00:30:36,227 --> 00:30:38,072
on Lp p 2 model, which is a

809
00:30:38,072 --> 00:30:41,245
really fast growing component of Lp lps platform,

810
00:30:41,562 --> 00:30:44,021
but we've got other affiliation models inside of

811
00:30:44,101 --> 00:30:45,980
Lp. And so if someone decides that is

812
00:30:46,179 --> 00:30:47,935
at the end of this transition period, they

813
00:30:47,935 --> 00:30:49,931
really wanna run their own R. Well, they

814
00:30:49,931 --> 00:30:51,927
can custody you with Lp and there's really

815
00:30:51,927 --> 00:30:53,923
no transition, and there's no disruption and they

816
00:30:53,923 --> 00:30:56,094
don't the break away from anywhere. Or maybe

817
00:30:56,094 --> 00:30:57,692
they decide they just wanna be paid in

818
00:30:57,692 --> 00:30:59,930
a 10 99 capacity, which is obviously our

819
00:30:59,930 --> 00:31:01,688
bread and butter. They can go and do

820
00:31:01,688 --> 00:31:03,766
that as well or they can stay in

821
00:31:03,766 --> 00:31:06,174
the W 2 construct and Jeremy describes it

822
00:31:06,174 --> 00:31:07,923
as a really nice Lp p Bear hug.

823
00:31:08,162 --> 00:31:09,672
I describe it as 1 of the few

824
00:31:09,752 --> 00:31:12,319
Fortune 500 companies that has an operating platform

825
00:31:12,376 --> 00:31:13,091
supporting advisors.

826
00:31:13,585 --> 00:31:15,424
Who can just show up to work and

827
00:31:15,424 --> 00:31:17,585
service their clients. And so we're betting that

828
00:31:17,585 --> 00:31:18,865
a lot of folks will wanna stay in

829
00:31:18,865 --> 00:31:21,285
that construct as well. But again, the flexibility

830
00:31:21,424 --> 00:31:23,675
to do what you want after that transition

831
00:31:23,675 --> 00:31:25,506
period over is is pretty different for most

832
00:31:25,506 --> 00:31:27,815
of those programs. Yeah. I think that's very

833
00:31:27,815 --> 00:31:31,173
well encapsulated and it's thinking that the... With

834
00:31:31,173 --> 00:31:34,859
the wire sunset deals, the retiring adviser monetize,

835
00:31:35,315 --> 00:31:37,567
they're on their glide path out. They retire

836
00:31:37,943 --> 00:31:40,822
the next gen adviser, is putting in all

837
00:31:40,822 --> 00:31:43,681
the sweat equity to keep the client relationships,

838
00:31:43,999 --> 00:31:46,143
manage the business, they get a lower payout

839
00:31:46,143 --> 00:31:47,732
over the duration of the deal, which is

840
00:31:47,732 --> 00:31:50,770
reasonable to in essence payoff the... What the

841
00:31:50,770 --> 00:31:53,481
retiring advisor got. But in the day, the

842
00:31:53,481 --> 00:31:56,293
employer is still owning the business. So it's

843
00:31:56,352 --> 00:31:58,446
sweat equity to in essence

844
00:31:58,758 --> 00:31:59,258
transfer

845
00:31:59,635 --> 00:32:01,786
ownership or retain ownership with the same entity,

846
00:32:02,025 --> 00:32:04,415
which is the wire or the bank. So

847
00:32:04,415 --> 00:32:06,088
to me, the most interesting element of what

848
00:32:06,088 --> 00:32:08,811
you're doing is the fact that the next

849
00:32:08,811 --> 00:32:09,709
generation adviser

850
00:32:10,085 --> 00:32:12,393
actually owns the entity owns the equity at

851
00:32:12,393 --> 00:32:14,383
days end, and then can do with it

852
00:32:14,383 --> 00:32:15,816
what they want. Sell it again,

853
00:32:16,389 --> 00:32:19,021
move it and have agency over what that

854
00:32:19,021 --> 00:32:21,095
looks like. So it is a seemingly a

855
00:32:21,095 --> 00:32:24,386
better deal for certainly the next generation adviser

856
00:32:24,444 --> 00:32:26,851
especially. So well said, how do you guys

857
00:32:26,851 --> 00:32:28,148
view this deal

858
00:32:28,524 --> 00:32:29,581
comparing to

859
00:32:30,037 --> 00:32:32,268
other typical M and A transactions that we

860
00:32:32,268 --> 00:32:33,542
see in the Ra world. I think we

861
00:32:33,542 --> 00:32:34,976
we've paid on some of it, the cash

862
00:32:34,976 --> 00:32:37,879
first... Equity. But are there any other key

863
00:32:37,936 --> 00:32:39,528
distinctions that we haven't mentioned that are worth

864
00:32:39,528 --> 00:32:39,846
calling out?

865
00:32:40,881 --> 00:32:42,233
I think you're right, Louis. We hit on

866
00:32:42,233 --> 00:32:43,203
a lot of them and I'll just try

867
00:32:43,203 --> 00:32:44,954
to summarize. So there's a lot of things

868
00:32:44,954 --> 00:32:46,785
that are similar and that was designed intentionally

869
00:32:46,785 --> 00:32:48,774
that way. We wanted to mirror the stuff

870
00:32:48,774 --> 00:32:50,445
that was working well in the marketplace, but

871
00:32:50,445 --> 00:32:52,515
then add some Lp peel flavor. And so

872
00:32:52,515 --> 00:32:54,769
try deal structures are similar as we've described,

873
00:32:55,009 --> 00:32:56,769
the exception there being, we're we're a hundred

874
00:32:56,769 --> 00:32:58,929
percent cash up upfront. We're trying to take

875
00:32:58,929 --> 00:33:01,009
things off advisors plates to make them more

876
00:33:01,009 --> 00:33:02,783
efficient of def fab and focus on their

877
00:33:02,783 --> 00:33:03,981
clients. So the reason they got in the

878
00:33:03,981 --> 00:33:05,659
business in the first place. And so that's

879
00:33:05,659 --> 00:33:07,178
similar to what you'll find in the marketplace.

880
00:33:07,737 --> 00:33:10,708
But we are also protecting that local flavor

881
00:33:10,708 --> 00:33:13,425
that entrepreneurial spirit. So while we're taking stuff

882
00:33:13,425 --> 00:33:15,343
off the plate, we're not changing the brand.

883
00:33:15,503 --> 00:33:16,862
We're not changing the the way they work

884
00:33:16,862 --> 00:33:19,194
with clients. We're not changing their staff, and

885
00:33:19,194 --> 00:33:20,792
making sure that we we ring fence that

886
00:33:20,792 --> 00:33:23,209
and protect it. So that is somewhat unique

887
00:33:23,269 --> 00:33:23,988
in the marketplace,

888
00:33:24,387 --> 00:33:25,985
and then providing that path to growth, and

889
00:33:26,145 --> 00:33:27,674
I think the path to g 2 is

890
00:33:27,674 --> 00:33:29,746
the real big differentiator we've talked about just

891
00:33:29,746 --> 00:33:31,340
to summarize that. That that is a big

892
00:33:31,340 --> 00:33:33,093
thing that's different than what you'll find out

893
00:33:33,093 --> 00:33:34,859
in the marketplace. 1 thing, Jared, and I

894
00:33:34,859 --> 00:33:36,053
talk about all the time is it's going

895
00:33:36,053 --> 00:33:37,962
to be interesting to see. And you talked

896
00:33:37,962 --> 00:33:39,792
about the next breakaway wave. I think you're

897
00:33:39,792 --> 00:33:42,497
spot on. But, like, what's gonna happen when

898
00:33:42,497 --> 00:33:44,662
these... Private equity backed firms go to sell?

899
00:33:45,061 --> 00:33:46,813
What are they gonna do to put lipstick

900
00:33:46,813 --> 00:33:47,848
on the pig so to speak. What are

901
00:33:47,848 --> 00:33:48,964
they gonna do to pretty it up to

902
00:33:48,964 --> 00:33:50,318
make it ready for sale. What's that gonna

903
00:33:50,318 --> 00:33:52,561
mean for the talent it's there, that can

904
00:33:52,561 --> 00:33:54,704
mean for the client experience, and are we

905
00:33:54,704 --> 00:33:56,688
gonna have a wave of next gen talent

906
00:33:56,688 --> 00:33:58,513
that leads those firms when they go through

907
00:33:58,513 --> 00:34:00,836
that transaction. So and so we built it

908
00:34:00,836 --> 00:34:02,351
differently. So we don't have that issue.

909
00:34:03,468 --> 00:34:05,861
Interesting. I was just gonna add there, Lewis.

910
00:34:06,100 --> 00:34:08,094
And another key in just that to Hammer

911
00:34:08,094 --> 00:34:10,972
home points. We've talked about we're not doing

912
00:34:10,972 --> 00:34:14,064
this with the expectation that we bundle up

913
00:34:14,064 --> 00:34:16,443
all these advisers and sell them somewhere else

914
00:34:16,443 --> 00:34:17,236
in a few years.

915
00:34:17,889 --> 00:34:19,724
And we're not restrained by those timelines.

916
00:34:20,203 --> 00:34:21,880
And I think we're starting to see that

917
00:34:21,880 --> 00:34:25,072
narrative play out in the marketplace where what

918
00:34:25,072 --> 00:34:26,291
is the next trade

919
00:34:26,604 --> 00:34:28,362
for many of the ag who've bought up

920
00:34:28,362 --> 00:34:30,280
these advisers? And what happens next if they

921
00:34:30,280 --> 00:34:32,438
can't trade? Are they going concerns for the

922
00:34:32,438 --> 00:34:35,155
next 20, 25 years or what really is

923
00:34:35,155 --> 00:34:37,322
the next phase of the evolution for the

924
00:34:37,401 --> 00:34:39,393
Pe backed roll up. And for us, I

925
00:34:39,393 --> 00:34:41,463
called that I was a key differentiator because

926
00:34:41,463 --> 00:34:44,490
we're doing planning here, strategic planning that goes

927
00:34:44,490 --> 00:34:45,539
out 10:15,

928
00:34:45,778 --> 00:34:48,244
20 years. We built a program that rewards

929
00:34:48,244 --> 00:34:50,311
advisors over the course of 10 to 15

930
00:34:50,311 --> 00:34:52,538
years, and we're thinking that far down the

931
00:34:52,538 --> 00:34:52,776
line,

932
00:34:53,348 --> 00:34:55,499
about the perpetual nature of this. And I

933
00:34:55,499 --> 00:34:57,490
think it influences everything that we do because

934
00:34:57,490 --> 00:34:59,504
we do believe in the power of independent

935
00:34:59,641 --> 00:35:02,212
advice. We do believe that disrupting an adviser

936
00:35:02,364 --> 00:35:04,034
is not the right thing to do that

937
00:35:04,034 --> 00:35:06,499
the adviser mediated marketplace is is here to

938
00:35:06,499 --> 00:35:08,567
stay. And that's... Again, comes back to why

939
00:35:08,567 --> 00:35:10,339
we built this and how we're investing

940
00:35:10,809 --> 00:35:13,195
the resources to continue growing this and growing

941
00:35:13,195 --> 00:35:15,741
our reach to both serve Lp advisors and

942
00:35:15,741 --> 00:35:17,651
and welcome advisors from outside of Lp.

943
00:35:18,142 --> 00:35:20,522
To participate a deal like this. Very interesting.

944
00:35:20,760 --> 00:35:22,108
So, Jeremy, I had a question for you.

945
00:35:22,267 --> 00:35:24,884
You've been in the Ib world with For

946
00:35:24,884 --> 00:35:25,757
most of your career.

947
00:35:26,248 --> 00:35:29,910
From my experience, if a independent practice under

948
00:35:29,910 --> 00:35:32,695
a broker dealer is going to sell. We

949
00:35:32,695 --> 00:35:34,803
typically see a bit lower

950
00:35:35,181 --> 00:35:38,373
valuations than an R looking to sell. Some

951
00:35:38,373 --> 00:35:40,767
of its business mix driven, is it all

952
00:35:40,767 --> 00:35:41,746
fee based versus

953
00:35:42,218 --> 00:35:45,083
30 percent fee based with 70 percent variable

954
00:35:45,083 --> 00:35:47,630
annuities. So there's some of that. But more

955
00:35:47,630 --> 00:35:48,107
importantly,

956
00:35:48,585 --> 00:35:51,472
historically, we've seen a lack of capital behind

957
00:35:51,862 --> 00:35:53,692
acquire who sit within a Bd. You don't

958
00:35:53,692 --> 00:35:56,340
typically see private equity firms backing

959
00:35:56,794 --> 00:35:57,771
Ib practices

960
00:35:58,146 --> 00:36:00,711
and most often, a buyer is going to

961
00:36:00,711 --> 00:36:03,102
either be the internal team, which can still

962
00:36:03,102 --> 00:36:05,493
be the case, or it's gonna be a

963
00:36:05,493 --> 00:36:08,224
local practice. Who maybe done 1 deal, maybe

964
00:36:08,224 --> 00:36:09,984
it's just done 2 deals, but may or

965
00:36:09,984 --> 00:36:11,284
may not have the

966
00:36:11,664 --> 00:36:14,144
robust capital backing that a private equity backed

967
00:36:14,224 --> 00:36:17,348
R or Lp p itself would have. So

968
00:36:17,428 --> 00:36:18,860
I have a follow up to that, but

969
00:36:18,860 --> 00:36:20,611
first off, do you agree with this concept?

970
00:36:20,850 --> 00:36:22,362
And if not, how do you poke holes

971
00:36:22,362 --> 00:36:24,932
in it? Sure. And I'd get that's a

972
00:36:24,932 --> 00:36:26,770
position in my perspective in the marketplace for

973
00:36:26,770 --> 00:36:28,687
sure. And and again, Mike... As you said,

974
00:36:28,847 --> 00:36:30,286
my experience is has largely been an Lp

975
00:36:30,286 --> 00:36:32,527
nlp And hills is a very large ecosystem

976
00:36:32,527 --> 00:36:34,590
it may look a little differently than look

977
00:36:34,590 --> 00:36:35,940
a little different than some of the other

978
00:36:35,940 --> 00:36:36,757
smaller Ib

979
00:36:37,289 --> 00:36:39,512
ecosystems out there. But in my experience,

980
00:36:40,005 --> 00:36:42,264
We haven't found much of a difference with

981
00:36:42,565 --> 00:36:44,644
valuation, which was interesting, And we actually now

982
00:36:44,644 --> 00:36:47,364
fully disclosed Sponsored the study, but advisor growth

983
00:36:47,364 --> 00:36:49,364
strategies did a study around that and thinking

984
00:36:49,364 --> 00:36:51,775
about value... Dispel valuation this and what really

985
00:36:51,775 --> 00:36:54,090
drove value within advisors that she had a

986
00:36:54,090 --> 00:36:56,086
shared Ad versus those that had their own.

987
00:36:56,645 --> 00:36:58,082
And there wasn't much of a difference. And

988
00:36:58,082 --> 00:36:59,414
in the M and A data that we've

989
00:36:59,534 --> 00:37:01,914
seen inside of Lp walls, there isn't much

990
00:37:01,914 --> 00:37:03,740
of a difference in terms of Eb multiples

991
00:37:03,740 --> 00:37:06,201
or revenue multiples or anything like that. What

992
00:37:06,201 --> 00:37:08,289
we've found is and you... Your business mix

993
00:37:08,289 --> 00:37:09,489
point is a really good. Yeah, to the

994
00:37:09,489 --> 00:37:11,170
extent, the business mix is different sure, there's

995
00:37:11,170 --> 00:37:12,769
gonna be a difference in valuation. But if

996
00:37:12,769 --> 00:37:14,690
you take a a like to like practice

997
00:37:14,690 --> 00:37:16,210
1, it looks very similar in terms of

998
00:37:16,210 --> 00:37:18,214
business mix between fee based than Broker dealer

999
00:37:18,214 --> 00:37:20,835
business. And they're of similar size and similar

1000
00:37:20,835 --> 00:37:22,424
growth rates. There shouldn't be much of a

1001
00:37:22,424 --> 00:37:24,807
difference in valuation. What we found is the

1002
00:37:24,807 --> 00:37:27,047
real big drivers of of value or the

1003
00:37:27,047 --> 00:37:28,184
standards, profitability,

1004
00:37:28,797 --> 00:37:30,627
growth. Am I in a good market that

1005
00:37:30,627 --> 00:37:33,513
has prospects for continued growth and expansion

1006
00:37:33,823 --> 00:37:35,572
And finally, and and very important 1 is

1007
00:37:35,572 --> 00:37:37,322
the team and talent you've got there. And

1008
00:37:37,322 --> 00:37:38,992
so those are the big 4 are really

1009
00:37:38,992 --> 00:37:39,809
what determines

1010
00:37:40,184 --> 00:37:42,827
valuation or a premium valuation. How advisors conduct

1011
00:37:42,827 --> 00:37:44,982
business under what type of construct is less

1012
00:37:44,982 --> 00:37:47,217
important we found. And... Because there's puts and

1013
00:37:47,217 --> 00:37:49,052
takes. Right? So be having your own R,

1014
00:37:49,212 --> 00:37:50,900
you've gotta do compliant. Gotta... You're on the

1015
00:37:50,900 --> 00:37:52,171
hook for that, and you got the Fcc

1016
00:37:52,171 --> 00:37:53,521
knock it on your door and making sure

1017
00:37:53,521 --> 00:37:54,952
you're doing everything above board.

1018
00:37:55,826 --> 00:37:58,130
Visor under a shared, like, at Lp. Don't

1019
00:37:58,130 --> 00:37:59,737
have to worry about that. Lp takes care

1020
00:37:59,737 --> 00:38:01,494
of it form. It's a version of outsourcing

1021
00:38:01,494 --> 00:38:03,170
and it creates scale in their business. And

1022
00:38:03,170 --> 00:38:05,724
so there's puts and takes there, but my

1023
00:38:05,724 --> 00:38:07,240
experience, I haven't seen much of a difference.

1024
00:38:07,400 --> 00:38:09,250
That just but 1 point, I would say

1025
00:38:09,250 --> 00:38:10,447
the exception of that is the point you

1026
00:38:10,447 --> 00:38:12,623
made. The more buyers that are well capitalized

1027
00:38:13,559 --> 00:38:15,315
and the on the market may drive up,

1028
00:38:16,129 --> 00:38:17,647
valuation, and we've seen that in the marketplace.

1029
00:38:18,126 --> 00:38:19,804
But the big question is how high will

1030
00:38:19,804 --> 00:38:21,083
that go? Will that remain Or where will

1031
00:38:21,083 --> 00:38:22,761
that come back? And so that's the 1

1032
00:38:22,761 --> 00:38:24,453
exception to though with everything. I've said Yep.

1033
00:38:24,771 --> 00:38:26,203
That's exactly the way that I've seen it

1034
00:38:26,203 --> 00:38:28,271
too with some of the transactions that we

1035
00:38:28,271 --> 00:38:28,771
facilitated

1036
00:38:29,146 --> 00:38:31,055
is that a like for like business.

1037
00:38:31,550 --> 00:38:34,829
The value isn't necessarily any different. Ultimately, someone's

1038
00:38:34,829 --> 00:38:36,989
gonna pay what they think it's worth, and

1039
00:38:36,989 --> 00:38:39,083
that's gonna jive the price. But I do

1040
00:38:39,083 --> 00:38:41,081
think there's credence to what you hit on

1041
00:38:41,161 --> 00:38:43,878
Jeremy about how if there's more bidder, it

1042
00:38:43,878 --> 00:38:46,195
has the potential to drive up the price.

1043
00:38:46,529 --> 00:38:48,862
So in the Ra world, if you have

1044
00:38:48,999 --> 00:38:49,818
25

1045
00:38:49,876 --> 00:38:51,868
private equity back to acquire who are gun

1046
00:38:51,868 --> 00:38:54,614
for a deal, naturally, you'd would expect someone

1047
00:38:54,673 --> 00:38:56,748
to go to the kind of the next

1048
00:38:56,748 --> 00:39:00,021
multiple range and competition does drive price. So

1049
00:39:00,021 --> 00:39:01,777
fundamentally, I agree with you and that that's

1050
00:39:01,777 --> 00:39:04,023
what I've seen to, the valuation shouldn't be

1051
00:39:04,023 --> 00:39:07,467
different, but typically with more external bidder, there's

1052
00:39:07,523 --> 00:39:09,274
potential to increase the valuation.

1053
00:39:13,430 --> 00:39:14,706
Let me go to my next question, which

1054
00:39:14,706 --> 00:39:17,997
is related. Let's say an Lp nlp practice

1055
00:39:18,056 --> 00:39:21,506
or any practice we're looking to sell to

1056
00:39:21,739 --> 00:39:22,557
the liquidity

1057
00:39:23,013 --> 00:39:26,141
succession program? Wouldn't they con get a higher

1058
00:39:26,437 --> 00:39:29,166
valuation if they shop the deal to dozens

1059
00:39:29,303 --> 00:39:32,812
of ex internal well capitalized acquire or even

1060
00:39:32,812 --> 00:39:35,430
shopped it within Lp nlp ecosystem of well

1061
00:39:35,430 --> 00:39:36,223
capitalized buyers.

1062
00:39:36,778 --> 00:39:38,365
It's a great question. I was going to

1063
00:39:38,365 --> 00:39:40,300
interrupt you guys before, but the the person

1064
00:39:40,300 --> 00:39:41,659
that's helping us with this told me not

1065
00:39:41,659 --> 00:39:43,420
to talk over, Jeremy because we're on 1

1066
00:39:43,420 --> 00:39:45,179
mic, so I didn't do it. But where

1067
00:39:45,179 --> 00:39:46,619
where I wanted to, the point that I

1068
00:39:46,619 --> 00:39:48,471
wanted to get to and I'll just share

1069
00:39:48,471 --> 00:39:50,381
an Anecdote Lewis. We were going through a

1070
00:39:50,381 --> 00:39:51,438
process recently

1071
00:39:51,893 --> 00:39:53,485
with a center of influence, who had brought

1072
00:39:53,485 --> 00:39:55,952
us a deal from outside of Lp, and

1073
00:39:55,952 --> 00:39:57,066
it was an independent. And we ended ended

1074
00:39:57,066 --> 00:39:59,782
end winning this process. I wanna be forthcoming

1075
00:39:59,782 --> 00:40:02,324
with that. But what came back was you

1076
00:40:02,324 --> 00:40:04,944
guys are by far paying the highest cash

1077
00:40:04,944 --> 00:40:06,771
multiple of all the offers that we saw.

1078
00:40:07,184 --> 00:40:09,672
But you're the lowest. You're the lowest offer

1079
00:40:09,729 --> 00:40:11,400
of all the offers that we saw. I

1080
00:40:11,479 --> 00:40:13,627
I think that's a key point about open

1081
00:40:13,627 --> 00:40:16,188
marketplace and multiples and valuation is that we

1082
00:40:16,188 --> 00:40:18,422
come back to... We pay a hundred percent

1083
00:40:18,422 --> 00:40:20,815
cash consideration in these deals. We think cash

1084
00:40:20,815 --> 00:40:23,287
is king. Again, we're a publicly traded company.

1085
00:40:23,447 --> 00:40:25,361
We'd be very happy for advisors to to

1086
00:40:25,361 --> 00:40:27,046
buy our stock. But in a lot of

1087
00:40:27,046 --> 00:40:28,635
cases, I think when you start to see

1088
00:40:28,635 --> 00:40:31,336
these really inflated multiples, a lot of it

1089
00:40:31,336 --> 00:40:32,710
is in private

1090
00:40:33,179 --> 00:40:36,130
e liquid equity without a confirmed date on

1091
00:40:36,130 --> 00:40:37,406
whether or not adviser is going to be

1092
00:40:37,406 --> 00:40:39,161
able to get liquidity out of that deal.

1093
00:40:39,559 --> 00:40:41,394
And further to that, I think we're starting

1094
00:40:41,394 --> 00:40:42,931
to see a little bit of a reckoning

1095
00:40:43,404 --> 00:40:45,961
with what kinds of multiples these ag are

1096
00:40:45,961 --> 00:40:47,479
going to achieve in the marketplace. And I

1097
00:40:47,479 --> 00:40:48,699
think a lot of the assumptions

1098
00:40:49,157 --> 00:40:50,755
that are built into a deal when an

1099
00:40:50,755 --> 00:40:52,606
advisor gets this crazy multiple and we've all

1100
00:40:52,606 --> 00:40:54,121
been to the conferences and we've heard my

1101
00:40:54,121 --> 00:40:55,637
buddy down the street got x and my

1102
00:40:55,637 --> 00:40:57,711
buddy up the street got y. Well, a

1103
00:40:57,711 --> 00:40:59,465
lot of those assumptions are based on a

1104
00:40:59,465 --> 00:41:01,714
firm trading at a really specific mall And

1105
00:41:01,873 --> 00:41:04,588
I think where we sit our opinion is

1106
00:41:04,588 --> 00:41:07,063
that cash is king because it's certain. And

1107
00:41:07,063 --> 00:41:10,416
the market clearing transactions that have happened to

1108
00:41:10,416 --> 00:41:10,916
affirm

1109
00:41:11,229 --> 00:41:13,623
those pretty crazy multiples. I have either been

1110
00:41:13,623 --> 00:41:15,697
to a large strategic that might not be

1111
00:41:15,697 --> 00:41:17,134
in the interest of the advisors that are

1112
00:41:17,134 --> 00:41:19,698
being sold to that place. Or into the

1113
00:41:19,698 --> 00:41:21,527
public markets, but we're not seeing as much

1114
00:41:21,527 --> 00:41:22,265
of that

1115
00:41:22,640 --> 00:41:24,468
anymore. And so I don't know if that

1116
00:41:24,468 --> 00:41:26,773
takes your question sideways, but I I think

1117
00:41:26,773 --> 00:41:28,938
what we question is the the validity of

1118
00:41:28,938 --> 00:41:30,157
this... Of the assumptions

1119
00:41:30,616 --> 00:41:32,613
under some of those valuations that advisors are

1120
00:41:32,613 --> 00:41:34,131
seeing the marketplace, and we just encourage you

1121
00:41:34,131 --> 00:41:35,329
do your reverse due diligence.

1122
00:41:35,903 --> 00:41:37,896
Dig into the numbers, dig into the valuations

1123
00:41:37,896 --> 00:41:39,331
that you're seeing, the projections that you're seeing,

1124
00:41:39,411 --> 00:41:42,041
are you banking on something that's realistic? Or

1125
00:41:42,041 --> 00:41:44,010
would you be better taking your cash and

1126
00:41:44,129 --> 00:41:46,202
putting it into a fund funds that's betting

1127
00:41:46,202 --> 00:41:47,717
on the best managers. I don't know. I'm

1128
00:41:47,717 --> 00:41:49,710
not counseling anyone either which way. We just

1129
00:41:49,710 --> 00:41:51,088
have a healthy skepticism

1130
00:41:51,465 --> 00:41:52,900
of how the industry is talking about it.

1131
00:41:53,314 --> 00:41:54,751
Yeah. So it sounds like what you're saying

1132
00:41:54,751 --> 00:41:57,805
is it's the structure matters more than the

1133
00:41:57,864 --> 00:42:00,657
valuation. And you feel like the structure you

1134
00:42:00,657 --> 00:42:03,698
have in place is perhaps more advantageous than

1135
00:42:03,698 --> 00:42:06,720
other bidder, even if the overall valuation might

1136
00:42:06,720 --> 00:42:09,582
be lower because you're not chopping the deal

1137
00:42:09,582 --> 00:42:11,331
to 20, 30 different,

1138
00:42:12,063 --> 00:42:12,542
potential buyers.

1139
00:42:13,818 --> 00:42:15,652
Lewis, I was gonna say something very similar

1140
00:42:15,652 --> 00:42:17,327
to that. I think you're right. I mean,

1141
00:42:17,487 --> 00:42:19,401
there's 20 to... You know, 20 25 bidder.

1142
00:42:19,561 --> 00:42:21,395
They all the offers look very similar.

1143
00:42:21,969 --> 00:42:23,568
I think Ours is very different. And the

1144
00:42:23,568 --> 00:42:25,166
and the reasons we've talked about. And so

1145
00:42:25,166 --> 00:42:25,906
you're essentially

1146
00:42:26,285 --> 00:42:28,283
comparing apples and oranges in some cases as

1147
00:42:28,283 --> 00:42:30,201
far as what the experience is going to

1148
00:42:30,201 --> 00:42:32,052
be on the other side, only for the

1149
00:42:32,052 --> 00:42:33,807
selling advisors, but also for their next gen.

1150
00:42:33,966 --> 00:42:35,561
And so that's the thing that they need

1151
00:42:35,561 --> 00:42:37,396
to evaluate is but I want 1 of

1152
00:42:37,396 --> 00:42:39,252
these 20 offers that all look very similar

1153
00:42:39,390 --> 00:42:40,826
when I'm going into a model that all

1154
00:42:40,826 --> 00:42:42,516
feels very similar. Or do I want something

1155
00:42:42,516 --> 00:42:44,032
a little bit different. And so it's all

1156
00:42:44,032 --> 00:42:45,069
about fit at the end of the day?

1157
00:42:45,228 --> 00:42:46,904
It's not all always about the highest price?

1158
00:42:47,542 --> 00:42:50,110
Well said, similar So either of both you,

1159
00:42:50,350 --> 00:42:53,302
what attributes do the best businesses have as

1160
00:42:53,302 --> 00:42:55,936
they go through your valuations or put another

1161
00:42:55,936 --> 00:42:58,649
way. If someone's listening to this, they're thinking

1162
00:42:58,649 --> 00:43:01,027
about how to maximize the long term value

1163
00:43:01,027 --> 00:43:03,723
of their business, what are the key things

1164
00:43:03,723 --> 00:43:06,126
they should... Pay attention to or try to

1165
00:43:06,126 --> 00:43:09,074
influence before they go through a transaction process.

1166
00:43:09,632 --> 00:43:11,146
Yeah. We spend a lot of time with

1167
00:43:11,146 --> 00:43:12,978
our advisors and talking about this, and we

1168
00:43:12,978 --> 00:43:15,779
have some interesting off. Within Lp where we

1169
00:43:15,779 --> 00:43:17,130
actually can hold up a mirror to the

1170
00:43:17,130 --> 00:43:18,483
adviser and say here, let's look at your

1171
00:43:18,483 --> 00:43:20,232
practice right now. If you've got a 3

1172
00:43:20,232 --> 00:43:21,663
year timeline. Here's some things we can do

1173
00:43:21,663 --> 00:43:23,913
in the interim to really get your business

1174
00:43:24,064 --> 00:43:26,617
ready to sell? And so things like looking

1175
00:43:26,617 --> 00:43:28,291
at something things we talked about. Do you

1176
00:43:28,291 --> 00:43:30,923
have sustainable organic growth within the business, do

1177
00:43:30,923 --> 00:43:32,519
you have the right talent on board and

1178
00:43:32,519 --> 00:43:35,645
if you develop that talent? You identified potential

1179
00:43:35,645 --> 00:43:37,721
successors in the business. 1 thing we've done

1180
00:43:37,721 --> 00:43:39,715
is we've actually looked at their the underlying

1181
00:43:39,715 --> 00:43:42,324
households are there some households that no longer

1182
00:43:42,444 --> 00:43:44,520
fit, your service model or on a good

1183
00:43:44,520 --> 00:43:46,276
fit for your business and can Help p

1184
00:43:46,276 --> 00:43:48,991
purchase them, support them with our essentially our

1185
00:43:48,991 --> 00:43:51,146
investor focused solutions team, a team of advisors

1186
00:43:51,146 --> 00:43:52,159
that can work with those

1187
00:43:52,677 --> 00:43:56,019
smaller somewhat mismatched households that advisors no longer

1188
00:43:56,019 --> 00:43:58,008
wanna support. We can do that for them,

1189
00:43:58,644 --> 00:44:00,634
capital for the... For for in exchange for

1190
00:44:00,634 --> 00:44:02,485
that and it creates capacity in the business

1191
00:44:02,485 --> 00:44:04,724
as well as capital, potentially deploy for growth,

1192
00:44:04,885 --> 00:44:07,445
which is a really interesting virtuous cycle if

1193
00:44:07,445 --> 00:44:09,845
you will. We have advisors that use that

1194
00:44:09,845 --> 00:44:10,325
partial book,

1195
00:44:10,977 --> 00:44:13,046
solution on a regular basis. And once a

1196
00:44:13,046 --> 00:44:15,035
quarter once a year, they come back and

1197
00:44:15,035 --> 00:44:16,387
as they continue to grow the top end

1198
00:44:16,387 --> 00:44:18,474
of their business, they're able to to maybe

1199
00:44:18,474 --> 00:44:20,155
find a better fit for their lower end

1200
00:44:20,155 --> 00:44:21,514
of their book of business. Just as an

1201
00:44:21,514 --> 00:44:23,674
example of things that folks do to get

1202
00:44:23,674 --> 00:44:25,914
their businesses ready for, and I'll, know, the

1203
00:44:25,914 --> 00:44:29,036
ultimate monetization event. Well said, Jared or Jeremy,

1204
00:44:29,433 --> 00:44:32,132
what's your view on where valuations are heading?

1205
00:44:32,449 --> 00:44:34,195
Do you think we've reached the peak or

1206
00:44:34,195 --> 00:44:36,671
is there room to run? I've held the

1207
00:44:36,671 --> 00:44:38,418
view for a while that I think it's

1208
00:44:38,418 --> 00:44:40,482
subsided, but it felt like the last few

1209
00:44:40,482 --> 00:44:43,261
years, we were approaching bubble territory, where the

1210
00:44:43,261 --> 00:44:44,928
price of these assets just kept going up

1211
00:44:44,928 --> 00:44:46,396
and up, and, ultimately,

1212
00:44:46,929 --> 00:44:48,677
it's hard to see how the plane was

1213
00:44:48,677 --> 00:44:51,697
gonna land. If, ultimately, there's a maximum amount

1214
00:44:51,697 --> 00:44:54,002
that the next private equity sponsor is gonna

1215
00:44:54,002 --> 00:44:56,083
pay. To buy 1 of these large firms,

1216
00:44:56,480 --> 00:44:59,340
how do they keep increasing the valuation without

1217
00:44:59,340 --> 00:44:59,840
some

1218
00:45:00,294 --> 00:45:02,439
crazy external factor happening that we're unaware of?

1219
00:45:02,677 --> 00:45:04,448
So to what's your viewpoint on this? Do

1220
00:45:04,448 --> 00:45:05,108
you think

1221
00:45:05,487 --> 00:45:07,085
valuations will go up? Where do we think

1222
00:45:07,085 --> 00:45:09,902
we've reached a point of equilibrium or maybe

1223
00:45:10,041 --> 00:45:10,761
valuations might go down?

1224
00:45:12,213 --> 00:45:14,758
I think we've reached the point of equilibrium.

1225
00:45:15,155 --> 00:45:17,383
And as I mentioned before, I think what

1226
00:45:17,383 --> 00:45:19,569
we're starting to see is a... Fundamental

1227
00:45:19,946 --> 00:45:23,454
question around what the exit is for some

1228
00:45:23,454 --> 00:45:25,527
of these private equity act firms and what

1229
00:45:25,527 --> 00:45:27,702
the future holds. And I think that'll naturally

1230
00:45:28,333 --> 00:45:31,520
lead to a normalization of where multiples are.

1231
00:45:31,918 --> 00:45:33,693
I don't think it's going to go down

1232
00:45:33,831 --> 00:45:35,982
by half. But I think some of the

1233
00:45:35,982 --> 00:45:37,988
crazy numbers that we've seen thrown around are

1234
00:45:37,988 --> 00:45:38,488
happening

1235
00:45:39,021 --> 00:45:40,531
less and less. And I guess what I

1236
00:45:40,531 --> 00:45:42,915
see from my perspective is that most of

1237
00:45:42,915 --> 00:45:45,195
the folks who are saying, hey, multiples are

1238
00:45:45,472 --> 00:45:47,614
are only going up and are are at

1239
00:45:47,614 --> 00:45:49,598
a record high, are the people that are

1240
00:45:49,598 --> 00:45:53,589
being paid directly and benefiting from multiple being

1241
00:45:53,899 --> 00:45:55,976
high and and and continuing to go up.

1242
00:45:56,137 --> 00:45:57,814
And so I I just... I questioned how

1243
00:45:57,814 --> 00:45:59,732
much further we can run. I don't think

1244
00:45:59,732 --> 00:46:02,059
it's necessarily a bubble that's gonna pop and

1245
00:46:02,059 --> 00:46:04,201
go down by a significant amount, but I

1246
00:46:04,201 --> 00:46:06,501
certainly don't think we're where we were in

1247
00:46:06,501 --> 00:46:07,929
20 20 or 20 21.

1248
00:46:08,737 --> 00:46:11,436
And I'd add Lewis, my perspective there is

1249
00:46:11,436 --> 00:46:13,261
what I've experienced and what I am it

1250
00:46:13,261 --> 00:46:14,610
is... I've seen him a bit of a

1251
00:46:14,610 --> 00:46:16,848
pullback in 2 ways. We had the cost

1252
00:46:16,848 --> 00:46:18,594
of capital shoot up with interest rates. And

1253
00:46:18,594 --> 00:46:20,659
that's certainly everyone thought that was gonna affect

1254
00:46:20,659 --> 00:46:22,485
valuations. And I believe it eventually did, but

1255
00:46:22,485 --> 00:46:24,247
it did in 2 different ways. When I

1256
00:46:24,247 --> 00:46:26,235
think the multiple overall has come back a

1257
00:46:26,235 --> 00:46:27,906
little bit. Back just a little bit to

1258
00:46:27,906 --> 00:46:29,974
something that's not as close to bubble territory

1259
00:46:29,974 --> 00:46:32,216
like you mentioned. As it was. And you've

1260
00:46:32,216 --> 00:46:33,807
seen a shift, you, Jared talked about this.

1261
00:46:34,125 --> 00:46:36,193
Shift in how much of the consideration was

1262
00:46:36,193 --> 00:46:38,420
cash versus this private equity. And so we've

1263
00:46:38,420 --> 00:46:41,802
seen more of the... Upfront consideration shift towards

1264
00:46:41,939 --> 00:46:44,250
the equity versus in the cash because of

1265
00:46:44,250 --> 00:46:46,162
the cost of capital and and and taking

1266
00:46:46,162 --> 00:46:48,244
on leverage, in the businesses. So those were

1267
00:46:48,244 --> 00:46:49,912
2 big things that we've seen. And then

1268
00:46:49,912 --> 00:46:51,660
you've got... I feel like there's this game

1269
00:46:51,660 --> 00:46:53,725
of musical chairs, and and a lot of

1270
00:46:53,725 --> 00:46:55,289
shares have been removed the music hasn't stopped

1271
00:46:55,489 --> 00:46:56,526
But there's gonna be a lot of folks

1272
00:46:56,526 --> 00:46:59,078
looking for missing shares when it does. And

1273
00:46:59,078 --> 00:47:01,311
we've seen some headlines around some large firms,

1274
00:47:01,710 --> 00:47:03,784
private back, go out to the marketplace to

1275
00:47:03,784 --> 00:47:04,842
try to recap

1276
00:47:05,393 --> 00:47:07,222
and not get the valuations they were hoping

1277
00:47:07,222 --> 00:47:09,367
for and having to stop that process. So

1278
00:47:09,367 --> 00:47:10,797
to me, there's a couple data points there

1279
00:47:10,797 --> 00:47:12,864
to point at that to suggest that's where

1280
00:47:12,864 --> 00:47:13,897
we're headed. Interesting.

1281
00:47:14,628 --> 00:47:15,825
A question I wanted to ask you, it

1282
00:47:15,825 --> 00:47:17,340
just it just came to mind as we're

1283
00:47:17,340 --> 00:47:20,632
we're talking about equity. So the pitch that,

1284
00:47:21,089 --> 00:47:23,163
any firm that has equity as part of

1285
00:47:23,163 --> 00:47:24,141
their deal structure

1286
00:47:24,454 --> 00:47:27,003
points out is that if you take some

1287
00:47:27,003 --> 00:47:30,532
of your deal consideration and equity, you're diversifying

1288
00:47:30,669 --> 00:47:33,480
your growth essentially instead of being a hundred

1289
00:47:33,480 --> 00:47:36,300
percent reliant upon, what clients you keep

1290
00:47:36,760 --> 00:47:38,619
how you grow your business

1291
00:47:39,160 --> 00:47:39,660
individually

1292
00:47:40,053 --> 00:47:42,046
Instead you have that lever, but you also

1293
00:47:42,046 --> 00:47:44,916
have the lever of our equities compounding at

1294
00:47:44,916 --> 00:47:46,829
15 percent per year, and you get the

1295
00:47:46,829 --> 00:47:49,870
benefit from all these... Programs we're doing and

1296
00:47:49,870 --> 00:47:51,461
all the M and A we're doing. How

1297
00:47:51,461 --> 00:47:52,734
would you respond to that? I mean, I

1298
00:47:52,734 --> 00:47:53,234
know

1299
00:47:53,688 --> 00:47:55,255
equity, we always say is

1300
00:47:55,693 --> 00:47:57,208
in some ways, like a lottery ticket. I

1301
00:47:57,208 --> 00:47:59,601
mean, I think in this industry equity tends

1302
00:47:59,601 --> 00:48:01,835
to be a decent bet, but we've seen

1303
00:48:01,835 --> 00:48:04,786
instances not naming names where that certainly wasn't

1304
00:48:04,786 --> 00:48:06,795
the case. Or I think I know which

1305
00:48:06,795 --> 00:48:09,028
firms you're talking about Jeremy who went out

1306
00:48:09,028 --> 00:48:11,762
to market. We're looking... We're promising a certain

1307
00:48:11,900 --> 00:48:13,814
valuation to their advisors and they weren't able

1308
00:48:13,814 --> 00:48:16,065
to pull it off. But with that kind

1309
00:48:16,065 --> 00:48:17,985
of example aside, how would we react to

1310
00:48:17,985 --> 00:48:19,985
that concept that equity is part of a

1311
00:48:19,985 --> 00:48:22,144
deal structure, which is different from how Lp

1312
00:48:22,144 --> 00:48:24,733
p does deals, is actually a pretty compelling

1313
00:48:25,268 --> 00:48:26,700
diversification lever for an adviser.

1314
00:48:28,212 --> 00:48:30,281
My... And I know Jeremy has thoughts here

1315
00:48:30,281 --> 00:48:32,111
too, but my initial thought...

1316
00:48:32,841 --> 00:48:33,579
Is that

1317
00:48:34,271 --> 00:48:37,130
if it's equity that is the cream on

1318
00:48:37,130 --> 00:48:38,878
top of the valuation that you're getting, and

1319
00:48:38,878 --> 00:48:40,387
you feel like you're getting a fair deal

1320
00:48:40,387 --> 00:48:42,000
on a cash basis and you can take

1321
00:48:42,000 --> 00:48:43,539
that and put it in the bank and

1322
00:48:44,000 --> 00:48:45,199
diversify it how you want. And then there's

1323
00:48:45,199 --> 00:48:47,519
an additional equity component. Then great. It's a

1324
00:48:47,519 --> 00:48:49,763
flyer. It's a bet on, whether or not

1325
00:48:49,763 --> 00:48:51,056
this firm will will compound

1326
00:48:51,586 --> 00:48:54,122
by 15 percent per year. But as an

1327
00:48:54,122 --> 00:48:55,573
adviser, if you are trading

1328
00:48:56,277 --> 00:48:58,763
your largest personal asset in most cases

1329
00:48:59,216 --> 00:49:01,996
and simply swapping the equity and not getting

1330
00:49:01,996 --> 00:49:03,981
much cash and you're getting a below market

1331
00:49:03,981 --> 00:49:05,625
multiple which we can all reference and figure

1332
00:49:05,744 --> 00:49:07,582
around what that that would mean. Then I

1333
00:49:07,582 --> 00:49:09,500
think it's not such a great bet. Because

1334
00:49:09,579 --> 00:49:12,296
I think as Jeremy alluded, we're not seeing

1335
00:49:12,296 --> 00:49:13,036
the same

1336
00:49:13,746 --> 00:49:16,524
exit events that we were 5 or or

1337
00:49:16,524 --> 00:49:18,508
or 10 years ago for most these firms.

1338
00:49:18,746 --> 00:49:19,698
And I think it is a little bit

1339
00:49:19,698 --> 00:49:22,054
of a a musical chairs type situation with

1340
00:49:22,413 --> 00:49:23,925
who's on the other side of the next

1341
00:49:23,925 --> 00:49:24,163
trade?

1342
00:49:26,074 --> 00:49:27,983
And I would just add and admittedly, I'm

1343
00:49:27,983 --> 00:49:29,655
an Lp home, but I would rather take

1344
00:49:29,655 --> 00:49:31,269
the cash and invested an Lp.

1345
00:49:31,739 --> 00:49:33,331
I think that's a better bet. Yeah.

1346
00:49:35,083 --> 00:49:37,233
Alright. There you go. I like it. So

1347
00:49:37,392 --> 00:49:38,905
Jared, I know you and I, over the

1348
00:49:38,905 --> 00:49:41,710
years have talked about. This concept over over

1349
00:49:41,710 --> 00:49:43,784
a couple of beers. But what do you

1350
00:49:43,784 --> 00:49:45,858
think the industry will look like 5 years

1351
00:49:45,858 --> 00:49:48,601
from now. In general, And then also just

1352
00:49:48,735 --> 00:49:51,746
overall is all the consolidation that's happening, do

1353
00:49:51,746 --> 00:49:52,934
you think it's good for advisors?

1354
00:49:54,854 --> 00:49:56,848
Well, I don't have a beer in my

1355
00:49:56,848 --> 00:49:59,721
hand, unfortunately, to to maybe po authenticate as

1356
00:49:59,801 --> 00:50:01,179
I would if I did, but

1357
00:50:01,556 --> 00:50:04,119
I think to thing. So 1, I do

1358
00:50:04,119 --> 00:50:05,471
think we are going to see...

1359
00:50:06,266 --> 00:50:08,039
Instead of the the continued

1360
00:50:08,732 --> 00:50:10,281
aggregation of advisors

1361
00:50:10,735 --> 00:50:13,043
into these Pe backed platforms. I think we're

1362
00:50:13,043 --> 00:50:15,588
more than likely going see more advisors start

1363
00:50:15,588 --> 00:50:16,199
to leave

1364
00:50:16,637 --> 00:50:19,744
And you referenced your next breakaway wave article.

1365
00:50:20,062 --> 00:50:21,974
I think that's very real because I think

1366
00:50:21,974 --> 00:50:23,726
we have a lot of talented next generation

1367
00:50:23,726 --> 00:50:24,841
advisors who are wondering.

1368
00:50:25,254 --> 00:50:27,242
Who are wondering what's next, and that leads

1369
00:50:27,242 --> 00:50:28,595
me to 0.2,

1370
00:50:29,152 --> 00:50:30,981
which is... I think this industry has to

1371
00:50:30,981 --> 00:50:32,827
grow up a little bit, And I think

1372
00:50:32,827 --> 00:50:34,922
we have to start thinking about talent strategy

1373
00:50:34,981 --> 00:50:36,815
from Cradle to the grave, and what I

1374
00:50:36,815 --> 00:50:39,447
mean by that is the independent space is

1375
00:50:39,447 --> 00:50:41,521
going to have to invest in adviser training

1376
00:50:41,521 --> 00:50:44,572
programs see the purchases that they're doing, both.

1377
00:50:44,732 --> 00:50:47,369
We're we're thinking about that as, I think

1378
00:50:47,369 --> 00:50:49,607
large Pe backed firm should be thinking about

1379
00:50:49,607 --> 00:50:51,525
that. And so I think that's the next

1380
00:50:51,525 --> 00:50:54,097
the next theme is how we're starting to

1381
00:50:54,097 --> 00:50:56,334
mirror maybe something like the accounting world where

1382
00:50:56,334 --> 00:50:59,530
you take a thousand graduates from universities and

1383
00:50:59,704 --> 00:51:01,065
Train them up and then they go out

1384
00:51:01,065 --> 00:51:03,405
in in many different ways to regional firms

1385
00:51:03,464 --> 00:51:05,164
and boutique firms and

1386
00:51:05,545 --> 00:51:07,880
independent firms. So I think that's that's a

1387
00:51:07,880 --> 00:51:10,280
coming theme that we're gonna see because it...

1388
00:51:10,440 --> 00:51:12,280
There's a real talent shortage in in this

1389
00:51:12,280 --> 00:51:13,559
industry. And I think what we're all gonna

1390
00:51:13,559 --> 00:51:16,760
find is, we've bought some really successful advisors,

1391
00:51:17,252 --> 00:51:18,997
but the next generation is not quite there

1392
00:51:18,997 --> 00:51:20,346
to continue servicing those clients.

1393
00:51:21,377 --> 00:51:22,884
Well said, yeah. I'd pay agree. I think

1394
00:51:22,884 --> 00:51:23,678
it's to really...

1395
00:51:24,407 --> 00:51:27,770
Interesting analogy. And I've heard the accounting firm

1396
00:51:28,145 --> 00:51:31,008
analogy described kind the way industry consolidation is

1397
00:51:31,008 --> 00:51:33,651
happening as well, where In the fifties sixties

1398
00:51:33,651 --> 00:51:36,444
seventies, you had all these disparate local regional

1399
00:51:36,444 --> 00:51:38,519
accounting firms, and then you saw the emergence

1400
00:51:38,519 --> 00:51:39,796
of the big 8 and then the big

1401
00:51:39,796 --> 00:51:42,382
4. And now you have a similar dynamic

1402
00:51:42,439 --> 00:51:44,849
where you have the big 4, you have

1403
00:51:44,906 --> 00:51:47,532
lifestyle businesses, you have some of these regional

1404
00:51:47,532 --> 00:51:50,090
players. And I've heard that analogy too for

1405
00:51:50,090 --> 00:51:53,108
the way in the Ra industry is gonna

1406
00:51:53,108 --> 00:51:54,934
look at days end. But I I love

1407
00:51:54,934 --> 00:51:55,967
what you're saying about how...

1408
00:51:56,777 --> 00:51:59,007
Someone or someone have to figure out the

1409
00:51:59,007 --> 00:52:01,317
training of the next generation because simply,

1410
00:52:01,874 --> 00:52:04,183
the next generation that has left to many

1411
00:52:04,183 --> 00:52:07,082
of these firms, They typically don't have the

1412
00:52:07,376 --> 00:52:10,313
same business development acumen. They may not have

1413
00:52:10,313 --> 00:52:12,297
the same relationship skills that the founder did.

1414
00:52:12,788 --> 00:52:15,641
And as those advisers leave, they go to

1415
00:52:15,641 --> 00:52:18,652
other industries, etcetera, there's likely a pretty big

1416
00:52:18,652 --> 00:52:22,886
talent shortage. Unless... Maybe Ai and other technologies

1417
00:52:22,886 --> 00:52:25,119
will make it so that a typical advisor

1418
00:52:25,119 --> 00:52:27,432
can service 300 households instead of a hundred

1419
00:52:27,432 --> 00:52:29,027
or whatever the typical is. But I'm with

1420
00:52:29,027 --> 00:52:31,119
you on that. I'm met the description. 1

1421
00:52:31,119 --> 00:52:33,036
last question for either of both of you,

1422
00:52:33,596 --> 00:52:36,093
any parting words or advice for those

1423
00:52:36,472 --> 00:52:39,201
thinking about their business like a business looking

1424
00:52:39,201 --> 00:52:41,741
to maximize the value and potentially sell it

1425
00:52:41,741 --> 00:52:42,296
in the future.

1426
00:52:43,646 --> 00:52:45,630
Yeah. I I'd say the advice I like

1427
00:52:45,630 --> 00:52:47,869
to give is to to be intentional about

1428
00:52:47,869 --> 00:52:49,697
it, determine what you want to have it

1429
00:52:49,697 --> 00:52:51,923
look like and and look critically at your

1430
00:52:51,923 --> 00:52:54,172
business, have someone hold a mirror if if

1431
00:52:54,228 --> 00:52:56,626
necessary to really understand areas of strength and

1432
00:52:56,626 --> 00:52:58,054
areas of weakness and the things that you

1433
00:52:58,054 --> 00:52:59,800
actually are that are actionable and you can

1434
00:52:59,800 --> 00:53:02,498
improve and enhance and drive towards that a

1435
00:53:02,498 --> 00:53:04,898
premium valuation that you're seeking and Also, it's

1436
00:53:04,898 --> 00:53:06,973
not always about valuations we've talked. You want

1437
00:53:06,973 --> 00:53:08,888
that and fit. And you want to find

1438
00:53:08,888 --> 00:53:11,601
the the best fit for you, your clients

1439
00:53:11,601 --> 00:53:13,688
and your staff. The holy trinity you the

1440
00:53:13,688 --> 00:53:15,678
advisor practice, if you will and making sure

1441
00:53:15,678 --> 00:53:17,031
you can... You've gotta sit for all of

1442
00:53:17,031 --> 00:53:17,190
that.

1443
00:53:18,464 --> 00:53:20,349
I think what I would add there. The

1444
00:53:21,907 --> 00:53:22,407
is

1445
00:53:23,106 --> 00:53:25,503
in terms of being intentional, we have plenty

1446
00:53:25,503 --> 00:53:28,393
of conversations with advisors who and and in

1447
00:53:28,393 --> 00:53:30,951
the past have dismissed the idea of selling,

1448
00:53:31,270 --> 00:53:32,869
dismissed the idea of succession plan, I've got

1449
00:53:32,869 --> 00:53:33,268
20 years.

1450
00:53:34,547 --> 00:53:36,957
If this isn't part of your normal... Business

1451
00:53:36,957 --> 00:53:38,789
planning. If you're not educating yourself on what

1452
00:53:38,789 --> 00:53:40,780
the marketplace look looks like. You're not only

1453
00:53:40,780 --> 00:53:43,408
doing a disservice to yourself, again, with your

1454
00:53:43,408 --> 00:53:45,732
most likely your largest personal asset, poor But

1455
00:53:45,732 --> 00:53:47,401
you're doing it a disservice to your clients

1456
00:53:47,401 --> 00:53:50,025
that have entrusted you with their assets to

1457
00:53:50,025 --> 00:53:51,773
your employees to your family to all of

1458
00:53:51,773 --> 00:53:54,577
your stakeholders. And so that's my parting words

1459
00:53:54,577 --> 00:53:57,155
are duh, don't ignore the chorus of voices

1460
00:53:57,533 --> 00:53:59,131
that are talking about M and A succession

1461
00:53:59,131 --> 00:54:01,300
planning because it's a really... Key part of

1462
00:54:01,300 --> 00:54:04,328
this industry and educating yourself now well ahead

1463
00:54:04,328 --> 00:54:06,957
of when you execute your event is only

1464
00:54:06,957 --> 00:54:08,710
going to lead to a more positive outcome

1465
00:54:08,710 --> 00:54:10,477
because you're gonna be an educated buyer. As

1466
00:54:10,477 --> 00:54:12,302
you would with most other things in your

1467
00:54:12,302 --> 00:54:14,525
life, and so it's just... Yeah, be intentional

1468
00:54:14,525 --> 00:54:16,112
and and do it 10 or 15 years

1469
00:54:16,112 --> 00:54:17,700
in advance, I'm sure things will change, but

1470
00:54:17,700 --> 00:54:20,180
stay on top of the trends, and understand

1471
00:54:20,180 --> 00:54:22,333
what different option is made for your business

1472
00:54:22,333 --> 00:54:23,847
and what the impacts would be for your

1473
00:54:23,847 --> 00:54:26,796
clients, etcetera, and you'll be well well positioned

1474
00:54:26,796 --> 00:54:29,518
to to take advantage of that eventual exit

1475
00:54:29,518 --> 00:54:31,588
or succession or transition, whatever you wanna call

1476
00:54:31,588 --> 00:54:32,702
it. I'm with you guys.

1477
00:54:38,210 --> 00:54:40,941
What I've found is the actions that someone

1478
00:54:40,998 --> 00:54:44,207
can take with intentional or to be proactive

1479
00:54:44,345 --> 00:54:47,228
about that can drive a higher valuation. Even

1480
00:54:47,228 --> 00:54:49,139
if you decide not to sell are just

1481
00:54:49,139 --> 00:54:51,369
really good business practices that are gonna help

1482
00:54:51,369 --> 00:54:53,918
your business. So I think with everything, a

1483
00:54:53,918 --> 00:54:54,715
little bit of planning,

1484
00:54:55,352 --> 00:54:55,591
education,

1485
00:54:56,243 --> 00:54:58,868
taking time to work on the business instead

1486
00:54:58,868 --> 00:55:01,016
of always being in it is always a

1487
00:55:01,016 --> 00:55:03,998
prescribed formula. So guys, this was really interesting

1488
00:55:04,135 --> 00:55:05,889
and an eye opening to me as well.

1489
00:55:06,208 --> 00:55:09,237
What you've created with liquidity and succession. I

1490
00:55:09,237 --> 00:55:10,991
think it is a differentiated offering in the

1491
00:55:10,991 --> 00:55:14,193
market. A pretty interesting alternative to a traditional

1492
00:55:14,193 --> 00:55:17,937
wire sunset deal to trading to a private

1493
00:55:17,937 --> 00:55:19,849
equity backed R or a roll up or

1494
00:55:19,849 --> 00:55:20,588
an ag.

1495
00:55:21,138 --> 00:55:22,249
And I think we hit on a lot

1496
00:55:22,249 --> 00:55:24,788
of key themes that any adviser can learn

1497
00:55:24,788 --> 00:55:27,169
from as they look at maximizing the value

1498
00:55:27,169 --> 00:55:29,153
of this immense asset that they built over

1499
00:55:29,153 --> 00:55:30,518
the years. So we'll have to do this

1500
00:55:30,518 --> 00:55:32,188
again by, thank you both for joining us.

1501
00:55:32,903 --> 00:55:34,492
Thanks for having us. Yes. Thanks, Louis.

1502
00:55:37,195 --> 00:55:37,250
So

1503
00:55:42,061 --> 00:55:44,925
Curious about where why and how advisors like

1504
00:55:44,925 --> 00:55:45,641
you are moving?

1505
00:55:46,292 --> 00:55:49,554
Download the latest advisor transition report to learn

1506
00:55:49,554 --> 00:55:49,713
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1507
00:55:50,429 --> 00:55:54,027
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1508
00:55:54,027 --> 00:55:56,500
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1509
00:55:56,500 --> 00:55:57,616
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1510
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1511
00:56:00,806 --> 00:56:04,407
com forward slash transition work. Or if you'd

1512
00:56:04,407 --> 00:56:06,316
like to talk, feel free to give us

1513
00:56:06,316 --> 00:56:08,565
a call at 09:08

1514
00:56:08,861 --> 00:56:12,059
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