#FA Success Ep 249: Going Beyond Client Experience With Client Adventures To Drive Organic Growth, With Drew Waldron

Resources Featured In This Episode:

• Drew Waldron
• Canvas Wealth Advisors
• Arrived Outdoors
• Kansas State Financial Planning Program
• Wealthbox
• FinLife Partnership
• Honest Conversations and Money Mind

Full Transcript:

Michael: Welcome, Drew Waldron to the "Financial Advisor Success" podcast.

Drew: Thanks, Michael, for having me on, I appreciate the opportunity.

Michael: I'm really looking forward to today's discussion and talking a little bit about, at least as I think about it, kind of client experience and creating client experiences. Yeah, I know the industry has had a lot of buzz these days around creating a good client experience, which most firms seem to mash in as some combination of, "We got to have nice technology and a really good website and portal so the clients "have a good experience," and we've got to give really good service because good experience starts with having good service." But I know your firm is just building, at least what I would call client experiences at a whole other level from what I think the typical firm thinks about when they talk about client experiences. I've at least heard what you guys are doing is described as creating not just client experiences, but client adventures in what they get to do and participate in as clients of the firm. And so, just I'm looking forward to talking today about, I guess, what is the next level of meaningful client experiences really look like in building  an advisory firm?

Drew: So, when we started it, it was all about kind of how do we take and make a client's life easier, right? And that's by giving them more time. And by giving them more time, it's more time to do the things that they love. So, a lot of our typical clients, which would-be business owners, C-level execs, professional athletes, science salespeople, those are kind of our current kind of niche markets. They don't have time to plan a lot of the stuff and trips adventures that I think that they would go on if they could kind of click a button, pay the price that it is, and kind of have the white-glove service of a trip like they would want to experience it on their own. So, that's kind of what we were trying to do as far as creating those kinds of unique one-off adventures for our clientele.

The Client Adventures That Drew Organizes For His Clients [05:10]

Michael: So, can you share an example of just...like what are you doing? What are you creating for clients?

Drew: So, typically, what that looks like is my business partner, Scott kind of spearheads this client adventure thing because he's a big kind of adventure junkie, in my opinion, where he'll do anything with anybody anywhere. So, whether that's some sort of random fishing trip, some motorcycle trip, some four-wheeler trip, those are what we're trying to create. And then we try to create a trip where we invite guys on purpose or gals where we know they'll have a connection business-wise, where it can improve both of their businesses. It might be a potential customer for the client or it might just be an introduction that leads to potential customers for clients.

Michael: So, when you organize trips like this, you're not just necessarily inviting your clients directly, you're inviting your clients and other people that might be meaningful for your clients to get connected with as sort of a...I was going to say like a staged introduction. I'm almost thinking of a blind date set up and maybe it creates negative connotations for some people, but just staging introductions as a part of these trips because you're going to put them next to people that they may benefit in getting to know further.

Drew: Exactly, that's exactly what we're trying to do. And so, we think about every trip as an opportunity for either our clients or our prospects or someone who's really not even a prospect but we know has potential to be a prospect. If we can get them on the right experience with the right people, it makes them think about us and our business a little differently than I think you think about a typical wealth management company.

Michael: So, can you give me some examples of just what are these trips mean? What is a trip you've...adventure you've done for clients?

Drew: So, recent ones we've kind of done in the last year, Scott kind of spearheads these and usually is the kind of lead taking people on these because I got three young kids, so being gone for a week or 10 days doesn't work as well as it does for his schedule because he's got three older kids in high school. So, he's kind of the adventure trip junkie and I kind of tagged along for probably two or three a year. Mine are usually more golf-centric, his are more usually adventure-centric. So, two years ago right when we started the firm, he did a dirt bike trip down to Peru and kind of all-around there.

And then this past year, he's done a bunch of stuff kind of in the mountains where you take motorcycles and you stop at certain points, or you take four-wheelers, etc., kind of off-roading. And the whole reason he kind of started that was because when we were at our previous firm, he would run through his budget within the first month of the year because this is how he entertains prospects, clients, etc. And so, he kind of created a business outside of the wealth management business that kind of created a place all these kind of C-level execs and business owners could go and hang out, have a cocktail, meet different people in their same position, and then kind of create these one-off trips around that.

Michael: Interesting, interesting. And so, what's the scope of these trips? How many people typically are gathered up to go? How long do they actually go out on these adventures?

Drew: So, usually, it's 4 to 12 and I think it depends on the trip how many are invited. So, a shorter trip, usually more people, and sometimes that's just like a duck shoot. They go down south to TNC and shoot ducks. Kind of like a European-style hunt with pheasants, maybe. So, those are more 12 to 16 people. And then when you're talking longer trips, a week, 10 days, we're talking 4 to 8.

Michael: Okay, so that's a long trip if you're talking for a week or 10 days, that's a serious outing.

Drew: Correct, correct. Like, he was just fly fishing in Montana with seven other guys that flew up on a plane, landed right where they were going to be, fly-fished for four days, and then came back.

Michael: So, how does it work in terms of just organizing and managing this? Just you literally have an internal team that just does this? Is there an employee at the advisory firm that's just like advisory firm adventure organizer job description?

Drew: So, actually, he does it because he loves to do it. And then he still owns a percentage of the company that he kind of created outside the wealth management firm where he runs some of the stuff through because they are like YETI dealers because they order so much YETI stuff. So, he'll create this trip and then he'll get a bunch of gear because they have dealer orders and dealer prices at cost where he can get the guys all geared up before they go. Does that makes sense?

Michael: Yes. So, what's the outside business then that he's created?

Drew: It's called Arrived Outdoors. So, I think it has around 100 members and then him and another guy own it, actually a client of ours. And it's all based off that kind of C-level exec, business owner, you got to apply, you got to interview to get in, then once you're in, I think it's just like a flat fee per year. And then there's kind of a little bar that he kind of created with a conference room where you can meet, it's got like a bow range, etc., where you kind of hang out and kind of get to meet the other guys in the club.

Michael: So, almost country clubs, social club, executive club-style thing literally as a meeting place and then the club does adventures jointly with the firm because Scott wears both hats.

Drew: Correct. Exactly.

Michael: And so, who pays for these? Do clients and prospects still pay their own way to go on these adventures? Or is this actually a marketing expense of the business to bring four clients and three prospects on a fly fishing trip to Montana for a couple of days?

Drew: So, they all pay their own way. And the thing we figured out is they're happy paying their own way. They don't want you to pay for them, they want to pay their own way and they want to feel a part of the trip, right? And if they pay their own way, they feel like they have some skin in the game and they're more tied to going. If you pay for them, they're not necessarily as tied to the trip or have any skin in the game on the trip. So, we found it's more enticing for them to pay their own way, they don't like people paying for stuff for them.

Michael: Okay. And again, you're working with some fairly high-income and fairly affluent folks. So, a couple of days fly fishing in Montana is not going to be a price deal-breaker for them even if they're dropping a couple of thousand dollars on this trip.

Drew: Exactly. Because guess what? He's lining up their fly rods, he's lining up their tour guide, he's lining up the flight, private plane, Southwest Airlines, whatever they want to do. He's lining it all up. So, literally, they're just writing a check for the price.

Michael: Okay. And so in kind of a very literal sense, it's a paid experience, they're going to write a check for the experience, they're happy to write a check for the experience because they just get to write the check, show up, and have the experience.

Drew: Yeah, and I think we've kind of created a little bit of a mantra around it where people want to be on them because they don't know who they're going to meet and they know it's going to be good introductions for their business.

How Drew Figures Out Who Gets Invited On The Trips And The Extent To Which The Trips Generate Business [13:20]

Michael: So, how does that work then? How do you figure out who's getting invited and who gets the invite, particularly if you're getting into not even just inviting your prospects which I get, but inviting people who may be good introductions for your clients? Because it's prospect for that small business owner and they are downstream prospects for people to do business with. Just how does the selection process work of figuring out who gets invited to go on what?

Drew: So, we kind of discuss it but I kind of leave it up to Scott because he's...so when we left our previous firm, we kind of wanted to keep the rules bifurcated where business development kind of just ran sales, finding the next new client, finding the next new COI, and the wealth advice was kind of separate from that. But the one thing we do a little differently is I try to keep him extremely him or the other business people we have extremely tied to the relationship so that they can kind of explore that and deserve referrals. And if they stay connected, I feel like they deserve the referrals a lot better. Previously, he would bring them in and then be kind of on to the next one. It was kind of that model of find the next client. Our model is a little different where it's stay connected still and continue to deserve referrals because I would say 90% of our business comes from current clients' referrals.

Michael: Okay. So, to what extent do these client adventures, I guess, drive business? I'm just trying to envision is this like a primary prospecting engine for you where you invite out very high-quality prospects and by the time they spend four days with you fly fishing, you probably formed a decent relationship and have a decent chance of getting them as a client? Or is this more heavily events you do for clients because it keeps them connected to the firm and very positive on the firm and then that just makes them send more referrals because they talk about the cool adventures they have with the firm and then if you join the firm, you get to be in the club and you can get on future Canvas adventures as well? I guess is it more about being a prospecting engine, or is it more about clients because it just makes part of the great client experience that ends up driving referrals later?

Drew: It's the latter. It's that taking them on the trips, and then they talk not necessarily about the trip but they talk about the quality of people they meet on the trips and what business might come from them, from doing the trips or experiences. And some of the experiences may be local, right? That might be one night. So, we just try to make it unique and special each time and try to invite the right people around them where they feel like, "Man, I'm glad I went on that trip because I met this guy or gal."

Michael: And so, that's why, again, the trips are less about people that would be prospects for your advisory firm and more about people who may be good relationships for your clients who are on it. "Hey, whatever, you buy a bunch of YETI stuff, we know the guy in town who's the primary YETI distributor, we're going to do a trip and just put you two together because you might have some great conversations and come up with a new business partnership."

Drew: Exactly. Exactly.

What Canvas Wealth Looks Like Today [16:43]

Michael: So, then talk to us overall about just the size and structure of the firm at this point? Just what is this grown to by creating these kinds of clients adventures?

Drew: So, we started this Q1 2019, so we're just a little over probably about two and a half years in. We're at around $455 million in assets and that's about 200 households, so probably looking at an average client liquid assets with us that we manage in the $2.5 million range.

Michael: And so, when you started in early '19, was that starting literally from scratch? Or were you breaking away from somewhere else where some clients came with and that was the foundation? What was the positioning in early 2019 at launch?

Drew: So, we left a large RIA and we were under a pretty stringent two-year non-compete. And the we left was extremely fair about clients that called us and wanted to follow us but pretty much started from scratch.

Michael: Okay, so I guess it wasn't a non-compete that prevented you from completely being in the business, but it was a non-solicit that you couldn't reach out to any of the clients that you used to have unless they completely followed you of their own free will?

Drew: Correct, exactly what happened. So, first few months, you're looking at the mirror and be like, "What do we do here?" And so, some of my clients followed and then you get to the $50 million mark and you're like, "Okay, at least we can pair our expenses and technology, etc. Now, how do we figure this out from this point?"

Michael: So, then just help us understand further, if you've had roughly $50 million that kind of followed you out, you're at $450-plus now, so just where does $400-plus million dollars come from in the span of two and a half years?

Drew: I don't know if it was a little bit of luck, timing, the pandemic kind of helped, in all honesty, because every prospect we had at that point, we were just kind of all over talking about what we were doing for clients, what we were thinking about. And it just resonated with the prospects to want to hire us and want the proactive service model because a lot of advisors, I think, sat on their hands during that time because they didn't know what to say to clients. But we just took the approach, if you say something and give them advice about, "Hey, let's do this or this." It means a lot to them that you care enough to keep calling because there are a lot of days, you didn't really know what was going to happen. The market was down 8% to 10% a day some days.

So, those interesting times, if you were staying in front of them and talking to them about what you were doing...and even if they had another relationship with another advisor, the simple question is, "Well, what's your advisor telling you to do right now?" And when they said they haven't heard from them, and then a few more weeks went by and they still haven't heard from them, that was like the easiest close of all time just because we cared enough to keep calling. And we had the bandwidth...at the time, I think we had 5 people at the firm but we probably had 50 to 100 relationships, so total time-bandwidth just to call people all day and drip on them about, "Hey, here's what we're doing for our clients, we've harvested some losses across our taxable accounts, now we're reinvesting into this. What are you doing?" And when the phone was silent, you knew you had a really good opportunity to get that client.

Michael: Yeah, just it's that powerful reminder. I think when times get difficult, the impulse for so many of us is just you got to react to the clients who are calling when markets are volatile and they may be nervous, they may maybe jumping and you got to talk them off the ledge. But often, the tendency is like if they're not calling you, you don't always feel the motivation to call them because if you know markets have been volatile and there have been some losses, you got at least a risk that if you reach out to the client, they're just going to be upset and vent on you and it doesn't feel very good to get vented on.

So, a lot of firms I know just end out with this tendency to not do a lot of additional phone calls to clients who aren't calling us in the middle of volatile times. But I think it's powerful that the point that you're making is, “But other advisors may be calling on them,” and if another advisor says, "Well, what is your current advisor telling you to do?" And the answer is you haven't been communicating much or anything to them, you're creating an opportunity for someone else to put a wedge into that relationship.

Drew: Exactly. And so, we really took advantage of that, but it also reminds you when and if it happens again, that you better be on your clients because guess what? Somebody else is always knocking at the door.

Where Drew’s Clients Are Coming From [20:55]

Michael: So, how do you find the people to be knocking on their door, though? I get if you're talking to some very affluent prospects who aren't getting phone calls from their current advisors, that if you talk to enough of them, a few of them inevitably aren't getting calls from their current advisors and that's an opportunity for you to win some clients and you did win some clients. But how do you find the people to call to be having those conversations in the first place?

Drew: Honestly, I think a lot of that to where I worked before. That's where I got my network, that's where I got introductions and met a lot of people in Kansas City, Wichita. It was from those experiences at our prior firm that I worked to even have the connections of the people to call on.

Michael: So, what was it that you were doing there that built the network the way that it has for you?

Drew: I think, in that role, I worked on four different wealth teams as kind of like the junior advisor. And through that, they were all brand new wealth teams when I started on them, so they grew from no clients and zero assets under management to, pretty much in all the cases, over $250 million of assets and a couple million in revenue. And you know in that junior advisor role, you're putting in a lot of the plans, you're doing a lot of the asset allocations, you're doing a lot of the tax planning prep, you're doing a lot of the estate plan review, insurance reviews. So, through that, you see a ton of different types of clients and it's kind of amazing how much you learn about the business when you grow four books of business like that because that's probably 400 to 500 clients and you get to see a lot of cool things that clients are doing.

And you get a lot...you get to figure out, "Hey, I really like this about what this advisor is doing but I don't really like the way they do it this way." Right? So, I took the things that I liked from each advisor I worked for and tried to mold that into my own team. And then when I did, I had a really high growth team there and it got to a point where the organization was growing so fast, which is a great problem, right? But the old culture and the old entrepreneurial every kind of book of business, every advisor kind of ran their practice the way they wanted, was starting to go away and the opportunity for equity ownership in the firm or owning your book of business was going away. So, you either had to just be okay with being an employee or you had to take the risk and leap of starting your own firm, not knowing if anyone would follow or who would follow, right? But I thought it was worth the risk-reward.

Michael: But it sounds like your role there was more internally oriented just in writing plans and supporting plans and supporting this series of four different wealth teams that grew. So, I understand that in terms of kind of cutting your teeth on the business and delivering advice and deciding how you want to deliver advice your way. Where does the network and the prospecting end come from?

Drew: So, in that, you help close 400 to 500 clients, right? And along the way, you probably meet at least another 100 to 200 prospects that you didn't get. So, that's in the Kansas City Midwest area, probably 700 to 800 opportunities right there, right? And so, through that, I used to never say no. The old firm had a lot of sports game tickets, concert tickets, etc., and I was on a few boards of charities. So, through that, your network becomes 1,000 people, right? And those clients that you did work for would introduce you to other people, right? And so, my role was, when I was a junior advisor was more internally, doing the plans, cutting your teeth, right? But it was also building the network of introductions around Kansas City of, "Hey, I really like this guy, you should meet him." And I never was very pushy or salesy, I'm more of a become your best buddy sales guy, which I appreciate more because it builds a friendship. And most of the time, I don't even have to ask for the business because they want me to have the business because they know I'm going to do it the right way.

How Drew Explains The Value Of His Service Model To Prospects [27:03]

Michael: And so, you had said that a lot of the growth came as well but just when you're reaching out and talking to prospects who may or may not be getting actively communicated with their current advisor, you had said they found your...I think as you put it, your proactive business model more appealing. So, help us understand this, what is the model of what you're doing? How do you explain that value proposition to prospects?

Drew: So, we try to touch every client every month, which now that it's grown to this point, is a little...it's tough, it's getting tougher every day. So, I kind of have three junior advisors working underneath me at the current moment, so we kind of split it up a third, a third, a third, as close to as possible as that and a lot of those touches are coming from them. And they're proactive touches about different things throughout the year, specific to each kind of client's plan. And so, we explain that and say, "You might not want to meet every quarter or semi-annually or annually, I don't really know what your kind of meeting style is, how often you want to be in a sit down meeting with us, or a Zoom meeting. But we're going to touch you every single month and it's going to be something that's going to add value either in your life or in your kind of financial plan." And each time it's a little bit different, and you just got to find the pain points for each kind of client and just scratch those itches.

Michael: So, can you give us some examples of just what are touchpoints for you in practice? Because just for some firms, that's like checking email, and for other firms, that's an updated tax projection that gets produced every time, and obviously, those are very different in time to produce in the first place. So, every client gets touched every month, what is a touch in your world?

Drew: So, I would say it's more like the ladder, updated tax projection, investment change, portfolio rebalance, an introduction to a potential customer. For the high-end salespeople, it's an introduction to a potential client that they get to prospect. It's one of those client experiences we talked about, it might be taking them golfing. It's just something to be in front of them, make sure they understand where they're at and where they're going, and make sure it's still kind of...you guys are still seeing eye to eye with where the plan is going. And then trying to proactively give them ideas on efficiency across the board, estate planning, tax planning, whatever it may be, we always want to try to come up with something new. So, we meet every Monday as kind of a team of advisors, and we kind of tackle 10 to 25 clients in that one-hour meeting like, "Hey, what are we going to reach out to these guys this month about and why?"

Michael: Oh, interesting. So, every Monday, you meet for an hour and just talk through 10 to 20 clients and the discussion of, "What are we doing to touch them this month?"

Drew: Exactly. And so, it's their job to bring me the ideas and I do my best to pick holes in them or try to make them better.

Michael: Okay.

Drew: And I feel like that gives them a good platform to learn and think outside the box on their own because they're the ones formulating the ideas now. It used to be me but now I've kind of put it on them and if they come with some weak ideas, I just tell them, "That's terrible, don't waste your time calling the client because that's a wasted touchpoint, they're not going to get any value out of that call."

Michael: And so, how does this scale up with just the number of clients? I think you had said you're approaching 200 households in the aggregate and so I'm just thinking like 200 households, 12 monthly touches per year, that's 2,400 touches. It can take an hour or two per touch just to kind of set it up, do the thing, do the projection, make the introduction, whatever it is, and just suddenly, you're talking about 5,000, 7,000, 10,000 hours of client touchpoints across the firm, which can be many people's worth of full-time job just facilitating touchpoints. So, is that actually what it looks like in practice, or are you trying to find different ways to scale the volume of touchpoints? Just how does this work?

Drew: Definitely trying to find different ways to scale the touchpoints, and we try to leverage technology as much as we can. But on the 200 households, the thing I think you got to realize is we have a couple of families that are a lot of those households where we manage...we consider an irrevocable trust entity for a different beneficiary its own household as far as our portfolio accounting systems can...

Michael: Right, because it's a separate entity, it's got some ideas, so you've got to...

Drew: So, I would say true households are probably more around 130 to 150.

Michael: Okay. Okay, because I guess you don't have to call the trust for a touchpoint, it doesn't miss you since it's a piece of paper.

Drew: Yep. So, usually on those trusts, I think we have 25 of them that are the same trustee, so it's one contact point for all those so it's a little easier to scale as far as that is concerned. But definitely, as we continue to grow, if we continue to grow, if we're lucky enough to do that, we're going to run into service issues of the monthly touches just because it's going to get out of hand. There's no way we can touch every client every month unless we continue to bring on younger advisors that can grow and learn to kind of have those touchpoints and think outside the box.

Michael: I wanted to say, just where do you see this going? You're on a very fast growth track if you're writing $100 or $200 million a year, so I'm presuming you got to be staring down that capacity wall pretty soon pretty imminently. So, just how are you thinking about handling the scaling up and the volume on these touches?

Drew: That's something I talked to Joe Duran about at Goldman who's kind of helped mentor us as we've grown this firm, is how do we...we met with him and he's like, "You're going to run into these hurdles at $250 million, $500 million, and then again at between $1 billion and $2 billion. And so, you got to figure out how to build up your minor leagues, so your younger advisors that can help scale and service that model that you kind of created."

Michael: So, what kinds of pain points or walls are you getting cautioned about at $250 million to $500 million and going from $1 to $2 billion?

Drew: Continuing the same service model we've had previously because we got clients comfortable with these monthly touches, monthly action items, ideas, and then how do we keep doing that as we grow from 50 households to 100, to 150 now, and then to 200, 250. Because each time you add a new household, that's a lot of front-end work and I don't think a lot of people appreciate how much work bringing on a new household is if you're doing it the right way. So, how do we continue to hire younger advisors where they cut their teeth on those opportunities? Because that's what I did.

I mean, I did 400-plus of them at our prior firm in three or four years. And so, that's a lot of plans, that's a lot of time, and that's a lot of behind-the-scenes work. And so, how do we...that's why we've kind of started this pathway with Kansas State University School of Financial Planning is getting an intern every summer there and then we just hired the intern we had this summer because she was awesome, she was a rock star. And so, how do we keep that pathway going but it's going to have to probably be more than one a year moving forward at this rate.

Michael: Yeah, one and then two, and then three, and then five just for the volume of clients as it ramps up.

Drew: Yep. Exactly.

Ways That Drew Is Looking To Maintain The Pace Of Client Touchpoints As The Firm Grows [35:29

Michael: So, are there other things that you're doing or looking at for just how do you scale the volume and the frequency of the touchpoints without drowning the team in the process?

Drew: Yeah, so we've actually just recently changed CRMs just because I didn't think our CRM tracked touchpoints well enough. So, we just moved to Wealthbox, which I think has a better platform for kind of the service model we're looking for, which is why we're using the CRM for. How are we servicing each of these clients? How often have we touched them? When's the last touchpoint? What was it about? And then that's kind of the Monday morning meetings is bring me proactive ideas that we can take to these people or introductions we can make to these people.

Michael: And what were you using previously that just wasn't working for you?

Drew: We were on Salesforce when we first moved just because I wanted to actually keep all the tech stack the same as our prior firm. But that didn't work and it was too expensive, so we moved to Redtail. I never thought Redtail was that great. And we hired a new guy out of Notre Dame and my main role for him is to figure out how we become more efficient because he's a junior advisor studying for a CFP, but he's going to be more of a COO type. And so, he's an operations wizard. And so, he found Wealthbox and since we moved over to that platform a few months ago, it's moved a lot, it's been way more streamlined than it previously was.

Michael: So, what's so different about Wealthbox versus Redtail that just is making the difference for you?

Drew: Easier to put in touches, easier to track last time touched, and easier to see over time what you're touching them about, what ideas have you given them? Which ones have resonated, which ones haven't? Why? It's all kind of available and easier to see reports, right? So, we're looking at it at a high level rather than having to go into each client to figure out exactly where it's at. He's kind of developed all that reporting where it's a lot easier for me to see, "Okay, here's who we've touched the last two weeks, the last month, the last 60 days, who haven't we and why not?"

Michael: Okay, so it was kind of the ability to create reports that track and report on all the activity in the touches, that's where it really boiled down to?

Drew: Exactly.

Michael: I guess as well as, I think you said, just the speed of putting touchpoints and it sounds like just entering tasks and touchpoints was easier for you?

Drew: Yeah, the interface I think on Wealthbox is much easier on the eye as far as number of clicks to actually enter in a task or a touch or a to-do. So, that's kind of the main reason we kind of moved over to it.

How The Canvas Wealth Team Is Structured [38:35]

Michael: So, what does this look like from an overall team structure end? Just how are you structuring the firm and looking at continuing to grow and scale this?

Drew: So, right now we have eight people. We kind of want to wanted to get away from straight wealth management teams like we had at our previous firm, where you'd have a senior advisor, junior advisor, and client service associate. We kind of want to not silo each team, if that makes sense? And so, we want to keep the teams tighter together and ideas share across teams. So, we got three junior advisors kind of below me, one just passed the CFP, and then the other one takes theirs in November, and then in April, a new guy, we just hired a CPA from KPMG.

And then we have my assistant who kind of does all the paperwork, money movement, admin-level stuff, so I would consider her more operations-oriented. And then we have a couple of business development officers, so Scott kind of runs the business development team. And then we got Kevin who's a professional athlete who just retired from the MLS, who is in the business development kind of realm as well and wants to eventually get a CFP and become a kind of dual role like I do, which is give advice but also try to find new opportunities. And then we have a CFO who kind of just does the books, the accountings, tax return, etc., kind of took that off my plate because I used to do that too.

Michael: Okay. So, how does it work from the perspective of just managing clients and client relationships? It sounds like you've kind of got a divide of you're driving the advice side of the business, Scott's driving the business development side of the business, very common way duties get split amongst partners. But does Scott also keep in service clients or is he living solely in the business development world and you are...you and your team are leading all of the relationship management and advice for all of the clients of the firm?

Drew: So, he's just doing business development. He actually used to be an advisor at Smith Barney and then when he went to Mariner, he just did...Marty kind of moved him just straight business development role and out of the wealth advisor role. And so, that's the lane he kind of just stays in is build our network, observe opportunities, ask for opportunities, and that's the lane he kind of stays in, and Kevin kind of runs in that same lane right now as he kind of studies. And then we got me and three others kind of below me that are just servicing the current clients. And we don't usually go to a meeting until it's in the seventh or eighth inning and the client...or the prospects essentially ready to sign up in the business development person's eyes.

Michael: Okay. And how does the business development side work, then? I understand Scott is a partner with you and driving business development and driving these client adventures as well, but you said you've got other business development officers as well. So, what did they do? What is that role look like?

Drew: So, that role is just finding COIs, entertaining them, or doing coffee with them every other week. Whether that's CPAs in town, estate planning attorneys, insurance professionals, other people in their network that they know whether it's at their country club, etc., that will help them drive business because they are either good friends, best buddies, or think they deserve the business. So, that's kind of their daily role is just stay active in the community, try to run as many meetings as you can, and then stick close to the clients you brought in to deserve referrals from them. So, whether that's take them golfing and whether that's take them fishing, whatever it is, stay close to them and see how the relationship is going with me and the other advisors, what are they getting, what are they not getting? And then asking for introductions to anybody else that they think could use the service.

Michael: But these are...these business development officers are not advisors themselves, they're not taking on clients.

Drew: Correct.

Michael: Ultimately, they determine someone's interested, and then if they are, they're like, "Well, I'm so glad you're interested in being a client of the firm, meet Drew and our advice team."

Drew: You know what? Scott is the best at handing them off because he says, "You don't want me to manage your money, you want me to take you golfing, fishing, hunting, have fun." And he just says that to them in the meeting. He's like, "Trust me, you don't want me to manage your money." And so, it kind of makes them laugh and they're like, "Yeah, you're probably right, but I like you as a person and I want to be able to do those things with you and continue to build my network and get opportunities and introductions from you, but I don't want you actually managing my financial plan."

Michael: But then Scott could say, "But I've got this partner, Drew, and he's awesome at this stuff and I can't wait to introduce you and we will work with you together, but you'll be thankful that I'm not actually the guy who's managing your money."

Drew: Exactly how it happens.

Michael: Because I think that just it illustrates an interesting point that for the advisor world, I think so many of us come up in this environment that the only person who can sell the value of your advice is you, the only person who can sell the value of your relationship is you. And that so many firms live solely under the model of advisors go and prospect for business and get clients and do their own business development, and then some are good and some are not so good and we tried to train them to be better and firm owners lament that their advisors maybe aren't the best business developers sometimes.

But it seems like you run just a very separate and distinct model that just says, "No, business development is a completely independent function from wealth management. Yes, okay, maybe in the final inning, we'll bring...the business development person can bring the advisor in just so the client at least understands who they're saying yes to, that they're going to get after they say yes and become a client." But that you don't actually need advisors to be out there prospecting and developing their own prospect relationships from the start to actually get new clients.

Drew: Correct. But I'm also of the opinion that doing the networking helps you become a better advisor because you learn the pain points of somebody that maybe will never become a client but it might be pain points of another person that you can already speak to because you've had the opportunity to think about it after the fact. Like, "Man, that's that guy's pain points, what would I do in that situation if he was actually my client?" And so, that's what I've always tried to take it as like I probably do just as much networking still as I used to because I love that opportunity of meeting new people and figuring out their problems because they're usually different than any other client we have.

How Canvas Wealth Outsources Part Of Their Investment Management Platform [46:09]

Michael: And so, speaking of just the investment side of things, I was struck even as you were just describing the team. You're leading wealth management, there's three junior advisors, you've got an assistant driving operations, a CFO doing the books, Scott and Kevin driving business development. You didn't mention an investment team or trader or person. So, is that also internal for you? Is that external? Are you living planning only and not even doing the investment side of the equation? How does that work in your firm?

Drew: It's internal but also external. So, we made the decision when we left to outsource the entire investment platform as far as investment research goes. So, that's how we got connected with Joe Duran and United Capital is they had the FinLife platform and we could outsource kind of...it's kind of like a TAMP model, right? They have model portfolios, SMAs, etc., all the way down to private alts. And then when Goldman bought United Capital, it actually made that relationship even better, in my opinion.

The investment research and due diligence we get on a daily basis from Goldman now, I have so many emails in my inbox just of little articles on countries or slants they're putting on the market that I kind of catch up on the weekends or at night because they send so many good detailed articles. And they're honestly excellent about putting bullet points at the top and then if you want more info, read below. So, we outsource a large part of our investment platform to them where they manage it, and then kind of do satellite strategies around the outside that might not be affiliated directly with them. Does that make sense?

Michael: Yep. Yeah, so, functionally, FinLife...because I know originally, FinLife was going to be purely a technology platform to manage client relationships, not necessarily tied to portfolios. It sounds like now the version of it that you're engaged with is FinLife gives you some technology but it also plugs into just Goldman Sachs entire platform, they operate more as a TAMP structure for you and you can outsource to all the different separate account managers and other managed account solutions on their TAMP platform.

Drew: Correct. And what I also think it gave us that was totally different than anything I've ever experienced before and I was a little hesitant to do it, but we flew some of the United Capital guys up to Kansas City and met with our first couple of clients that kind of followed us over. And the MoneyMind HonestConversation piece of their kind of client onboarding platform was totally unique in nature, in my opinion. And I learned a lot more about those clients than I ever knew before because we engaged the non-CFO spouse and got them talking about what they wanted and it kind of opened my eyes to, "Man, I thought I was really good at this job, maybe I'm just average because I've never asked these questions." And so, we were sold after that, as soon as the United Capital guys walked out of the office, I'm like, "We got to buy this client onboarding platform." And I didn't even know what it would become as far as the TAMP structure with Goldman, but that's just made it even better.

Michael: So, can you explain further for those who aren't familiar, just I think you mentioned MoneyMind and HonestConversations. So, what are those?

Drew: So, the MoneyMind is a link we kind of send the prospects before their first meeting with an advisor. And it's a little seven-question questionnaire online that kind of ask you questions to give us a feel for how you think and feel about money and sort of develops what we would consider your intuitive response about financial situations. So, you're one of three MoneyMinds, you're a Commitment, Protection, or Happiness. A Commitment slant would be you derive joy from giving in fear of letting others down. A Protection slant would be you value security and peace of mind, so typically going to focus on cost and delayed gratification. And then Happiness I think of as just FOMO, you don't want to miss out, you always want to do everything, and you're not really worried about how much you spent in the moment.

Michael: Okay. And the idea is just MoneyMind...or I guess FinLife gives you MoneyMind, MoneyMind is just pre-packaged this whole thing together so you don't have to reinvent the wheel and these conversations. They built their tool in the seven-question questionnaire, it's just you can send it out to prospects and you just get responses back and get to start having good conversations on that basis.

Drew: Yep, so we have their answers by the time they come in, we kind of walk through why we have them take the survey, and it all goes back to the "Thinking, Fast and Slow" book. And so, typically, what the research shows behaviourally is that wealthy people answer most questions to their advisor with an intuitive response. So, if there's a slant on their MoneyMind of how they intuitively respond, that might be slanted towards something that they really don't want and what their intentions, motivations, and goals really aren't. And so, if we know that in advance of, "Hey, this person is a Commitment MoneyMind, so they're going to derive joy from giving in fear of letting others down," and we reach out to them about a tax planning strategy and they're busy with their business, they're going to probably respond intuitively really fast because they don't think it's going to make a difference on the bottom line that much. And so, if we know that in advance and that it might go against the kind of cards they pick in the HonestConversations game and it's not what their true intentions are, we kind of point that out of, "Hey, you said you want to this, is this what you want because this is why we're kind of implementing this tax planning strategy?"

Michael: Okay. Okay. And so, is that essentially the FinLife platform at this point? Or are there other things that you get or use or do for being part of the platform?

Drew: So, it's that kind of client onboarding process because we envision in the future of the firm, the onboarding process looking similar across the board as far as whatever advisor you're working with, where previously where we worked, every advisor kind of started off the process totally different. So, we wanted to create the same experience as you start with an advisor and then I want the uniqueness of that advisor to come out in the relationship as it goes, but we want the onboarding process to be similar across the board. So, we want to know how you think and feel about money, and your history around it with your family and how you grew up, right? And then we want to play the HonestConversations card game, which has separate decks. You kind of go through the decks, you pick your kind of priorities, and then we kind of ask questions around those priorities and we get the non-CFO spouse talking about what they want with their wealth.

Michael: So, can you just give example...just what are these cards? Just what are you doing with HonestConversations?

Drew: So, you got three stacks of cards, they're actually colored, and the clients don't really know that but each color is kind of related back to a Commitment, Protection, or Happiness kind of MoneyMind. So, it's kind of unique, whenever they...typically, a client will fill out the MoneyMind and it would be totally different than the cards they pick. So, for example, a lot of people pick a Commitment or Protection MoneyMind, but then all their cards they pick are orange cards, which are Happiness cards. So, you can tell their true intentions and motivations are to be happy and the most drawn card is probably, "Spend time with the people I care about." But they typically will answer responses intuitively of a Commitment or Protection because they want to protect to kind of...and spend focus on cost, really, before they do anything or actually enjoy their wealth. So, it's trying to give them the invitation to say, "Hey, you have enough wealth here, why aren't you doing that family vacation that you talk about?"

Michael: And so, part of the point is actually to help them, I guess, true to the label of HonestConversations, get more honest about what their goals really are and highlight just some of the gaps of like, "See, you said Protection was most important but then when you actually get to your goals, they're not Protection goals, so let's just talk about that." Right?

Drew: Exactly.

Michael: "Here are your goals but I'm seeing the disconnect. Couple, talk amongst yourselves."

Drew: Pointing out the disconnect, right? And then trying to get them to envision what they truly want and how they've already built up the assets to do that, they just got to actually live that life. Because a lot of people talk about it but they won't actually execute on it because they grew up in a situation where they maybe were extremely poor, and so they're big-time savers and they don't want to spend on that next vacation that's going to cost $15 or $20 grand.

Why Drew Uses Two Different Client Portals [56:07]

Michael: Right. So, is that the core of what it means to be on the FinLife platform, or is there other stuff? Or do you essentially go from the onboarding capabilities, now you're into the investment management side of the Goldman part of the offering?

Drew: Yes, so there's a client portal that we can utilize. Depending on the client, we either put them on the FinLife AdvisorCenter platform and they have a portal there, or they have a portal on eMoney, our planning software, it kind of just depends on the client and what we think they're looking for, if that makes sense, because the platforms are a little bit different.

Michael: Yeah, so can you distinguish those? Because I feel like one of the ubiquitous challenges we all have these days is every piece of software has its own wonderful client portal that you can use, except no client actually wants to log into five different portals because that really kind of makes it not very portally. So, what are the differences in the portals? And how do you decide which portals you're using with which clients?

Drew: So, we typically lean to the FinLife AdvisorCenter kind of portal for clients unless they're extremely cashflow oriented, budget-oriented, they want to know what they spend, where they're spending it, what their net cash flow is, they are more prone to be put on eMoney just because they can see the cash flow reports as much as they want. And on the FinLife platform, it's more of a goals-driven platform where you can see your kind of MoneyMind, you can see your cards you've picked in the HonestConversation game, the same type of kind of net worth statement that you'd get on eMoney. And then you can actually kind of communicate with clients back and forth through their portal. You can leave video messages, etc.

Michael: I was going to say just what communication would you do there versus just sending them an email or having a video call or in-person meeting with them?

Drew: So, there's priority action lists that kind of track what you've done for a client, what's outstanding, whose courts it's in, so who has the ball on it, does a client need to get us something or do we need to deliver action on an action item? So, it kind of tracks that type of stuff on their platform.

Michael: Okay, so more of, let's say, like a client task list but not a task list of things you need to do for the client. Literally, client task lists like, "These are your financial planning action items that you're supposed to be working on, let's make sure you're working on them and we'll check in on them."

Drew: Yep.

Michael: And then paired with all of this is there's a Goldman back end for the investment management.

Drew: Correct, which is a lot of ETF low-cost models, and then you can put an active slant on it if you want. So, you can take their active slants within that, whether that's a country-specific slant, "Man, they really like Mexico," right? They'll put a slant in on Mexico and trim their emerging market ETF. So, it's things like that.

Michael: Okay. And so then, how does this price for the firm? Are you paying monthly fees like a software fee for FinLife? Or are you paying basis points more akin to how you'd pay a TAMP? Just how does this work from a cost structure for the business?

Drew: So, it used to be paid per advisor, but then they switched the model when Goldman bought them and it moved to a price for the firm, and then it's just a quarterly fee for all those kinds of services.

Michael: And it's basis point fee or just flat dollar fee?

Drew: Flat dollar fee.

Michael: Okay. And can I ask just what's the fee or at least what's the neighborhood of the fee or how's the fee gets set for you?

Drew: It gets set based on...I think if you add more assets to their kind of TAM, your fee goes down. So, I think the max fee is $50 grand for the firm and then it trends down as new assets are either in their models, etc.

Michael: Okay. And then I'm presuming then there's a separate fee just literally for their models when you're using their models because investment managers like to get paid?

Drew: Correct, 5 to 10 basis points on an ETF model if you have an active slant on it.

Michael: Okay.

Drew: And then it trends up, like if you want an SMA, they're 25 basis points. So, they've negotiated pretty good rates as far as if you want an active manager because if we were trying to hire an active manager in some of those spaces, we'd probably be paying on our own 50 to 75 basis points.

Michael: And at the end of the day, these are all outsourced investment implementation. So, literally, they're doing the trading, they're doing the management, they're keeping clients on the model, all of that, as part of the outsourcing to them for the TAMP implementation?

Drew: Correct. So, the only thing we trade in-house is outside satellite strategies and those are all usually individual stocks.

Michael: Would you trade directly or you just have other managers you happen to like for some of those strategies that aren't on the Goldman platform?

Drew: Both.

Michael: Okay. So, the core of this, it sounds like, just kind of flat minimum fee for the platform that gets you MoneyMind, HonestConversations, the portal, all of which you're using, then as client assets get added into the models, if you're...they've got a base fee offset model. If they're getting paid on the models, then they offset against the software platform fee, and off it goes overtime.

Drew: Yep, exactly.

Michael: So, then how do you handle this from the pricing on your end? Do you pass TAMP model fees through like, "This is our advisory fee for what we do and then this is the Goldman fee for what they do?" Do you just pay these fees out of your own pocket so that the client can have a single bundled fee? How do you handle this because this is not trivial cost by the time you add up hundreds and millions of dollars and tens of thousands of dollars in platform fees?

Drew: Correct. So, we pay the flat fee for all the clients, essentially, for the MoneyMind and FinLive platform and access to the Goldman research, we pay all that fee. And then if they're in a specific Goldman strategy, we outline that kind of on our Exhibit B and note that, "Hey, you're going to pay this five basis points for the strategy."

Michael: Okay. So, you pay the platform-y part of the fee but you're effectively passing through the TAMP portion of the fees. So, like if they want the five-bip ETF model, they pay the five bips, if they want the 25-bip SMA strategy, they're paying the 25 bips.

Drew: Correct.

Michael: And so, what is your...then what is your fee structure?

Drew: So, we don't really have one. We have what they called max fee, I know it's kind of funny, but our max fee and ADV is 1% of AUM. But typically, it all depends on where we're at with the client. I don't come in with a new prospect and expect that they're going to give me all their financial information in the first month that I know them. So, if a client wants to come in and just say, "Hey, I got this active business, it's obviously profitable because it's throwing off cash flow, I have a lot of extra cash sitting in my business, I think I want to give you $1 million to start and see what you do with it based on this risk tolerance that I kind of give you in the outline that we discuss. And if down the road, I like what you're doing and you earned my trust by giving me some other ideas for my business or tax planning or whatever, then guess what? I'm going to share probably more information with you over time."

And that is honestly how we've got a lot of clients. It's not by trying to be pushy and get every single fact about their finances before they become a client. Because at previous firm, it was always like, "Hey, you got to tell us everything before we invest dollar one because we want to know that it makes sense for your whole plan." And I always thought that was the wrong way to do the business. If someone just wants to trust you with $1 million, that's a great opportunity to invest the money based off of risk tolerance you kind of discuss, give them little tidbits of ideas, action items, things to think about. And guess what? Over time, they're going to trust you more and more and probably give you all the detail that you wanted at the front end. But sometimes as advisors, I'm not sure we deserve that from day one.

Michael: So, do you ever worry, though, that you'll get into a situation of, "We made some recommendations, then once we find out more information about their situations, it's like, "Oh, that actually probably wasn't a great recommendation after all?"

Drew: So, typically, our clientele is a lot...our average age is probably 40 to 42 years old. We have a lot of younger clients that want growth in their portfolios. So, in a lot of instances, it's equity exposure or it's finding on the local real estate deal, we can kind of pool client money together and buy a building and have an NOI that comes off that and your cash-on-cash returns in the 8% to 12% range. They want those kinds of growth opportunities. So, I don't look at it as if like, "Hey, if I find out this, this might not be right." I feel like they tell you pretty early on that this is money that they don't really need and this is money they want to grow.

So, you don't really need to know what's coming off my business because guess what? If I've had the business five years, I can kind of back into what they're throwing off. And then it's trying to figure out kind of net cash flow outside of that, what are they spending as a family, and kind of touching...most of them don't even have an estate plan when they come to us just because they're new to the wealth.

Michael: And so, the idea, in essence, is just they know what their spare investable dollars are, or at least they're making the decision that these are our spare investable dollars. So, when they come and say like, "I want to work with you guys to allocate these dollars, I want a higher risk growthy opportunity because I'm okay with that and I can afford it," then you're okay with that. Like, "They literally said what they want, so we're going to find that solution for them, we don't have to do the entire comprehensive financial plan of every asset they have everywhere just to prove out that, yes, it's okay for them to buy this thing. If that's what they want to do, we will implement what they are asking for to the best of our ability."

Drew: So, I absolutely would rather do the comprehensive deep dive but sometimes it's just not realistic because people are a little hesitant to share all the information and I've come to the conclusion that that's okay. If you want high...you come in and you say you want high growth, usually, I give them more moderate, because if it goes down at the beginning, guess what? They're going to be calling me like, "Man, you're losing me money." And obviously, we can't control where the markets going to trade, so I usually give them a little bit below what their risk tolerance they say is just to get them acclimated.

And then once you get it going, guess what? If you're making them even more than the bank would make, which is nothing these days, they're going to start trusting you that you know what you're doing in the industry, which makes sometimes no sense, in my opinion, but they start trusting you that if you can start pinging them with, "Hey, in your business, have you thought about doing this? I don't really know all the structure and where all the cash flow is going and what equipment you bought this year, but let's talk about this." And it opens up another avenue of a conversation where they start sharing more and more.

What Comes Next For Drew And Canvas Wealth [1:08:12]

Michael: So, what comes next for the firm from here? Just as you look at growing, you've got needs to grow biz dev, you've got needs to grow planning, you at least potentially have needs to grow investing or maybe you're happy to keep outsourcing it and not bring it in. But how do you...what comes next for you from here and how do you think about where you put investments into the firm at scale growth, just given the sheer volume of growth that's coming in for you?

Drew: I think it's by continually building out that deep advisor bench of younger advisors. So, whether that's through K-State School of Financial Planning, or trying to pick off younger advisors from other bigger RIAs where you kind of...you know how it works in a big RIA, you kind of have to wait your turn and I feel like you have to wait a little too long, in my opinion. So, if we can give them opportunities to be the guy or the gal at an earlier age and kind of mentor them where they've already had some mentorship around how to run a book of business and take care of clients, then we could just kind of fine-tune that and give them opportunities at an earlier age, I think we got some opportunity there. And so, that's kind of what I think about is how do we build out this advisor bench, and then I got to be okay over time continually giving up clients and seeding these new younger advisors with a small book of business that they can kind of grow from that point.

Michael: And how do you think about just approaching the question of building a bench of young advisors and training them? I get hiring them looking at college programs like Kansas State, looking at younger advisors in bigger RIAs who feel like they aren't getting their shot, but what is training look like for you? Or how do you just even figure out who the right advisor is that's a fit for you?

Drew: So, we actually kind of take a boiler room approach where I have all the younger advisors in my office with me, so they all kind of have standup desks. And when we're working, no one's talking. But when there's a question or idea, it gets thrown around the room, and I kind of push it back to them to answer their own questions or have somebody else in the room answer the questions. Because I came from a place where you kind of were siloed in your own office and sometimes you had to come up with your own ideas. So, I wanted to create the culture of everyone in the same room, everyone bouncing ideas off each other, and guess what? If you got a meeting, there's a conference room right over there where you can go and use it for a call.

Michael: And you've mentioned a couple of different structured meetings you seem to use as well, your Monday meetings on, "What are we doing for our monthly touches for the upcoming weeks' worth of clients?" Are you doing other structured meetings like that as well? Or is the focus really like, "No, you just got to get everyone in a room together where they can have the conversations and then let the conversations happen as what clients need and we talk about it?"

Drew: Yep, it's the latter, it's all be in the same room. And a lot of clients still call me first. And so, if they call me, I put it on speakerphone, they get to listen to the conversation just like they'd listen to a meeting. Or in email, I kind of deflect the emails to them to respond to rather than me, so I'll copy them on a response and the goal is always to respond within 12 to 24 hours to everything. But typically, if a client wants to know something, they want to know it right now. So, we're really good about responding within that first 30 minutes and getting them the answer that they're looking or say, "Hey, we need to research this more before we give you an exact idea of what we think you should do."

Michael: And then, how do you look at building and expanding the business development side?

Drew: That one's a lot harder because it's hard to find people that enjoy that role because it's a very hard role because you have to be extremely comfortable asking for the business. And that's a hard thing for a lot of people because we've hired a couple that we've had to let go already because they weren't ever comfortable asking for the business. There's a weird thing around money where the people can sometimes get uncomfortable with the ask. They have the relationship but they can't make the ask. And so, we're looking for people who can make the ask, which is not easy to find.

Michael: Any tips or suggestions just where are you finding them that works? Where have you been able to find business developers that can do that and learn that?

Drew: So, we got kind of four people who do business development as of right now, and then each of the young three advisors kind of do it in their own way but they're still new, they're still trying to build out their COIs. So, for us, it's try to get them COIs and then foster those relationships over time. But for the ones that kind of do business development on a day in and day out basis, that's kind of Scott and Kevin and then I kind of do it part of the time. And then another guy who owns some of our firm kind of does it part of the time but he owns another business, so he's kind of doing it through that business too. But trying to find the person that's comfortable in the ask and getting them up to speed enough on our industry is not easy to find.

Michael: So, does that make you consider other pathways instead? Or just a, "I guess we just have to keep trying to figure out how to find the right people?"

Drew: I think it's making me consider instead of a true bifurcation of roles, some sort of dual role like I kind of do where you spend some of your time networking and trying to find new opportunities but then also a large amount of your time still goes towards just the wealth advice portion. So, I don't know how we figure out that fine mix or if I can find somebody younger from K-State school of Financial Planning that's more sales-oriented. I don't really know what the answer is, but that's something I definitely think about or struggle with on a day in and day out basis.

Michael: And then how do you look at the investment side of the business in the future? There's so much discussion out there these days of the future of external TAMP platforms and some that make the case of, "It's being increasingly commoditized, just outsource it to a provider, focus your team resources on other places." And another say that if you apply the average TAMP fee to a multi-$100 million practice, it's like, "Geez, you could just hire some people and do it internally, why send it out at all? It's cheaper to insource." So, how do you guys think about that as a multi-$100 million firm that's outsourced and using a TAMP platform through FinLife at this point?

Drew: That's a great question because I was always of the opinion it's hard to hire enough talent inside your firm and pay the amount of W-2 costs plus benefits it would be to have the talent to put you in the right allocations. So, I've always thought, "Let's outsource this to somebody that knows what they're doing so we don't have to worry about the research portion of it in the high level, beta allocations to the market." And then we could throw...the goal is probably, over time, to bring at least one or two people in-house where we can kind of have them run the satellite strategies around the core of the portfolio, which I think will always be somewhat Goldman/TAMP-driven.

Michael: So, in the future, the bulk may stays may still stay in an external TAMP core but you may hire more internal team in the future specifically for more specialized value add satellites?

Drew: Yes. I think that's what I'm thinking at this point that makes the most sense in my mind, but we'll see kind of where this goes as far as growth of the firm and if that makes sense.

What Surprised Drew The Most About Building An Advisory Business And The Low Point Of His Journey [1:16:27]

Michael: So, as you look back on this journey of starting the business at a large firm that decided to break out on your own, and now going through the growth cycle of breaking out over the past couple of years, what surprised you the most about trying to build your own advisory business?

Drew: It's a lot harder than I thought it was to get off the ground. So, when we left, we hadn't even applied to the SEC or done any of that, so we were honestly somewhat clueless on how to create an RIA. And just that whole first kind of 90 days was just like, "Man, what are we doing? We don't even know what we're doing. We don't even know how to create this. We have clients that want to come over but we don't have anywhere to put them." And so, that whole kind of starting the firm up and one of the guys who's an investor in the firm kind of was right and I was wrong. I was like, "I don't think it'll cost that much," he's like, "It's going to cost more than you think to get all these technologies and have it the same way it was before or better." Right? And I never thought it would cost or take as long as it did to kind of get up and running where we actually could take a client on.

Michael: And you mentioned that having an investor in the firm, can you just talk a little bit more about what that structure is? So, there's like a non-advisor person who just put dollars into the firm in exchange for a stake?

Drew: Correct. So, he gave us essentially a note that we've already paid back to...essentially, it was a convertible note into equity once we paid it back. And it was actually my biggest client who at the time, I was like, "Here's the best advisor at this firm, you need to go work with them. I'm going to go try to start my own. I don't really know what I'm doing but I think this is the opportunity that I need to give it a try. I got young kids, let's give this a run. If it works out, great. If it doesn't, I can go work at another RIA in town and be fine." I think that's the leap a lot of advisors or younger advisors struggle with of going to start their own firm or going with a new startup is it's kind of a big, warm, cozy blanket to work at a big RIA because it's...I hate to say this, but it's kind of hard to mess up.

And so, they don't want to take the risk in the upside opportunity if they're under a warm, cozy blanket. And so, literally, he looked at me and he goes, "I'm not going anywhere but with you and you're going to need some money to start this, so you tell me whatever it is and let's get it going because I want to be part of it." And that right there just gives you the confidence that you're doing the right thing, and it gave me all I kind of needed to kind of push "Go."

Michael: And so, can I ask just how much did he stake or how much working capital did he give you to get you off the ground? What did it take to make it work?

Drew: So, I think we had a line of credit up to $500k, I think we drew it down to like $250k or $300k and then paid it back in 2020. So, after Year 1, kind of after each quarter you kind of bill...we do quarterly billing, so we'd always pay some of our quarterly billing to pay down the note and then we kind of paid it off, I think, late 2020. So, a year and a half in.

Michael: But it was structured as a convertible note, so it wasn't just straight debt, he's now an equity owner for a piece of the firm as part of his risk-taking process for loaning money to a startup business.

Drew: Exactly, exactly. And we couldn't have found a better partner, he would do anything to get introductions for us. And in his industry, it's totally different, he's in the trucking industry. And so, his introductions are always business owners because he's talking to the business owners of these firms. So, it's great opportunities and it's people who are probably underserved in our line of business.

Michael: Right. And at the end of the day, it's one thing to just ask clients for referrals, it's another when you've actually got someone who owns a stake in the business who sees it appreciate when they refer clients to make them even more motivated to refer clients.

Drew: Absolutely. Absolutely. And so, that's something I think about, though, moving forward is, "How do we create a firm where the younger advisors, if they grow to a place where I think they can on our platform, how do they grow into some sort of equity in the firm so they're as tied to it as I am?"

Michael: Meaning you're trying to figure out how you're going to give equity participation opportunities for the younger advisors coming into the firm at some point?

Drew: Absolutely.

Michael: And how do you think about those? Are those future buy-ins? Are those future grants? Are those future comps? How are you viewing equity for future advisors?

Drew: It's a good question. I just think about it all the time, "How do I tie all these people who are working just as hard as I am to the same cause...to the same level and extent that I am?" Because I'm extremely invested, obviously. But to get them to that level, I feel like they have to have some sort of equity carrot for the extremely exponentially growth-minded people. So, I got to figure out or kind of call on people like you to figure out what makes the most sense as far as creating that structure where they have the opportunity to either buy in or be granted it over time based on kind of the work that they do.

Michael: So, what was the low point for you on this journey?

Drew: Probably leaving a good firm. It wasn't easy because you like a lot of the people, pretty much all the people. They're great people, so when you leave a firm and you're kind of out on your own and a lot of those people probably are like, "Man, what's he doing?" Right? And so, the communication’s not there anymore when he used to talk to them every day, so it's just kind of like you're out on your own in the industry when you're really not but that's just the way it feels, you feel like you're in a silo all by yourself.

Michael: And so, what did you...how did you deal with that?

Drew: I just kind of tried to call on different mentors that weren't totally affiliated with the firm anymore, if that makes sense, and try to get...bounce ideas off them about how to start this up and get it going. So, the problem was that was the only big RIA I worked at, so that's where a lot of your connections are, right? And different people feel differently about when you leave, right? So, it's trying to talk to the people and call on the people that were happy for you to take the leap.

What Drew Knows Now That He Wishes He Knew Then, And What Success Means To Him [1:23:29]

Michael: So, anything that you wish you'd done differently in retrospect? What do you wish you could go back and tell you from three years ago before you made the transition?

Drew: Oh, no, that's a tough one just because you always think about, "Man, if I could have done that a little bit differently, it would have worked out better for us." But there's no way you'll figure it out. If you ever leave a big RIA that's really successful, there's no easy way and good way to leave. There's just not. So, how to do it is just take the leap and then say thanks for everything that they've done for you because I wouldn't be where I'm at in my career without those opportunities and connections and network. And so, I'm extremely thankful for that but there's no good way to leave. You can't just be like, "Hey, I'm going to go start this," and they're going to be like, "Yay, go do it." Right? They're going to be like, "Hey, how do I keep you here because you're a successful part of the organization?"

Michael: So, they're always going to try to pull you back if you're doing well, which, if you're really thinking about leaving, just makes it harder.

Drew: Exactly. Exactly. So, before we left, it's just constant, going through your mind like, "Man, I'm going to feel bad doing this," "I think it's the right thing," "No, wait, I know it's the right thing but it's still very hard to do." Right?

Michael: Yeah. So, was there a thing or a moment that ultimately led you to pull the trigger or follow through on the decision to leave?

Drew: I think there's just multiple things over time. As an organization gets bigger, there's more red tape, there just is. And if you're trying to service your clients in the best way you know how and you have to keep stepping or asking for permission to do things, it just becomes like, "At what point are we just doing it for the firm rather than for the client?" And so, I just kind of got to that point like, "I can't do this anymore, I just want to go try to do it the way I think is best for the client."

Michael: So, what advice would you give to newer advisors looking to come into the financial planning profession today?

Drew: I think the biggest thing is finding a good firm where you can find a good mentor who teaches you the business the right way. And some of those bigger RIAs, you just get so many opportunities to see different clientele. That's amazing, you can't put a price tag on that. Even if they underpay you, it's still worth the experience just to go see, "Oh, my gosh, I just saw 400 new millionaires next door come in in the last four years," right? And they're all totally different. And each of the advisors I worked for was totally different, the way they kind of ran their business.

And to be able to see that and experience that is priceless, in my opinion. So, just go find a firm that kind of does the business the right way, which there's so many of them out there, as you know, and get the experience from somebody who knows what they're doing and mentor you, and then continually ask for opportunities. That's what I did at Mariner is just keep asking for opportunities because they'll say no a lot of the time, but then they realize that, "Man, you're a valued commodity." Because guess what? You keep asking for the next opportunity, you want more, and...

Michael: So, what kind of opportunities were you asking for? What does that mean in practice?

Drew: So, that was me probably as a junior advisor going to all the business development people at the firm, which I think there were six or seven just in Kansas City, and saying, "How do we get more opportunities for our team? I'll do whatever it takes, I'll go meet wherever...even if it's a prospect in the first inning, I want to go to the meeting." Because guess what? The more meetings I was in, the better it was because you'd see different people with different problems and you'd get to think about, "Man, if I was serving this client, here's what I would do."

Michael: So, as we wrap up, this is a podcast about success and one of the themes that always comes up is just the word success means very different things to different people. And so, you're on the path of this fantastic growth cycle for the business, crossing $450 million in just a couple of years, so the business is doing incredibly well. But how do you define success for yourself at this point?

Drew: I think it's continually growing and mentoring young advisors. I get more excitement out of my day watching them do something cool for a client that they want to come to tell you about than I do actually doing it for a client myself. I used to get that same euphoric kind of feeling when I did it myself, now I get that when I'm just helping these young guys and gals learn the business. So, it's just continually giving them kind of our kind of foundations of culture, which is just the will to win, being competitive, having high energy, finishing. I feel like enough people...so many people in our industry don't finish. They talk about all the things they can do, but they don't actually get it to the finish line. And then just being truly genuine with every client and relationship you get the opportunity to service because it's an amazing business but that opportunity can be taken away in one second, somebody can leave you for X, Y, or Z reason. So, just always trying to be genuine with every relationship and deserve the opportunity.

Michael: Well, very cool. Thank you so much, Drew, for joining us on the "Financial Advisor Success" podcast.