#FASuccess Ep 433: When You 10X Your Advisory Firm To Over $20M Of Revenue…And Want To 10X Again, With Cameron Passmore

Resources Featured In This Episode:

• Cameron Passmore: Website | LinkedIn
• 10x Is Easier Than 2x: How World-Class Entrepreneurs Achieve More by Doing Less by Dan Sullivan
• Rational Reminder Podcast
• Larry Swedroe | Larry Swedroe's articles
• Daniel Solin
• William J. Bernstein
• Paul Merriman
• Ben Felix YouTube
• Michael Kitces on the Rational Reminder Podcast
• Ben Felix
• Conquest Planning
• #FASuccess Ep 161: Cultivating The Right Firm Culture With A Reality-Based Leadership Approach, with Tessa Felix
• Scott Galloway
• OneDigital

Are you a successful financial advisor, or do you know of one that would be a great fit for the Financial Advisor Success podcast? Fill out this form to be considered!

Full Transcript:

Michael: Welcome Cameron Passmore to the "Financial Advisor Success" podcast.

Cameron: Well, thank you, Michael. I've learned so much from you over the years. Hopefully I can give a little bit back to the audience. This is a real treat.

Michael: I appreciate it and you joining us for what really has been a pretty amazing growth journey that I know you have to share with us as well. And to me, a lot of this just focuses...I think our theme today is probably going to be around the whole concept of 10x growth. Ben Hardy, Dan Sullivan wrote a book a couple of years ago around this, maybe somewhat provocatively titled "10x Is Easier Than 2x." And having literally been through more than one 10x experience in building businesses, I find...with the utmost respect to Ben and Dan, I feel like the book title is a bit misleading. I really don't find it's easier. It's different, and it's actually so different it requires you as a founder to change so significantly and be so different in what you do and how you have to interact with the business that I find most people don't 10x specifically because we don't want or we can't handle or we don't want to go down the path of the amount of change it actually takes and how different it is to 10x a business.

Cameron: I think you're spot on.

Michael: I know you've been down this road, a genuine 10x over the past 10 years. You're now more than $20 million of revenue and many billions of dollars under management as we'll get into soon, as one of the largest independent fiduciary firms in Canada. So there's a little bit of a cross-border dynamic we'll get to delve into as well. And now rather than rest on your laurels, you're now saying the path for what does it take to 10x the business again and figuring out what has to change now to get from here to there. And so I'm excited to talk to you about what really actually happens when you have a business that goes through a 10x growth change and, I don't know, maybe we'll challenge the notion of whether 10x is really easier than 2x, as much easier as the book name suggests. I guess what do you think about the whole dynamic of 10x growth, Cameron?

Operating As An Outlier In The Canadian Financial Advice Marketplace [05:36]

Cameron: It's a funny observation, Michael, because we used to sit around, my colleagues and I or friends of mine in the business, I think back to early 2000s and we would say, "If only we could be $100 million, we'd be set." And then it was, "If only we could become a $200 million book, we'd be set." Then all of a sudden, we kept our head down and ended up building to...we're around $5 billion plus or minus Canadian today over the past 15, 20 years or so. And it's not easy, but it is possible, and it is about that evolution. You often talk about that evolution that a founder, the person that started this back in the day, figuring out the roles through time, and it's so outcome by, it's who knew that I would somehow be able to be involved in something that would go from literally nothing in 1991 to being part of this unbelievable team of 100 people serving over 2,000 families and over $5 billion. I never even imagined that.

So we found ourselves a couple years ago wondering, wow, we're kind of onto something here. The market is giving us information that what we are doing, this fiduciary planning-focused, markets work, one team going to market. We're onto something. What could we become? And it's almost like to dare to dream. And I look at some of the great U.S.-based firms that have become amazingly efficient, scaled enterprises helping tens of billions of dollars of assets for thousands of families, and we're not all that different. I kind of go back to when we started the podcast, Ben and I, we used to listen to some of the great U.S. investment podcasts, and it's like, well, there's two guys that are doing it. We're two guys, maybe, we don't know, maybe we could do it, and we kind of did. And it's almost like you have to just let yourself dream and imagine what's possible and combine that with meeting and enabling unbelievable talent. People deep down are motivated and when you give them a vision, and the vision is so clear in Canada, you give them a vision and help them and get out of their way, what they can do is so far greater than what I could do as a founder. We are doing things now that I could never have imagined even five years ago, Michael. And that's the fun part about all of this, and you're helping so many people, which in Canada is so desperately needed.

Michael: I'm struck by part of how you framed that almost back to the beginning. I remember living this in early stages of the business and I've heard it from so, so many advisors over the years. That phrase, "If we could just get to," insert milestone here, $100 million, $250 million under management, $500 million, a billion, $3 million of revenue, $5 billion, whatever the number is. "If we could just get there, we'd finally be set." And then you get there and you're not. The goalposts move.

Cameron: But it's not about being unhappy. We talk about helping more people. It's not about...and I'm not suggesting you're saying this, Michael, but it isn't about just more for the sake of more. It's not some balance sheet-driven, EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization], blah, blah, objective. What we do legitimately helps people. What we do is legitimately good quality, caring work for people that care about their long-term security. This stuff really matters. This stuff is no joke and there are so many great planners that do this work. However, the dynamics in the Canadian marketplace, which I know best, is such that so many people aren't even aware this is an option in the marketplace. We are so dominated by a handful of banks and insurance companies, most people don't even know that there is some sort of fiduciary planner-focused option in the marketplace, let alone what that even means.

Michael: Yeah. And just for folks who are listening with our mostly U.S.-based audience, just for a rough context, the Canadian market for big banks and brokerage firms as opposed to independents looks something the U.S. market did probably in the late 1990s. So independent advisory firms that charge fees were a thing, but virtually everybody in the industry works for a large financial services firm. In the U.S., we're a little bit more insurance and brokerage-based. Canada is a little bit more bank and brokerage-based just I think because of how the financial services systems evolved. But the breadth of RIAs in Canada, there is kind of the breadth of RIAs here in the U.S. in the late '90s and early 2000s, which is to say very, very few. A huge firm might have a billion dollars and someday maybe someone will get to $10 billion.

Cameron: I think that is accurate. I think you're right. And Canada also has some of the highest expense ratios in the world. We have less than one-third the adoption rate of index funds versus the American marketplace. And if you're a bank, insurance can be a dominant industry, index funds are, to some point, to some extent, suicidal to the business. Because I believe so much of the margin comes from those products.

So that, I think, is the opportunity for us as an objective of becoming a leading scaled fiduciary, planning-focused, markets work kind of firm.

Michael: But I'm struck in that...in that vein, kind of getting back to the earlier comment at the beginning. It sounds the vision in the 1990s for you when you were starting the firm and really out in the wilderness, building your own log cabin with your two hands, I'm envisioning, and doing the whole, "If we could get to $100 million, we could be set. If we get $200 million, we'd be set."

Cameron: Going back even further...

Michael: The mission, when you started out, wasn't "Our Canadian marketplace needs the disruption of fiduciary...”

Cameron: Oh my God, no.

Michael: ...fee-only advice. That came later?

Cameron: Michael.

Michael: The goalposts moved on you or you moved your own goalposts?

Cameron: Michael, I was a beef salesman, graduated in 1989 from McGill, and I sold beef. I sold the ultimate commodity. I was a price quote machine. I was a beef Bloomberg machine effectively. And it was ridiculous. I just wasn't fulfilled. And someone said mutual funds. Well, Canada was the birthplace, I think, of back-end load commission mutual funds. So you sell 100,000 mutual funds, you make $5,000. So the goal was to sell 100,000 mutual funds every month just to survive. It was a survival thing. Yeah, you kind of knew that there was this burgeoning opportunity to help people. There's less pensions in the world other than public service pensions. So you kind of knew the trend was in your favor, but you didn't really know how it was going to play out because it was all based on hustle and networking and all the things I'm sure you did back in the day as well. It was a hustle and it was basically hustle to survive.

And I found myself at the "Cheers" bar in Boston sitting with an executive from Fidelity in 1995. I remember it like yesterday. The executive...because this was one of those due diligence trips, of course, that we all did back in the day, due diligence. And he said to me at lunch, said, "If you don't go fee-based, you're dead in a year." And this put the fear in me like nothing else at the time. Of course, he was 20 years early. So we came back and we felt we had to go fee-based. So we ended up leaving the mutual fund dealer we were with and joining PWL, which just started back in the day. And all of a sudden when you go fee-based, it's like, wow, you can look at anything for a portfolio, Michael. This was like the most wonderful experience. And this is just when this thing called an ETF or EFT, what was it? You didn't really know at the time. So ETF.

Michael: Is that the one where you move money, electronic funds transfer?

Cameron: And then you try to understand this creation, redemption thing. I remember being at dinners with people from State Street and you couldn't understand this creation redemption for the life of us. But we knew the fees are, what, like point-something percent. It was unbelievable. We never looked at fees before in the mutual fund world. And it's like , this is so sensible. And all of a sudden you start...there's this thing called, you might've heard of it, Google back in the day. And I didn't realize I'm sounding super old, pardon me, but this is real. We were just getting email at the time, right? And all of a sudden you can Google and there was this person called Larry Swedroe who I reached out on this thing called email and Larry responded and he became a good friend and came up here three times to help us educate the public. All we had to do was do a small donation to a hospital of his choice. He didn't ask to be paid. He just said, "You guys are on the right side of angels and I want to be part of this." And it's like this mind-blowing realization that there's a whole movement of people that actually give a damn that want to make a difference.

I met people like Dan Solin who wrote books. I know you know Dan, he spoke for us as well. Bill Bernstein, Paul Merriman, all these wonderful early people in this space. And then ended up meeting the good people at Dimensional Fund Advisors in the late '90s, early 2000s, and have been working with them since they came to Canada in 2003. But there's this whole world that I never even knew existed that just kind of blew my mind. And how's that not exciting, to bring something new and interesting at lower cost and sensible to the public? And most people still to this day, Michael, kind of think we're nuts in the industry.

Growing The Client Base By Connecting With The Employees Of A Fast-Growing Company [15:30]

Michael: So, when did the scope and size and vision change for you? Was it all incremental all the way through?

Cameron: No.

Michael: Like, "We're $100 million, maybe we could do $200 million. We're at $200 million, maybe we could do $300 million. We're at $300 million, let's go for $500 million."

Cameron: No. So we survived the crisis of 2008. That was a horrific event, as you know, and then just kept our head down and then discovered financial blogs in Canada. And there was one blogger in Canada that...this is before you actually interacted with the blogger, the writer. This is super early on in blogging, right? So ended up getting to know a blogger who wrote a great financial blog and just got to know him, of course, sort of casually. He would come to seminars that we would have and stuff. Anyways, he made a kind introduction to the founder of Shopify. So our world changed. And again, serendipity, unintended consequences. You never know how these roles are going to turn out. Just happened to meet the founder of Shopify back in 2011 because he was looking for low-cost diversified index fiduciary-type advisor. So I got the introduction through this blogger. That, in hindsight, was the day that gave us the opportunity to change our trajectory. No one knew how the movie would play out.

This is 2011, four years before they went public. They were an Ottawa-based company. That's where it all started here in town. I'm in Ottawa. And then just got to know more and more people in that organization and just happened to help. I had no idea how the movie would play out, Michael, just got a chance to help a lot of people set up their retirement accounts and just provide great service and keep helping, keep helping, keep helping. Over the years...They went public in 2015. They became, at one point over the last decade, the most valuable company in Canada by market cap. They're now I think number two, not by much, behind Royal Bank. So it's been an incredible relationship with an incredible group of people and we were able to continue and keep up with their demands for the past, what is that, 14, 15 years. So that's been a big part of our story and we're super proud of that.

But during that, we were able to enable some of our young talent that was here. There was four or five of us when I first met them. We were tiny, like we might've been $100 million in AUM, maybe. We hit $45 million coming out of the crisis. That's how bad it was. That's how small we were. Ended up meeting them and just keep helping, keep helping, do what you can. They go public, keep helping, keep meeting more people, focus on a reputation, meet more people. And we were meeting hundreds, possibly thousands doing seminars, webinars, one-on-one meetings and helping a lot of them as clients with their portfolios. That wasn't necessarily...you didn't have to, we'd help anybody, right? We're pretty proud of how we're not a hard sell kind of environment. And they went public, share price soared, a lot of people cashed out, exercised options. For example, in 2021, I think we brought in somewhere around half a billion dollars of assets in that one year alone. Luckily we were prepared. Luckily we had people in place with great talent in place. Clearly I cannot do it on my own. It was a team. It was a village to do this, but that's one event.

But concurrent to that, we knew we did not want to be kind of a one-trick pony. So we were actively diversifying and getting into Ben's YouTube channel eight years ago, the podcast, which you were a guest on back in, I think it was episode 112, I looked it up. You were a great guest back with us in the early days. So we did things that to make sure that we diversify and take advantage of this. And that's where you start realizing we could help more people here. We got great talent. We've got the ability to attract talent. So that's when the dreams really started, but that event did certainly and that rapid acceleration of talent and clients really set the stage.

Michael: So take me into that a little bit further about, I guess, how you are executing how this is playing out for the growth of the firm. So it's 2011. You're tens of millions of AUM, sounds like. You're $50 million to $100 million AUM.

Cameron: Yep.

Michael: You have the serendipitous opportunity to get in front of the founder of Shopify pre-IPO, who has totally aligned with your low-cost fiduciary indexing method and approach. And so then what happened? So he says...You get to start working with him. He opens the door to employees. You're trying to niche into Shopify. All of the above? How was this playing out?

Cameron: I would characterize it as simply wanting to help people. There's no...we didn't think about it as a niche marketing. And there were maybe 40 people at the time. And I said, "Do you want me to do..."

Michael: Forty people at Shopify or...?

Cameron: At Shopify. This is long before they knew they were on...they may have known they were onto something, but it's long before they were really something. And I said...because we have RSP [Canadian Registered Retirement Savings Plan] season to the end of February. I said, "Do you want me to do a seminar for your team?" And he's like , "Sure. And so I did a seminar and that seemed to go well. And then you talk to people in the hallway. "Well, can you help me with my retirement account, or help me with this, or help me get a credit card, or I've got bad credit, can you help me get a loan?" Or whatever it was, I'd do whatever, right? I wasn't that busy at the time, and I kept going back and I just got in this habit. "I'll be back tomorrow." So you go back tomorrow, you meet whoever. He said, "Well, you got to meet this other person." Okay, you meet the other person. And then, "Oh, well, we just set up a Toronto office." "Well, I'll go to Toronto." So we started going to Toronto. "Oh, we have a Montreal office." Okay, go to Montreal. We just kind of became part of the fabric. There's just such a high level of trust.

I literally knew everybody in the company. I would go to their Friday happy hours. I felt like I was an employee. I would sit in the Toronto office when it just opened. There was, I think, three people. We used to share one big desk. At one point there are thousands in Toronto. Right? So it just kind of naturally happened, and did good work, and highly responsive, and just keep showing up. Just show up. It's such a big part of the...Now, it's virtually impossible, I think, to replicate this because here I got in with the founders, who are highly respected people, and their team was super young. So it's like , okay, kind of saying good enough for them is probably good enough for me. Like, "Will you work with me?" That kind of was the feel and we just kept on for years, Michael, years, because they didn't really soar in share price until ' 16, '17, '18, and then through the pandemic, it just really went.

Michael: I was going to say, so translate this back to growth of the firm. When did revenue really start moving for the business? When did you have to start expanding the team and making changes in response to, oh, there's money really starting to move now?

Cameron: Yeah, '16, '17, '18. I'm so thankful that we had the people in place and I've always believed...I know that our industry kind of thinks that young people might be too young to deliver great advice, but our team...and I've always believed that age is not really relevant. It's experience and talent that's relevant. Our advisory team is super young now. Our advisory team, I think the average age is about 32. So back then it would have been in the mid to high 20s. And Ben is, what, 35, world-class talent, world class, as is everyone on our team. So I'm 59. We do not have an advisor other than me in the 50s. I could be wrong, but the vast majority of our advisors are in their 20s and 30s, but they get the reps up because there's so many meetings, so many appointments with...certainly today because we've got lots of lead flow coming in. But if I look through the years, lots of reps of presentations and one-on-ones with people at Shopify and elsewhere. So they use their reps up fast.

Michael: So I guess how big was the firm of assets and revenue and how big was the team by 2016 when growth starts to move a little bit more?

Cameron: It would have been...I have to look this up and see, but I would have guessed it might have been a billion, somewhere between $1 billion and $2 billion, but we were hiring...in 2020, 2021, we hired 20 to 25 people. And this is one of the great unintended consequences of our podcast. Most of the talent came through the podcast. People would listen to me and Ben and hear how we thought and how we presented ourselves and felt an affinity for that. You know that's one of the great things about podcasting, they get to know you. And we would have people reach out and say, "I want to be part of this mission." It wasn't about, what's your payout? It's like, "I want to be on this bus and I like where it's going." So we were able to welcome unbelievable young talent in 2020, 2021 to keep up and then to keep enabling, at that point, the older people, who were still 30-ish, to delegate and share clients and develop the team and work on the delivery models through that time. And that enabled Ben to focus more on content and get out of the client service loop because his gift is on content creation, communication. Allow me to get more time to think more strategically and do bigger-picture-type things because the next generation are such incredibly talented, empathetic advisors. So you let them do it, let them run with it.

And we realized that the clients didn't care, but as long as clients are served by someone on the team who is excellent, they're okay if Cameron's not at every meeting. They're okay if Ben's not at every meeting. And they know we're a team. They know Cameron, they know Ben's here. And now you're seeing that happen to the next layer where the next generation of leaders are sharing and delegating clients and kind of repositioning clients in the team. Because that's one of the great challenges as you grow and people develop different interests and different skillsets, what do you do with the client service? Well, as long as clients are very well-served as a team approach, our experience has been that clients are okay with that. And a lot of the sensitivities are in our heads, not the clients.

Successfully Transitioning Clients To Newer Advisors [25:54]

Michael: So when did the transition begin where they weren't just all becoming your clients?

Cameron: Oh, that was early on. That's one of my great...it sounds way more arrogant than I mean it, but it's one of my superpowers is the ability to delegate and let other people...these other people are so good. Let them run with it. Yeah, there might be mistakes, but I make mistakes too, right? Let them experiment on different service kind of techniques and whatnot and let them meet clients. Now, I'd be in the meetings, of course. It took place over time and we've become much more fluid with it now. But over the last...'16, '17, '18, '19, because there's a bunch of us that have been here now for a decade more or less together that have really gone on to be part of a leadership team of the overall firm. And as you get busy with leadership-type things, you have to figure out ways to delegate. And I think we've done that. I'm pretty proud of how we've done that.

Michael: So when you were first getting out of meetings, client meetings, just share with us more how that transition worked.

Cameron: Well, it became a volume thing, right? You just couldn't physically do it. We would go to an office and meet 16 people in 30-minute meetings back-to-back. And then there was two of us going for three days. You had 50 meetings over 3 days. It's just not physically possible. Right? And I have no problem delegating clients, again, because the caliber of the people is so high and the fact that we're a team, one philosophy, one service delivery, one investment belief system, one planning belief system, we're truly one. Right? We're one company with one go-to-market thing to offer.

Michael: What was the hardest part to let go of as you were going through these transitions?

Cameron: I'm so grateful to be with this team that I don't even view...honestly, if someone could do something better, have at it. I love it. There's nothing in this world professionally I enjoy more than seeing the next generation do what they do because without them, this would not have happened, period. So I'll let go of literally anything. There's things I love doing, but if someone can do it better, the business deserves that. And I want people to come and say, "Look, you're not doing this very well. We should be doing this." And I've heard that message before. Have at it, go for it, love it all day long. And the team knows that. They would rip things out of my hands. Like, "Don't worry, we've got these clients." And they would take some of the most complicated clients that we were dealing with and just take them. Don't even invite me to the meetings because they knew I empowered them to do that. They knew I wouldn't be upset. You're not going to tick me off. I'm thrilled. Doesn't upset me at all that I wasn't invited to those meetings. And they're still doing a great job for those clients because the clients are still here. They figured out a better model than I ever would have. It's just, that is an unbelievable experience to watch that happen to me.

What PWL Capital Looks Like Today [28:55]

Michael: So what is the team...I guess just the firm overall, can you kind of give us a sense of the state of the firm today of assets and revenue and clients and staff, or core business metrics?

Cameron: Yeah, core business metrics, big picture, we manage just over $5 billion Canadian of assets for about 2,400 families. So the average is just north of $2 million per family. We have two main parts of our business. One is a legacy, which the firm originally came together as independent advisory teams working together in a dealer five years ago. We reorganized such that a couple of, call it books came together and did a reorg where the books became owners of the company. So it gave us a mechanism to do succession planning. So that created what we call the core of the business. And then there's right now two other teams that are still in the way we were before. They're fantastic people. We get along great. We are thrilled that they are here. We would never do anything to not support them. But their relationship is such that they pay a fee for what we call shared services. So shared services are roughly $1.3 billion. The core of the business is roughly $4 billion in total. There's around a hundred employees here. It's roughly, I think it's 84 in the core of the business, 16 are in the other two teams. Total revenue of everyone is roughly $27 million plus or minus.

With the growth of Shopify, we've been able to work on our segmentation. So we have a high net worth part of the business that's roughly $1.3 billion for 100 families. We went the other way to help with scale and set up what we call an emerging wealth part of the business. So that's $60 million of assets for 350 families. So we can be more efficient in helping them and freeze up advisor time. And then the real core is the mass affluent part of the business, which is roughly $2 billion for 1,300 families. The interesting thing when you look at the book now, two-thirds of our assets are held by clients that are under the age of 60. Less than 10% is over the age of 70. So we have a very young clientele, which is no real surprise given our experience. But we also have a very young team. So that's really kind of the sweet spot of what's going on here, which it's a really interesting dynamic to have so few...our retirement payments are not that material to the overall book.

Inside the team, so we have roughly a quarter of the team are what we call on the advice team and the service delivery. But we've invested heavily in the platform over the past five years, building out finance team, building out the compliance team, six-person marketing team. Of course, a lot of this on the social side and supporting the YouTube and the two podcast channels and all the things that you know go along with that. Right? Plus all of the...there's hundreds of different documents and white papers and websites and everything else that goes along in the marketing team. We also built out a data team. So we decided strategically five years ago to invest in a...and I didn't even know what this term was at the time, but a data lake. And now with the advent of AI and everything else, thank God we did. We have an institutional-grade quality data lake that we're now able to use as our source of truth and not be beholden to software providers to hold our data.

So now we have a team in place that can build APIs to automatically link to other different solutions that we find we want to bring in-house. We've invested in inside a platform for the CRM that, again, feeds in the data lake to give all kinds of different reporting. We can build compliance efficiency tools and marketing efficiency tools, meeting prep tools. We're able to customize that, workflows. And again, if we didn't have the data lake, you'd be beholden to what the software providers...and believe me, in Canada, we do not have the same suite of software providers that you have south of the border. So that's where it kind of dovetails with the opportunity as well, which is we've invested in this, we've invested in a leadership team, right? So we have all of this platform, but once you built out this platform, it's so scalable. It's like , huh, our message is resonating. We kind of know we're onto something from a belief standpoint. We know there's people that want to join this kind of firm. In there is the opportunity.

Investing In Data Management To Boost The Firm's Client Value Proposition [33:34]

Michael: So I'm fascinated by the data discussion and data lake discussion. I feel a lot of firms have been increasingly interested of late in trying to figure out, okay, if we can't get all the vendors to, as the saying goes, play well together in the sandbox and integrate and move data the way we want them to back and forth, darn it, we'll just take control of our data and do it ourselves. But it takes a lot to actually do that well. We have a lot of data and how to actually architect and warehouse it effectively is a big deal. So I guess I'm just trying to visualize what the investments were, what you've spent. What kind of investment has it taken for this to actually get to the point where you feel it's working for you?

Cameron: The short answer is a lot. The more extensive answer is we have three full-time people on data and BI [Business Intelligence]. We have three people in our IT team, including tech support. We invested in a cybersecurity specialist this past year, which was super important. We have a product leader as well. So that technology team is a team of eight people. I don't know what the total payroll is, but it is a very meaningful line item for us.

Michael: I was going to say, just general cost of very smart people in data and technology, in particular, multiplied by eight, that's probably over a million dollars of payroll on the team to make that happen. And again, when you're $25 million to $30 million of revenue, it's like, okay, we put 4% of our revenue towards data. I'm like , okay, when you see 4% of revenue, it sounds manageable. When you say a million dollars of payroll, it feels a little daunting.

Cameron: But even there, for example, we had someone...This is one of the stories I'm...It's a perfect illustration of what we've been doing. So you know Ben, Ben Felix, my co-host on the podcast and just a great brain around this stuff and communication ability. He is so driven as an engineer to get to an optimal solution based on evidence and not just some sort of rule of thumb thing, and you know that about him. He would think about things on planning and would kind of challenge common assumptions. Anyways, someone reached out to us four or five years ago who listened to the podcast, a tenured prof at Queens University in Kingston, Braden. He wanted to have an impact on financial planning and decided to completely retool his career, give up his tenured prof position, right? This guy's got a master's in mechanical engineering, or Ph.D. in mechanical engineering. Don't let me understate it here. Ph.D. in mechanical engineering, brilliant, brilliant guy who has been creating tools the past four years to bring higher fidelity decision-making to financial planning decisions and builds unbelievable tools.

But going back to tech, you start bringing this kind of ideas and brains to solving problems and you have to run all kinds of analytics and all of a sudden you're pinging the cloud to do computing. Whether it's on Azure or AWS [Amazon Web Services], you end up with these bills, monthly bills in the thousands, sometimes tens of thousands. And I'm not just saying this about his tools, but there's a line item that didn't even exist five years ago. Who knew you could spend $10,000 a month on Azure metering costs? You didn't know that five...maybe you did. I didn't know that five years ago. But these are the kinds of cool things to get to the answer that you think is better for the client, right? So you start dreaming of what kind of tools can we build because often software that comes in financial planning...and we've been migrating to a platform called Conquest, which I know you know of, phenomenal platform, but there's things that we want to do differently than what they do that we deem to be the way we view the world, right?

So now we've got the data lake, we can API with Conquest and build out these super cool tools to help, for example, an incorporated professional decide what their mix of salary versus dividends should be, and should they take an IPP, individual pension plan or not? These are not easy pieces of advice to give, as you know. And as Ben and Braden have told me, if you didn't do this in a world of technology using algorithms, a human brain can't get the optimal answer. You might say, oh, this is too wonky. Does it really matter? No, it does matter. And we can show you mathematically how much it does matter to understand how the technology can answer a complicated question better than you can answer. This stuff matters to us. Do you need it to build a great business? No. Is it important for us to do it? Yes. If someone really cares about this kind of stuff, they're going to be real happy in this place. If this is too wonky and too complicated and gets in the way of more sales, you're not going to be happy here.

Michael: That's an interesting framing. So what I'm hearing, my interpretation of that is this isn't just “We want to get a better ROI out of our software and our technology budget and we've determined that if we spend X dollars on the data lake, it's cheaper than spending Y dollars on custom software development. And we're managing and optimizing our tech costs.” This sounds much more like , “No, I have a certain planning approach and client experience I want to create. And if I have to spend a million dollars on a data lake and a data team in order to be able to express our output the way that we want to do it, and we have the size and economies of scale to do it, then that's how we're investing into the business for the value prop to clients, not managing the tech infrastructure cost of the business.”

Cameron: Correct. It's all about doing and building better. That's what this is about. So now you get an idea. You can go to Phil, our head of operations, and say, "Can you do a tool this?" That doesn't mean it's an endless buffet of ideas and running all kinds of tech debt. That's not it. But to have control of this via data lake and a bunch of people that know how to do coding and a little bit of programming and power BI data visualization kind of work, it has a huge impact on the team. And it's presented the way we work, the way we think, the way we operate, and you're not beholden to a software provider. We've had way too many times where a software provider has changed or got out of the business or whatever happens, right? I get it. But we get kind of tired of being the victims of these things that happen.

PWL Capital's Team Structure [40:12]

Michael: So help me understand then just the team structure, the proverbial organizational chart of the core business. You said 80-something people. We can't do every single literal seat on the chart, but help me understand what the leadership team structure is and then at least what the departments are that show up and how people are distributed across departments.

Cameron: For sure. So formally...and I'm not a big title guy, as you can imagine, I am formally CEO of the Canadian business. Brenda Bartlett is our president. Two very different roles. So Brenda...

Michael: What's the difference between CEO and president in your world?

Cameron: In our world, I'm more on the client delivery, go to market, relationships, networking, storytelling, and a new part of my role is going out there looking for teams who might want to join us, so much more on the call it M&A side. So I'm kind of outward-facing. My strength is not in making sure the ship is tight. Brenda's got extensive experience and expertise in making sure the ship is tight. We're a Quebec-licensed dealer in Canada. So she's bilingual. She has tremendous experience in the whole regulatory, legal compliance world, handling audits and dealing with the regulators and all of that. She has tremendous experience, governance, all the legal side, all the tax and accounting side. So she's more internal, operational. That's not my gift to the world. So that's how we kind of divide and conquer internally.

And then we have a leadership team of 10 people. So the different groups are, one is advice, the advice group, which is the largest group inside the firm, as you'd expect. We have marketing, we call it brand experience, that's another one. We have research and product. So that's Ben's group. We have technology that includes data and all the IT stuff. We have people and culture. So Ben's sister, Tessa, who was on your podcast, I think five years ago. Tessa's still here and is absolutely world class in culture. And then we have the operations team, which is a large group, of course, because we are our own dealer. And then the last one that goes into that group is finance. We have a full CFO and full finance team, which is just an incredible group of people. So we meet every other week as a leadership team. And then in the opposite weeks, we have what we call a growth meeting where the people that are directly involved with growth meet every other week. So that's our cadence of leadership. And then each group has their own meeting cadence in conjunction with that.

Michael: And then roughly speaking, how large are these departments, these seven functional areas in the business, even just approximate? I'm just trying to get some visualizations.

Cameron: The marketing team is six people. Ben's team is three on research and product. Technology is, what did I say, 8, 10, something like that. And then Tessa's team is three and has to grow. Operations is 5, 10, 15, 20-ish. I'm rounding here and there's some project leaders in there and API builders and stuff that in that group. So there is some crossover. And then finance team is four people. So I think I got that right.

Michael: And then how big is the advice function, the advice firm?

Cameron: The advisory groups, the total advice group is 22 people. We use, I kind of call it the modified diamond team. We believe in diamonds with the...so I view myself formally as the top of the diamond, and then a senior leader on one side, and then a planner on one side, and then an operational person. Kind of now we're going with super diamond because people know that I'm still here and Ben's still here. But we're also big fans of allowing the planning associate to work with different advisors to get more learning, different experiences. It's also great for when someone happens to go on a vacation or...Jaclyn was just on a mat leave and the team kind of fills in around while Jaclyn was away as a lead advisor. She comes back and the world carries on, and they did it beautifully.

And our goal is when someone goes away, they come back to...I'm not naive, I'm not saying this is totally true, but the goal is to come back to inbox zero. And when you've got one team, one set of clients, one philosophy, you can do this. And it gives the newer members of the team just such a great experience of seeing how different advisors communicate. But the process, how we build plans, how we deliver it, our goal is to make it as consistent as possible, of course.

Michael: And so if I think about this from a sort of business ratios perspective, I think you had said there's something on the order of about 1,700 families in the core, give or take a little, 22 advisors in the core. So the average advisor sits at about 77 clients. I'm sure there's a distribution around that, but is that how you think about advisor capacity?

Cameron: No. So we think about it from a team standpoint. The average advisory, the average diamond handles around 175 families right now. The AUM per advisor kind of gets wonky because we've had a lot of clients who were in the hundreds of thousands or perhaps low millions become $20 million, $30 million clients. So it kind of skews the AUM per advisory team and also drives down the average run rate of the book. So if you look at the overall book, we're somewhere like, I think it's around 55 or 60 basis point run rate on the overall book, but that's because it's skewed by large clients. But we think about the average team is 175 families plus or minus and around, depending on the book, between $300 million to $400 million of AUM.

Michael: And again, a diamond team that handles 175 families in your world is how many...what are the diamond seats?

Cameron: A lead advisor, a financial planning associate. Some of them are sharing another financial planning associate depending on what's going on in the book and how many new clients are coming on, and then an operational person. The challenge now...

Michael: So that's like a three-person core team.

Cameron: Correct. So the diamond I put on is that Ben and I are here as well as part of the...but not part of the service delivery.

Michael: Okay. So it's like a triangle with a lifeline at the top of it.

Cameron: Yeah, that's a fair way of putting it.

Michael: Or something. So lead at the top, associate and operational support people at the base, but they don't have to totally operate in isolation. They've got some access to you and Ben with the obvious caveat of there's 1,700 clients in the core, so you're only going to really be so involved with any one of them at any point.

Cameron: Yeah. And don't forget, the advisors' focus is to master the craft of delivering the service. They're not tasked with going out to find leads. Our goal is to institutionalize lead flow. That's the dream. Because at this scale, you can hustle to, I don't know, pick a number, a few hundred million of AUM. You can't just hustle a $4 billion or $5 billion business. You need to be deliberate about systematizing it at that scale, and that's what we've been working very hard at.

Cameron: Now the challenge is, how do you evolve from here as different people, different advisors express different interests of perhaps being more on the meeting new people as they come through? So how do you scale that? How do you add on more financial planning associates as they advance in their careers and their skills to become leads or near-leads with the lead advisor? Because we have an incredibly strong bench of financial planning associates. Some others might prefer to, “You know what, I've got my book, I'm super happy with these clients, I want to stick with that.” So the teaming models is going to be really interesting to see how it evolves from here. The other team we developed early on to give scale to the advisors was we have centralized trading team and that's a team of four people. It's all trading, all fund flows, all following up on wires, following up on transfers, all of that happens in a specialized team. So they put in their...we have a ticketing system, you put in a ticket for whatever you want to happen, and the trading team takes care of that.

Michael: So if a team has a dedicated operational support person as well, where's the dividing lines of what...I guess if I'm a lead advisor, what does my ops person do and what goes into centralized shared resources in a ticketing system?

Cameron: Yeah, so the ops person really focuses on the compliance part, the paperwork part, the updates, they know your client, and we're improving that. We're installing a digital onboarding system as we speak, which should make that process...and it's going to be straight through processing with our custodian, should make that much, much better to enable the operational person to get closer to the client and I think it's fair to say make their job perhaps more interesting and less routine. But right now it's mainly on the paperwork, meeting prep, what do we need to get done, getting LOIs done, things that.

Michael: Okay. And I guess when I think about this team unit overall, so senior advisor and support advisor to 175 families, and if you're $300 million to $400 million of AUM at 55 to 60 basis points of revenue yield, if I'm mathing this right, this is somewhere in the neighborhood of a $1.5 million to $2 million revenue team.

Cameron: Yes.

Michael: I guess if we want to fully translate in U.S. dollars, I think we're roughly a one-and-a-half exchange rate, so it's a million to a million-and-a-half U.S. dollars revenue team, I think.

Cameron: That is correct.

Michael: Okay.

Leveraging A Podcast And Thought Leadership To Be Top-Of-Mind When Prospective Clients Experience A Pain Point [50:31]

Cameron: It's interesting when you think about the client journey. Most of our leads come in and they know who we are, they know what we're about, they kind of know what they want. So it's not that convincing that this makes sense often. Sometimes, of course, it is, but often it isn't. And it means that you jump right into the plan, you're not convincing about the portfolio, the value proposition is not picking the next stock, or fund, or timing the market, or whatever other value props might be out there. It isn't about that. It's about help me have a great investment experience over a long period of time and focus on what we can control, which is the whole planning process. We can't control markets. In fact, the more that we kind of mess with them, the more likely we are to underperform is our opinion, right? So don't play with the soap. Just let the soap be alone so you don't dissolve the soap here. And most people know that. So it makes things much more efficient all over from meeting the client, explaining the value proposition, trading, we use largely one decision. We call them one decision type portfolios from Dimensional Fund Advisors.

So Michael, you and your family might be in the 70-30 portfolio. Ben has shown in a number of papers that asset location in our experience in Canada, I know it's different in the U.S., but in our experience, asset location doesn't make a lot of sense. So you might be, you'll be 70-30 in your trading account, your retirement account, your kids' account, subject to risk profiling and all that, but we don't worry about asset location. Well, that's an incredible streamlining for good reason in the backend. We don't do it because it's efficient. That happens to be an unintended consequence of having this philosophy. And all of our advisors, all of our clients, virtually all of our clients are in that kind of portfolio. The only reason they wouldn't be is if there's unrealized gains or they put in a rule that says they must have a certain percentage in ETFs or whatever other constraints, but that's less than 1% of our overall AUM.

Michael: So help me understand from the marketing end...a lot of the folks that know you and PWL from the U.S. are familiar with your podcast, "Rational Reminder." But it sounds like a lot of the early growth engine of the business came from the Shopify relationship and getting super deep in Shopify and being the go-to in Shopify. And so as Shopify got huge, you got huge opportunities with it that you got to capitalize on. So I guess I'm just trying to understand, when did the marketing shift from Shopify-centric to, I guess, podcast and all the other things that you do right now?

Cameron: Eight years ago, Angelica, who now leads our marketing team, but at the time she was on the marketing team, came and said, "You guys should be doing content. We should be doing a content-forward strategy." So Ben and I were like , "Okay," but I wasn't too keen on it and shy or whatever. So Ben started his YouTube channel and if you look back at the original videos, they weren't great, but it didn't matter. Just do it. It doesn't matter because nobody's watching, so just start doing it. And then Ben and I decided to do a podcast, ordered up the equipment, had literally no idea what we were doing, so much so that we chucked our first episode we recorded because we didn't know that the machine we had only recorded in mono and it didn't matter for a podcast. Angelica said, "Just keep at it. Just keep at it. You'll find your thing." And I can speak to the podcast because Ben can talk sometime about his YouTube channel, but the podcast, we just started recording stuff and we got 10 or 20 episodes in, then we started having guests. I reached out to Larry and Dan Solin and other people. We got into this cadence of our stuff one week and guests another week, and just kept going, right?

And then Ben discovered his love for deep dive into technical topics and his ability to communicate those topics effectively. That's become his thing, right? So he would get deeper on the us episodes and we're getting better guests on the other episodes. Then all of a sudden we had a chance to interview Ken French and Gene Fama. Once you get these bigger names, all of a sudden you start getting rebroadcast and reposted and shoutouts and Reddit and everything else. You start getting momentum up. And we've just kept going. We're 368 episodes in, over 7 million people have listened to the podcast over time. And it's been an amazing opportunity, as you know better than I do, it's an amazing opportunity just to get the power of the voice in people's ears and just...but it's had so many unintended consequences like we become better communicators, I think. It becomes an amazing training tool for the team. Ben puts amazing deep dive thoughts and research into these.

Once you go public on a podcast, you better have done your homework or you are going to get roasted. So you end up becoming better thinkers, better communicators. I mentioned asset location earlier. In Canada, the typical rule of thumb answer is, "Oh, you should diversify asset location," for whatever reason, doesn't matter. Well, he did a deep dive and said, "No, I disagree, and here's why." And he's done this many times and I hear people on the side saying, "Oh my God, what Ben said was outrageous." I said, "Okay, great. Then show up with as good a thoughtful and well-researched counter-argument. He would entertain you all day long. He'll have you on the podcast."

To which you always get crickets. He did one on permanent insurance and enraged people. It's like, "I get it. Please come with a counter." Crickets, Michael, crickets. He's not saying he's absolutely right, but you better come with a good game if you're going to challenge him. So we just started doing this and people started listening and what's interesting...so great for the team, great for attracting talent, great for team training, great for answering prospects' questions. "Oh, you got a question on this, Mr. and Mrs.? Listen to our conversation, episode 321, we talked specifically about this at minute 21." So that's all obvious. And the unintended consequence as well is...because you say, well, you give all this out for free. Our audience is super nerdy and most of our listeners would not become clients. Aha, Michael, but there is a great unintended consequence. We get reach-outs often from people that say, "Look, I sold my whatever business. My son-in-law or my daughter-in-law says I should talk to you because they don't want to take care of my stuff." That's pretty cool.

Michael: So, I guess my twofold question there first, just what do you do to get people who are podcast listeners to actually show up as prospective clients?

Cameron: So, our strategy and our belief, and if people listen to Prof G. Scott Galloway, he talks about this dynamic that's shifting, that people are using what he calls weapons of mass due diligence to help them solve problems. So, we've been deliberately doing this painkiller strategy of putting out papers and tools and podcasts that answer specific questions like, "When should I take my Canada Pension Plan? Should I take it early or late?" That comes up all the time. So we have white papers, we have podcast interviews, we've talked to the chief actuary from the Canada Pension Plan. Braden, who I mentioned earlier, built a tool that has been used millions of times to help with that decision and is actively used by hundreds of other advisors that we know of in Canada to help make that decision.

So, all of a sudden, if you, Michael, go out and say, "When should I take my CPP?" And whatever platform you're looking on, you're not asking your buddy at the tennis courts. You're doing the due diligence on your own. Well, if we show up and you go and read, and often you'll see, well, there's a video by Ben Felix on this, check out them. They might be worth considering. So, you start to build up some brand. As this Prof G says, you have to have a brand that is trusted, right? But you also have to have solutions that make sense that answer that specific problem. And it's painkiller-driven because if you wake up tonight, Michael, with a massive pain somewhere, you're going to seek to fix it. But you're not going to wake up tonight and say, "You know what? I need a financial plan." You might, but it's not likely. But if you have a serious pain, like should I take salary or dividends from my corporation? Should I crystallize capital gains because the government in Canada last summer was proposing an increase in capital gains tax rate? What if I'm incorporated? What if I'm whatever? These are complicated, painful things that come up at the time. And if you were there as a trusted brand with tools and thought leadership on that topic, that should lead to leads. And that's proven to be the case.

So, for example, last year, we had 1,100 leads come in and we welcomed 200 new families as clients. That was the first year we put a stake in the ground and said we want to start to solve organic growth, the institutionalization of lead flow. That was the goal, to be more deliberate about it without paying for advertising. We just want to kind of see if this machine is starting to measure work. So, from sources of leads last year, referrals came in fifth. Fifth. So, ahead of referrals was...and we do a great referral rate because I think I've heard on your podcast that a referral rate of 10% of clients is pretty good if you get that kind of referral rate. We have always been on the 10% number. You might tell me that number is wrong. Shame on me, but we're quite happy with that 10% rate. But we received...

Michael: Meaning...Sorry, I just want to be sure. Meaning 10% of clients have have sent at least one introduction, may or may not have turned into a client themselves.

Cameron: No. If you have 1,700 families, you should get 170 referrals this year. Some might refer 10, some might refer none. So, that's the way we've always thought about it. I'm attributing that to you. I may have falsely attributed it. But things like web, YouTube, social media, "Rational Reminder," all of those are ahead of referrals for sources last year. So 68% of all leads last year came from those 4 sources.

Michael: Wait, what were the other four?

Cameron: So there's web. So general web inquiries. So we have a web form, of course. YouTube leads. So when you go on the form, you say where you came from. So I'm not saying this is guaranteed scientific because, of course, it's all intermingled. "I read a post on Reddit and I saw Ben's YouTube channel." So, and we only have a choice for one. So, web, YouTube, social media, because a couple of us are reasonably active on Twitter, and "Rational Reminder." Those are the four categories.

Michael: In that order?

Cameron: In that order.

Michael: So actually one, two, three, four sequentially.

Cameron: And then referrals are coming in five.

Michael: So, good old web. I Googled. So, that comes back to things like the tool you built for like when to take your Canadian pension, which for folks listing, the Canadian pension is roughly the equivalent of our Social Security system, but there are some additional choices in the Canadian context. So, there's a few more levers you can pull, which means there's a few more analyses and trade-offs that you can analyze to optimize.

Cameron: Correct.

Michael: So where does Shopify business development opportunities fit in there? Do those overlay on that or is that now channel number six after the other five?

Cameron: I think it's six or seven. But as you know, the larger accumulation of assets in a new public company comes from options and the options are much richer earlier on, of course, because the future is not as clear as it is today.

Michael: Well, and just there comes a certain size where your tech company is no longer growing by a bajillion percent a year after it did that many times and IPO'd. So there's only quite so much high volume upside now.

Cameron: Correct. And Ben's YouTube channel, Ben has over 400,000 subscribers, 22 million views, and I think the quality is so high it should be many, many multiples higher. But we're super thrilled with that and you never know what video is going to hit, right? And so he's been playing around with thumbnails. What thumbnail gets the biggest traction? There's a science to all of this. So he's really, really taken to that to try to get more traction.

Combining With A Larger Company To Pursue The Next Round Of 10X Growth [1:03:09]

Michael: So now I have to bring this all the way back around to where the conversation started. So you've had just this amazing growth trajectory for what it's been over the past 10 years to get to the point you're at now, and then decided that you wanted to 10x it again from here and made significant changes.

Cameron: I think that's a fair assessment.

Michael: So now I guess catch us up to...so as you got to this threshold and you looked at what comes next, what were you seeing comes next and what were the changes you started making in response?

Cameron: So a couple years ago, we started imagining what we could become and we decided a long time ago that we wanted to be a company of consequence, a company of impact. We wanted to try to fix the financial planning landscape as best we can in Canada. We have never, ever talked about becoming a lifestyle business. So with that as a backdrop, we're always kind of open to what is possible. Then two years ago, we started having inbound calls from different people seeking to acquire us. I know this is much more prevalent in the U.S. and common. This is a new experience to me.

Michael: Well, it feels like they're running out of big things to buy in the U.S. So it would make sense that they start calling other countries as well that have similar models to what we're doing here.

Cameron: The early ones are all about, "How can you not want to do this? You'll become so rich." I'm like , oh my God, this is such a turn off. That's just not how our brain operates, right? So those are easy to discount and we decided we're just going to keep going. And then you meet some others that are super impressive firms, very impressive people. But it just didn't feel right. Maybe we're just too dogmatically independent. We didn't want to fit into someone else's mousetrap, although that's a beautiful business model. We wanted to kind of keep doing...because we kind of like the way we think and operate, and we're super nerdy, and if you're not super nerdy, we're not really going to get along. I can't change who we are. That's who we are. And that's what we love doing. So we just kept our head down.

Then I got a call from a friend of mine in the industry who said, "I just talked to this guy from a company called OneDigital. I think you might want to talk to him." And this was summer of 2023, so almost two years ago, Michael. So I had a chance to talk with Michael Sullivan, co-founder of OneDigital. And it was clear then that he's different. They're different. Great call. And left it as it is because we're happy what we're doing. They're happy what they're doing. And we just kind of carried on. And then later in 2023, he called back. And again, this is not spreadsheet, MBA, McKinsey-esque kind of operation. This is like, there's some people like, "What do you want to do? What are you trying to accomplish? And there's stuff we could do together." So he called back on the phone and said, "You guys be interested in coming to Atlanta and kind of meeting some of our people?" And we're like, "You know what, sure."

So I was joined by Ben and Brenda. We went to Atlanta and met a few of the people. It's like, wow, these people are interesting. But it's private equity and we force ourselves to be skeptical. Private equity-backed and U.S. firm and all of that. You can see the obvious stories that you don't want to get sucked into. I've read the books on plundering and all the horror stories of private equity. So came home and we all agreed that's fine, we'll carry on, carry on. So we came back, and then last summer we connected again and we've been talking back and forth and you kind of get a feel, and a friend of mine in the industry said, "If you're going to keep talking, make sure you know that you're not a lifestyle business, you want to be a business of consequence." Tick. His other advice was you should do a home and home and go as deep in the firm as you can. So I proposed that and we all agreed.

So we went back to Atlanta, most of our leadership team went back to Atlanta and met a lot of people. They came up here and met a lot more people because we were...I like to get consensus. I like to get input from lots of people. So we opened it up to a lot of people. And we all came back and said, on both sides, these people are unbelievable. And you had to force yourself to make sure you stayed critical, but you start to see what is possible. And that was amazing to think about what's possible.

Michael: What was not possible already? The business 10x'd, you have a thousand leads coming in, not formal measure, but that probably puts you somewhere around the 99th percentile of firms that are already successfully executing on growth and you are doing that on your own. So what was not possible that suddenly seemed more possible as these conversations were getting underway?

Cameron: Yeah, and to your point, the business was great. We'd reached the normalizing of EBITDA in the call it 30% range that you've talked about so many times. We've done a very good job of stewarding the business. We figured out the growth. We started to figure out teams and culture and compensation. All these things, we've done a very good job. However, as a dealer in Canada, if someone approached me and said, "I want you to acquire us and we can come together," just the way the rules work...and we were financially solid, we're highly regulated in Canada as a dealer, as we should be. But the reality is, if there's any component or significant component of cash in a transaction, we could not settle the trade. We didn't have a deep enough balance sheet for a big book acquisition.

Michael: To contrast the U.S., if you're a broker-dealer, there are some actual capital requirements like net worth and cash requirements you have to have, essentially make sure that client security stays safe.

If a business goes insolvent in our RIA world, although a handful of states have some level of income net worth requirements, often they're not a lot more significant than you have to have a positive net worth and not a negative net worth, we don't traditionally have capital requirements to run an RIA in the financial advisor world here in the U.S. the way that effectively you do in Canada because your platforms are closer to what we would characterize as broker-dealers and to the capital requirements that you need, which then gets messy when you do debt-based acquisitions.

Cameron: We are closer to a dealer in structure, but we look just like an RIA. We operate just like an RIA.

Michael: But you got dealer-style capital requirements, so literal balance sheet matters.

Cameron: That's only part of it. We had solved the succession, so this was not about succession. We'd solved that with our reorg five years ago. Twenty-two percent of the firm's ownership had transferred to the next generation from the first generation, so that was largely solved. But the real thing was two points. The expertise in growth at scale, which I don't think one should underestimate, that expertise is a big deal. How to do it, how to grow culture at scale, how to close the deal, how to get people to come onside. This is all...OneDigital has done this, I think, over 200 times over the past 14 years. And we were at the annual conference last week in Atlanta, around 1,500 of our newest colleagues, and frankly we were blown away by the caliber, the quality, the interest of these people. And they, to a person, welcomed us. We went into Team Canada, 8 people out of 1,500, and people knew we were there and it was a wonderful experience.

So to be able to scale culture is something that I find super exciting to do. So that was a big part of it. And also just from a pure...If we want to grow with inorganic growth, which we've never really done before, but this is one of the grand opportunities facing us in Canada is many advisors are my age or perhaps a bit older, want a great place for their team to go that can cross the trade, take care of their team and maintain the same investment philosophy. There aren't many options in Canada. But to be able to cross that trade and diversify, if you take some of the transaction and equity, I would argue is super appealing if you're selling a meaningful size...anyone, but especially a meaningful size practice.

Michael: And so the punchline to all of this, I presume, is and so you did a deal with OneDigital after these conversations.

Cameron: So we did a deal with OneDigital. So they grew up in the HR, consulting, employee benefits, insurance business. That's 85% of the current business. Five years or so ago, they acquired a large group benefit provider 401(k) business. So there's roughly $120 billion of 401(k). They had like 7,000 plans. Attached to that was an RIA that was handling the transition of assets from retirement to wealth, from group to individual. So they kind of, accidentally is my take on this, accidentally ended up with this RIA business and found it intriguing. So you met Mike, you know a bit of his personality, but he's always looking for interesting, smart people that are building something interesting that has tailwinds. He's looking for tailwinds and smart people who want to build. That to me is the purest magic that's going on here.

So he gets involved in the wealth business, understands more about...He has a background knowing Vanguard and that markets-work philosophy, ends up they hire someone to join his team that has the background from Dimensional, learns about kind of the Dimensional story and kind of the more advanced way of thinking about markets, realize a lot of really cool, smart people are in the Dimensional world and that's the circle that brought him to us, being kind of one of the thought leaders in this space. It wasn't a story about going to Canada. It was not a board meeting objective to strategically do this. It was like , no, he's just kind of going around talking to people, finding interesting people that are building something cool. That is the story.

So they're leaning into us as their first non-U.S. acquisition. They're leaning into us to help them build, which is already successful. They're a very successful wealth business, so I don't want to overstate that. But they're looking to us to help build this markets work planning-focused part of the business. Which to us is like, wow. As opposed to the other people were saying, "Join us and do it this way. Here's the menu, just do this." Which for some is very appealing and they're wonderful firms. It just wasn't for us. Whereas this is like, wow, we get to put our stamp on it. We're pure in Canada. So we've got this pure plan in Canada supported by these wonderful people with experience in doing M&A. They have the balance sheet. The trade will cross. And people that do join at some level will be able to participate in the equity part of the story.

Michael: And so that becomes part of the fuel for the next 10x cycle, like how do we go from $5 billion to $50 billion, is now we have expertise and growth at scale and access to capital to the extent that acquisitions of like -minded firms in Canada who have basically nowhere else to go could merge themselves into you.

Cameron: Now, there's always options. I'm not naive. But I think we've become a great place for...it's more on the barbell side. Retiring advisors who want a great place to go to, but also for new talent because, as you know, there's a massive talent shortage coming, especially in this world, the world of what we call our people. So we've got this pipeline into talent through Tessa and her team to bring on young advisors who don't come at this world from an I'm going to hold you hostage until you give me a higher payout kind of mentality, which I believe to some extent has a stranglehold on advancements in our industry. Right? It's also good as an outsider to know that OneDigital will never sell to a Canadian bank. So many of the pitches that I would get from other places was, effectively, "Come get rich with us as we build something." And where are you going to sell to? Well, where's the money? The banks. That's how the movie's played out so many times. OneDigital is not signed to a Canadian bank. Right?

And the other plus is we know a ton of advisors in the U.S. We know a lot of people in this markets-work world listen to the podcast. This just allows us to perhaps welcome them as part of the team. We have more than half of our listenership and viewership of YouTube are in the States. We considered acquiring or doing our own RIA in the U.S. Super complicated. We decided not to. This takes care of that problem with all these listeners. So we just go through the boxes of tick, tick, tick, tick, tick. And frankly, and I know given the climate these days this may not be a popular thing to say, but Americans, you guys build, man. You build. You don't have the tall poppy syndrome. You're not afraid to build. You're not afraid to go to market and say, you know what, we're going to become a $40 billion company. And I have to hand it to the American culture of that. It's not really the Canadian way of doing things. So you add up all that, and we went through due diligence through the fall and you learn a lot about people who went through due diligence and, tell you, the honeymoon has been as good as the courting phase. It's been an incredible experience. These are incredible people. I'm proud to be part of this. I think we're going to do something incredible no matter what happens. But we really have a shot of creating something pretty freaking cool here.

What Surprised Cameron The Most On His Advisor Journey [1:17:06]

Michael: So as you reflect on this journey, cumulatively 30-odd years now, what surprised you the most about building and scaling up an advisory business?

Cameron: What surprised me the most I think is the unintended consequences just dominate. We had Ken French in the podcast and he said it similarly for the markets, which is unexpected returns will always dominate. Upside and downside. It's the same thing in this business. Who knew that I would get an email from the founder of Shopify, November 2nd, 2011? Who knew? Who knew the meeting would go so well? Who knew they would go public? Who knew? And you look back over your career and these certain things. Who knew? I almost didn't hire Ben, if you can believe it. I almost wasn't able to convince Tessa to join us, if you can believe it. Our lead of advisor team turned me down the first time I made an offer to him. Came back after two years and joined us. There's so much randomness and unintended consequences. Who knew the podcast would be the pipeline to this unbelievable talent flow in 2021? That wasn't even a consideration when we started the podcast. And the way the world works that this karma goes around, that to me blows me away. And you just keep working hard, keep your head down, do good work, somehow stuff happens.

Michael: So how do you plan for or manage to that reality if it's the unintended, unanticipated consequences that dominate?

Cameron: That is a good question. I've already had conversations with firms in adjacent businesses like property and casualty insurance, employee benefits already in Canada. It's only been nine weeks, Michael. I've already had these conversations like, wow, we could do that. You start to think of like, can you imagine having a P&C adjacency? And some of these firms have a deep corporate bench in the States. There's all kinds of cross-border lead flow in their businesses and they have connections to large companies. Like, wow, maybe we could do the Shopify experience again. And this is happening often where it's like, wow, I didn't think about that. I talked to somebody at the conference last week. All they do is guarantee standard issue disability insurance for executives and lawyers. Huh. I didn't know PEO [Professional Employer Organization]. I didn't know what PEO was four months ago. I didn't know PEO existed in Canada. There's an association. I talked to someone last week at the conference that's part of the North American Association of PEO Providers. Huh. Who knew? Who knew?

Michael: And so the theme is just you expand your opportunities to find opportunities and some find their way to you?

Cameron: That seems to be what's happening. It's kind of like, I don't know, a big octopus. We've got our arms in all kinds of parts of the business and when you take that at OneDigital scale...I had an email from someone yesterday that brokers insurance business. I don't understand their business. All of a sudden we've got this meeting coming up in a few weeks. Who knows where that could go? I have no idea. it's just so much fun. It's hard. Got a lot of stuff to figure out, but that's the beautiful part about having an amazing team and a pipeline to future great team members.

The Low Point On Cameron's Journey [1:20:38]

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

Cameron: Oh, that's easy, and you will relate to this, I know. Just imagine the world in fall of 2008. I didn't have my iPhone yet. We had no way of accessing anything during the day. Found myself in Santa Monica at a Dimensional conference. Santa Monica, as you know, is one of the most beautiful places on Earth and I would argue is not the most affordable place on earth. And we made the wise decision to bring, at the time, our kids there and we traveled in Southern California while the market is literally imploding and burning around you. And it was the most surreal experience where it's like you felt to your bones what risk really was. Dow went down below 10,000. It was dropping 800 points a day. We used to go back to the business center at night in the hotel and go into what was called Yahoo Finance. This is earlier. I know everyone is rolling their eyes. I get it. This was real.

Lehman Brothers just collapsed. Right? I think Wachovia was going down. The Icelandic banks were going down. The financial world was potentially ending. And our business went from $100 million to $45 million in 8 months. If that isn't horrifying, I don't know what is. And meanwhile, we're in Santa Monica, California trying to keep a straight face for the kids who were super young at the time. So that was the low point. That's when you realize risk and, as you know, costs are fixed, market goes down. That was quite a period there with no salary.

Michael: So what was the strategy for coping and managing? I'm not sure it would have been the strategy as much as just real-time survival. What pulled you through? What got you through?

Cameron: Oh, the belief that markets worked. Risk and return are related. Expect returns to go up. You had to believe you came out the other side. You had no choice. And if you had chosen to...You know how fast it snapped back in the spring of 2009. Had you made the choice to get out, let's say at Christmastime, that would have obliterated your business forever. Right? You believed all the way down, then you stopped believing, and it snaps back. Similar experience in March of 2020. You got to believe. That's what we're here for. So luckily, it did turn out, but that was...Because people say they can take on volatility, but it's always the stories that people can't take. It's always the story, and the story then, that was pretty horrifying.

Michael: I how you frame that. People can take the volatility. What they can't take is the story that goes with it.

Cameron's Advice For His Younger Self And For Newer Advisors [1:23:23]

Michael: So what do you know now you wish you could go back and tell you 10, 20 years ago in the much earlier days of the business?

Cameron: Oh, there's nothing I necessarily would have believed. This whole experience has been unbelievable. I could give some advice, but luckily I was wired in a way that worked given what we were doing and the kinds of people that we welcomed to the firm. It's just luck, right? Luck and hard work. I had hard work wired into me from a very young age and I loved serving people. I grew up working in a butcher shop from a very young age. I learned about customer service and just be there and take care of people. They'll keep coming back and they'll take care of you. So I've been hard wired that way, so I already knew that a long time ago. I guess my only...I never could imagine that it could play out this. I'm an optimistic, glass-half-full kind of guy and we've been near people, like at Shopify, that have had many, many, many multiples more success from building a business and whatnot than we have. But in our little way, I never would have imagined. The dream of $100 million to now we're $5 billion. What are you talking about? And now you want to become $50 billion? You can dream, man. It's possible. And I know that sounds like a bumper sticker, but it's true.

Michael: So what advice would you give younger, newer advisors coming into the profession today?

Cameron: Be clear. Be clear on the philosophy. I get reach-outs often from people coming into the business. And my advice is do your homework, get a belief system and find a place where you can be part of a strong belief system. If you share our philosophy on planning and investments, you have an unbelievable opportunity. Not only with us and our firm but in our part of the marketplace. There's so many great firms across the world that share our belief. So many. It's such a massive opportunity to bring this message to the market. I'm just saying that Canada is particularly strong. But try to join a team. Early on, don't focus on your compensation. Focus on making a difference. Solve people's problems. Everyone's got a problem they want to solve. If you come in and are empowered and work in a firm where people will let you do great work, man, you can make a difference. And everything else follows from there if you're in a decent shop. Compensation will follow. But early on, just get in, make a difference, solve problems. Don't be shy to stand up, speak out, and take a crack at making a difference. That's what people in leadership roles want and need. And the opportunities, in my opinion, are literally endless in this space because so many people need great advice.

What Success Means To Cameron [1:26:17]

Michael: So as we wrap up, this is a podcast about success and one of the themes that always and forever comes along is just literally that word success means very different things to different people. And so you've built what anyone would objectively call a phenomenally successful business as you've 10x'd over a decade and crossing $5 billion of assets and now gearing up for the next 10x cycle. So the business is in a wonderful place. How do you define success for yourself at this point?

Cameron: Obviously I knew this question was coming, so I did give it some thought, but I do not have a fancy answer. It's pretty simple to me. I love getting out of bed in the morning. I love it. I love it. I get up at quarter to 5 every morning. I love it. So as long as I'm excited to get out of bed every morning, that is successful to me. Love making a small difference every day. I think we all want to do that, but difference to the team, difference to the country, difference to the planning, the investment industry. I love seeing the next generation make a difference. Love it. I love focusing now on continuing to create an enterprise that kind of opens up the floodgates of opportunity to planners, to advisors, to clients to really have a better future. But the ultimate, and I think you know this, probably my main answer is I just love how hard work and luck kind of come together and create these crazy unintended consequences. Right? You just don't know what's going to happen. Life is so random that if you're dogmatic in your ways and don't see opportunity, those things might not happen. You've got to be open to these opportunities as they come along and have those conversations and take those risks.

I think back to, I mentioned reaching out to Larry Swedroe, in 1998, on an email reached out to Larry Swedroe and said, "Hey, I'm here, I'm in Ottawa. I got a small business. I'm trying to make a difference." And who knew he'd say, "I'm in. I'm there. Tell me when. And by the way, I'm not going to charge you." What? You didn't know, right? Who knew that by connecting with a blogger, I'd end up meeting the founder of Shopify? Who knew? Who knew going to a networking event and meet Ben Felix? Who knew? Who knew he'd turn out to be such a great...? He didn't know. You don't know. Stuff happens, man. And just good, hard work, good hard-working people that want to work together, the togetherness is also a big part. That's why the term “frankenfirm” comes to mind. We want to be this oneness coming together, same philosophy to make each other better. That's the whole point of this. If we can make ourselves better, we're going to go to market better and have a better impact on more people. That matters. That's super fun to try to create to me and to us.

Michael: I love it. I love it. Thank you so much, Cameron, for joining us on the "Financial Advisor Success" podcast.

Cameron: It's been a total blast, Michael.