Ep 422: Developing Your Leadership Skillset On The Path From Intern To President Of A $13B AUM Enterprise with Kay Lynn Mayhue

Summary

Podcast Summary: Financial Advisor Success

Episode 422: Developing Your Leadership Skillset On The Path From Intern To President Of A $13B AUM Enterprise with Kay Lynn Mayhue

Host: Michael Kitces

Guest: Kay Lynn Mayhue, President, Merit Financial Advisors

Date: January 28, 2025

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Episode Overview

This episode features Kay Lynn Mayhue, President of Merit Financial Advisors, a hybrid firm with over $13 billion assets under management and 26,000 client households. Kay Lynn shares her journey from intern to president, focusing on her evolution as both an advisor and a leader, providing insights into leadership challenges, career progression, succession planning, building firm culture, and large-scale mergers & acquisitions (M&A) in the advisory space.

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Key Discussion Points & Insights

1. Evolving Advisor Career Tracks (04:00–09:00)

• The traditional model of learning sales first has flipped; now, many advisors start in technical roles (paraplanners/associate advisors), then move through client relationships, business development, and finally leadership.
  • Quote (Michael Kitces, 03:47): “There are really quite different skill sets… first you learn your technical knowledge… then you handle client relationships… then business development… and then leadership.”
• Larger firms allow for greater specialization; advisors can now choose to focus on their strengths—whether technical, relationship, or business development.

2. Kay Lynn’s Early Years & Mentor Influence (10:15–15:21)

• Kay Lynn began as an intern in a boutique Dallas firm, benefitting from early exposure to comprehensive financial planning and mentorship from successful female advisors.
  • Quote (Kay Lynn, 14:05): “I got so fortunate because I did my internship with a very successful female advisor… I never had that preconceived notion that as a female I was going to have limitations in the business.”
• Her path: intern → paraplanner → high-net-worth advisor → successor/partner.

3. Transition into Leadership & Management Lessons (26:45–37:33)

• The challenge of moving from "doer" to "leader." Early on, her intense focus on results clashed with staff needs for empathy and validation.
  • Memorable moment: Team threatened to quit over her management style, prompting profound self-reflection and change.
    • Quote (Kay Lynn, 27:36): “My team came in… and said, ‘We don’t want to work for Kay Lynn anymore’… that was a humbling moment.”
• The importance of radical candor, seeking feedback, and blending results-orientation with genuine personal connection.
  • Quote (Kay Lynn, 34:33): “When something doesn’t come natural to you, you have to establish other patterns of behavior… and when you see results, it gives you that momentum to keep going.”

4. Succession Planning & Selling to Merit (37:33–46:20)

• Initially planning internal succession, but realized industry complexity (tech, compliance, investments, marketing) would better be handled as part of a larger enterprise with institutional resources.
• Decision to merge & sell to Merit Financial Advisors stemmed from need for scale and new leadership challenges.
  • Quote (Kay Lynn, 43:31): “We needed to equitize a few of the advisors… many have built successful businesses and have not figured out how to properly equitize their G2.”

5. Equitizing G2 Advisors & Merger Mechanics (46:20–58:07)

• Industry-wide issue: If G2 (next-gen) advisors are not given equity, there’s significant risk—they may leave and take clients, lowering firm value.
• Merit often structures deals to ensure G2 ownership to stabilize teams and raise valuations.
  • Quote (Kay Lynn, 55:45): “Let’s come up with a plan to equitize the next generation. We’ll place a premium on your business if you do—so it’s a win-win.”

6. M&A at Scale – Lessons & Challenges (58:36–63:56)

• Early M&A deals were often about facilitating retirement successions; as scale increased, leadership needed to be grown from within each region/office.
• Acquiring remote offices is logistically challenging; it's crucial to develop local leadership for national expansion.
  • Quote (Kay Lynn, 60:23): “If it’s your first acquisition… stick close to home... It’s a totally different ballgame when you’re trying to lead a team from a distance.”

7. Building Culture & Organic Growth Tracks (67:46–76:33)

• Cultural fit is paramount. Merit screens rigorously, often walking away from leaders who run dictatorial, non-collaborative teams.
  • Quote (Kay Lynn, 68:12): “We figured out this founder was leading it like a dictator and the team had just been beat down… That’s not a servant leader.”
• Organic growth is emphasized, with multiple channels (“growth tracks”): business owner/ESOP services, CPA partnerships, referral programs, digital marketing, etc. These are packaged for advisors to “plug and play.”
  • Quote (Kay Lynn, 75:00): “It’s business development in a box—you pick which one you want… we’ve set it all up; you still have to execute.”

8. Leadership, Psychology & Behavioral Tools (76:56–82:43)

• Kay Lynn wishes she’d studied psychology; understanding people is the crux of leadership and advising.
• Merit uses Behavioral DNA (aka DNA Behavior) assessments with both clients and staff—for hiring and ongoing team management.
  • Quote (Kay Lynn, 77:48): “I’m a student of personality tests… Behavioral DNA measures, for example, communication style, competitiveness, attention to detail… I won’t do an interview without having that in hand.”

9. Personal Reflections: Work-Life Balance (82:46–85:12)

• Work-life balance remains a challenge, especially as a mother of five in a demanding leadership role.
  • Quote (Kay Lynn, 84:11): “Work-life balance is challenging… when I miss things, I just try to be present where I am.”

10. Advice to Advisors & Defining Success (85:23–end)

• Advice: The industry now allows you to craft a path tailored to your strengths (technical, client relationships, business development). Take personality assessments, get feedback, lean into what energizes you.
  • Quote (Kay Lynn, 86:02): “Be excited that you’re entering the industry at a time where you can be you… there’s not a predefined recipe you have to follow.”
• Success for Kay Lynn is now about impact: supporting her team’s growth and opportunities, and fostering an environment where others thrive.
  • Quote (Kay Lynn, 88:35): “Success, at this stage of my career, is: are others growing, do others feel supported.”

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Notable Quotes & Memorable Moments

• The Frying Pan Moment (28:00): Kay Lynn’s team threatened to quit, a major wakeup call for her leadership style.
• On Equitizing G2 (43:31): "I don't know that we talk about that enough from an industry standpoint because this next generation… needs a passageway to partnership.”
• Culture Fit Cautionary Tale (68:12): Walking away from an M&A target whose leader was a “dictator,” underscoring the criticality of aligned values.
• On Work-Life Balance (84:11): “There's no work-life balance in this fast-growing business… I just try to be present where I am.”

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Timestamps for Key Segments

• 04:00 – 09:00 | Career path evolution in financial advice firms
• 10:15 – 15:21 | Intern years and importance of female mentors
• 26:45 – 37:33 | Leadership failures and transformation after tough feedback
• 37:33 – 46:20 | The decision to merge/sell for scale and opportunity
• 46:20 – 58:07 | G2 advisor equity, succession, and valuation dynamics
• 58:36 – 63:56 | Learning from M&A: scaling requires new leadership structures
• 67:46 – 70:36 | Defining and detecting culture fit in acquisitions
• 70:44 – 75:21 | Building organic growth inside a large RIA
• 76:56 – 82:43 | Behavioral DNA and leadership: the psychology of success
• 84:11 – 85:12 | Work-life balance realities
• 86:02 – 89:03 | Final advice and defining her own success

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Resources Referenced

• Behavioral DNA / DNA Behavior (personality assessment tool)
• Radical Candor (leadership book)
• Strengths Finder, DISC, Enneagram (assessments)
• Future Proof conference (industry event)

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Tone & Takeaways

Kay Lynn speaks candidly and with humility about her mistakes and transformations, blending managerial strategy with a deep people-first approach. The episode is both practical—offering actionable insights on leadership, succession planning, M&A, and firm growth—and inspiring, emphasizing authenticity, growth mindset, and servant leadership.

For advisors at any stage, this episode is rich with lessons on career navigation, the importance of feedback, and organizational culture in modern advisory firms.

Transcript

[A]

Welcome to the Financial Advisor Success Podcast where you go behind the scenes with financial planner, speaker and consultant Michael Kitces to hear stories of how leading financial advisors navigated the inevitable challenges that arise on the path to success and get insight from leading industry consultants about how to break through to the next level in your advisory business. And now, here's your host, Michael Kitces.

[B]

Welcome everyone. Welcome to the 422nd episode of the Financial Advisory Success Podcast. My guest on today's podcast is Kaelyn Mayhew. Kaylin is the President of Merit Financial Advisors, a hybrid advisory firm based in Alpharetta, Georgia that oversees approximately 13 billion in assets under management for 26,000 client households. What's unique about Kaitlyn, though is how she developed her advisory, management and leadership skills to work her way up from starting as an intern to eventually become the president of a national RA enterprise and lead their proactive mergers and acquisition strategy. In this episode we talk in depth about the ups and downs of Kaylin's evolution over the past decade from being a client facing advisor to a large firm leader, including the lessons she learned when once early on her team threatened to quit because of her original management style how Kaylin grew to recognize the importance of connecting better with her team members as people rather than just focusing on business results and outcomes alone. And Kaitlin's strategies today are on asking peers and employees for feedback, which have helped her recognize blind spots in her own leadership approach and even as she's now advanced the highest management levels at the firm. We also talked about Kaylin's current role managing her firm's merger and acquisition activity, including how she and her business partner decided to sell their previous firm to Merit rather than go through their own internal succession why Kaylin sees more value in selling firms when their G2 advisors are also equity owners, even if the founder is still planning an external sale in the long run because it results in more of an ownership mindset in the selling firm's G2 advisors that helps them see the benefit of staying on and growing their equity further after the deal is closed and why Caitlin places high importance on culture when evaluating potential firms to acquire, both to ensure the right fit for her firm and a more smooth transition for the selling firm's team coming in and be certain to listen to the end where Kaylin shares how she incorporates the Behavioral DNA Personality Assessment tool both when hiring new employees and when working with clients how Kaelin's firm offers organic growth tracks that allow advisors to plug into potential sources of clients such as marketing to employee Stock ownership plan firms or partnering with CPAs and then execute in that channel with an established marketing playbook from the firm to grow their own practices and why Caitlin thinks it's important for advisors to reflect on the current phase of life they're in. For example, whether they have young children or are now empty investors and structure their own work according to that phase to be able to achieve both professional ambitions and their priorities in their personal lives over the long run. And so with that introduction, I hope you enjoyed this episode of the Financial Advisor Success Podcast with K. Lynn Mayh.

[A]

Foreign.

[B]

Welcome Kaelyn Mayhew to the Financial Advisor Success podcast.

[A]

Michael, thank you so much for having me. I'm excited to talk to you today.

[B]

I really appreciate you joining us and a conversation I'm looking forward to around as I think about just the ways that our careers evolve in the advisor business and what you have to learn. Like no one learn to, to grow in a long term career. There's, there's a phenomenon to me that like there are these different domains that you go through when you're learning in the business. I mean if you go back like to our deep roots, everybody learned to sell and do business development. If you survived long enough, then you could learn everything else.

[A]

Yeah.

[B]

And fortunately that's, that's kind of shifting to what I think is a much more established and healthier career track where there's, there's this progression that's emerging where first you learn your technical knowledge. So you're a peer planner, associate advisor, you get your CFP marks, you learn the book stuff, then you have to figure out how to actually handle client relationships. And so suddenly it's less about the book knowledge and it's more about, okay, how do you actually express that to a client so that they get it and take your advice and stay on board and don't leave the firm and relationship management takes the center. Then if you do well at that, as a lot of career tracks are emerging, now is your opportunity to make partner. And so partner is all about can you do business development, marketing, sales, growth, can you, can you make some rain, can you bring it in? And that's a whole different skill set than the technical knowledge or the relationship knowledge. And if you do that well enough, then the business gets big and you hire a lot of people to do those things. You don't do any of those things anymore. And now suddenly the role is all about leadership and management and driving the team forward and the business forward. And they're really to me like they're really quite different. A lot of people, very few people are good at all four. A lot of people don't even want to do the progression of all four because they're so different. Kind of find the one that you really like and you, and you hang out there and I know you, you kin have had a track of doing the whole progression from basically like entry level intern, associate advisor to president, leader of a 12 billion plus RIA. And so I, this is, I'm excited to talk about what that career progression looks like and has felt like to you and I guess even whether you think that's a fair representation of those four domains and how they've evolved as you've done this for 20 plus years.

[A]

Well, I think you summarized it so well. I can remember going to a couple of my first interviews now this would have been in the mid to late 90s and I thought I was going to go in and tell them everything that I know about the stock market and the economy and broad based financial planning and risk management and estate planning. And really I came in and I can remember some of the questions were how many Christmas business cards do you send out and how many people are in your Rolodex? Yes, this is before we had all of our contacts and our phones here. And so it was nothing about actual financial planning.

[B]

It was all like, yeah, who do you know as prospects you can call on, on your first day here?

[A]

Yeah, exactly. And then I also look back at that book knowledge, being able to translate that into being an effective advisor for the client. I mean I hadn't even gone through purchasing my house yet. I hadn't dealt with merging finances because I wasn't married yet like all of those life experiences. So I love that our business has matured to a place to where we have that, that incubacy period to where we can really grow up in this profession. And I've got career financial planners on the team that that's what they do best is the planning, the behind the scenes, the in depth analysis. I've got the new business development people that just love being in the community and meeting new people. And then I've advisors that their heart is really in the relationship side of the business and they want to be in that conference room day in, day out, building relationships and continuing that financial planning process through the life cycle of working with that client.

[B]

Yeah, it's, I mean to me there's sort of two interesting parts of this that have evolved together for the, for the profession. One is I do feel like we've we've basically flipped the career track from what started out as. I mean I remember starting the life insurance company. You know, you were expected to sell from day one and if you did that successfully for five years, you were allowed to go get your CFP marks, but you had to, you had to sell successfully for five years. And I was always in the camp of like, shouldn't I know things before I go call myself an advisor and sell? But, but that wasn't the way it was done at the time. And now I feel like we've, some firms still do a version of that model, but a lot of the industry has flipped that around to say no, no, we're going to start in these paraplanner associate advisor roles where you work on the technical and then we're going to move into service advisor roles where you get to do manage relationships. And then some of us do the business development thing. And as you said, we can find our desired career tracks there. Right. Some actually just really enjoy continuing on the technical end. So now you can do that. There's like internal financial planning departments with financial planning specialists and directors of financial planning who nerd out on technical stuff and don't necessarily go work with clients. They get to do the technical things they like. Others love the relationship side of the business and build their client base. Some are great at business development and get to have a role specialized in that. So I feel like it's interesting that a. The career tracks have kind of flipped from what they used to be and we also just have firms large enough to actually have specialized roles. You know, I mean when we're small, everyone's kind of a jack of all trades. When you get to a certain size you can actually have like a financial planning department with the technical specialists and advisors who manage client relationships that don't have to worry about the rest and a separate team that does business development. So the advisors can quote, just advise and the business development people just do business development. And I feel like that's also a new, a new thing in the profession that we didn't really have very much 20 plus years ago.

[A]

Well, and Michael, because I was with a smaller company for the first two thirds of my career and now I'm with a larger company, I have lived both sides of that. So I think these, these larger firms that have evolved, I think what they're offering is, is they are offering that career pathing. And so you do have those baby steps that you can stop along the way at any point in time. If you're if you're that great servicing advisor, wonderful. Let's, let's build a growth plan around you being the best servicing advisor and continuing to grow in that role.

[B]

So help us understand how this has evolved for you from starting entry level, moving to senior leadership in a very, very large firm. But I'm curious to start at the beginning of how this career track has actually played out for you in practice.

[A]

Yeah, so I did start out as an intern in the industry and I was fortunate to get exposed to the independent side of the business really, really early on and got to learn what it meant to be a fiduciary. I got to learn what it looked like to not have that was manufacturing products that there were quotas on that we had the world to go out and pick from as far as be our client's personal shopper for different things that they need in their financial world. So that was, that was very fortunate. I was actually in a degree plan. I think it was the first in the university where I was where I qualified me to sit for the cfp. And so I got exposed to that comprehensive mindset really early on. So that's just been a core part. I know that there's successful advisors out there that really deal only on the investment side or really only deal on the insurance side. I just felt like the marketplace that I was serving was better served by me taking that comprehensive approach. And so that's the world that I grew up in and was fortunate enough to join up with a partner that was already in some high net worth places. So as you can imagine, you know, Here, here's the 2223 year old Kay Lynne walking into these relationships. They were already high net worth clients and so I was able to ride the coattails of my, my partner in or who became my partner and really setting that planner role. I felt like it was such a great progression as far as like intern to that financial planner to high net worth advisor. Really worked my way into the that successor piece, was running the firm for a good while. My partner of almost 20 years retired and then I chose to merge in the firm with a larger firm versus do an internal succession plan. So I know we always look back at our careers and there's these pivotal moments. That was a real pivotal moment for me to say, all right, we've been planning this internal succession plan for a long time now, but there's a new trend emerging. And so this was back in 2016, 2017 and I saw the complicated parts of the business that were creeping up. Things like technology. I mean, I can remember our first financial plans. They were on like a yellow legal notepad and I had a calculator. And now I think we have something like 12 pieces of technology that are integrated for the financial plans that we do for our clients now. And so it was just, the business was getting more complicated and for me I felt like it was just, it was better for the clients. It was, it was better for the amazing team that we had built out. And ultimately it was better for me because there was going to be a challenge. I didn't realize how bored I had gotten in the role that I had been. So now I get to sit, so I guess you could say a seller. And now I get to sit as a leader at one of the fastest growing RIAs. And I would consider us to be a serial acquirer. So it's fun to get exposed to so many different advisors and the businesses that they have because there is no single recipe for success. That's what's so fascinating about this business.

[B]

So I would love to just kind of delve further into the steps of that journey of even kind of the first stages. Right. Intern to planner to high net worth advisors. You'd framed it. So take us back to the start. What was the original firm that you joined? What did it look like? What were they doing at the time? What was your role when you, when you showed up and joined? How did this begin?

[A]

Yeah, so I don't think the firm exists any longer that I was interning with, but it was a boutique financial planning firm in Dallas, Texas and it's not that it doesn't exist anymore. It was purchased as far as they chose to sell. So there's definitely a trend here. And walked in and was paired up with an advisor. I think one of the interesting things is there's not that many highly successful prominent female advisors in the industry. I don't know why, because I think that, and I'm a little biased as a female and a former advisor that we make really, really good advisors. But I got so fortunate because I did my internship with a very successful female advisor and then after that internship was over and I went to go work with another successful female advisor. So I never had that preconceived notion that as a FEMA I was going to have limitations in the business. So I had some really great mentors that were already out there modeling what it looked like to be a great advisor and a great leader in the industry.

[B]

Were you looking to work with other women advisors?

[A]

I wasn't that was not something that I set out and I think it was my ignorance. I didn't realize from a percentage standpoint what a minority the female advisors were in the industry, especially female advisor leaders.

[B]

So. So you were just looking for jobs?

[A]

Yes. Yeah. Sign me up, put me in coach. Yep. I was just eager to get started. I was tired of being a poor college kid.

[B]

Okay, so. So what was the, what was the scope of the internship? I mean, what did you do? How did you get the role?

[A]

Yeah, financial planning, modeling, asset allocation. And then of course there was the, the fun stuff. Like I, I think I was going out flipping the mattresses of the advisor's vacation home and picking up the dry cleaning and, you know, just doing stuff that you do as far as from an entry level position. So of course there was some of that, but there was great exposure to sitting in on client meetings. There was great exposure as far as working with a team at the time. So it was just an excellent experience for me.

[B]

Okay. And then when you finish, like did that turn into a role with the firm or that was that. And then you had to find a new job somewhere else.

[A]

It did. Interesting story there. And I know that your listeners are of all generations, so I'm sure that some will identify with this. So I had, I got a job offer at the place where I was interning. And it was a good job offer, but like any good steward would do, I was out talking to other people and I had accepted the position because I thought that that was the best one for me. And I met just a super charismatic, fast growing advisor. I got introduced to her through a friend of a friend. And I said, this is, this is who I'm supposed to work with. This is, this is the one. There's just a connection there that I need to pursue. I know. Yes, yes, exactly. It's really hard, but I know that especially in hindsight, that made the right decision. And I did turn, I went back and I turned down the one that I had accepted and went with a new opportunity that I just felt that amazing connection with.

[B]

And so what was that firm? What was that role? What were they doing and what were you going to be doing with them?

[A]

Yeah, so I was going to come in as a para planner. I don't know that that title actually existed. The advisor had had so much success and was growing so, so quickly that she really needed to have someone that was doing the financial planning for the clients and really saw the need to do comprehensive financial planning. We were actually charging fees for financial planning. This was like the late 90s. I mean that was, that was absolutely unheard of back then, that fee for service. And so that was my predominant role. Quickly moved into more of an advisor role. I don't remember the exact timeframe, but was really eager to sit into, sit in the client meetings, be the one that was advising the client through complex situations. Was really fortunate because they were, we were in a marketplace of high net worth. So a lot of advisors come in and they, they're, they're learning on the smaller clients. I immediately jumped in and we were dealing with clients that were anywhere from two and a half million to 25 million, which was just a really exciting marketplace to be in.

[B]

So share with us a little bit more what that is, what that transition was like. Again, I think of paraplanner roles as I'm mostly technical behind the scenes. I'm not necessarily in client meetings and responsible for communicating advice and managing relationships. And then you're moving into this advisor role where you are responsible for that and for some very sizable clients. And, and I'm presuming are still in like in your mid-20s at this point?

[A]

Yes, yes. Yeah. I was very young.

[B]

How was that transition?

[A]

Well, first off, I think that the CFP at the time I had mentioned that I was in the CFP program at the university where I was at and had those wonderful initials behind my name. I think that at the time it wasn't very widespread. And so I think that that gave me some great credibility. I'm a, a big proponent of team approach on serving clients. And so the fact that I was able to talk about the fact that we had a financial planning department and that we had great investment people. I've never been in a situation that I felt like I needed to be all things to the client and have all of the answers. And I think that when, definitely when you're starting out in the business and when you're young in the business, having those, those that team approach and that story puts you at a place to where you, you don't have to wake up at 3am and read wall Street Journal and be prepared to answer any question or know all of the proposed changes in the tax code. So I think that that that team approach gave me a lot of confidence to walk into those meetings and be comfortable saying, I don't know, but let me get back to you versus trying to fake it until I could make it interesting.

[B]

So, so what I guess is what was the size and setup of the firm overall? I mean, that, that sounds Like a fairly sizable firm, particularly for the late 1990s, if you've got an investment, you know, investment people and a planning department and it's not just the founder that does every everything all at once and you're their associate support person. So like what was the size and nature of the firm that you.

[A]

Yeah, yeah. So at that particular time when I got started we were on the planning arm of Lincoln Financial and so we had a built out financial planning team just down the hallway. We had the centralized investments and before they were called tamps, you know, we had the outsourced CIOs. And so we just had a ton of resources versus that story where it's me, it's all me, I'm making the decisions in your portfolio. I'm also going to go out and tell you what insurance you might need and what products you should have and then I'm going to give you the tax advice. It's like no, no, no. We've got, you know, we've got experts that we can pull in as that's need. So it was a terrific environment for the clients to be served in. And I think that it's one that I've tried to model as we've built out teams after leaving that environment.

[B]

Interesting. So you were I guess an independent practice for what you were doing. But all the Lincoln Home Office resources against probably then like the local branch resources were the way you could talk about the team, the collective we of all the people that are backing you so that it doesn't feel like it's just you. K Lyn, 24 years old, trying to work with this high dollar client. It's, you know, we are working with you and I've got this great team with all of these resources and we are so excited to work with you. Exactly how did you get comfortable working with these high dollar clients in your 20s or even just learn how to handle high dollar clients in your 20s?

[A]

So I think it's exposure and it's also getting outside of your comfort zone. I think my entire career I have spent it reinventing myself and getting outside of my comfort zone. I could give examples in the last 24 hours where I continue to get outside comfort zone. So I think that's, that's going to be whether you're wanting to move up market as far as the type of clients that you're working with, whether you're wanting to bring in additional revenue streams like charging for financial planning and not just offering it for free, whether it be doing M and A and Doing an acquisition and testing your, your skills and converting clients from a retiring advisor. I mean, all of things are going to require someone to get outside of their comfort zone. So it's never, oh, I feel so confident. I'm just walking in there and it's just being prepared to fall and pick yourself back up and being a student of success. So at both my internship and at the Lincoln office, I would often just sit and have lunch or coffee with some of the advisors that had been doing it for 10, 15, 20, 30, 40. I think there was like one that had been doing it for like 50 years. And I was just a sponge. And then I'm also an avid reader and so I think just reading things like as we started to scale the team as an example, just being engulfed in leadership books and just always realizing that we're learning on the job, I say every single day I'm in school. So it's invigorating if you can look at it that way. It also gives, gives yourself a lot of grace because you're not expected to get it right all the time. You're not expected to have all the answers. So it's just like my, my kids in school right now, it's like you're, you're going there to learn. I, I walk into whatever's on my calendar every single day with an attitude of I'm here to learn.

[B]

So, so it was things like men, I guess, mentoring, talking to other advisors. That was your. How do I figure out how to actually do this part? I mean, it wasn't, there wasn't structured learning or anything.

[A]

I'm presuming there was a boot camp that I went through that was wonderful. But you know what that boot camp was? That boot camp was how to sell. It was not necessarily how to be a great advisor. So, yes, I could get it across the finish line. I knew the areas to talk to with the client to win that business, to get them to see why they would be better off as far as working with us. But when it came to decision time, when it came to hard things happening in their life, when it came to times where the market was going haywire and how to talk the clients off the cliff, wasn't that a fun time to start in the business? Right. As far as to jump into that advisor role, as we have 9, 11 and the technology bust. So I learned a lot during that time period. So it was, it was some good trial and error and just always having that mindset of what could I do better the next time?

[B]

So so what came next on the journey?

[A]

Yeah, so I think that it was when I. When our team started to grow. And I think that this is one of the most pivotal points, most humbling points in my career. So I am naturally a doer. I think that I have had success because I can outwork almost anybody. And that does not necessarily translate to a great leader. And so I think it's the African proverb that says, like, if you want to go fast, go alone. If you want to go far, you go together. And so what I had to learn, that doesn't necessarily come natural to me is the leadership side of the business. And so do you mind if I share a little story about that?

[B]

Please, please.

[A]

Okay. I. I look back at this and talk about a humbling moment. I was probably 28, 29, maybe 30 years old. So gives you some context to been in the business for what had that been nine years or so at the time. And we had a team. I think it was like five people. And they came in to my business partner, and I was. I was running the show, and they. My business partner together, and said, we don't want to work for K. Lynn anymore. And it wasn't very funny. It wasn't very funny at the time. I'm laughing now because I'm so grateful for that. I. It's, you know those moments where people are just so brutally honest with you that it's like you have to make a change you hate. Like you get knocked over the head with a frying pan. And that's what happened to me that day. I can remember it like it was yesterday and how insecure I felt, how inadequate I felt. And I thought about quitting. I'm like, well, maybe I should be doing something else. And I said, no, no, this is a great opportunity for me to learn. And so the very next day, I got on the phone with the team. I apologized. I fully accepted responsibility for the things that they had pointed out. And I just. It was this big shift in me that went from leading like a drill sergeant to figuring out that I needed to be a different type of leader. I needed them to. I wanted them to follow me. I wanted them to follow me because they believed in what I was working towards. And I needed to communicate vision to do that. I needed to communicate purpose, and I needed to be respectful. I mean, these folks were not robots. And so I. I had been operating with this. I always say, I don't have a type A personality. I have, like, a type, you know, double A, triple A personality. And so I needed to realize that people want to work for folks that they know care about them. And I hadn't paused. I was so focused on the results that I was knocking people over left and right to get to that next finish line or that next goal post. And so it's still a work in progress. I still have check ins with the people that I work the closest with. Like, how am I doing? What do you need more of from me? What do you need less of? And I think we all have those things that come out in moments of stress. And that's definitely one of the things that comes out. When I have so much on my plate, I just try to jump in. And so I would just challenge anybody that may have that, you know, type A personality and may have that just drive or minus probably borderline obsession with results or addiction towards results and progress here to just ask the people that you're working with, they'll tell you, don't wait for those, those moments to happen. So I think that that was Michael, when you ask as far as, like, what was that like, it was a huge adjustment. It was probably the biggest adjustment in anything that we're talking through was that difference from, okay, I'm going to be a really great advisor. Okay, Now I'm building out a team. Now I've got to be a really great leader.

[B]

So just help us understand a little more. What, what was the, what were they so unhappy about? I mean, what were you doing that I'm sure, like neem seemed natural and appropriate at the time? You were wanted, you were trying to get to results, not like you were trying to make the team not happy. So, like, what were you doing that implied like it was, it was a blind spot at the time.

[A]

We can, hopefully this is a testament to the fact that I can change. And I do listen, I am, I am very eager and I'm a sponge for constructive feedback because many of those people still, I work with them today and so we could bring them on to the podcast and ask them. But I think if I were to summarize it for them, it goes back to that saying, people don't care how much you know until they know how much you care. And I wasn't taking time to get to know them personally. I wasn't. I. It was just, they would come in and it's like, well, have you done this and have you done that and where are we on this? And if there was a mistake that was made, it's like, well, let's, let's talk about that and why'd you make the mistake and don't do it again? And it was just very, very focused on results and not really focused on the relational side of the and which was so interesting to me looking back at it, Michael, because I was such a relationship person with the clients, it comes naturally to me. Right.

[B]

Did that not translate over from what you're doing with client work?

[A]

Well, you know, so it should have. Right. It should have been intuitive that it should have been the same type of relationship, but it wasn't. And, but so I think that I needed to have that, that frying pan across my head to get that realization. And I'm so grateful that the team cared enough to bring it instead of just leaving. I mean, they could have left one by one and just we could have had some turnover. And 10 years later, we could still be having a revolving door in that if they hadn't cared enough to share that. I think that that goes back to one of the core values that I try to instill in our leadership team, which is radical candor. You can't expect people to read your blind spot. It's a blind spot. So let's talk about those things. So I would say that there's a lot of things that have shaped me as a leader from that and the radical candor piece. There's actually a book. If you haven't read it, I can save you the trouble. Radical candor is say what you think and do it in a loving way. And when your heart is at the place where you're trying to help someone and you're sharing that constructive feedback and you've made those deposits of caring and helping them grow, that is truly a great formula for just a growth pattern for your leaders and for the rest of the team.

[B]

So how did you change? I mean, like, we're. We tend to be wired the way we're wired, it's very hard to change that wiring. As you said, you know, you're still very results oriented.

[A]

Yes.

[B]

So, I mean, were there there tools, tricks, things you did to trick yourself? How did you get yourself to actually change when you're still driven to the same results, outcomes?

[A]

Well, I think it comes down to being disciplined. And when something doesn't come supernatural to you, you have to establish other patterns of behavior. So maybe a good correlation to that day. I mean, take your health as an examp. If you got a phone call from your doctor today and it's like, oh, we've got your results and you've got high cholesterol you're diabetic, you're prime for heart disease. If you don't change, you probably only have a couple years to live, and those are going to be miserable years. It's like, well, I better change then, right? So I think it was one of those things that I realized that I could, if I was going to grow and if I was going to impact the number of clients at the time I went. And now when I look at what we're building at Merit and the ability to impact the industry and the communities that we're in, it just comes down to discipline. And I also think that when you have results with something and it gives you that momentum to keep going, right? And so when I saw if I, if I, if I tweaked things, if I started my Monday meeting with asking people, how was your weekend? And let's share something about you versus all right, let's dive straight into the cases. And then I start to see people that are happier and they're more productive and they are willing to stay later to finish the things. And they don't roll their eyes at me anymore when I come in with two or three changes on something or I come to them with something last minute that I shouldn't have. So when you start to see that you can actually get, you can get the better results, which is what was at the crux, what was at the center of my desire, it leads to a circular reference of just wanting more and more and more of that. And there was a little bit on the faith journey as well that helped that to where I really personally want to be remembered by loving people. Well. And I know that that's a weird word to use at work as far as love, but it's important to me. So I think that there was just some maturing that I had to go through to get to where I am today. And by all means, I don't want to say that I am perfect. I still have moments, like I mentioned, when stress comes into play that, that instinct to just drive, drive, drive comes in and that drill sergeant in me comes out.

[B]

So. So what was next in the, I guess, evolution of the firm and the career stage? I guess at this point you're coming up on 30 and you're expanding into leadership as an advisor. You're expanding into leadership, moving away from the advisor role. What was happening at this point?

[A]

Yeah, it's still very client centered, still very new business centered. But as the team was growing, there were more demands on me from a leadership standpoint and a conductor of the business unit that we were running. So our team was growing a couple of people a year to where we would go from 5 people to 7 people to 9 people to 12 people to 15 people. So there was just some. Some great growth that was happening there. I was less on the advisor side and more on the. The new business development side as far as just really bringing in the clients, or the best way I can describe it is more like a doctor, nurse type setup that we had. And so I was more of the doctor that would come in for the short visits. And then we had service advisors that were going to be the ones that were spending the majority of the time with clients so that we could leverage and work with more clients. And so I think that that was really the evolution. The big change happened when my business partner of that 18 or so years was ready to retire and we were planning on doing the internal succession plan and. And I started to think about what it was going to be to fill her shoes, what it was going to be like to build a business that was going to serve the future client well. What were some of the areas that we had just personally neglected. We hadn't made any big investments in technology. We were outsourcing the investments, and that was expensive for our clients, and we really needed to bring a CIO in house. Marketing was getting relatively challenging. I was losing a great new business developer and my partner that was retiring. And so for all of those reasons, started to look around and ultimately made the decision to merge in to sell to a larger firm. I was in a business coaching group and we were having some interesting discussions, had hired a firm to. To expose us to what some of the other opportunities out there were. And ultimately. So it's really interesting for me to sit in the seat that I am now because I feel like there's a number of advisors that are interested in what a potential partnership could look like. And right now, when I get on a conversation with someone that's interested in learning more about merit from a partnership standpoint, there's really three things that they're looking for. One is succession, one is growth, meaning that they're growing and it's just gotten so painful. And the third way is that they're already doing something great as far as from a leadership standpoint. And they're really looking to see if there's some place that they can plug into to have a bigger impact and to get to where they're going quicker and have more fun doing it. And so when you look at those conversations and Where I was at back in 2017 team, I think, and I've heard it say two ways. I think that there's so many of us that have to be that jack of all trades or like a visual on this would be the Swiss army knife, right? It's like we have to be the cco. We've got to be the HR person dealing with compensation and healthy turnover or unhealthy turnover. We're looking at the lens through the client experience. We're making decisions based upon technology. I mean, the folks that I'm running into that have had successful businesses like what we had built, there's just so many complexities in the business. And so I think that was a really pivotal moment for me to realize that there was some ways out there that I didn't have to be that jack of all trades, that I could jump into a place where things that were energizing to me and new challenges. Because I personally had gotten pretty bored sitting in the conference room. I had, it's like that, been there, done that, got the T shirt type of mentality. But I didn't realize it because there was nothing else on my radar until I set out on that mission and so made that decision back in 2017 to sell to Merit. Was still really focused on the running the smaller business unit that I brought in with me as far as the number of advisors and a great support team and amazing clients that came in. And then we started to do some additional acquisitions. And so me taking that president of the larger company and I think at the time we were around 60 employees total, just made a lot of sense if we were going to focus on institutionalizing a lot of, of things like the client experience, financial planning. It was exciting to me to, as being an advisor and being in that seat for 20 or so years, it was exciting for me to be able to leverage that and really work on building something that was going to impact many, many more lives than what I could have done before.

[B]

So I'm fascinated by this kind of crossroads moment when you're, you're, you're getting to the moment of the succession plan and, and deciding, seeing, realizing that maybe it's to an external partner. So I guess first question or clarifications, were you an equity owner at all at this point? Like, had you done part of the equity, just not all of it.

[A]

Correct. Yeah.

[B]

So what, what was the, do you recall? Like, what was the split at the time? I mean, just trying to visualize like 98% and 2% or like you were 60, 40 and about to flip over to the majority. Like where, where was it?

[A]

Yeah. So I mean the plan was going to be a complete buyout. There were a couple of other advisors that were. When we looked at the internal succession plan that were not equitized that we were going to. To equitize. And so that was part of my challenge when we looked at an external. Because I was already a shareholder, we needed to equitize a few of the advisors. They, they, they had been great contributors to the business and had really helped us get to where we were. So that's interesting that you're honing in on that because I can't tell you how many conversations I have with advisors that have built successful businesses and have not figured out how to properly equitize their G2. So I think that that's like I don't know that we talk about that enough from an industry standpoint because this next gener. And just a side note on that, we've actually done two different acquisitions because the founder had a G2 advisor that was their succession plan leave because they got frustrated because they weren't properly equitized. So I think that it's so important from an industry standpoint that we create that passageway to partnership. I. You can look at it a couple ways. I think that there are certain points of equity that you are earning it and that it should. I hate the word to use give because I don't think that you should ever give away equity. But yes. Are there contributors in your business that are earning equity? Absolutely, in a lot of circumstances. So I think that that's really important. And then that skin in the game. And we have a marketplace every year where our leaders and our advisors are able to in. It's a pretty amazing thing to see when someone writes a check that owner mentality. Many of our folks already have that ownership mentality but it's just like. It's like a light bulb comes on that wasn't there before. So just offering those buy in opportunities regardless of where the business is at I think can be so impactful for that G2. So a lot of what we do on the deal structures and, and we've had I think like I don't know, I think it's been like 35 or 36 since I've been here. A lot of what we do is figure out how to equitize that G2 and how to get them very engaged and we want them to be here for, for the long term and call it golden Handcuffs. But I just, I want them to have it. I mean, they're helping us grow. They're serving the clients well. I want them to be at the table for our shareholders roster.

[B]

So I feel like there's. There's a common fear for a lot of G2 advisors that goes something to the effect of, I would like to buy in and be the successor. I'm not sure I can afford it. And I'm terrified that the founder is going to go sell externally and then I'm just kind of dragged along into whatever it's.

[A]

Yes. And.

[B]

And so I'm like, I'm kind of fascinated that. I feel like you were, you were at a version of the crossroads and it was your idea to sell.

[A]

And I think it was a little different because I was already. Yeah, it was. It was a little different because I was already a partner. But I would say, Michael, there's definitely that fear. I was at Future Proof just this, this last year, and I had a group of G2 unequivocally come up from a very large RIA that was at the 11 in conversations to sell to one of the other larger RIAs. And they were terrified. They were like, how can this be happening? What should we be advocating for ourselves? What should we be asking for? I have not followed up on that transaction to see, but I can tell you as a buyer, if you have your advisors that are unequivitized, that are responsible for 50, 60, 70, 80% of the client's interaction and they have a problem with the transaction and aren't excited about it, you are buying a very risky business there. And so they were making plans to potentially leave because they weren't being heard. They. There wasn't a plan in place. They felt like the clients would follow them. They were asking what attorneys they should be talking to. So I agree with you on the G2 and the nerves that come in if that is not being addressed. One of the other things that you said is super interesting. And I think that valuations have gotten things to a very scary point on an internal succession plan. So I sit in a pretty enviable position right now because I've got great capital partners, I've got great debt partners. Access to cash is not a problem when you are a successor and you're looking at trying to cash flow the deal, basically having the existing revenue pay for whatever the debt services and to make an income. It's really challenging, especially for the successful businesses that are able to demand these market prices. So unless that founder wants to give A gift and to put evaluation on the business that's well below fair market value, which I'm sure that there's some out there that are doing that. It's really challenging if that advisor, that founder, the owners want to realize what a fair market value is and do an internal succession plan. Because, like, I mean, like our deals right now, the cash is paid out in two years. I mean, they're done. And when you look at cash flowing, some of these, it takes what, you know, seven, eight, nine years, maybe longer on some of the valuations for the businesses out there. And if I were a seller today, I wouldn't be super excited about weighting that long. That's a lot of risk.

[B]

Right. Unless at best your successors get a bank loan so they can finance over seven to nine years, but you can still get paid out shorter.

[A]

You got it. Yeah. And that is something that's great. That did not exist outside of like the SBA and maybe live oak, who was, who was in the market back in the day. So, yeah, the bank loans are definitely out there. I will say the, some of them that are using the sba, they're just some, some big challenges with that. So, so read all of the fine print. And I don't think that a lot of these G2 advisors that I am, that we have on our team and that I'm talking to in the industry, they're just starting out their lives. Many of them have new families. They're trying to pay for things like daycare and, and, and mortgage payments and all of those things. And so to think about having to sign personally on a loan and take a lien or a second mor, or come up with some cash for the, for the down payment, it can just be really, really challenging right now.

[B]

So I guess the one question I have from the, from the flip side on this, I know you, you guys do a lot of acquisitions. You see this from the, like, the external buyer's perspective. So as you said, you know, if, if you're buying into a, a seller who hasn't equitized their G2 has a lot of people who, who are maybe thinking about leaving and aren't excited to go along with the deal. If they do leave, at least some segment of clients will go with them. Realistically, like, it's not going to be all, but it's going to be more than a few in virtually all cases from the buyer's perspective. I feel like then isn't that a riskier business that has less fair market value than it otherwise would or convert. Conversely, your external buyer risk is higher than the internal successor risk because if they internal successor, they're staying because they're internal successors. So why isn't this deal marked down as an external buyer and a more appealing valuation to sell internally if there's really so much flight risk? Does everyone just not actually think the advisors are going to leave at the end of the day?

[A]

Yeah. So I think it's twofold. The first, the first one is when you can put a design in play where you can equitize the advisors that are truly responsible for the growth and are in a position of advising those clients. We've got deal structures that we'll talk to the founders about. Sometimes the founders are making them loans from some of the cash that they receive and are going to receive that payback over time. Other times if they're receiving some equity in the deals. Because right now we're just talking about the succession transactions that we're talking. We have a lot of other types of transactions where people are really growth oriented or they're coming in to lead an initiative for us. So we're looking at ways to get that equity into the hands of that G2. So we're having those conversations, coming up with a plan and what that does is it reduces that risk. The other piece of this really has to do with upside. It's like giving them a picture of, let's take our organic growth channel as an example so our advisors get the capabilities that come with our organic growth channels. So we've got capabilities to plug them in with CPAs and do revenue shares, property and casualty insurance agents, we've got custodial referral programs, bank referral programs. We've got digital marketing, we, we've got business owner and business valuations retirement plans as far as working with the participants of the retirement plans that we manage and could manage if there's new ones out there. And so I think that it's painting that picture for the advisors, like, hey, there's a lot of opportunity here for you to continue to grow your client base. And if you go out on this on your own, you're going to have to, to do the safari hunting. And what we've got over here is the zoo hunting. That's going to make things a whole lot easier. Now there's still work that you've got to do on your part, Mr. Or Mrs. Advisor, but we've got those channels that you can plug into and then also just talking up the support. I think that that's a big piece if you can free up the advisor's time. We've got a number of advisors that come in that are still doing their own paperwork. I just like, I can't fathom that, like why, why that is the worst use of time when it's something that's so leverageable and we have such great talent in the industry that has that experience that we can team up with the advisors. So I think it's just really painting that picture for the advisors on why they would want to stay getting involved in those conversations really early and then properly equitizing those that should have been equitized before.

[B]

So can you help us understand a little bit more just how the equitized, the G2 mechanics work when you're doing that coming in as, as a buyer, I'm just trying to visualize like how, I mean sort of the flow of dollars but essentially like out of whose pockets does this, does this come at the, at the end of the day? I mean are, are, are you effectively giving equity to G2 that the founder never did? Does it technically come out of the founders pocket because they failed to do this? You need to remedy it. Like how does this, how does this actually flow?

[A]

Let me see if this makes sense from an explanation. And you really hit upon it earlier, Michael. The valuation of a business where the next generation has not been properly equitized would be lower. And so if I'm having a conversation with a founder or someone on our team is having a conversation with a founder that, that hasn't done this, the conversation is going to be let's come up with a plan to equitize the next generation. We're going to be doing this through your valuation, meaning we're going to place a premium on your business. If we can come up with a plan together for you to properly equitize the next generation that's been working with you for sometimes it's 10 years, sometimes it's 20 years. And so while many times it's quote coming out of the founder's pocket, it's really not because we would value the business much differently and would spread out the payments because there's more risk on that. And so it's just a win win. And so those conversations are happening before we have evaluation conversation. So we're making sure that they're on the same page.

[B]

So oversimplifying a little bit, I know is much more complex in practice, but this could be a thing like look, we've valued your business at $9 million if you will shift 10% of the equity to your G2 to properly monetize them, incentivize them. That business is so much more stable. We'll give you $10 million valuation. And if you get a $10 million valuation and you still own 90%, you're actually not worse off.

[A]

That's exactly, exactly right.

[B]

So that in theory we're trying to get, we're trying to get there to some extent. So it, it indirectly comes from the founder's pocket, but if it makes the business more stable and more valuable, they may still make it back anyways.

[A]

Right. And it's, it's, it's dollars that wouldn't have been there in the first place. If we look at it outside of that. And, and some of those conversations are we would not be interested if you don't do this. The majority, majority of them are because.

[B]

Otherwise the advisors are too much of a flight risk essentially for, for you that you don't want to go in and buy a business full of next generation advisors that are angry and disgruntled about equity. They thought they were getting it that they're not getting.

[A]

That's exactly right.

[B]

So, so now catch us up to the story that. So you decide to do the deal into, into merit along with the, your partner who was the founder. So she exits, I guess like she exits and you roll into, into merit with your equity in your role.

[A]

Exactly.

[B]

So, so what happens next?

[A]

Yeah, so we started to do more acquisitions and we learned a lot from those and maybe there's others that are listening that are in conversations about an acquisition or thinking that they one and would love to share some lessons learned along the way here. So the first few ones that we did were more on the succession side and geographically speaking they were all throughout the US and so I was driving myself to an early grave trying to lead these businesses and these advisors from a distance. And so it's just not something that's scalable. So that got US to about $4 billion of assets under management. And we knew what got us to 4 billion. There was no way that we were going to get to 10 and beyond and have the same format. And so what we had to do is we had to mix in some leaders. We had to go out and find the non succession planning advisors to partner with and they needed to be in dispersed geographies so they could help us with the national footprint that we have been building over the last few years. And so just some specific advice on M and A stick close to home. If it's your first acquisition or your first couple of acquisitions, there's so much opportunity. I mean that's great. If you're in Dallas and you get the opportunity in Arizona, like it sounds great, maybe you love golfing there. But it's a totally different ball game when client reviews come up and you're trying to lead a team from a distance. Like it's, it's just very, very challenging.

[B]

And so if you're, if you're not used to managing a team remotely or if you're an advisor that likes the in person office, when you buy a second office in another state, you essentially now are a remote work company. They might all report to a same office in a different location, but it's not your office.

[A]

So and if that team isn't, even if you're used to remote and comfortable with that, if that's team is not used to it and if that client base is not used to, is going to be a big, big challenge. So I would just say definitely the other thing that we learned the hard way, have a plan for paying for these businesses. There's a ton of opportunity. I heard a statistic today that 37% of the advisors are going to be retiring in the next decade. If that's the case, there's going to be. We always talk about the, the generational shift of our clients and the money that's going to be shifting down to their kids. We're not really talking a lot about what's going to happen and the lack of talent that's up and coming in our advisor community to take over those. So there's so much opportunity. But have a plan for the financing piece of it. We got to a place to where it made sense for us to bring on a capital partner. It was really important for us for that to be a minority capital partner, for that to be a strategic partner, meaning that they were bringing more to the table than just capital. And we got very fortunate, found a great partner back in late 2000, kicked off in 2001 with them. So if you're going to continue to do mergers and acquisitions, it's just a cash heavy business. So I would be thinking about and talking, talking to other people around what that capital partner looks like. Because bank financing will only take you so far.

[B]

I was going to say. So what happened or what shifted? So it started from bank financing and then it stopped from bank financing. So what broke about bank financing?

[A]

Yeah, I mean, I think it's just the bank's tolerance, especially like a traditional banking relationship. We have some very Sizable transactions, you know, billion dollar plus transactions on AUM that we were excited about doing. And the traditional banks don't get really excited about that. They're looking at things through a risk standpoint. And so it was important for us to have a capital partner that we weren't going to have to shy away from some of those larger transactions.

[B]

Okay. And so ultimately, ultimately an equity investor was, was and is just willing to take more risk than the banks to give you the cash that you need to do the deals that you were finding.

[A]

Well, I think it's. Look at it through the lens of you're aligned with a bank. They're looking at it through the, the risk lens. Right. Like, what could go wrong? We need to, we need to. Because they have no upside. Their, their upside is their interest. Right. And so if you have a shareholder, they're looking at it through the exact same lens you are. Oh, this is a really great opportunity. This could mean huge things. We've got multiple arbitrage that we're going to have on this deal. So it's just so refreshing to have someone that's sitting on the same side of the table versus someone that has no upside outside of the interest and the fees they're going to charge you. And all they look at is it through that risk lens.

[B]

So how did you get to the point where you're involved in M and A from what was originally, you know, a practice you were running? I guess once you get a card in a branch, you were running in a larger system. Like, when and where did that change come?

[A]

Well, we didn't have anybody else, so our CEO and I, we were the M and A team for a long time and we learned a lot through that. I felt like I was just. It was a real blessing for me to have been in their seat because I could, I could think like they were thinking. I could think about scraping the name off of the wall and the emotional piece of that. I could think about the concerns around the client, messaging on what this meant to them. I could think about what it meant to having been a, an individualist and had so much autonomy. And now all of a sudden, I'm thinking about joining this firm. And now it's a collaborative group. So even though it's built on servant leadership and collaboration, it's just different than when I had all the control and could just go and run and make a decision on the dime.

[B]

So now, like paint the picture for us of Merit Financial Advisors as it exists today. What's the overall state of the business now.

[A]

Yeah. So, gosh, as far as numbers, I think by the first quarter of next year, the transactions that we're closing on, making some guesses on what the market's going to do, will be between 13 and 14 billion dollars. We've got a national footprint. Really excited about our leadership reorganization that we went through this year. We have four managing principals that have different territories that they're overseeing. And these four individuals are just. They're just phenomenal. They. They were successful entrepreneurs, great advisors in this business before they came in to merit through different transactions, they were running successful businesses, had leveraged their time, had built up other adv. Several of them had done transactions themselves on the mergers and acquisitions. So they brought that experience to the table. And you know what gets me really excited is two of them are in their mid 30s, and two of them are in their mid 40s. And so they're just so young, have so much energy and so much experience to bring to the table. So when you ask about the current. We're just set up to continue to grow. And, and we're just. So we're on the same page as it relates to things like the importance of culture. Realizing that who we let in the door is one of the most important things in determining what our future culture and company is going to look like. So we need to say no way more than we say yes. It's not just a numerical financial statement that we're looking at. We're truly looking at the business, the people, the team, before we make those kind of decisions. And then we're growing organically. Organically, like crazy. And, and I think that that's the future of the industry. There's so few RIAs that are growing organically. When you net out the market. We've put a deliberate focus, made some strategic hires and some major investments in this area. And I see that just continuing. But that. That buys. It's. It's like a magnet. Right. Because if you're going to buy a business, you're going to be paying a pretty penny for that business if you don't have a plan to grow it on the other side.

[B]

So how do you, like. I'm fascinated by the culture discussion. So I guess I'm just wondering, how do you describe the culture? What are you looking or screening for to figure out who's a culture fit?

[A]

That's a great question. Maybe I'll start with a story on what's not a good cultural fit.

[B]

Sure.

[A]

We had an advisor in that had a pretty sizable business, pretty Sizable team had gone through the valuation process, had not met the team yet, had an LOI letter of intent that was signed. And we went to that next step to go out and meet the team. And we quickly figured out that we were sitting in a conference room and one of the main advisors that was in the room, I asked him a specific, specific question and it was directed at him. Well, the owner just answered for him. And then I asked another question of another advisor that was in the room and he was at least allowed to answer it. But then he was corrected because he didn't answer it the right way. And I was like, oh, this is getting really, really interesting. And so we figured out that this founder was leading it like a dictator and that the team had just been beat down into submission. And that's not a servant leader, that is not a collaborative leader. And so we ended up walking away from that deal. And because of that, we actually found a company, because I consider that to be really fortunate that that was uncovered in a pretty brief time period with the team. But because of that, we went out and we hired a firm that we have on retainer that will do. Call it like a 360 light with the M and A folks that were in conversation with that will go out and interview those team members. So we get a really great look at what is truly going on with the team. And then there is no substitute for in person time. Part of our courting process is just constant time together. Home office visits, coming to one of our local offices, going to their office, having meals with them, seeing how they interact with, with the staff at the restaurant, seeing if there's a mistake in their order. Are they all bark and bite? How are they reacting to things? How are they negotiating things? So we're just really, really trying to understand them as a person and then trying to get to know their team.

[B]

And what are you doing that is making organic growth happen? Well, for you, we know that seems to be a collective industry challenge these days.

[A]

Yes. Well, the very first thing that I think everybody should be doing, it kind of goes back to those old wirehouse days of the, what was it like the temperature gauge where the people's names would be up on the board, the leaderboard for the week, for the month, for the quarter. Yeah. So I think part of this is just some healthy competition. So we've got technology that monitors, monitors all of our advisors, the number of new households they're onboarding, the number of new assets, the different qualified initials that they're having, and all of that is sent out in a weekly report and we started doing that probably a year and a half ago. And it's just so interesting. It drives behavior, it brings out that healthy competitive spirit to where we've got that on a regional level to where our different offices will have competitions with each other that we're not even privy to. I'll hear about it afterwards that there's some going back and forth. And then we do have what we call our circle of excellence where our top advisors get together. It's a coaching environment. They're able to bring their spouses as an appreciation piece to it and then we just bring them together in community. I think that in addition to being very deliberate about investing in our organic growth tracks and truly believing that it's the company's responsibility to take care of the heavy lift for the advisors on new business development so they can do what they do best which is be with their clients and meet with prospective clients. And so we are building and have been laser focused on building out that basically the institutionalization of the organic growth.

[B]

Interesting. So are there is that still then ultimately very individual advisor doing business development oriented like driving referrals, getting out into the community. Like the things we tend to do as advisors and individuals individual level just multiplied by all the advisors in the firm?

[A]

No, I mean of course the advisors that have success in that and have that. I would call that the unicorn status that have that drive to do so and that enjoyment to do so. They're going to do that. But there's a number of advisors that really need to plug into and we call them organic growth tracks. If you can imagine like a track at like your kids school. It's the track is built, they still have to get on it and run right. So they still have to do the work. But it's things like business owners for our advisors that like to work with the business owners we've got a process to do business valuations. We've got different industry conferences and digital marketing that we have focused around the the business owners. We've got a new market that we're entering in on the ESOPs that brings us into those marketplaces. So those advisors don't necessarily need to understand the ESOP process, but what they do need to be prepared for is once we get that liquidity event and we have that owner or owners that are going to have a big payday, well they need to be prepared to do that planning and to come up with a plan for that investment in the financial planning strategies that need to come into play on tax mitigation and other strategies once those liquidity events happen. Professional alliance programs. If someone. We've got a number of former CPAs on the team and they love to partner with other CPAs. And so we've got a process around our advisors and partnering them with local CPAs. And so we've got a methodology around finding the right type of CPA firms to partner with, where we have revenue share arrangements with those CPAs. The laws are different in every state on what kind of licensing, if any, the CPAs need to have in place for those. But that's, that's an organic growth track. Right. That's that track to where they get in it, they get on it, and they're running on the track. But they didn't have to go build it. They didn't have to come up with the idea. They didn't have to go find the cpa. That's up to the company to do so. So those are just a few of the examples on the areas that we're having success.

[B]

So it's like, I mean this in a positive way, but it's like business development in a box. Like, you know, here's. Here's business owner niche in a box. Here's CPA partnership referrals in a box. You know, we, we've built these things out. You pick which one you want to do. You still have to actually do the work, the steps and the execution. But we've set it all up for you. So off you go.

[A]

And.

[B]

And then ultimately they get further fired up because they do it and then they're on the leaderboard and then they want to beat the other people on the leaderboard because some of us are a wee bit competitive.

[A]

Yes. And make it to that circle of excellence trip. Absolutely.

[B]

So what does this add up to overall? I guess, in terms of client count, team headcount? I think you'd said earlier you think you're on track for 13 to 14 billion in AUM, but I'm just trying to visualize what that is in terms of client and team count.

[A]

Yeah. So from a team standpoint, we'll be at 275. And from a number of advisors, it depends upon category of advisors, because I know we talked earlier about all that career path. Right. To where you have some service advisors, some that are more on the relationship side. But we have. Any way you slice it, it's between 100 and 110 advisors that are out there serving the clients and our communities.

[B]

Interesting. So you actually have a Good amount of as I view it, like staff support and leverage. Because you've got almost two support for everyone, one advisor as a, as a headcount total. I just think of that as that's a pretty broad support infrastructure.

[A]

Yes, yeah, absolutely. And some of that's centralized and some of that's on the, you know, the corporate side of things versus actually in the region. But ultimately we all exist to serve our advisor communities.

[B]

So what surprised you the most as you've gone down this 20, 20 plus year journey of building advisor advisory businesses and scaling up?

[A]

If I could go back to school, I would get a degree in psychology. I feel like that has been the most challenging part of all of the different parts of the business that I've been in. Minus that planner backstage, you know, just, just get the numbers in there and see what the output is. So I think that that's been the thing that is the most surprising to me. Me, I, I'm a student of the different personality test and we've got one that we use with our clients and we also use it internally that I think is just fantastic. It's behavioral DNA or DNA behavior. I think they just did a rebrand but it is fantastic. I also love everything from Myers Briggs to Colby. They, I mean they're all great. They're all great.

[B]

So what is behavior DNA like? What's their setup? What do they do? Why do you like it so much?

[A]

Yeah, so it breaks folks into different categories and then within those categories it gives extremes on behaviors. So let me give you an example. It might have something along the lines of loves to communicate or is more reserved. That's one of the things that it's going to measure in the output and it's really hard to tell the questions on what they're trying to get to. So I don't think that there's a way to manipulate the system other than just to completely not even read the answers and just go through it and click buttons because if you're putting any significant thought into it, you really can't figure out where they're going with it. So that tells me a lot about people competitiveness. Like I'm content versus I am, you know, uber competitive. I love details, I am a generalist, you know, those kind of things. And so I, I love having that report when I'm meeting with someone either for the first time or I'm doing a one on one with one of the team members that I work closely with or that I'm jumping into. Maybe there's a problem and I'm jumping into that. If I have that report, I feel like I really understand them and I can get into their headspace and meet them where they're at because I understand if they've got a need for control versus they're comfortable with delegating. Those are all really great things to understand about people. So I think that that's probably the most surprising thing is how much of leadership, how much of being an advisor really is psychology. Yeah, you've got to know the basics, you've got to know the nuts and bolts. But that's like hygiene. You really make a great advisor and you really make a great leader when you can understand, understand people.

[B]

So and, and you said you use this with advisor, like with the team and with clients.

[A]

Yes, yeah. It's a tool that has a financial DNA side to it. So it's exactly the same set of questions, but there's a different report that you can run. And it's fascinating. I can remember as far as being client facing and I wish I had had the tool because so many of our advisors adopt this and use it in a big way because I mean, think about sitting down with a husband and a wife and it is so clear after a few minutes that they're on different planets when it comes to risk tolerance. You know, the, maybe it's the wife that wants to stuff it under the mattress and it's the husband that wants to go out and make some big bet on a franchise or go buy some expensive piece of real estate that they think is going to turn around after a hold of a year and be worth double, you know, those kind of things. And so this tool will actually break that down and they could have been arguing over that, this for their 20, 30, 40 years of marriage. And then you bring this tool and it brings it to light like, oh, that's why you, you've got a high risk tolerance over here and I have no risk tolerance according to that. That's really important for us to see where our differences are as a couple. It also educates the advisor. You've got a new client coming in and it educates the advisor on how involved is this client going to want to be, how often are they going to want to hear from me, how much control are they going to want to have? How much do I want to include them in the decision making process? Is this a, you know, just tell me if there's a problem and call me if I need to know something person, or is this someone that wants to hear on A very regular basis that everything's great. And here's some details on why everything is great.

[B]

I guess I'm just trying to visualize. So how does it get used internally? I mean, is. Are you. Is this in your hiring process to evaluate it?

[A]

Is. It is, Yeah. I won't do an interview without having that in hand. And I reference it in the interview. And then we've got a wheel where everybody on the team is placed into one of the categories so we can see where our colleagues are that are closest to us. I've determined that anytime there's an interpersonal problem on the team, it's because of one of two things. They're too alike or they're too different and they don't have an appreciation for where the differences are. And so just educating the people that are having some challenges are where we're at.

[B]

Why? Why is two alike problematic to alike.

[A]

I mean, if you have two people, like, let's say that they've got a need for control and you have two people that are, you know, trying to steer in different directions. Yeah. Or two people that just need all of the attention to detail and you've got them working together on a project with, and you don't have someone that's okay with not being 100% accurate. I mean, there's some things that you just need to run and jump on that. Of course, you want to have a baseline of confidence, but you have to move at times. And so it's little things like that.

[B]

So what was the low point on this journey? Journey for you?

[A]

The low point? You know, it has been a wonderful journey. Even the low points I've really learned from. So I shared the one that was the team coming in and saying, we don't want to work for Klan anymore. It was a low point for a very short time period. And then it's been a really positive thing. I have to say. Anybody that's wanting to build a business in this fast growing, ever changing industry and be a leader in a sizable business, work life balance is challenging. I've got five kids. And like today, tonight, I'm out of town on the road. I'm missing a basketball game. I'm missing a Christmas concert for my daughter. Like, I mean, it's just. So, of course we have these low points. And I think you've got that iceberg analogy as far as success is like the iceberg. I don't think anybody sees all of the sacrifice that it takes. And I don't want to think that I'm in that category alone, I know I'm not. I know my fellow leaders in this business have the exact same struggles and the exact same hardships. So I think in those low points when I miss things, I just try to, I just try to be present where I am. So that's the best advice because there is no work life balance in this fast growing business.

[B]

So can I ask like how old are the kids? I'm just trying to visualize like when, when kids were part of the timeline of like the overall career arc.

[A]

Yeah, good question. So my two older ones are not biological kids. One of them came in through a blended family situation. So I have been mom to her since she was 6 and she just graduated from college. So we've got one off the the payroll, which is super exciting. And then we've got another came into our family as he aged out of the foster care system. And so he was 18 at the time and he's about to turn 23. And then I have three in middle school, if you can believe that. We had three biological kids in three years. And so it's super interesting that you ask about that because what I'm doing now, there's no way that I could have done that when I had three little babies or was going through the pregnancies. So I think just finding out where you are as an advisor, finding out where you are in that phase of life and realizing that you've got limitations.

[B]

So what else do you know now that you wish you could go back and tell you 10, 10, 15 years ago, if you were like in the building stage and had I would have.

[A]

Started acquisitions so much longer ago. The multiples have gotten so high. These business valuations are fabulous. I'm so excited that our industry is finally being recognized, that there's smart money that has come in and I think it's here to stay. Stick around. And they're bringing such great ideas and scalability. But I would have totally jumped into that if I would have known where we would be at as an industry now.

[B]

So what other advice would you give younger, newer advisors looking to start their careers today?

[A]

I think the main advice is be excited that you're entering at a time period in the industry where you can be you. If you're a great technician, build a career as a financial planner. If you're a great relationship person, build a career as an advisor that focuses on servicing those relationships and being just so engulfed in that client's lives and working with that multi generational family and the adult children and just Being there for them. If you're a really great business developer, build a team around you that will serve the team or will serve the clients and that you can just go out and bring in those new clients and serve more clients. And so I think my advice would be just figure out how. Figure out who you are. Take every personality test that's out there. Enneagram, you know, figure out who you are and then build a career. And don't think that there's one size that fits all and that there's a predefined recipe that you've got to follow that's not the case.

[B]

And just curious, on that theme, are there. What are the assessments, assessments you would steer people towards if they're trying to figure that out.

[A]

So Strength Finders is a great book. Has a, has a test in there and I think it's fantastic. We already talked about behavioral DNA, which I absolutely love. I think the disc profile is, is a fantastic one. And then I would ask the people that are closest to you, what do you think I'm good at? Where do you think I'm the most energized? Whether that be your parents, whether that be your boyfriend, your girlfriend, your spouse. If you have that can give you feedback, ask for that. Go back to your. Or go to your boss. Ask the. Ask your co workers. Just gather information because other people will see those things that spark you and that bring you energy before you see it.

[B]

So as we wrap up, this is a podcast about success. And just one of the themes that often crops up is that word success means very different things to different people. It even changes for us through stages, through seasons of life, as we talked about. So to me, you've been on this amazingly successful path for the business in growing with the prior firm and now in leadership here and have essentially done the intern to President Arc, which is pretty cool. How do you define success for yourself at this point?

[A]

Well, well, I'm going to go back to that comment on how am I loving others? Does my team feel supported? Does my team feel like they're growing? Am I offering more opportunity for someone coming into the firm that they wouldn't have had without having the interaction with me and with the company that's success at this stage of my career. Are others growing? Do others have feel supported?

[B]

Very cool. I love it. Well, thank you so much, Kaelin, for joining us on the Financial Advisor success podcast.

[A]

Michael, thank you so much for having me. This has been a lot of fun to talk to you.

[B]

Likewise. Likewise. Thank you.

[A]

Want even more ideas, tools and resources on how to break through to the next level of success as a financial advisor. Check out the leading financial planning industry blog, Nerd's eye view at www.kitsis.com, where Michael covers the latest practice management trends and financial planning strategies. And by joining the Members section, you can earn IMCA and CFP continuing education credits along with exclusive member content. Get it all now at www.kitsis.com com.