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Managing Your Practice
From Growth Within to Success Throughout: Nurturing Employee Development for Firm Prosperity
00:40:46
Mark Johnsen, CEO of Wealth Architects, and Rob Greenman, Chief Growth Officer of Vista Capital, both live, breathe, and bear the responsibility in their respective firms for managing growth, and with it, creating a culture and sales cycle that...
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- [00:06]
A
Hi, everyone. Thank you for joining us today. My name is Katherine Williams. I'm head of Practice management here at Dimensional. And our team and our focus has been really, over the last decade, working with advisors, thinking about resources and how to help advisors manage and grow their businesses. And that growth component is a topic that comes up a lot in pretty much every conversation we have with clients, whether you're striving for significant growth or you're simply working to stay ahead of those natural headwinds that are gonna come at you. As an advisor and a business owner, one of the biggest barriers we hear about most often is having the right team members with the right skills needed to help drive growth in your organization. And this can be especially amplified for organizations where business development has historically, you've got maybe one or two lead advisors and then a great team of service advisors that are caring for existing cl. So how do you drive a growth mindset within your organization? How do you perhaps move service advisor toward lead advisor over time? And what incentives and rewards do you need to consider? Joining me today are two gentlemen who are focusing on these questions, focusing on this area within their businesses. I'm really excited to have them with us today. I'd like to introduce you first to Mark Johnson, who's the founder and CEO of Wealth Architects, based in Northern California. Mark, it's great to have you with us today.
- [01:25]
B
My pleasure, Katherine. Thank you for asking me to be here.
- [01:28]
A
And Rob Greenman is the Chief Growth Officer, a role that we are continuing and are watching and seeing it pop up more than ever in our Global Advisor study. Also a partner with Vista Capital Partners based in Portland, Oregon. Rob, it's great to have you with us.
- [01:42]
C
Thanks a bunch, Katherine. This is fun. I love listening to the podcast and I guess I'll get to listen to myself, which is painful to do when this airs, so thank you.
- [01:51]
A
Feel the same way, to be honest with you, but we got a strong west coast contingency here today and I'm really looking forward to this conversation. As I mentioned, I don't know that we do any conferences, meetings, presentations, materials that doesn't get to the heart of what we're going to talk about here today. At the end of the day, having the right people with those skill sets in your business, again, no matter what your growth objectives are, is really a critical area. And I know both of you have spent a lot of time thinking about this and implementing things in your organization to level set that. Mark, I'd love to start with you if you could just give our Audience Just a little bit of a snapshot of Wealth Architects kind of size, structure, scale. I think it'd be a great place to start for our audience.
- [02:30]
C
Thanks.
- [02:30]
B
Katherine and I started the firm back in 2005. So we're a young organization but starting to feel old in many respects. And we are about 25 folks and manage close to $2 billion of discretionary assets under advisement and just have a really wonderful team. We're located in the heart of Silicon Valley and that's our current structure.
- [02:54]
A
Rob, tell us a little bit about Vista Capital.
- [02:56]
C
Yeah, Vista Capital, we're an independently owned, registered investment advisory firm here in Portland, Oregon. One office just like Mark. Not in the Silicon Valley. Sometimes I've heard of it referred to as the Silicon Forest. I don't use that. But Silicon Valley seems more of a prospect. Rich environment market. We have 33 employees and 11 partners. We manage about two and a half billion for 550 households.
- [03:20]
A
And Rob, in the early days of Vista Capital, who drove business development? How did growth happen?
- [03:27]
C
We were really fortunate because the two founders of the firm, Doug and Michael, were both really dynamic business developers. Michael tended to focus on that more than Doug, but Doug was a dual threat where he was the investment focus, but he also had very strong business development chops. You had a hockey stick style growth curve at the beginning because you had two founders who worked really well together and they were both producing at a high clip. As you grow, that becomes more difficult because when two people are producing the results for a two or a four or a five person firm, all of a sudden you get to 10, you have to start thinking differently.
- [04:08]
A
Yeah, we're definitely going to unpack that. And so many of the organizations we work with and listening today are in that same seat, if you will. Mark, when you think about those early days, you've hung your shingle, you've bought the plant for the front desk and all that good stuff. What did that look like in those early days for Wealth Architects?
- [04:25]
B
The interesting thing is we had a team coming out of the brokerage firm. We were a part of Citigroup, and I had spent the first 10 years of my career doing that. So in many respects, I think I was one of the first private wealth advisors to go independent and was like the first penguin off the cliff to see if I would get eaten. And I didn't. But really it was a lot about survival. And in fact, I think the biggest thing was really just nobody knew who Wealth Architects was. None of our clients really knew what a registered Investment advisor was. It was. He's still a maturing industry, but an infant industry. But for folks who came out of the. The brokerage world, it was just really trying to get people to be confident in us. That first year, too, was trying to transition those people we wanted to work with and actually reduce the size of our business by over a half on purpose just to work with the archetype that we wanted. And then it was just learning how to run a business and what are the things that we need to do. And then from there was, how do you focus on growth? I guess I can expound if you'd like me to. That's how I would start.
- [05:34]
A
And I'm curious if you could just talk a little bit about getting more precise, more focused around the clients you most wanted to work with. Why, I think so many advisors, so many firms, particularly in those early years, we often joke about taking anything with a pulse kind of a thing, but we know why that has to change over time. What was the driver for you?
- [05:53]
B
Yeah, the big driver for me was I learned early on I was 22 when I started in the business, and I was told in our training, the statistics were probably 10 of us would be back in five years, and one of us might be back in 10 years. So it wasn't a very uplifting message. So my first job was to just survive. And then after five years, it was like, okay, I think I can do this. And read the Millionaire Next Door and said, I think I want to work with millionaires. And at the time, that seemed like a lot of money. And I just said, let's try to pick an archetype. And then at 10 years, it was start the firm. And again, I think the biggest thing for me was just realizing that this business can be a wonderful business if you're working with people you want to serve. And it can be a kind of a nightmare business and extremely stressful if you're dealing with folks that don't agree with you philosophically or you don't love and respect them. And so for me, it was every five years, it was really being very intentional about who were we serving and why were we serving them. And that's really served us pretty well over the years.
- [07:00]
A
I often share the story of an advisor we know who, in the spirit of working with the clients you want to work with that don't drain you. They're not challenged, not just for you, but your entire team. One of the advisors we work with allows the team to select a client that they're Going to fire, which we can unpack that in a whole separate podcast. But very powerful, very enlightening. And I think it helps drive that focus of let's be sure we're not even taking the wrong clients in the first place. Is that going to show up on the other side? Rob, you talked about this Hockey Stick. We see that a lot. We see that in our data. We see it as firms are hitting what we call different walls they bump into over time. What began to shift as you found that Hockey Stick wasn't quite looking quite like that. And what were some of the pressures that showed up in the business on that?
- [07:48]
C
A couple things I would say. And I also wanted to circle back on something that Mark mentioned, which I think is important. But the first part I would say, when we think why this occurs and how we're going to be able to keep this growth going. Philip Pelaviev, he talks about thinking about business development and the structure of your firm. Like a soccer team, where you can have a goalie on a soccer team who's not scoring. In fact, you need these goalies right in your partnership ranks. You need whether they're the chief operating officer or whoever they might be who aren't. Maybe they're focusing on the profitability of the firm but not bringing in revenue. And you need those folks. However, if you have six of the 10 people on your soccer team who are goalies, you're probably not going to be scoring very many goals and that's not going to work out very well. And so I think that's part of the crux of what we're talking about with growth is again, it works when you have two of the four, two of the five. But as you start growing and you get to firm size like Marks and Likes Vistas and so many others, as these reas are experiencing this growth, you need more people contributing to these growth goals. Because as the numbers just become so big, you can't just have, for example, those initial founders. They're not going to be able to hit these targets by themselves. They need to cultivate this business development culture to be able to have other people contributing those efforts with them. So that's one thing I think what Mark talked about, I think is so important this whole conversation, because when you take a step back and you think about the roots of this industry, the way you made in this business is exactly what Mark talked about, is you cut your teeth in sales. And if you didn't make it and didn't have those skills, you were kicked to the curb, and you were done. And so the people who were in, they had the skills. And when you truly think about it through the client's lens, our industry had this whole thing backwards because it's not right to be having people who don't, frankly have the experience, even though there's many people that did a fine job, don't get me wrong, but don't really have the experience to be able to offer these folks. And then. So we get them to cut their teeth in sales, and then they learn the craft and are able to provide the advice later. And what we're doing is we're flipping that entire model on its head, and now we're bringing people in from the bottom. We're saying, hey, we need you to serve clients and take great care of them, and we're going to help you get your cfp and we're going to help you become great at this craft. And then later on, we're gonna help you learn the business development, or the naughty S word, sales side of things, and we're gonna teach you how to do that later. And so that's a difficult shift, especially with the type of people you're attracting. Right. Because people who are coming in aren't necessarily opting in to this culture of business development. It's something that has to be organically cultured and nurtured along the way.
- [10:39]
A
Yeah, that's. And I'd love to get both your perspectives on that as we talk about that transition. So the business has said, look, we want to grow. It cannot be driven just by one or two or three folks. We do need more people. We need more of a focus and effort on that. But you've got a group of folks that you may have hired and. Or developed specifically to be, as we would often say, sitting more on that service side, the service advisor side. And now you're coming to them and saying, hey, we'd like you to do this. What did that look like? I'd love to hear from both of you in terms of making that move. How did you assess that? What were some of the decisions you decided to pursue on the other side? Mark, I'd love to get your sense on that.
- [11:19]
B
Yeah, Rob, I think that was well said, and I think you're right. We do have the business backwards. And that's why the RIA model is very attractive, is because I think all of us fundamentally believe that sales is really not the primary skill you should have to advise clients. But it was a necessary thing, Katherine, to break that question down for me. I think one of the most important things to do is to really articulate, why do you want to grow? And if you know me and our firm, I'm jealous that Simon Sinek wrote the book start with why? Because I think that was just fundamental to our process, and it continues to be. But most people focus on the strategies and the tactics and the tools, and they don't think about what are the values, the vision, the goals that they have. And so for me, growth only matters in the context of what are you trying to accomplish. So some business owners say, hey, I want to build my company and I want to sell it, and I want to sail off into the sunset. Some say I want to build a legacy organization. That's what we're trying to do. We want to have continuity. I lost my father when I was in high school. Continuity is a focal point of my life. I want to make sure that clients don't depend on me, that they have redundancy in our organization. And I also feel strongly that I'd like our business to try and be here in a hundred years and be one of those few that can survive that. That's a very hard thing to do. But when we recruit, when we bring advisors on, I talk to them about growth, and they always ask that question. But I try to be very clear on what we're trying to accomplish. And if you're being hired as an advisor, it's clear that part of your career path to get to the place of being a true lead advisor or strategic advisor to clients is that you are going to have responsibilities to grow this firm. And the reason for that growth is not necessarily just to make you more money or the company more money or the owners more money. It's to provide this legacy continuity and to provide career development and growth opportunities for the next generation of folks. Otherwise, it just doesn't work. And I think Rob can speak more eloquently probably, to what that's like being the second generation or the third, but it's hard to do. So I always start with why. And I think that sets the right expectations up front for the people coming into the organization.
- [13:45]
C
If there was a video component to this, you would have seen Katherine in my heads just nodding the whole time. Because I love how you said that. And that's so important, especially when you think about if we're bringing these people in who are not motivated by sales and we're trying to cultivate that kind of relationship and we're really trying to find that edge, we're pushing them A little bit outside of their comfort zone. And we're trying to get them to lean into this and they have to buy into the why. So I couldn't agree more. I think that at Vista, when I started here 13 years ago, I had this amazing opportunity of stepping into these client relationships that I was not said, hey, here's a computer and a phone book in the old days or whatever it might be, and go find them. And you keep some in the house, keeps the rest, right? I was said, hey, these are these amazing relationships we want you to plug into and serve. What an incredible thing for a person, for me to be able to step into this career and get to do right. And so I think that what growth really is, what I try to talk to our team about, is you're providing those same opportunities for the people behind you. Because without growth, I wouldn't be where I was today. This opportunity wouldn't exist. We did this exercise at Vista where we said, what if we hadn't grown? Like, what if we just decided growth wasn't important? And we went back to when Doug and Michael started the firm in 2001, and we said, all right, how many households were there? What was the AUM? There were about 65 households and 40 million of assets that they started the firm with. And we said, what would it look like if they just kept things exactly the same and hadn't grown? What would it look like today? Same market performance, same clients, same cash flows in and out of their portfolios. Some we lost to death or some maybe went another direction. Client retention's pretty good, but every once in a while something happens. And if that had happened, we looked at it, 65 households went to 36 households, and the 42 million of AUM went to 106 million of AUM in 20 some years of business. And that's. That's impressive. But I'll tell you what, it's not a 33 person firm. It's an entire different story. And so growth, to Mark's point, it's for the future generations. It's not necessarily even for us. It's for this future firm that we want to be.
- [15:59]
A
Yeah.
- [15:59]
B
Katherine, can I just make one point for those listening? Because I'm very close with Doug and Vista and John, who now leads Vista, and I hear about Rob being a superstar, and that's great. I haven't really spent a lot of time with him or getting to know him, but just listening to him. One thing I would say to those listening, if you are an aspiring, wanting to Be a partner. You think you should be a partner. Rob's perspective right there is really important for the founding generation. The gratitude and the perspective that he was able to just walk into relationships. And it's not so much gratitude, it's just a recognition that was a privilege for him to do that. And I think Rob, that was really well said.
- [16:45]
A
I think it's an excellent point as well. And for a few reasons, I think especially now as organizations, and this was mentioned a moment ago, are even going from G2 to G3 and G4 is not that far behind. And so how those leaps and those transitions take place can look very different. Will look very different from G1 to G2, but that there's so much that shows up in terms of the culture of the business, the kind of people you have. And that gratitude piece I think is one that is just, if anything, as you said, Mark, start there. Yeah, seriously, just and be aware of that and dial in on that. You've established a culture. You're thinking about it even as you're talking with prospective advisors or folks in the organization. Certainly when we look at the high performing firms in our Global Advisor study, we see some long standing characteristics around, for example, their value proposition. But everyone in the organization knows what that is, their mission, vision and values, why they exist. All of that is really deep within the fabric of the organization and having that growth mindset, whether it's inorganic or organic. Right. Both those things are in play for so many firms. It's just known and it's not just happening at that leadership level or just happening in the advisory team. So I love what both of you have said about that. So you've established that. Talk a little bit about how you develop the skills that you both want to see in a true lead advisory. We'll stick with the role titles we're using from our Global Advisor study. Different firms can call them different. Different titles for sure. But that role where there is senior advisor work being done, but also business development, how have you each approached the development of those skills now that you've got that mindset kind of coming alongside, if that makes sense.
- [18:31]
C
Yeah, we've done a couple things and a couple things and we're learning as we go. I'll say building the ship as you're floating along here. Absolutely. I think one thing, we've definitely utilized DFA in a big time way. I'll tell you the podcast that you posted, I feel like it was right in the middle of the pandemic with Craig Wortman that Was phenomenal. If anyone who hasn't listened to that one, go back in the archives and dig it up. I think I listened to it three times. Yeah. And I got different things out of it each time, and it was just phenomenal. So we definitely have done some work, even with folks from the DFA team in terms of leaning into a culture of feedback and deliberate practice. The FA folks have really helped us understand the importance of impact questions and some of this. And so I think the skill set is really important. I personally think that the skill set sometimes gets too much. It can also be a little bit of a crutch. There's the ability to do it, but then there's just the activity. And sometimes people can just feel stuck and think they need more skills before they can go out and just try. And we need to give people that psychological safety to just give it a shot, man. Because if you're not out there trying something and being willing to fail, it's really tough. So we're trying to do some different things right now, specifically around activity. That removes some of these barriers for people to not feel successful. Because I learned this at a DDFA conference probably 10 years ago. Somebody looked at the best firms and they said, what are the number of interactions or touch points with the prospects it takes, typically in order for the first time you make contact, until you actually get them to become a client. And their research said it was 40 touch points. That's insane. That's a long, slow drip that requires patience.
- [20:22]
A
That's like watching paint dry. As I say, that was.
- [20:25]
C
So for us to focus just on the bottom end of the funnel and tell people, hey, you need to go get results. It's a little bit, like, not fair to them, especially young people in career. We went out and we developed something this year. A guy that I. I met, Matt Parenti. I met him through the G2 ensemble practice. And Matt's just a great guy. And he told me about something he was doing with measuring activity rather than results. I met with the head of business development for a big, huge regional law firm, and I picked her brain on some different things. And she was asking me about how we function, and I was telling her about how we work in teams. And I thought, wait a minute, there's something here with what Matt was talking about with activity and teams. And we put together something we call growth points. And so we have 12 members of our business development team, and we have teams of four. So three teams of four. And we say, what are the activities that we think are going to lead to results and let's just track and measure those and let's have a little competition. Everyone loves competition and we'll have different teams and these teams will work together. So rather than having this kind of boiler room leaderboard, we're all in this together. There's three different teams. We're competing against one another. And let's gamify this a little bit and let's just track the activities and trust that the old Philadelphia 76ers trust the process. If we do the work now, we will get the results and let's make them feel good about the activities they're doing rather than just say we need results now.
- [21:52]
A
Mark, I think that's a really important point and that is something certainly I've talked with organizations over the years about as that talent is developing and again going back to these high performing firms, one of their characteristics is they are absolutely more likely to be hiring at that lower that we'll call them a support level because they want to give time, do training, get folks up and running and that the win in that early year or two can in fact be that they took the app at. They may not have hit the ball, but they took the app at and measuring that. I think that also sends a signal. Many organizations say, look, I need you to figure out how to develop sales or go out and do sales, business development. But you have to figure it out on your spare time because there's nothing about your current day to day that really helps drive that forward. And so I think you're sending a message to your team that says we're going to want results but we want to really incent you right now to take those at bats to do that practice. And we're pretty competitive here at Dimensional as well too. So we like a good competition on that. Mark, how have you approached that? How have you thought about that within your business?
- [22:53]
B
Yeah, I mean I think we could probably spend an hour and a half talking about just this question because it's rich. So maybe we have around two. But Rob, I loved what you said about activity and a hundred percent agree. I'll key in on that. I like to break things into threes because I usually can't remember more than three things. And I think most people don't remember more than three. The first for me is the word influence. And what I realized just as I grew in my career was what I was really trying to have with clients is influence. And it was influence to change their behavior, whether it was making a bad investment decision or changing their life to do something that was more meaningful to them. And what I realized was influences is really just helping people to act and change the way that they act. But it's. If you help them get what they want, you usually get what you want. And we reverse that script. We go out and even think about with sales, it's like, how do I get what I want? I want more referrals. I want more clients. Instead of thinking, how do I help the client get what they need and what they want? And by doing that, you create a raving fan. And so the thing I'm very grateful to my team is that I wouldn't have been able to be the rainmaker, for lack of a better word, or to grow our business in the early years without the support of these incredible teammates who basically had my back, who were building trust with clients, helping them to get what they wanted. And what I had to just rewrite the script for our team was with their anxiety about, how do I get a referral or how do I do? What you do is I said, you have actually more influence now with the client than I do, because they're calling you, they're asking you for things, they're asking you for your advice, and they're looking to you or their direction. I was able to maybe open a door, but really you now are the one who has a raving fan. So you have a different kind of influence or you have influenced them in a different way. But it's really, I think, breaking it down for folks to say, how do you create influence in your role with your skillset, is what I focus on. You may not be the storyteller that I am, but you have the ability to build trust in different ways. So influence is a big word, and I would encourage folks to think about that at each level of their organization. The second word is courage. Rob said, when I was starting out, the number one characteristic I think of a great advisor is courage, because it's courage to step into difficult conversations. It's the courage to keep somebody invested when the market's down. It's the courage to, hey, are you happy with my services? And ultimately, that vulnerability and the ability to have courage is all about creating influence, and it's about, how do we grow. If you don't have courage to grow, you're not going to do it. And I had to, I guess, build that courage over a lot of years because I was just trying to find somebody to do some financial planning for. And I, you know, I tell our joke with Our team, I said, you guys don't have time to go find someone new because you have too many people to do financial planning for. So I get it. But it's also respecting that position they're in and saying, I just want you to have the courage when a door opens in a conversation, to step in through that door and say, hey, somebody's being laid off from their company. Do you have any colleagues that need help with this? That takes courage to just ask that question. We have this fear about doing it. I was not afraid to do it because I was just trying again to find a client. But I think we also need to allow, Rob said this, the team to actually get there at bats because practice makes perfect on this. And when you're not getting those at bats, you basically are never going to develop the skillset. So we've got to carve time for them. We've got to allow them to have that time. And then the third, which I a hundred percent agree with Rob, and it's everything I've focused on personally and in terms of growing our team is just activity. So we measure our success by are we doing the best that we're capable of and doing what is in our control. I'm a long distance runner. If I train for four or five months for a race and that race goes terribly because of the weather or I just feel bad that day, I actually have complete satisfaction that I gave everything I had to run that race. Some results are great, some are terrible, but I've had to learn that it's about the activity. And if you do it consistently and you measure it and you break it down by level of role in the firm. The most junior people in the firm can be doing activities that are building their business development chops, but they're not having to go out and just try to find referrals or get referrals. They're just trying to start a conversation with a center of influence when they're 22 to build that relationship. So when they're 40, that's a huge center of influence for them. So that's how I approach it with our team is really just breaking it down into those three areas.
- [28:00]
A
I like that. Influence, courage, activity. And Rob, I appreciated what you said too, about focusing. Let's focus on developing those advice skills. And then we absolutely want to lean in around the ability to tackle that letter word sale. Right? Yeah. That it's often perceived as. All right, so let's talk about this because probably if anyone listening is thinking, when is she going to Ask them about incentives and rewards. How do you reward the behavior? How do you reward the results to whatever degree you're willing to share? This is a question we often get, which, by the way, I often push back a little bit and say we're not ready to quite talk about comp. Cause you gotta get a couple of these other things lined up. So let's try one cart and horse sort of a thing. But. And I'm the first to say you can have an amazing compensation plan. And that, in my opinion, will not get you where you want to go if you don't have these other components we've been talking about. But with that said, we all get out of our pajamas, at least from the waist up. If we're coming into the office and we're looking to reward the behavior and reward what's what the impact is on the business. Mark, how has that taken shape for you, the evolution of that and the way you think about it?
- [29:08]
B
I do think it's a carton horse question, but I think for me, the way I always answer this is more of a cultural mindset. And what I'm focused or was focused when we started the firm and continue to be focused on. And I think incentives will drive the behavior that you want, and it'll often drive the behaviors you don't want if you're not very clear about why you're doing it in the first place. So coming out of the brokerage world, which is a very individual silo, you survive or die on your own. And I always played team sports like soccer, and I just felt, hey, you know, I want to be a part of a culture where everybody's showing up and trying to win a trophy together. I didn't care about being MVP if our team didn't make it to the championship. That didn't matter to me. Culturally, the mindset was always, how do I create a reward system where everybody is incented to drive growth? And we'll participate in that. For us, as a firm, that's always been a profit pool that is very liberally shared with the team. It's a formula of if we grow and we hit the growth targets that we have, there will be profits to share with the firm. We've had to evolve. How are those divvied up over the years? But a big component of it was to say, did you contribute to the growth of the organization? And I wanted to have everyone have an ownership mindset and continue to have an ownership mindset before they actually were physically putting their own skin in the game, so to speak, to have it. And so we do that. Every person in our firm participates and has since we've started in the organization. And ultimately, we talk about growth every single week in our team meeting. In 30 minutes, we'll talk about it. And we have for the history of the firm, because to me, every single person on our team, from the person who greets the person at the door, has the opportunity to lead from their chair and influence growth. And if you're helping someone set up a vault or what have you. So that, for me is the primary incentive I've tried to use. I don't know if I've done a great job of creating the incentives around business development year to year, per advisor. We're at a place where I think now we need to evolve our team to that. But I'm actually quite reticent about doing it because I don't want it to be people feeling like they're holding on to things. We're a very collaborative culture. You're not the best advisor to serve a client. You should pass it on to someone else, but still be rewarded for the growth of our organization. I'll be honest and say I'm still figuring it out, but I'm holding onto those core principles.
- [31:48]
A
A lot of firms we speak with, a lot of business owners we speak with, they ask that same question around, should I have a dedicated business development incentive at the heart of kind of what you were just describing? And interestingly, I think if the concern is that it's going to chip away at what you just described in terms of the cultural mindset, rewarding everyone, getting everyone to think in a very entrepreneurial way, there's the right way and there's challenges around doing that, for sure. And based on all of our work, there's a right way and a wrong way to go about that. And it's an area that we spend a lot of time helping, we continue to see that business development incentive itself show up in the comp and in the data that we gather. But how you deploy it and how you use it for sure, can. It's a tricky one, definitely. Rob, how's that looked for you all?
- [32:32]
C
I love what Mark talked about with incentives and driving behavior and also perhaps creating some of the things you don't want in terms of culture. And while I did not come up with the title Chief Growth Officer, there's times where I feel like my job also is the guardian of culture, because while the task at hand is growth, for my role, I'm very protective of wanting to make sure we do things in the right way that does not erode culture as well. And the term, for example, book of business does not exist within the walls of our firm, and nor will it ever for as long as I'm involved here. It's important that we have this culture of business development, but not have an incentive structure that suddenly just puts us right back to the brokerage firm, which is why a lot of these folks left in the first place. Right. And we're thoughtful and careful about that. The reality is we're no different than most RIAs in that the heartbeat of our growth comes from client referrals. And I think it's a little bit misleading for a lead advisor or any particular individual to get full credit or to say, ultimately, I'm the one that created this client referral. I think that it's really a testament to what the firm has built, its history, and also what the entire team has been able to produce for that client. We work in teams of three. So there's a lead advisor, an advisor, and a client service associate. And so one thing that we do is whenever there's a client referral that comes through the door and is closed business, that entire team participates equally in a small bonus. It's really not all that big, but we want them equally to feel like, to Mark's point, even the people at the front door, we want everyone to feel like they're a part of this and to be bought into this culture of business development and growth. And so that's one thing we do, because client referrals are going to be the lion's share of the new opportunities we're getting. And we want everyone to feel like they're a part of it and be proud of it.
- [34:33]
A
I've got a couple more questions in our remaining moments here for both of you and Rob, I'll start with you. We've talked about the people, obviously, the skill sets, the mindset, the culture of the organization. We've talked a little bit about how do you reward that behavior? Even what's been the biggest challenge that you've all had to tackle as you've worked through this?
- [34:53]
C
Yeah. I think the challenge is that the goals are lofty, and as we grow, these numbers just get bigger. And the reality is we do need more people contributing to it. And so you have a bunch of CFPs and CFAs who are very number and goal oriented. And we have a bunch of people that are really driven for success, and they always want to outperform. If you Will, that's what we like to do in this industry. We're very performance based. And at times when you face some big numbers and you don't hit them, that can be deflating to people. And by the way, for us, the scorecard gets wiped clean and you start with a new goal every year, for better or for worse. And so last year's successes suddenly are off the board and you're starting from fresh even when you do have a good year. So that can be tough at times, I think, which is all the more important it can be to just zoom out and focus on the things that are going really well and not get too caught up sometimes in year over year growth and be focusing on knowing that some of the seeds that we're planting today are gonna bear fruit down the road. And we're doing good work still. And to really just lean into being patient, we have to be persistent, but we have to be patient too.
- [36:02]
A
I like it. Mark.
- [36:04]
B
Yeah, Rob, that was really well said at the end. I think patience is a virtue. Something easy to preach about, but hard to practice.
- [36:10]
A
Myself, my last question was going to be what have both of you learned just as leaders and being responsible around this? So maybe you've answered that question as well.
- [36:18]
B
Yeah, I, the the biggest challenge, it is partially the law of large numbers and it is partially the fact that by the time you wake up to the problem, you, you need multiple years to solve the problem and get the ship right. And so it sneaks up on us. Right. And I think back in the valuations of the tech bubble, I remember someone said if intel was going to really realistically achieve its growth rate, it would have to create a new heel at Packard in five years. And that just really stuck with me. I've never forgotten that. And we're now raising more money every year than we had when we started the firm or I ever thought I would ever achieve in my whole career. So it's pretty phenomenal. But to be able to do that, you have to take a longer term mindset. And so part of this activity thing is we have an activity matrix, which is to say by level, by role, all the activities in the firm that we're focused on and what I just present to everyone every year is if everybody does their part, which I think is achievable, we'll have almost 500 of these activities by the end of the year. And it actually isn't unachievable. The law of large numbers. It's just everyone has to be doing their part to continue the organic growth. So again, to get everyone in that mindset, that momentum, that rhythm, it just takes years to do it. And that's where I think it's just challenging because sometimes you go through Covid or you go through a financial crisis and you're just all hands on deck to just get through saving the business, so to speak.
- [37:55]
A
I'm actually going to extend an invitation to those of you listening. If we started to talk about something or we didn't get to an element of what we've been talking about here, driving growth, the skill set. How do you really foster both a cultural mindset and the activities we've been talking about? And you want to hear more in any of those areas, shoot me a note and we'll either get Mark and Rob back or we'll absolutely try to unpack it in a future conversation. Mark and Rob, I want to thank you both for taking the time to join me today. As I mentioned, the top of our time, this is an area that comes up regularly for the clients and the advisors that we're working with. So sharing your perspective, your battle scars and the wins as well, there's been many of them. You're both to be congratulated for wonderful businesses that you're driving and creating every day. And thank you for your time. It's been a pleasure to see you.
- [38:44]
C
Thanks a bunch, Katherine.
- [38:45]
B
Yeah, it's my. My pleasure. Thank you for asking.
- [38:48]
C
Thanks, Mark.
- [38:49]
A
For those of you listening, you can find Mark and rob on LinkedIn and the usual channels. And if you'd like more information about how Dimensional is working with advisors and investment professionals, you can check us out@dimensional.com and with that, we will catch you next time.
- [39:05]
D
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