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Foreign.
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Hi everyone, this is Kathryn Williams, head of Practice management with Dimensional Fund Advisors. You are in for a treat today. You know, as we think about 2025, it was another remarkable year in terms of client engagements, working with clients really around the world. And who better to hear about how the year shaped up than the practice management regional directors on my team. And I know so many of you engaged directly with them this year. So as I said, I think you're in for a real treat. So this is a good old fashioned podcast takeover. And I'm going to turn this episode over to Steven, Mark, Livia and Pete for a great conversation Team. Take it away.
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2025 has been a year of rapid change for advisory firms. Succession, AI team, capacity, client expectations. Today we're unpacking the real lessons from the front lines. My, my name is Stephen Demand, Vice President, Regional Director on Dimensional's practice management team. And I'm so excited to be joined here by some of my esteemed colleagues on the practice management team. Let's just go around the horn and would love to hear who's joining us today on the call. So, Livia, kick us off.
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Hi, my name is Livia Ramirez and I too am a regional director on the practice management team.
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And Mark Mark Colossa, Regional director and Vice President in the Charlotte office at Dimensional, also part of the practice management.
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C
Team and joining us in the afternoon here.
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Well, good afternoon, Stephen. Good afternoon, team. It's Peter Wozniak. I'm the regional Director for Practice management in emea, based out of our London office. Great to be here.
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So thrilled to be moderating this discussion today with you all. We see it, right, we see it from advisors every day on the ground, across the globe. And so for today's conversation, let's walk through how we sometimes approach the business through the pillars of an advisory practice. And I will start with human capital. Livia, what stands out to you when we think about human capital? You know, it's oftentimes the most expensive part of an advisory firm is its people. What stands out to you when you think about how firms are approaching human capital decisions these days?
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D
Thanks, Steven. And before we jump into that, I think it'd be helpful if we take a step back and define because throughout our conversation today, we're probably going to be referring to a topic term of high performing firms. And so I thought it would be helpful if we just define that for our audience and then we'll jump right into the question you asked me. So for high performing firms, we look at revenue growth, client Retention, employee retention, profit margin and revenue per advisor. And each firm is given a percentile rank across the five metrics and the average of these determines the overall ranking. And the top quartile of all firms by overall ranking is then selected as a high performing firm. Now just to be clear, if you're not a high performing firm, it just means that you're an other firm. Throughout our conversation today, and definitely during my section here, I'm going to be mentioning that. Steven, to answer your question, yes, absolutely. For most firms, the most expensive part of the business is their human capital spend. But another way to look at this expense is that this as a group is really the firm's most valuable resource that walks out the door and every day at the end of the day. So let's unpack what most successful firms are doing to keep their most valuable resource. So as a percentage of revenue, high performing firms are spending about 42% of their revenue on human capital versus other firms which is at 47%. And so I know that anytime I have these types of conversations with firms, it doesn't necessarily mean, let me just highlight, doesn't mean that firms are paying their employees less, but rather the same number of employees are generating more revenue. And in some circumstances high performing firms are really structuring their teams with a higher number of employees at the lower compensated roles. And so a visual way to think about this is firms that are more of a triangle shape, so meaning less senior staff and more support staff versus a martini shape which is a lot of senior staff and not a lot of support staff. So one of the great things about Global Advisor study is that we've now completed this for 15 years and we can take a look at trends. So we look at firms that completed both 2024 and 2025, of which there were about 311 firms and we saw an increase in human capital of about 12%. So when we talked to firms about this, one of the things that we really saw an interesting uptick in is in that role of paraplanner in which we saw a 41% increase in paraplanner for high performing firms versus other firms which had a 21% increase. So as a percentage of compensation, the total cash comp for 2024 and 2025 increased the most for three roles and that is for that of a senior advisor. And so just to level set, senior advisors are individuals that have client servicing responsibility as well as business development responsibility, operations associate and paraplanner. So again, going back to supporting that Triangle a little bit right at the senior level, at the more junior level roles. And so one of the common reasons that employees leave organizations is that they have career advancing positions elsewhere. And so providing what we see some of the best firms doing is that they're providing career paths and development opportunities that helps employees really visualize their long term role with the firm. So a different way to think about this is thinking about linear career pathing. So think about east to west versus versus non linear pathing, which is really think about this from north to south. So giving employees an opportunity to be able to develop their career based on their interests or maybe even what's going on in their personal lives in the moment.
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That's great, Livia. I think that type of trajectory too. And also the team leveraging team structure and those different styles is super important and super helpful to hear. Pete, Marc, anything you want to add to that?
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Yeah, from my standpoint, the other thing that stands out is a lot of people think about organizational structure and growth within an organization in a vertical direction. Right. So how do I move up in the organization? But a lot of the firms that we're working with as of late, they're creating depth at their relative positions. And what I mean by that is can you have a Service Advisor one, Service Advisor two and Service Advisor three, where that change, that increase in complexity, the increase in specialization comes through if you don't have the requisite space to have a new senior advisor, for example.
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E
I'll add, thinking about this from an EMEA perspective. Yeah. We've certainly seen the POD structure develop. It's quite common thing now, interestingly, I know we have our own research, but Michael Kitz's research on this topic is quite interesting. He talks about the power of having three as a team and this idea that once you expand beyond that, he calls it the Management Tax, the Coordination tax. It starts getting a bit trickier from that perspective. And so I think that's another way of thinking about the same problem. Like how productive can my team be? And this is in particular, I think, a challenge that firms face as they grow and they get beyond 5 FTEs. This general challenge of having to take more of a leadership role in management, it's just another thing that is front of mind for firms going through that growth spurt.
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C
Yeah, good point, Pete. And oftentimes that can have an impact on the client experience too. If your team is running at full capacity or isn't well suited, it can bleed through into how the clients experience your services. So Livia, anything else you want to add?
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D
Yeah, just building on what y' all have said, just even firms that are doing this really well, which means in terms of projecting your future org chart, it's just so critical because then it's just giving clarity on the next role that's going to be needed to be hired prior to you feeling like real capacity issues. And so that gives you an opportunity to be really clear on what roles and responsibilities might look like, being able to write that judgment job description ahead of time, you know. And the one thing I will say that when I'm talking to organizations about this and they're thinking about their future org development is thinking in terms of what roles are needed and not necessarily building a role around an individual at an organization. Because when you do that, then what happens is that there's a potential of creating a key person dependency versus making sure that you are thinking about your organization as an ecosystem, taking a look at what your future, future role needs are and then taking a look at your talent to see is there someone currently in the organization that you can either invest the time and resources to develop them into the role that's going to be needed and or at that point do you need to look outside of the organization to fill that role?
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C
Yeah, that's a really good point of removing the individual from the role. I feel like that's hard to do. Right. It's a small team and you're wearing lots of different hats. That can be a challenge for sure. Well, I feel like we could spend the whole hour just on human capital. It's an important topic just to, to round us out. I'd love to hear from each of you when we're dealing with the firm or maybe drawing on a firm story that you've helped with a particular human capital challenge. What's one takeaway or one behavior you want to see a firm adopt in 2026 when it comes to good human capital best practices? Go for it, Mark.
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A
The first thing that stands out to me, Steven, we talk about a lot is compensation. Our thesis, I think broadly for 2026, is if you compensation plan, we can tell you where you want to go as an organization. And if there's a misalignment there, you have a misalignment with either the goals of the organization or compensation. But your compensation plan should be reflective of where you want the organization to go in the future.
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C
Right. Clear comp plan. And we can be a resource there.
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D
Pete?
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Yeah, thanks, Steven. For me, it's I'll say two things, training and role Play. So invest in your people. We'll talk about technology soon. I'm sure. My perspective is, and this is a trend that we've seen over time, the more technology can help us and automate certain tasks, that kind of leaves more time for all of our people. What do we do with that? I think training and development plays a huge role and we've certainly had a full calendar this year and we're going to do it the same again next shift. When it comes to training and development from a communication perspective, thinking about the sales development of people, it's a huge part of the work that we do. And I just love seeing firms focus on that.
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C
Great, great point. Costumes optional for role play, but no, that's great. Livia, send us home.
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D
Yeah. I would say that when we speak to advisors, we often spend time having them think through what their value proposition is to their clients. I think advisors who can spend the time and be able to articulate what their value proposition is to their employees is something that really makes firms stand out because then it shows that they've been thoughtful, they are willing to invest time and resources and really in an individual's growth and contribution to the organization.
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C
That's a great point. You know, it's not just the clients that we want to practice that value proposition, but the employees as well. Terrific conversation, man. We're off to a great start, y'.
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All.
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C
I'm excited for, for this next one here around the client experience. Pete, you've got some great stories just in the prep, hearing a lot of the different examples that you've encountered over there. Give us an insight across the pond, what's going on over there and all of emea. What are some examples of exceptional client experience and what you're see how this landscape's evolving there.
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E
I know this is a topic you and I are both passionate about. You know, it's interesting when we think client experience, how do we even define that? Because there's a few ways we can think about this. There's the usual way. The first lens is what are the services that I'm offering to my clients? That's, you know, investments, financial planning, tax, or even some of those rarer ones. We see high performing firms taking on like education and thinking through how you educate your clients. That's certainly one lens. But the kind of more holistic view of client experience is really what's happening before the meeting, during the meeting, after the meeting. It's so much more expansive than that. And I like to think of this as the kind of Starbucks or Apple approach, really thinking through what's the experience of my client when they think of me, when they first reach out, maybe, or what's the experience the night before a meeting? What do they notice when they walk into the office? Or what follows afterwards? And this kind of holistic thinking, I think really recognizes that clients don't remember every aspect of the meetings that we have. They won't remember all the words, they remember peaks, they maybe remember pitfalls, and they certainly remember the end. So the question then becomes, well, how can we really deliver an exceptional client experience that pays attention to those really small details? Roy Sutherland, I think is really interesting, marketing guru, behavioral psychologist. And he talks about how these humans are prediction machines. We're constantly scanning, we predict everything to be normal, but the moment we encounter something different, that surprises us, that has this asymmetric positive upside in terms of the experience that we're delivering. And so some of the examples that we've heard over this last year. So advisors really taking this field seriously. There's a brilliant firm in London that we work with who, yeah, have invested in an amazing coffee machine. It used to be a kettle. Now it's a really amazing coffee. They actually nudge their clients to, you know, maybe we'll make you a cappuccino. Because they know the cappuccino experience they deliver to their clients really wows them. They've got the little cocoa powder shaker, they've got this beautiful glass. Even thinking about semiotics or that that world of, you know, semiotics is essentially what signals does an object or an experience delivered to my clients. So you might think of this as if you entered an office and you saw a huge mahogany table, leatherback chairs. Semiotically, that's kind of sending an old school private banking experience that's quite intimidating. So if we reverse that, you know, how do we be really thoughtful around the furniture in the office? Or even from a scent perspective, companies like Lululemon, they, they sent their stores or maybe, you know, next time you're in one, realize the experience is quite curated. And you know, we've got firms that have dedicated time to thinking through what's the scent of my brand? Like what, what do I want people to experience when they come and see me. And so I think those sorts of conversations are endlessly fascinating when you're developing a hospitality led approach to the experience that you're trying to deliver to your clients.
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C
Yeah, I would agree. I love that notion. I remember having a conversation with the firm around avatars and target CL profiles. And they said, what we do is we wake up in the morning, like visually with our target client profile and think, what are they experiencing when they drive into work? What are they, what's their commute like? What are they listening to, what are they having for breakfast? And, and to your point there, if they're coming into your office, what does it feel like? What do they see, what do they smell? What it's parking like. I've one example, I've been to an office in, in Michigan where you, you pull up and they have the name of the client, they have a sign for the clients that are going to be there. It's like a special reserved parking spot for the clients. I think that going above and beyond like that does create a lasting impression. Mark, Livia, any thoughts of other examples you've seen exceptional client experience out there from firms we work with?
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A
Yeah, the thing that stands out to me is do employees have the autonomy to recognize those opportunities and to capitalize on them? Some of the firms that we work with will say if the cost is below maybe $50, then anybody who interacts with that client is able to buy a gift, create an experience, what have you without getting approval, et cetera. So at the moment, where there's a client need or they identify some client want, you have the autonomy to do so. And that's predicated on the culture of.
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C
The organization and to build on that. I love that example. You're right, like empowering the autonomy and also celebrating it when it happens. Right. If you have a monthly meeting or weekly meeting, hey, here's an example of how Mark really showed up for clients this week. And, you know, he delivered a great rousing, you know, group run activity for everyone. And, you know, something in line with what Mark Colossa would do there. But no, I think it's a great example of the autonomy is super important in encouraging that. Lydia.
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D
So I would say from a cultural perspective is ensuring that every employee at the organization knows that they impact the client experience whether or not they are client facing. And so it's, you know, sometimes it's like trying to prove a negative. So every time that you have a clean billing quarter or you have statements that are very clean and no issues with your trading anything like that, it's almost like proving a negative. But at the end of the day, that really is impacting the client experience and leaning into remembering that the client experience. I think Maya Angelou says it best when she's like, people remember how you make them feel. And so making sure that that is motivating factor on wanting to provide exceptional and that wow experience regardless of what level of the organization that you are in and focusing on that is what we see the best firms do.
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C
Yeah, that's a great, great point. And I think the first part of that quote is they forget what you say. So hopefully y' all aren't forgetting what we say today and, and, or we're making you feel really good. Pete, make us feel good with that British accent here.
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E
I think what Livia is talking about is interesting to think about, you know, how you'll communicating to your employees around them, being aware they're delivering a client experience. The other piece of this that's really interesting is how do you actually systematize elements of this? What comes with that decision? Interestingly, when we looked at the client experience module from Global Advisor study this year, we asked how often do you solicit feedback from your clients? About half a firm said annually. And then when we said how do you do that? Even less. It was close to close to half. But even less said in person. Having that feedback loop and then understanding from your clients what are you actually delivering an experience that's referable but a really high quality client experience and then being able to do that in a repeated process driven way is where I think firms are really starting to accelerate and be thoughtful around that. Now a nice example of that just to finish us out on this topic is, you know, when you have that initial 90 days of work with a client, all the work is all front ended, right. You're changing the investments, you're building the financial plan and then there's a potential for the flow of information to drop off after those 90 days. And so just, just knowing that that's a nice marker in the sand to, to reach out to keep the conversation going. And there's some firms doing interesting things in that space as they think about the business side of it.
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C
Yeah, tell us some more of those interesting things. Let's build on this because this is near and dear to my heart. Obviously the feedback initiatives that we have.
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E
The idea of personalization I think flows through all of this. There's firms who will send a personalized gift 90 days after they've, once they've dropped off. There's also firms that have actually just shifted their paradigm in terms of how often they communicate with their firms. And there's an interesting advisor in Germany who's actually built a communication tracker. And so through a Power BI dashboard, he'll be able to tell, okay, when was the Last time I reached out to someone, what kind of contact was that? What kind of score can I give them? And just gives them a dashboard view of saying okay, well now I know I should be speaking to this person next. And it just takes away something that's quite manual and allows them to then, you know, be creative with their next step of communication based on everything that's happened in the past.
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C
I think that's a great, great example of systematizing it like you said. Here's a loaded question for the group. 50 points for whoever answers first on this one. If a firm wants to get feedback in an easy to conduct manner, what would you all recommend to them? Or what have we have you all recommended?
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D
You know, we do have the global investor study that is an option for clients that work with dimensional advisors that we often recommend that they can use as an option to if they're interested in getting a formal metric driven way to collect feedback. The word of caution we will always add though is one thing to collect feedback, it's another thing to actually implement it and also communicate back to the clients that based on their feedback the changes that are being implemented in addition to the things that they're going to keep in place. And so what we find is that the firms that, that and communicate back to the clients, then when they do the next survey they have, you know, generally even higher type of engagement because the clients know that the firm is taking this seriously in addition to ensuring that the organization and that that feedback is shared within the organization so that employees know what they do and how that is impacting clients lives.
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C
Great, great point. Yeah, I think the investor studies is, you know, a no brainer and, and using it as a resource for collecting feedback. But to your point Livia, like how you use that data, it's not sufficient to just collect it. Right. You have to act on it and use it. The last thing I'll mention on that is there is science behind this. You know, it's dimensional. We root things in academic science and rigor and question behavior effect comes through many different studies of just asking people for their input. Their feedback actually motivates and changes behavior. So people, if you ask someone, have they made an introduction to a friend or colleague, what do they value in you? It drives those beliefs and reroutes them in the things that you're doing well for clients. So there's just goodwill in asking for that feedback in the first place. Anything else before we round out? Okay, let's move into operations here and in particular, you know, when we think about fees or processes and technology. I mean sometimes these topics can get heavy. But from what we're seeing with artificial intelligence and a lot of the, dare I say, hype around the transformative effect that it can have with an advisory firm, I'm curious, Livia and Mark, you all did a deeper level engagement with a firm that was very AI forward. Any thoughts or perspective from that engagement and what we're seeing from an operations perspective there? Olivia?
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D
Yeah, so what we see is AI engagement is really important as far as creating efficiency for an organization. I think that the firms that are doing this best, they're thinking about AI, not necessarily in terms of it's going to replace individuals. They're thinking about it more as AI being augmented to an organization and to an individual so that they can become more efficient in what they do and how they do, create greater consistency in what they do and how they do it, and then leverage that to be able to help an organization grow. But thinking about AI as being a replacement for humans, it's not what we see the best firms doing.
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C
Pete, I'm curious. In the UK and Europe, oftentimes we look, look to Europe from a regulatory standpoint when it comes to topics like this. What are you seeing in terms of firms comfort when it comes to AI adoption there?
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E
The first thing I'll say is from the Global Advisor study, it's about 75% of firms who took part in the tech module in EMEA are using AI. So it's prevalent. What we're starting to see emerge is sort of two speeds. I'd say there's firms who in particular we've had these conversations this year, firms who have really tight integrated systems, great workflows, they actually struggle to identify where AI is going to play a role for them. They're still trying to see that. They're still skeptical of the technology they've seen. On the other hand, we've got newer firms who have really embraced the tools and they're allowing them to grow at speed. You have your meeting in the morning, you've got a really nice, well structured follow up email an hour later ready to go to the client. And so seeing those differences are interesting that there's an adoption, I'd say a fairly heavy adoption of domain specific or industry specific tools. But we're also seeing advisors build their own sub agents and people that are at the frontier of that. They're using sort of out the box copilot or chatgpt to do that. So I think we're seeing a range of adoption. From a regulatory perspective, all the caveats exist, but that's not necessarily slowing advisors down from wanting to experiment. I think in a way that's safe.
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A
Steven, from your standpoint, you've both attended as well as presented at various AI conferences. What do you see from your perspective?
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C
Yeah, I think the biggest observation I have, especially going to these conferences, these industry wide conferences focused on AI, is there's still a lot of fear of missing out the FOMO is real from advisors of saying I see the power of chatgpt in my hand held device, there's got to be some applications here. And again, I don't want to call it hype, but there's just a lot of not wanting to be left behind in such a rapidly changing environment. That being said to build on what Livia positioned here is that using these tools to augment, not replace, especially when it comes to client experience or client communication, is, you know, collecting meeting note information. That's the highest use case right now. It still continues to be the highest use case. It's not without not real compliance considerations concerns. So you still want to be mindful of those. But the massive broad scale adoption of AI into the advisory firm, we're just not there yet. And I think Pete, your examples are really good on how firms are starting to dip their toes into this or use it in certain ways. But I'm not quite convinced that it is totally revolutionized the way the advisory business runs yet. Livia, anything else you want to add to that?
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D
No, I completely agree with everything. I like the conditional. Yet I think you know that we're still trying to figure it out. And as we've both have heard many times is the current version of AI is the worst version that we're ever going to use. And so even as people are getting creative about how to use AI and maybe it doesn't work in today, but maybe six months from now that idea might work. And so, you know, continuously taking, scanning and looking for ways to leverage that is something that I think the great firms are doing. But it's not just necessarily AI, it's just technology as a whole. Encouraging firms to leverage their full use of the technology stack that they currently have and then seeing if at that point they are fully leveraging and they still feel like they could create more efficiencies, then at that point maybe taking a look at do they need to reevaluate their tech stack.
- [28:13]
C
Yeah, great point. And one final tip, I'll add on that that I've seen some firms do is if you have one or two employees or even a smaller subgroup that are really into this and keen to learn more. Like having a advisory board or a just a working group that has those calls with vendors or tests out some of the use cases obviously runs it through compliance. But you know, having a beta group that can be out there in a small capacity to help manage the just deluge of resources and changes. You could have a full time job just trying to keep up with all the new tools that are out there. So trying to chunk that I think can be a good resource for firms.
- [28:55]
D
You know Stephen, I did want to just add separate from AI but just thinking about operations in general, I think you know, when we take a look at the study and we see that capacity constraints and implementing workflows are the top two challenges that organizations have and they go hand in hand. One of the things that I know that we often speak to firms about is the implementing workflows. And where I think firms sometimes get stuck is that they're thinking about it in terms of how do I implement this fancy workflow into technology. And our response is usually start with a checklist. Don't overcomplicate anything. Just start with a checklist and the people closest to the process are the ones who should be creating that initial checklist and then at that point you start refining it and eventually you can get to the point of getting it into a formal workflow within a system. But don't over complicate the simple solutions that can be put in place today.
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C
Yeah, that's a great point. The book Checklist Manifesto by Atul Gawande is a great reminder of the power of checklists and just helping us stay accountable there and it start simple. The other thing I wanted to mention around this topic and I'm going to turn to Mark on this since you've, you've made a lot of friends of event clients based on your work lately presenting around fees and what's going on there in the landscape. So tell us, tell us a little bit about some of the research you've seen and what you've noticed when it comes to the fee landscape for advisors.
- [30:31]
A
Yeah, I think, I think it's actually pretty interesting if you look at the data from the data team within practice management. And so for those of you may be less familiar, we do have a full data team that is simply devoted to our two main studies to help bridge the gap in knowledge to use data to help you all make better business decisions. And that data team looked at what's happened in fees over the last five years. And very interesting given the amount of media headlines you see about fee compression in the industry. Based on the data that we have in the Global Advisor study, we don't see that to be the case. Five years ago, the effective fee in our study was around 66 basis points for the average firm. In our study last year, in the 2025 global advis, that's now 72 basis points. The other thing we looked at very deeply was to understand what's happening from a margin compression standpoint for firms in our study. And as you all well know, for those of you who are listening, you're doing a lot more than you were five years ago for your clients. Definitely more than 10 or 15 years ago. And so your compression comes in the context of higher operating costs. What's the good news based on the data that we have, is that clients do not appear to be particularly sensitive to a fee increase. The way we like to position this often is that raising fees or adjusting fees upwards tends to be more of an advisor issue than a client issue.
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C
To build on that and maybe transition us to growth. Mark, how are you seeing that related to growth and the fears that some advisors have around fees and growth too?
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A
Yeah, it's a good point. And the only one that we don't have data on is will prospects not consider you because of your fees? So unfortunately we can't look at it through that list lens. But many of the firms that we work with, if you think about in the context of the one way in which they grow is through either new clients or through a change in fees. We often talk about controlling what you can control at Dimensional. And if we can control the market, we wouldn't need to be worried about fees or new clients. But since we can't control the markets, the one thing we can do is adjust our fees or grow. I think it's important as we pivot into the growth pillar. Why is growth important in the first place? Right. We think about the stakeholders that are related to growth of NRA or growth of a broker dealer. There's a couple key stakeholders, of course. The employees, the clients, and I think importantly the community in which that particular firm sits as well. So growth allows for more opportunities for employees, allows for expansion potentially of benefits of employees. Importantly, from a community standpoint, you're also hiring in the community in which that firm sits most often. Often. So you can also make the case that it's also valuable to the community in itself. And of course from a client standpoint the more the firm grows, the more the clients receive additional services. Maybe there are other opportunities. Maybe there are like as Pete mentioned earlier, enhancement in the client experience. So with the backdrop of why the actual growth is important, we delve into what are firms focusing on. So of course, in 2025, and I think going into 2026, a renewed focus on organic growth growth. I know there's a lot of conversation about M and A and what that landscape looks like, but the bread and butter of the average firm or study is still client referrals. Roughly 50% of new clients fit 5 0. 50% of new clients come in through client referrals. And so there's this conscious decision being made to grow rather than simply hoping that growth will occur. And so that takes the context of three components. We think that three things need to be in place before you think about growth through any of our, our 11 channels of growth. Of course we have our core. Why? Why do you get up and do what you do every day? Why is it important? Why do you get excited about it? Establishing a core why? Establishing a target client profile that includes both demographics as well as psychographics. I'll say just in the website reviews that we've done within practice management, saying that you work with only individuals and families is probably insufficient for a target client profile. We need to go a little bit deeper to understand who are you best designed to serve from a demographic and psychographic standpoint. And lastly lastly, developing a value proposition that relates directly to your target client profile. So once we have those three things in place, the firms we work with are really focusing on creating a strategic approach to their channels of growth. Where do I want to grow through, how do I want to do that? What is the strategy that I'm going to implement? What's the education that I need, what are the activities I'm going to track and what are the resources that are required? That's great.
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C
Where would you recommend a firm that hears that and says, or an advisor that's listening and says, that's great. I agree with all that. Where do I start? Where do I begin? How do I get started on something like that?
- [35:04]
A
Yeah, we talked about some external resources earlier. The Checklist manifesto, watching the 18 minute Simon Sinek TED talk, how great leaders inspire action, and then developing your approach to your core why? So that when somebody asks you what you do, you reply with a why response. Just that may change the way that prospects and clients feel about you as an advice advisor.
- [35:27]
C
Yeah, that's. That's great, Livia. Pete, I know you. You both have done a lot of work around both of these topics as well. What are, what are your thoughts and perspective and how you've seen this work for firms?
- [35:40]
E
We track this in our study, and for 2025, it's still the case that only 36% of firms have a structured referrals process. For me, that number's. That's quite a low number. I think we've been in this situation where the advisors that have built these businesses, the referrals have naturally flowed to them. And that's probably why we've not seen so many firms do the work to build a process around this. But as firms grow, as more advisors come in, as more junior advisors rise up through the ranks, perhaps something that doesn't come as naturally to them, really making sure you systematize that process, I think is really important. And it's been great when we run these workshops, just seeing or hearing that feedback of six months later. The firms that do implement the work that we do with them, seeing that sea change and how many they're getting through the door that are appropriate, that's really interesting to us. So I'd say dimensional. We've partnered with work by Dan Allison to build out these workshops. I think there's certainly merit in getting involved in them. For me, I think the psychological shift, the starting point is really interesting and important. Clients don't refer to. Refer to the advisor to help the advisor. They refer to the advisor to help their family and friends. And so there's exactly what Mark said, right? There's a, there's an education piece. How can I increase the surface area of getting referrals through door is education. The bit I love actually from that whole process the most is personalization. So how can you personalize. Of course, we're systematizing lots of these parts, but how can you personalize parts of the process that really make you up your game? And for some of the, the more interesting conversations we've had this year that's been around. How do you share gratitude or how do you thank your clients once they've referred someone to you? We've heard some really fun examples of this. There's an advisor in the UK that he'll buy a Magnum bottle of wine. Not a regular bottle of wine, but a magnum bottle of wine. It's a nice gesture. It's something a little bit different thinking about back to, you know, the prediction machine element of this. But if you really think about the psychology of what's happening there, it's quite interesting. Interesting. If you're drinking a Magnum, you're probably drinking it with friends and family. You probably can't do that just you and your wife or you and your partner. You're doing it with friends and family. It's probably sitting prominently in the drinks cabinet for a while. There's lots of really interesting psychology. Why thinking through the gift in a deliberate way, again, might increase the surface area of referral conversations.
- [38:04]
C
That's a great example. From Magnum glasses to Martini shaped team structures. I think we know how we need to celebrate the end of the year here with the toast. But no, it is a great point. And I think you also. There's another example of linking that I remember you sharing with your own personal interests. Right. And that personalization of you, the advisor. And I think you have a good example of another German advisor around that personalization story. I'd love for you to share that to people.
- [38:32]
E
So when I say we look after clients in emea, that tends to mean uk. But yeah, we've got a real strong cohort in Germany amongst other countries. And they're innovative. They do think creatively about this. I'm not sure if this is the story you're talking about. One of the things that really intrigued me when I was Historically, golf has been a big thing for financial advisors. Right. That's been a big focus. It takes up the whole day. Not everyone's into golf. So there's an advisor who's really pivoted into playing Padel. It's great. So he does it in the morning. So it only takes an hour, hour and a half. He's bringing clients along to that. You always play in groups of four. So it's a great way of just a bit of exercise. It's much easier than tennis. You don't have to be a great, great racquetball player to have fun and do it. He's bringing centers of influence along, so accountant relationships. So it's like a really nice social way of building a relationship. And I think those examples are really interesting as we see the industry develop as tastes and preferences change. I think it's a really cool example for thinking creatively around how you can find new clients.
- [39:35]
C
Yeah, I love that notion too, of engaging centers of influence. Mark referenced. The referrals have always been the primary driver consistently. And well, a short second to that has always been the center of influence referral. And we oftentimes find that the average assets of a new client coming from a center of influence tend to be higher than that of the traditional referral. So it's something not to be overlooked as well. And bringing them together I think is a great strategy. Anything else? When we think about growth heading into 2026, before we move on to the.
- [40:10]
D
Final component here, here I'll add just one thing, Steven. And with the core, why that it's not necessarily just the client facing people who should identify their core. Why it is really important for every person at an organization to identify their core. Why? Because at the end of the day, every employee is a brand ambassador. And so you never really know when on any given situation as a brand ambassador, you might be able to bring in a client just because of the passion that you feel around what you do and who you do it for. That can be a real opportunity for growth and new client referrals.
- [40:51]
C
I love that and I think you're spot on. I think it also adds employee engagement. If you find purpose and value and you know your why, why you show up every day, it helps you stay connected to the firm and to the business. And again to triple down on that. To go back to Pete's earlier point when we were talking about human capital and practicing and role playing, sharing that with each other, sharing that with your team, practicing how you answer those questions and talk about it. You also learn things about your co workers and colleagues and you learn what motivates them and you learn what's important to them. And I think there's just a lot of goodwill that can happen by doing that across the board. So thanks for referencing that Livia. Great point. Well, as we round the basis here and head home. That's a baseball reference, Pete. I don't know a good cricket one. Send this home here. Let's talk about strategic planning. This is oftentimes it's one of the first elements of the pillars. But thinking about strategy, this is a great time of year as we come to the end of the year and start the new year to think about what is our strategy moving forward. And we've, we've worked with firms on different levels of this, going really deep and then some, you know, just high level conversations. But give us your insights team around what, what are some of those table stakes items when it comes to strategic planning that you feel are good hygiene as we come to the end of the year and beginning of the new year and we'll with Mark.
- [42:15]
A
Love it. Stephen. There two things that stand out. We find that in this industry what gets measured, gets managed. And it's very, very common to think about this. Are we tracking the what we call the, the leading indicators rather than the lagging indicators. And so for 2026, can the, the firms that are listening do that? The second one is that I think a lot of firms have a lot of initiatives, a lot of things they want to do. And because of that, they almost have the paradox of choice when it comes to what they want to attempt. You know, a framework that we have used at Dimensional very often often is the Keep Stop Start framework. Let's boil this down and think about one thing you need to keep doing in 2026, one thing you need to stop doing in 2026, and one thing you need to start doing in 2026 for firms of certain size, that may be sufficient for you to move the firm forward in the new year.
- [43:01]
C
Mark, tell us a little bit just to go back on that leading versus lagging indicators, what are some examples you've seen and what would you recommend maybe for a firm to getting started? There's.
- [43:11]
A
Yeah, I know a lot of firms, for example, track the number of new client referrals that they've brought in, but that's a lagging indicator. Right. I prefer to know, as Pete alluded to before, how many feedback meetings have you done in 2026 or expect to do in 2026? How many times have you asked a client for a referral in 2026? Those are the activities that lead to the results we're looking for. Something we didn't talk about in our growth conversation was around marketing. But there could be an argument made that some of the leading indicators just simply how often are you posting? What's our level of engagement for those posts?
- [43:41]
E
Right.
- [43:41]
A
Are we consistent with posting or developing podcasts, developing videos and things like that? There's a really good piece from Franklin Covey called the Four Disciplines of Execution, one of which is to identify those leading indicators. It's a great piece that's publicly available for those listening today.
- [43:59]
C
Pete and then Livia, send us home here.
- [44:01]
E
Yeah. My answer on this I don't think will be surprising. Most of our audience, I think by now would have heard of Traction or the EOS system. We talk about it here in Europe. I know it's talked about and you guys have talked about it quite a lot over in the U.S. i think advisors are drawn to it because it really tries to simplify what's the problem we're trying to solve. It brings it down to its most essential. We've got firms, cross border firms who are really seeing progress by taking on a specialized consultant to help them with that. But we also see smaller firms who adopt adopt it. You know, some of the workshops we've run, we've helped firms really consider how do I connect my short term targets to my long term goals. It's so easy to get lost in the day to day and the next client meeting, the next email. Stepping out of that for a moment would really provide value. And so advisors that we've done these workshops with this year have leaned into that system in particular.
- [44:59]
A
Oh, that's great.
- [45:02]
C
And Livia, you've been in the shoes COO of very large firm, advisory firm. When you're thinking about strategy, both having been in that seat and then now advising firms, what are your thoughts?
- [45:14]
D
So I'm going to start very big picture and just start with the most fundamental things of just making sure that you as an organization have identified and communicated your mission, your vision and your values. So thinking about your mission as to why you exist as an organization, what your vision is, where you're clearly able to articulate what the future organization will look like within around a two to five year period. And that's where EOs can be really impactful in making sure that you're executing on that and then thinking about your values and thinking about that in terms of the boundaries in which the organization will operate. So building on what we had talked earlier about, giving employees autonomy, you can think about the values as being an opportunity. So if an employee is in question about how to handle a particular situation and let's say that they don't have their manager or senior management available to them, they should be able to look at the values and be able to make an educated decision on how to execute on something and then, you know, at least it's grounded on something that is a shared value in a shared across the organization. So starting with the foundation of just mission, vision and value is really important for any organization, I believe.
- [46:29]
A
Yeah.
- [46:30]
C
Good to go back to those important mean they sound or almost seem basic, but they are foundational and so important. So thanks for bringing us back to that rock there.
- [46:41]
D
Stephen. I'm just curious for you what you think is important for an organization from a strategic planning perspective.
- [46:48]
C
Yeah, I think it's very much aligned around a vision of what you want to look like and what you want to be three, five years from now. And again, you're not saying it in stone, but if you don't know where you're going, you're just going to end up somewhere. Right. So I'm sure there's a great yogi berra quote that I'm misquoting on that.
- [47:07]
A
But Alice in Wonderland. Alice in Wonderland.
- [47:10]
C
Okay. Or Alice. Yeah, yeah, but, but to, to, to round us out here, I'm going to share. I, I did not use any AI. This is, this is Stephen demand AI here. This is real intelligence with subpar intelligence on this one that I'm summed up for each section that we just talked about about three takeaways for each one. And as I share these, I want you to pick one as we close out that you would say if you're going to start, here's where I would recommend or here's something easy to implement. Again, thinking about the advisors listening to this. So when we talked about human capital, the three takeaways that I heard were doing some training and role playing for your team, like getting some practice and some disciplined practice. Mark mentioned having a comp plan that's clearly defined and well organized. And Livia mentioned having that clear value proposition that all employees can articulate. When we talked about the client experience, it was thinking about going through the life of a client and what it is that they experience as they walk in your doors. Empowering employees to reward and give those surprise and delight moments and then the power of feedback and making sure that you're not just collecting feedback, but doing something with that feedback feedback. We moved on to operations and we talked about artificial intelligence as a way to augment. We talked about having a strategy to stay on top of it and then having a checklist for workflows, something easy and simple to start there. And then finally when it came to ops, we talked about fees and linking that to the increased services that you're doing and how that impacts both client retention and the importance of making sure there's alignment there. We led to growth where Mark brought us into the value of your why and recommending Simon Sinek the target client profile, relating your value proposition to your target client profile, having a referral process. Pete mentioned the importance of that. And then having personalized activities with COIs and your clients to really drive growth. And then finally we ended with strategic planning and what gets measured, gets managed and having good KPIs doing activities like a keep stop start looking at the leading indicators, not just the lagging indicators, having a framework like the EOS system or something to help you stay accountable. And Livia sent us home with this mission vision values, which I think is so important. So hearing all of that, we covered a lot of ground and I hope I didn't miss anything. And if I did that can be your takeaway. But I want you to distill all those great points and if you had to prioritize, what's the first thing you're going to add to your to do list heading into 2020, what stands out to you and where would you start based on that great ground that we covered? And we'll start, we'll be courteous to our friend across the seat here and we'll start with Pete.
- [50:07]
E
Thanks Steven. That's a great list. So if you want to hit it for six, that's the equivalent of a home run for cricket. If you want to hit it for six. I love this idea of empowering your employees. I think Mark's example you said below $50. That's actually the strategy that the Ritz has or had at least for a very long time time. Empower your employees to deliver an amazing client experience because they're your most important asset.
- [50:31]
C
Great. Thanks Pete.
- [50:33]
A
Mark, so we've talked about all five pillars but they there's all one central thesis around all five. Not to push off your question, Stephen, but it's a data request. If you don't know where you sit relative to your similar type firms, what other firms are doing, there's an easy way for you to accomplish that through the global advisor.
- [50:53]
E
Your study.
- [50:54]
A
Now we're going to roll out of course earlier this year in January of 2026. It gives you such a good opportunity to use data to help inform all of these topics that we covered in our time today.
- [51:05]
C
Oh great.
- [51:06]
D
And Livia, I would say investing in your human capital and making sure that you because again, it's the largest expense as a percentage of revenue that any firm has. So making sure that you are being strategic. And from that perspective, I'm thinking about thinking through your future organization chart. Think what your value proposition is for your employees, current and prospective, and then thinking through tactically how you can impact that strategy, which means writing really good job descriptions, making sure that you've updated your website so that you can talk about your value proposition to your future employees, I think is one of the things that firms could certainly implement in 2026 very quickly.
- [51:49]
C
That's great. That's great. Now thank you all for all that you do and really thank you to the advisors that are out there listening. The fact, listening to this already puts you in a league of the best of the best that are out there. And as Mark mentioned with the advisor study, those of you that are participating, it's already the firms that have the idea of wanting to get better. They're students of the industry that we get to see every day, that we just really enjoy working with you all. So thank you for the privilege of getting to work with you all. Thank you for being such a valued part of the broader Dimensional ecosystem and reach out to us. We're here for you all as a resource. Regional directors are great points of contact, but thank you for letting us be aligned in this journey together. And thank you all, Livia, Pete, Mark, for your time today as well. Kathryn, back to you.
- [52:42]
B
Well, there you have it. A busy yet incredible year officially in the rearview mirror. On behalf of the practice management team and our colleagues here at Dimensional, we're wishing you a fantastic 2026. And if you'd like to know more about how we engage with financial professionals, our D360 offering in particular, check us out@dimensional.com and I look forward to seeing you in 2026.
- [53:06]
F
Thank you for joining us for Dimensional Fund Advisors Managing youg Practice Podcast. For more information, please visit www.dimensional.com. dimensional Fund Advisors LP is an investment advisor registered registered with the securities and Exchange Commission. The views, information or opinions expressed during this podcast are solely those of the individuals involved and do not necessarily represent those of Dimensional or its affiliates. Dimensional is not responsible for and does not verify for accuracy any of the information contained in the podcast. All expressions, information and opinions are subject to change. This podcast is distributed for information purposes and it is not to be construed as an offer, solicitation, recommendation or endorsement of any particular security, products or services. Please consult with qualified legal or tax professionals regarding your individual circumstances. Investing involves risks. Risks include loss of principal and fluctuating value. This podcast is available for private, non commercial use only. You may not edit, modify or render distribute this podcast without the express written consent of Dimensional. Dimensional assumes no liability for any activities in connection with this podcast or for use in connection with any other website, computer or playing device.