My guest on today’s podcast is Michael Nathanson. Michael is the CEO of The Colony Group, a private wealth management firm based in the Boston area that has nearly $6 billion of assets under management. The Colony Group has managed to systematize its wealth management and investment solutions to the point of driving a whopping 39% profit margin, and nearly quadruple the size of the firm in just the past 5 years alone, through a combination of both a series of major acquisitions, and organic growth across multiple niches – including corporate executives, athletes and entertainers, and an ultra-high-net-worth family office division.
What’s unique about Michael, though, is how he functions as a true CEO of the Colony Group – where as he puts it, his primary job is to be the “Chief Inspiration Officer” that sets the vision for the firm, and tries to get their more-than-100 employees excited about achieving it, with a focused strategy to attract, develop, engage, and retain the top talent in the industry.
In this episode, Michael gives a behind-the-scenes look at how a large independent RIA thinks and operates, where the investment management duties are entirely separated from the wealth managers (who help clients select strategies, formalized in an Investment Policy Statement, but let the investment management team actually run and manage the portfolio), the firm has formalized its career track into a progression from associate to senior associate to financial counselor to senior financial counselor, and partners have formalized criteria to buy units of their LLC entity (with financing arranged by the firm).
We also talk about how Colony Group built its core technology stack with a combination of Tamarac, Junxure, and eMoney Advisor, its compensation policy for all the advisors in the firm, and how the Colony Group differentiates itself with prospective clients its four Es – Expertise, the Entirety of its comprehensive services, its Enhanced open architecture, and its ability to execute as an Enterprise.
And be certain to listen to the end, where Michael talks about what he sees as the true threat for advisory firms in the future – where it’s not about fee-compression, robo-advisors, DoL fiduciary compliance, or the generational shift to Millennials… but instead is all about the ability of the firm to keep its people inspired to achieve the vision of the firm. Because if the team doesn’t believe, then the firm won’t be able to execute.
So whether you’re trying to grow your own advisory firm to become a mega-RIA, or simply want some perspective on what it’s like inside a large independent advisory firm, and the role of a true CEO, I hope you enjoy this latest episode of the Financial Advisor Success podcast!