Lessons Learned From Building A $60B Advisory Enterprise: #FASuccess Ep 496 With Shannon Eusey

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Resources Featured In This Episode:

• Shannon Eusey: LinkedIn
• Beacon Pointe
• KKR
• Ownership Works
• HerWorth
• Salesforce
• Zoom

Full Transcript:

Michael: Welcome, Shannon Eusey, to the "Financial Advisor Success" Podcast.

Shannon: Thank you, Michael. Thank you for having me.

Michael: I'm really excited to have you join us today, and to get to talk about what I just think of as building a really, really big RIA. Because to me, there's been this fascinating evolution. If I go back to the 1990s, most RIAs were solos with like $10 million of assets. That was a lot of money back then. A huge firm had $100 million. And then by the 2000s, there were actually a lot of firms that had $100 million or $200 million, but a really big firm had a billion. And in the 2010s, there were a lot of firms starting to reach a billion, but a really big one had $10 billion. Now we're in this decade where there are firms of tens of billions of dollars, a lot of whom are shooting for $100 billion by the end of the decade. And I'm cognizant that at some point, this isn't just a matter of adding clients and assets to get bigger. The organization itself, as it really becomes a sizable enterprise, just gets really big and it's really complex. A $100-million team might have 3 to 5 team members. A billion-dollar firm might have a dozen or a few. A $10-billion firm might have 100 or 200. As you grow towards $100 billion, you're going to be pushing towards 1,000 team members, which to me is just a whole other level of complexity of systems, and processes, and HR, and technology, and infrastructure, all the things it takes to keep that many people growing and rowing in the same direction.

And so, I know you've lived this journey at your firm from founder origin almost 25 years ago, to today being one of those firms with the many tens of billions under management. So, I'm excited to get to talk about what it's really like to scale an enterprise that large that maybe the rest of us don't understand or can't fully appreciate until we hear it from someone like you who has been on that journey.

Shannon: It's been an exciting journey, that is for sure. And I don't think it's as scary as it sounds when you say it like, "Oh gosh, there's billion-dollar firms, $100-billion firms," and us in between that. It's been a great journey, and I think a very deliberate journey of building Beacon Pointe.

Michael: I love that you don't find it scary. My gross overgeneralization as I talk to advisors out there over the years, there's two types of advisors out there. One group where you say, "Someday this firm could have 1,000 team members," and they say, "Oh my gosh, that sounds horrific and terrifying." And the others where you say, "Someday, this firm could have 1,000 team members," they're like, "Cool. Let's go!" I feel like you're a little more in category two than category one.

Shannon: Yeah. We're nearly there. I think we have north of 800 team members today. So, we are getting to that 1,000 mark. And again, a bit deliberately. But I'm happy to share anything and everything and how we got here.

What Beacon Pointe Advisors Looks Like Today [05:23]

Michael: Sure. So, I think as a starting point, just to help us get oriented help us understand the advisory firm, just what it is as it exists today, and then I want to go all the way back to the beginning and replay forward how we got here. But help us make sure we understand where it is today.

Shannon: Sure. Today, and I think it's easy to talk, and maybe not for everybody, but easy for me to talk in terms of assets and offices and states. Today, we're roughly $62 billion in client assets, and we have 90 offices across the country. We're in 25 states, north of 25,000 clients, and average client size north of $2.5 million. And what I said earlier is close to 800 team members.

Michael: And I find it interesting even that metrics for you include things like how many offices, how many states. What makes that an anchor metric for you?

Shannon: Well, I think the way I look at it, team members is probably most important because that's who is driving the business. And I should say actually clients first, and it's actually how we make every decision in this organization is, "Is this in the best interest of our clients?" So, knowing how many clients we have and how important the decisions are to those clients is a very important number to the organization, and then our team members who are really fueling and driving everything we do here for those clients. So, making sure we know who those team members are is very important.

Michael: So, what's that like when you're then trying to coordinate that across 90 offices? I'm sure there's varying-size locations that are bigger and smaller, but that's 90 locations averaging 9 people per location to get to 800 team members.

Shannon: Yeah. I think you have to look at it a couple different ways. So, first and foremost, culturally, does this office align with Beacon Pointe? They wouldn't join Beacon Pointe if we weren't culturally aligned. Knock on wood, we've never had a partnership unwind, which I think is really important. We do call them partnerships because we truly believe these are partners within our organization that are becoming part of Beacon Pointe. So, each office is part of Beacon Pointe's firm-wide culture, but they also have the autonomy within their office to continue to run their office on a day-to-day basis, which we think is also very important to the organization. That's not to say they're running different systems or different processes. They're all on the same systems and processes. We actually call it One Beacon. But they do have the autonomy to continue to run their office in the best way they see fit in terms of how they're doing things on a day-to-day basis for their team and for their clients.

Michael: So, I'm intrigued by this. Is there a unit size of an office? I sort of did the napkin math, 800 team divided by 90 offices is an average of about 9 people per. Is that really the actual structure? Any particular office is a couple of advisors, a couple support? Or what does it look like?

Shannon: It's not. It's all over the place. We have offices that have 30-plus team members. We have offices that have two team members. We have offices where we've been geographically dense in certain areas, and they've all decided to come together as one office, so it's made that office much larger. We will continue to do that in areas where it makes sense, but we don't look to marry people off. So, if we have, as an example, if we've got three offices or four offices in Denver, we're not going to say, "You guys all need to come together and be one office," although there are a lot of efficiencies and scale to be had from that, and we'll certainly share that and help them see that. But we want them to come together and say, "We want this to be our office together," and we want them to jointly build that.

Michael: So then, help me understand further what's controlled at the office level versus centrally? Is there a home office? What's controlled at the distant office versus the home office? What happens in the distant office versus the home office? I'm assuming there are some things you centralize.

Shannon: Yeah. If you look back at the organization over the last 25 years, I would say that's one of the pivotal decisions we made, is to centralize some of our operational services. Now, much more has been centralized throughout the years: HR is centralized. Now, they're working with their teams on a day-to-day basis, but if there is anything as it relates to HR, that's handled in one central office. The finance function is handled in a central location. Our day-to-day back-office operations for client…money movement, and opening new accounts and trading is centralized. Over the years, we've continued to centralize things. But if you go back to when we started the organization in 2002, really, with the idea that we were going to bring...my dad came from an institutional consulting background, so he had actually founded his own firm in the '80s when I was in high school, working primarily with foundations and endowments. So, his background was on the institutional side. My background had been on the private wealth side.

He was actually 60 at the time, and I said, "Hey, Dad, I've got this great idea. What do you think?" He's like, "You're crazy." I said, "Well, Dad, either we do this together or I'm going to compete in your backyard." But he ended up agreeing that it would be a good idea, and I kind of look at today... I'm five years out from where he was at making that decision, and I'm not sure I would've been able to make the same decision. He had a lot of courage and guts to be able to do that at age 60. But I think he saw what we saw and what I saw when I wrote the business plan, was that there was an opportunity to take what he had done on the institutional side and marry it with my experience, as well as others who were joining Beacon Pointe, their experience on the private wealth side, and to be able to take what we had done for institutions in terms of investments and access and bring that to private wealth clients.

So, if you go back to the early days of Beacon Pointe, we were already building an infrastructure to be able to work with thousands of clients. And I think many firms start out with, and this is not Beacon Pointe, so I think when we look at, "Oh, you're at $60 billion and 800 employees." Did I envision that? No. Absolutely not. The firm is wildly larger than I ever thought it would be. But what we did envision was we are going to build an RIA. It wasn't an accidental entrepreneurship. We actually set out to build an RIA and to build it at scale. So, when we started the organization, while risky, because we had to take on several employees to start, and we had no clients, literally no clients, and no revenue. So, we just had our own capital that we put into the business, which was a bit scary, and we had a credit line. But we knew in order to scale the business, we had to build the business from the start.

Michael: So, when you're building this centralized operations, trading structure, I guess I'm just curious really practically how centralized this is. Are there no client service admin folks in local branches because it's all centralized and offices are solely advisors and associate advisors doing client-facing things?

Shannon: Well, that's the ultimate goal. That does not happen. Look, you partner with an organization and they have incredible talent on the operations side, and they've got people that are servicing those clients. Gosh, I even look back to our organization when we started and we lifted folks out of my dad's prior firm. We heard from clients saying, "Well, if so-and-so on the operations side doesn't show up, I'm not coming with you." So, we know how valuable those team members are to the organization, so we always try to make sure that we're building a structure and an environment where clients are best served. So, does that mean there's an operational person within that organization in a local office, oftentimes the answer is yes. Are we still trying to push the majority of operational flows and processes through our central team? Yes. Because we think we can do it more efficiently that way, and then let those people that were running operational functions within an office elevate to be more client-facing and client service-oriented as opposed to processing paper or doing data entry or, fill in the blank.

And what we have done too, which I think is very important, is every firm that has joined our organization, we don't let people go. This is not a, "Come join Beacon Pointe, we're going to partner with you, and then we're going to cull back part of your staff." That is not the idea. Because what we do know is when firms join Beacon Pointe, we give them a new growth trajectory for their organization. Not that they weren't growing, but we give them the ability to grow more. And so, we know this is not just an AUM acquisition or an advisor acquisition. This is a talent acquisition. So, we're getting the talent, and many times, and we see this across our organization, many times those folks join our central platform.

Michael: And so, in that vein, if I'm understanding right, as you grow and scale organically, those would tend to be hires that occur centrally as you scale the organization, but because a good bit of growth has come from mergers and bringing partner firms in, you don't want to alienate any of that talent that might have been locally. You don't want to alienate clients who really liked the talent that was local.

Shannon: Yeah. Because remember, clients first. So, how are we serving those clients best? You look at what many are saying today in our industry and have been saying for last decade, this is a talent game. We need to make sure we're getting the best and brightest talent, and gosh, we don't want to lose talent that could be better served maybe doing the same thing, maybe doing the same thing for the platform, but maybe elevating to do new things for the organization that ultimately better serves those clients.

Michael: And so, over time then, I guess just very practically, either great local people just keep doing their local thing, great local people eventually retire and move on themselves and then you might replace more centrally, and so, it gets incrementally more centralized over time, or someone local decides to stay but wants to pursue a more client-facing path, and you say, "Great, how do we transition some of the ops things you did locally to the central so that you can do other cool things remotely?"

Shannon: And even better. That's the best outcome. Somebody locally says, "Gosh, I want to service clients. How do I get in that position? And how do we train that person up to get in that position and elevate them to do that?" Because as you know, and I've heard you talk about it a lot, succession's important. So, making sure that we've got folks to be able to take on those client relationships as we have partners retiring or folks leaving the organization.

Creating A Centralized Service Team To Serve Offices Across The Country [17:10]

Michael: And so, for the more centralized side of this support, I'm just purely curious literally how it works. If I've got my client service team locally, I've got my person, he or she works with me, we handle the clients that we've got of mine in this office location here. It's very assigned and direct, like one-to-one or maybe one-to-two of admin support supporting a named advisor with a named set of clients. Is that still what you do centrally, or does it work differently once it comes to central?

Shannon: It's not as perfect as this one-to-one, one-to-two. It ends up to be that way, but we have a queue where we've got operational team members servicing that queue for advisors. And then it's segmented based on particular client and what we're doing for those clients so that we have expertise in those particular areas. And it's as simple as, you have this particular request for a client, it just hits the queue, and it goes directly to the right person to perform that and report back on what was actually done. And similar to trading…it's, "This is what needs to be done." It goes through the central queue. And again, it's not perfect because a firm will come in, and they will have a trader, and they're used to doing their trading, so then we slowly move them to. It's not like you come in and we turn the light switch off, and all of a sudden you're now on this new system. Yes, you are on new systems and technology, but it's more of a gradual move to get folks to doing things the Beacon Pointe way.

Michael: So, how do you actually handle the queue? Is this like a ticketing system structure?

Shannon: Yes. It's through Salesforce. So, they're processes driven through a Salesforce queue.

Michael: So, I guess functionally as the advisor, I end out working with groups of people and departments with specialized roles…I've got a new client coming in, there's probably a new accounts team. I need to do a trade for existing client, there's a trading team. A client needs a cash out disbursement request, there's a team that does that servicing.

Shannon: Right. But it's easier on the advisor. That sounds maybe a little bit complex. It's really easy for the advisor because it just hits the queue. They don't necessarily need to know...

Michael: Because they're not assigning it to a person...

Shannon: Exactly right.

Michael: They're just opening a ticket and saying they need a thing done and then a ticket comes back that says, "The thing was done for you or your client"?

Shannon: And the advisor is working with an associate wealth advisor as well, who's helping with that system and process.

Michael: Okay. And that would be a local person?

Shannon: Correct. Correct. And not always. I think this is the beauty of scale. You have a situation, and I'm making this up, let's say you have a particular office that has lost their associate wealth advisor and needs to rely on another office for some additional support. That's so easily routed because we have processes and procedures in place for every function within the organization. Or I look at, we had hurricanes. Well, it's really easy to reroute all those calls to somebody else because we do things the same way. And if you go back to the original genesis of the organization, many firms have been advisor-centric. And that's not to say we don't focus on our advisors. Absolutely that's core to everything we do, but we want it to be where it didn't matter which advisor got the client relationship or who was working with that particular client. We want it to be a more institutionalized to the firm. So, it wasn't I would come in the office and prospective client would walk in the door, and I wasn't competing with the person next to me. And I think that's one thing we were really intentional on, is making sure that everybody that had equity in the organization had the same share class of equity, so that all boats rise when the firm does well.

Michael: So, are there other things that's centralized for you? I'm hearing HR, finance, all the day-to-day back office operations of both accounts and money movement and trading and investments.

Shannon: And we also have a central estate planning function. It's part of the platform. Our financial planning, while we have planners in local offices, all the training and everything that we're rolling out comes out centrally. Our marketing, our communications, all of that is central.

Michael: Okay. So, now I'm almost going the other direction. So, what's...

Shannon: What's not central?

Michael: Yeah. What's not central? What's left besides all the advisors working with their clients across 90 offices, often with an associate wealth advisor who may be able to help as well.

Shannon: That's the goal.

Michael: That's the goal?

Shannon: That's the goal, is to have advice within the offices, and being able to support that advice at a central level. I think what I've learned maybe over the last decade-plus, is having experts in various areas, whether it's tax, estate, retirement planning, 529s, you pick anything, is having that dedicated resource to help at a central level has been really important, to help our advisors scale. I think the one thing that I've seen maybe even over the last five years is what we're putting on advisors today, do everything, literally everything. Things that we didn't think were really related to advice per se, is now everything's related to financial advice. So, I think we're continuing to ask our advisors to do more. So, we're trying to say is, how do we support those advisors and not give them more to do on a day-to-day basis that they've got to actually oversee and manage and take care of.

Deciding To Operate In-Person And Virtual Teams [23:27]

Michael: So, in this world where even client meetings at least can be more virtual than ever…our post-COVID world where we all got really comfortable with Zoom. I'm wondering when you figured out how to centralize so much else, do you think about the future of local in-person offices differently in a more virtual world? Or is that no, that's not going away. We want to still have local presences everywhere, even though in theory we could meet with Zoom?

Shannon: You know what? I don't have a strong opinion on that. And the reason I don't have a strong opinion, I can tell you, I have thoughts on it for sure, but I've seen, we've done partnerships over the last couple years where they've been 100% remote. So, where I would've said maybe five years ago or even three years ago, "Gosh, no, we still need to have people in offices meeting with clients and seeing clients"…then we partnered with a firm that had a billion dollars that was 100% remote." Now they still have access to some remote offices that they can go into if they need to do a client meeting and such, so I think my opinion on that...

Michael: Flexible co-working office space is amazing these days of what you can get it for very little cost.

Shannon: It is. It is. But I do also believe we're in an industry and a business where you learn a lot from those around you. So, I think we're missing out in some of those areas if we don't have a way for those offices and those people to connect and to learn and to be mentored by others. So, it goes back to, I said it early on, it's being really deliberate about those things. I think if you're not deliberate about, how do we maintain this culture? How do we maintain educating the next advisor? How do we grow people? What does talent growth look like through the organization? I think if you're not thinking about, what does that look like for us, I think that there will be a big miss down the road. So, I think if we're going to go to a world where there is more virtual, which I think we're already there, obviously, but I'm in an office today that is fully staffed. There's 60 people in here. So, I do think there's benefits to that, and I think what we're seeing, at least what I'm seeing from some of the younger talent that's coming in, they want to be in office. They want to see people. They want to learn from people.

Michael: Because they want the learning, because they...

Shannon: Because they've missed out on so much learning in person.

Michael: So, I'm struck by this. It feels like there's a little bit of a leaning towards in person, but not necessarily for the industry's traditional view, which is you need local offices everywhere because clients need the in-person opportunities everywhere. It feels like the leaning for you is more that we want to maintain local presences because those are convening places for culture and talent development. Is that a fair characterization?

Shannon: I think so. Yeah, I think that's absolutely fair. I think in some cases, yes, it's great to have a place for clients to come and to be able to say, "You know what? I want to meet with somebody on the estate side and the tax side and my advisor." So, I think that's important. But look, in the age of Zoom and Teams and everything else out there, it's already happening in other ways. But I don't think you can get rid of...again, I just think you have to be incredibly deliberate about making sure you're focused and thinking about culture. And one of the things I've done forever, and I'm still doing which our HR team goes, "You can't keep doing that." I'm like, "Well, I can't not keep doing it because I think it's so important to the organization." I meet with every new person that joins Beacon Pointe. That sounds crazy. And maybe it is a little bit crazy, and I don't do it in a group setting. I do 15 minutes at a time.

Michael: I was just going to ask, do you do this in groups? No.

Shannon: No. I do it 15 minutes at a time because what you learn, and that's not about, what are they doing for Beacon Pointe? And here's our systems and processes and all that stuff. It's more about, who are they as a person. And what do they want out of Beacon Pointe. How can I help them get to where they want to be. Are there any connections I can help them make within the organization. And then giving them a little bit about who we are at Beacon Pointe and what's important to Beacon Pointe. And obviously, culture being at the top of that and maintaining the entrepreneurial spirit. We're obviously integrating 80, 90 firms in the organization, we don't have all the answers. So making sure that we're giving folks a path to question or to break a process and rebuild it, I think is really important to the firm and for the success and continued growth of the organization.

Michael: So, can you talk a little bit more there, just 15 minutes, it's both a lot of time when you're doing across every person and a limited amount of time to strike up a conversation with a new team member. So, what are the things you're trying to convey or that you're trying to learn about? I'm going to assume you've got a series of questions or things that you cover since you've done that meeting many times.

Shannon: You would think I was that scripted, but I'm not.

Michael: What's in that meeting, though? You've got to have touched on...

Shannon: Well, it's literally different for everybody, but I always want to know about their story. How did they get to Beacon Pointe? What do they do outside of Beacon Pointe? What are they passionate about? And what are they passionate about at Beacon Pointe? And how can I help them succeed at Beacon Pointe? And I think part of it, Michael, is just, our business is about relationships. So how do you build relationships? Well, you can't build relationships by me talking to 800 people at one time. We do that too. We do town halls and such, but I think you have to build those individual relationships because it's about trust. And people aren't going to trust you if they don't know you. And if I can make those connections and help somebody outside of work, inside of work, make a connection.

And I hear it all the time, "I'm passionate about X or Y," and how do we connect them with somebody else in the organization that's also passionate about that? Or, "I really want to move to this particular location." "Hey, can I help you make that connection to the person that's running that particular office? Would that be helpful to you?" So, they're literally all over the place. But I have heard on some of these calls, somebody who was an operations person that said, "Gosh, I just got my master's in this particular thing in technology," and I was like, "Gosh, does our team know about that?" And like, "No." And I said, "Well, let me connect you with our technology person." So then, they've joined the technology team, or I've seen it happen on research. So, I think there's a lot of things that happen in the background but otherwise maybe wouldn't if we weren't making those connections.

How Shannon Describes Beacon Pointe’s Culture [30:38]

Michael: So, you've highlighted a few times here around, there's importance of culture when you're doing deals, figuring out who's culturally aligned. So, I'd love to hear more, what is the Beacon Pointe culture? How do you define that culture? Are there words? Is there a framework?

Shannon: Yeah. I think the biggest thing, first of all, when firms join us, it's, are they looking to build something bigger than what they've already built? Is it their way or the highway? Is it that, "I've done it this way, I can't change the way I'm doing things." Or are they saying, "Hey, look, maybe there's a different or better mousetrap that I can join to help me accelerate growth or learn more from others or make one plus one four as opposed to one plus one two?". So, I think it's maybe folks that have more of a growth mindset. Firms that are saying exactly what we're saying. And I don't think firms don't necessarily not say this in general, and I think everyone would say, "Gosh, we all believe that," but are they really putting clients first, then putting their team members second, and then shareholders last? We don't even talk about shareholders because if you can do those first two things right, your shareholders will do well.

Michael: Yep. So, how do you try to figure that out? Nobody says, "I don't put my clients first." But you're trying to diligence potential partners. So, what do you look at? How do you try to figure out who's really doing that?

Shannon: I think you can see it in service models, how are they servicing their clients? And it's are they doing in-depth financial planning? Because I think if you're doing that and you're doing it the way that we believe it should be done, I think you learn a lot through that particular process of what they've built around their clients. How many clients are they each serving? The things that tell you they are servicing their clients well. I think you can see, too, where firms come in and go, "Oh my gosh, I can't do all these things. This is why I'm here to talk to Beacon Pointe." And I think that's a realization that assuming that it's the right culture. And culture, it's like anything. It's really hard to define. You can define what your culture is as an organization, but it's hard to define if somebody walks in, are they going to be a good culture fit to our organization? It takes time.

It takes really getting to know that organization. It takes that organization getting to know our team. We put these firms, they meet with almost all of our executive leadership team. And I think we've turned firms away that somebody, it doesn't have to be more than one person, somebody on the executive leadership team says, "Gosh, this isn't a great fit for me. Something doesn't feel right here." Because a lot of it is, my gut tells me this isn't the right partnership for us. And we as an organization have to look at that because it's not about AUM or profit. Because you know and you've seen this in business is, if you don't have the right partnership, it can suck the life out of an organization. So, we just want to make sure that we're being really deliberate about...our first three screens are no jerks, no jerks, no jerks. We use this in recruiting, partnerships, acquisitions, succession planning. It flows through everything we do, and we want to make sure that everybody knows that here, so as we look to hire more people, that's a theme that we see across the organization.

Michael: So, what constitutes a jerk, and how do you know when you've found one to avoid?

Shannon: Gosh, somebody that doesn't listen. Somebody that thinks that they've built the best mousetrap and don't have any capacity to learn from others. Humility. I think there's just a lot of things. Integrity, obviously. That's sort of a non-starter if we don't think they've got integrity. We actually hire a lot of athletes across the organization. Do they play well with others? Can you get on a team and help build as a team? And it's interesting because I think we always knew culture was really important to the organization, but I think culture compounds just like capital. So, you've got to continue to build on that culture year after year. And it's not just talking about it's action, continuing to do the right things. We did a partners meeting, an advisor summit meeting, and we had advisors say, "What's the best thing about Beacon Pointe?" And to a person, it was either culture or people. And I do think it's across the organization, that's what we've intentionally done, is, can somebody step in and service this client that's in Boston from our LA office? Are they willing to get in there and do that?

And we have it across the organization. Somebody has a particular client situation that they need help with, that somebody's got expertise in another office. Everyone's like, "Sure. How do I help? What can I do?"

Michael: I'm struck that one of your factors on putting clients first is, how many clients are they serving? So, there's such thing as a firm that has too many clients per advisor that you're skeptical that they can even keep up with the client need?

Shannon: I wouldn't say skeptical, I would say opportunity for partnership. So, how do we help these organizations either scale to serve more clients, or say, "You know what? We need to help you with succession," or bringing in a junior advisor to support what you've already built so that you can actually turn around and actually grow that business. So, I think it comes in...there's a bunch of different metrics we look at that help us assess what's going on within that organization. And it's just like how a firm would assess buying anything. "Do we want to purchase this organization based on the EBITDA [Earnings Before Interest, Taxes, Depreciation, and Amortization], the revenue growth, how many advisors they have?" Because we know at a certain point, you can't service 300 clients. It's not physically doable unless we help you put this... You might be able to do it if we've got the client segmented properly, we've got the ability to automatically service some of the needs of that client by pulling some stuff off of your plate.

The Metrics Beacon Pointe Looks At When Considering Potential Partner Firms [37:37]

Michael: So, I'm intrigued, what are the other metrics that you start to look to as you're trying to evaluate and understand a firm's situation? Because I feel like these are probably just good practice management metrics for anybody to reflect on in their firm.

Shannon: You can imagine we look at, there's probably 100 different metrics. We look at net flows, we look at organic growth, we look at revenue per advisor, revenue per employee. We look at sort of, I think these are all relatively common metrics that firms like ours look at for organizations.

Michael: I'm struck by metrics like organic growth, revenue per advisor, revenue per employee. What are good numbers to you? What do you look at and say, "There, that looks really good," or what do you look at and say, "Ooh, we're absolutely..."

Shannon: Look, on the organic growth side, I can tell you what we at Beacon Pointe think is good.

Michael: Yeah. Yeah. From your perspective. Everyone's got their own view.

Shannon: Right, because I do sit in a study group with people that everyone's organic growth is all over the place. But we're looking, and this is not to say when we make an acquisition, firms are here, because that's generally not the case. So, we're trying to help unlock some of that growth, so we're able to see some things within an organization and help them create a blueprint for success. Because we now basically have our own industry benchmarking study based on all the firms at Beacon Pointe, so we can see, "Here are the top growers in the organization. How do we get to that particular number?" And I would say, high single-digit, low double-digit growth is really good. Now that's probably top 1% in the industry.

Michael: That's revenue growth, client growth?

Shannon: No, flows, organic growth.

Michael: Flows?

Shannon: Yeah. Net new assets.

Michael: Net new assets. So, no market in there, that's actual flows?

Shannon: Correct. And that is not easy to do. Those are hard numbers to hit. But I think if you can help folks, and this is why I said...you asked earlier about, is it just advice in an office? Well, ultimately, that's the best thing we can do, is have just advice in an office so that those offices can grow, and everything else is taken off their plate so that they can actually service and grow those advisory clients.

How Beacon Pointe Approaches Organic Growth Goals In A $60B+ Firm [40:11]

Michael: So, as you try to bring all of this together, how do you think about growth at your level in a world of organic growth from various channels, doing mergers with partners? I'm cognizant, I call it the tyranny of the denominator, growth rates get a little rough as the denominator gets big. Your denominator is $60 billion-plus. So, "Yeah, we need to build a six-plus-billion-dollar new firm every year just to keep a double-digit growth rate."

Shannon: I think that's true. I do think there's a little bit of truth to that. I think you have to be able to continue to grow as an organization for a whole host of reasons. How are you going to attract the best talent? How are you going to invest in the best systems? How are you going to best serve those clients if you're not keeping up and growing as an organization? So, I do think there's a lot of truth in that. So, we are aiming at those high single digits, low double-digit growth, but I think there's a lot of ways to do that. I think making sure that we're servicing clients in every possible way we can service them, do we have their retirement plan assets? Are we looking at all those pieces that we can bring on to make sure...it actually helps us better serve that client anyway. But are we looking at all those different pieces to be able to better serve that client? And are we attracting new clients in different ways?

One of the things that we haven't talked about, but I think is also really important is how are we unleashing organic growth opportunities for our advisors? Whether that's through some of our referral partnerships or creating new referral opportunities, whether it's a CPA network group that we're working on, or whether it's through some of our women's initiatives, making sure that we're seen as a firm that can help all these clients, I think, is really important. Or we're serving the ultra-high-net-worth market and certain family office type clients in certain offices, and being able to have those services, I think, is very important.

Michael: And so, in your world where you highlighted a lot of other centralization, how do you think about centralization of marketing versus, at least as I think of it like a more decentralized, one advisor at a time in their local market are pursuing their own strategies?

Shannon: So, I think it's centralized, decentralized. Can I say that?

Michael: Sure, but then you got to peel that layer for us a little.

Shannon: Because I think it is a lot of that. I think a lot of growth comes from being in a local market and being very involved in that local market, and being seen as a leader in that local market and having...we talked about a little bit about geographic density in that market and being known in that market, which creates some brand in that market. Very important, I believe. But I also believe that firms that are successful with a great strategy on their SEO [Search Engine Optimization] on their website, or are doing great centralized marketing efforts, or are building out…and we're in the process of building out a better digital platform for acquiring assets. How do we better serve women as we're seeing this significant wealth transfer to women? I think making sure that centrally, we're focused there so that we can actually give our local offices the ability to accelerate organic growth through those different areas.

Michael: So, what's at the platform level? What do you do or build for them that actually you can do centrally and put out to them?

Shannon: We have a 365-day content calendar. That's not to say we're sending out content every day, but we have content that is directly sent to clients, depending upon, obviously, the segmentation of that client, depending upon what we're actually sending out, specific to each client coming from our central team. If you go into my LinkedIn, it looks like that's all I do. I've never once posted anything on LinkedIn. So, that is a central function of our marketing team, that is centrally posting for our advisors. So, just a lot of the thought leadership is coming centrally from our team.

Shannon’s Original Vision For Beacon Pointe [44:51]

Michael: So, now take me all the way back now to the origin, the start. You said you had a vision, there was an original business plan. So, what was the original business plan vision? What was this supposed to be when you were getting underway 25 years ago?

Shannon: So, I will say 25 years ago, vision shows up long before validation. So, we were not validated very early in the organization because we thought, and it took us a while to get there. We thought we could do things a little bit differently, and I think the market said, "Hey, we are looking for something a little bit different." The idea of having no product, the idea of having no broker-dealer, the idea of building your investments off an institutional platform. It's interesting, 20 years later, we were starting to see that everybody had to have alternatives. Well, that's something that we did very early on because we were working with the large institutional client who demanded that. So, I think some of the things that we built early on may be a little bit of luck, but also something that clients ultimately wanted from the organization, and they didn't want a product. They wanted pure advice. That was the business plan and I will say I got a B on that business plan. But that's okay because that skeptic...

Michael: Because this was like a B school, business school, business plan?

Shannon: Yes. Everybody gets a B. People that do well actually get an A, but my professor did not believe that. He was very skeptical about the plan, but that skepticism became a little bit of our fuel.

Michael: Oh, well, he said I can't do it, so now clearly I need to do it.

Shannon: Right. So, look, we were fortunate early on in the organization where very early on, we were approached by Schwab to be part of the referral program. We actually turned them away because we were like, "No, we're going upstream." And then we quickly realized, "Wait a second, this would be an amazing partnership for the organization based on location and based on what they're actually referring to firms like ours." And then we were subsequently approached by TD Ameritrade and Fidelity to be part of their programs, and I think that was just a differentiator. Not many firms had all three referral platforms, which was good for the business, and I think to structurally start the organization. I heard somebody say recently, "You don't build a church for Sunday. You build a church for Easter." I was like, "Oh, that's a really good point," because we looked at our organization, we weren't building a firm to be a billion dollars. We were trying to build a firm that had scale, that we would be able to grow into the organization.

And I think if we would've knowing what we....I'm glad that was our thought because I think it's really hard for organizations to say, "I'm at $100 million." You look and go, "How am I ever going to get to a billion dollars?" But if that's your original thought, is like, "Yeah, of course, we're going to be a multi-billion dollar firm, and we're going to kind of tackle it day by day and client by client to get there," I think it's maybe a little bit of a different mindset. And I think having that structure right out of the gates and having the separation, which many firms don't do coming out of the gates, but having a separation of people who are focused on running the business and advisors or research folks or whatever the other functions are in the organization, I think it often gets blended into the same person, and I think that's really hard because it's really hard to see what's coming around that corner or where should we maybe be investing.

Easy in 2008 to say, "You know what? Let's cut spending and let's do this, let's do that." As opposed to, "Wait, is this an opportunity? Where can we lean in? Where can we invest?" And I think we were fortunate during that time, and we leaned in. We said, "This is an opportunity, and I think there's going to be a lot of opportunity coming out of this." Obviously, we looked at the finances of the firm and said, "What should we or should not be doing based on this market environment?" But for us to lean in and say, "There's opportunity coming out of this. Can we potentially partner with other firms because we have built the infrastructure?" And that's what came out of our starting to do acquisitions.

Michael: So, can you share a little bit more about separation of people running the business from advisors and other functions? I get why we do that at a certain point as the firm gets, at least by industry standards, fairly sizable because it just gets so large that you can't manage the things while you're also an advisor doing the client things., And so, roles tend to specialize. But I find for a lot of firms, that might not come until a billion or two billion of assets. Is that when the separation came for you all, or were you trying to do this or even earlier?

Shannon: No, we were trying to do it really coming out of the gates, to say... I'm not an advisor. I have worked with clients over the years, but that is not what I do on a day-to-day basis. What I've historically done on a day-to-day basis is run this business, think about strategy, work with the other executive leaders here to put forth a strategy and growth options, and think about M&A [Mergers and Acquisitions] and think about some of these other things in the organization, as opposed to, I'm working with 100 clients and doing this part-time. Because I think that's when it gets really hard. Which hat are you putting on today? Are you going to be the CFO? Are you going to be the CTO? Are you going to be head of HR? So, I think being able to separate that from advisors early on was really important for the organization.

Michael: So, how does that manage just financially for the business? There's almost only so much dollars to hand around. Traditionally, in firms early on, most of the dollars coming in goes back to the advisors to service the clients they've got as they're getting going. It's not the biggest pie to split to a full-time professional manager.

Shannon: No. So, we didn't take compensation for at least a year. I have my first paychecks that sit under my desk. One was a dollar and one was 79 cents. We just said we’ve got to put money back into this business so that we can actually see the inflection points of the organization to actually grow through this. Was it easy? No, it wasn't easy. You talk about, behind the scenes, what was going on. What did that look like? It was hard. It was really hard. I sold my house and put that money into the business. And I was actually pregnant when I started the business. We started the business in March of 2002. I had my son in January of 2002, so we're doing SEC filings, figuring out everything as I was eight months pregnant. But failure wasn't an option. We said...

Michael: Not after you sold your house with a newborn.

Shannon: I sold my house with two. I had a two-year-old and a newborn, and my husband was staying at home with the kids. So, it wasn't an option. This was like, "We are all in, and what do we need to do?" And you know how this goes, as an entrepreneur, it's 24/7. And I would say for the first 20 years, maybe longer, there was not one day that I didn't check email, not one day that I didn't check in. But I love it. I think that's the other thing is I've loved what I've done for this many years that I was willing to pour that in and raise my kids. My kids are as old as Beacon Pointe, which is, it's fun because I've raised my kids alongside the organization. It wasn't always fun, to be clear. There were a lot of hard moments, but I wouldn't change it for anything.

Michael: So, how long did it take before you actually could get paid from this thing you were trying to make?

Shannon: It took us about a year. The fortunate thing we had was my dad had worked with institutional clients and I had worked with private clients, and Matt Cooper, who joined us early on, actually before we opened the doors, also had experience on the private wealth side. So, our ability to be able to bring in private wealth clients early on to the organization was very important. And to bring in my dad's institutional clients, we were able to bring over as well.

Michael: So, how much business came over in that first year to seed the survival as it were?

Shannon: I don't know the exact AUM. I should know that. I could go back and look at the exact AUM numbers. But we had to bring over a billion and change, but it wasn't all private wealth money. We had a lot of institutional money, which, as you know, the fees on those were very low.

We tightened our belts. We bootstrapped the business, and we tightened our belts personally and just said, "We're going to make this thing succeed." And we invested in people. Look, we had, I think, eight people to start, or right around there. So, we had a credit line that we were using. And my house that we sold was capital for some of that. And my dad put in capital as well. So, we just made it work.

Considerations When Starting Down The M&A Path [54:58]

Michael: So, then as the growth journey continued, it sounds like there was a turning point for you in and through the financial crisis, if I heard right, that's when interest in M&A and taking on partner firms began.

Shannon: Yes. I think we saw in 2008 that, "Gosh, this is an opportunity. Will we see folks leaving wirehouses? Will there be an opportunity for folks to just kind of bolt onto our platform? Should we be a TAMP? Should we offer these services?" But then we thought, "Gosh, that's maybe not the best idea. We should have firms join the organization and partner with the organization." We put it in a drawer for a couple years. And then Matt and I were both actually... I was leaving the TD Ameritrade advisory board, Matt was going on, and we were at the same event, and it was like the light just clicked. We were like, "Oh my gosh, look at how many RIAs are coming to market, day after day, year after year, and they're stalled out on growth because they're wearing every single hat within the organization. What if we went to market and said, 'We'll partner with you.'" And by the way, we didn't have capital. It was just, "We're going to set up another RIA. We still have the Beacon Pointe RIA, and we're going to set up this Beacon Pointe Wealth Advisors RIA, and we're going to start making acquisitions. And we own part of it, and you guys, based on your earnings, you own part of it." And then we just started making acquisitions. And what we originally thought is, "Gosh, this is going to be succession for people." People are looking for a place to go and a place to potentially retire. But what we found is we were attracting people that were growers, that wanted to continue to grow, but had stalled out on growth because they were doing too many things within their organization.

Michael: So, I'm intrigued that you did this with a separate sister RIA and not doing the deals into Beacon Pointe directly. Why the separate second entity layer?

Shannon: Because you can imagine at the time...so, this was our first acquisition in 2011, Beacon Pointe was nine years old, and we had grown it to of size. It was worth a lot of money at that time, and we didn't want to dilute what we had built. Not knowing…we were taking a risk. We didn't know. So, we were like, "Let's try this, see if it works. And if it works, we'll figure it out." Well, it did work, and we figured it out, and we didn't figure it out really well until...we figured out that model very well, and we figured out how to service those clients really well and how to integrate really well. But what we had to do in 2020 was put those two organizations together. Because it worked well until it didn't work well. It worked really well, and like, "Yes, this thing is doing great, and people are looking for an opportunity to join Beacon Pointe." But then we were in a position where, "What do we invest in as an organization? Well, this group would like us to do this group would like us to do this." So, then, we ultimately combined the two organizations and have been off to the races since.

Michael: So, the challenge point eventually was, well, now we've got two entities we own that are both generating profits. We've got to decide what we're reinvesting where for growth, and if it's two different organizations, we actually have to have the somewhat awkward conversation. Are we investing into the, I don't know what you call it, the core Beacon Pointe business or the wealth advisors business, and that's awkward split to have to allocate when the ownership cap tables are not the same between the two.

Shannon: Correct. Correct. You nailed it. That's exactly right. And which we did, and we figured it out, and that's been great. And I think you look at the firms that joined us, I think they also looked at Beacon Pointe and said, "Gosh, you're a firm that understands what it's like to be zero AUM going to $100 million going to a billion, going to two, three, four, five. You know what those inflection points feel like, look like. You can help us as we think through building the organization that we started." So, we were that RIA that started making acquisitions of RIAs as opposed to we didn't start the business saying, "We're going to partner with other RIAs." We started with, "Hey, we're going to be a really great RIA doing really great work for our clients." And then the other nice thing that did for us is it allowed us to have this test kitchen. If somebody had an idea or wanted to change up a process or do something different within the organization, we could test it with our original group in the RIA that I'm sitting in today or the office I'm sitting in today.

Making The Decision To Take On Outside Capital [1:00:08]

Michael: I know at some point along the journey, you also got involved in the outside investor world. So, when did that come into the picture and why?

Shannon: Yeah. It coincided with bringing the two firms together. So, that happened in 2020. Look, we recognized that if we wanted to continue to compete and do acquisitions, we needed capital. Because that worked. It worked for a while until it didn't work. And I think that's a little bit of our story along the way. It's being able to, and I think this a little bit goes back to what's important when I talk to new team members, it's having that entrepreneurial mindset because not everything's perfect. And it wasn't this, Beacon Pointe went from zero to $60 billion, and what a success story. There were a lot of pivots along the way that, like, "Yeah, let's try this. See if it works. If it doesn't work, then, great, we're going to move to the next thing." We didn't ruminate. We didn't worry about those decisions. We just kind of moved on. And I think me having been a former college athlete and having a lot of athletes here, it's what we practice for. We would lose. If you lose, that's great. You had to get up the next morning and go, "Okay, well what do I need to do and what do I need to put in place to win?" And I think that's been a lot of the mindset of the firm for the last 25 years.

Michael: So, what changed that you had this path of doing mergers through the 2010s, and then as you got to the 2020s felt you needed outside capital partner to continue going?

Shannon: I think, look, more competition, more demand from the folks that had built RIAs that were looking to get some capital off the table. I think people were looking to diversify their assets, which, understandably, right, with the average age of the advisor continuing to rise. I think it was just a market force that said, "We need some more capital in this."

Michael: Because early on, you thought you were going to get retiring advisors, but you got a lot of overwhelmed growers.

Shannon: We did. We did. And the funny thing is, we still didn't get retiring advisors. A few advisors have retired through the years, but still, even after the capital. But I think people were getting older, and they obviously wanted to do some financial planning and estate planning, and I think we were just getting people at a different life cycle. And we're still attracting younger advisors as well, but I think capital is now just part of the equation.

Michael: Because the wealth advisor deals were often like stock-for-stock deals, roll your stock in and get a piece of the aggregated pie?

Shannon: That's what ours was, yes. But that's not what the market was doing in 2020.

Michael: Because by 2020, multiples are getting a little higher, advisors are getting older, and at the least they're saying like, "I want to cash out a portion of this, if not most of it," and then you just need cashy cash at that point.

Shannon: A hundred percent.

Michael: You need cash at closing.

Shannon: A hundred percent. And we saw it. We were able to significantly grow the business from 2020 to the beginning of 2022, and then we partnered with KKR effectively January of 2022. And the reason for that, because...

Michael: Yeah. What brought KKR to the table when you were just at two years into the prior partner?

Shannon: Experience and partnership, and the ability to the ability to show and share and give us the knowledge that we didn't have of what does that engine look like, not even for the RIA space, although they had experience in the RIA space, actually quite a bit, but what are other industries doing? Can you help us with this expertise on thinking through what we should be looking at? What are our blind spots? It's funny, we say that we want a partnership with all of our offices that we partner with, which is 100% accurate. We wanted a partnership with our private equity firm.

Michael: So, can you share a little bit more of what expertise? Does it your size and scope? You're $10 or $20 billion at this point. So, what expertise do you seek at that size and stage that it's compelling when the right PE firm brings it to the table?

Shannon: Honestly, it's like, what expertise don't they have? Because they've seen so many transactions through the years and so many different businesses, like we could say, "Pick anything." We could say, "What does it look like to have a very effective digital marketing campaign? What does it look like to increase fees across the organization? What can we implement, or what are the things we can do? Can you do the research? What are our competitors doing in the marketplace?" Do that competitive analysis. Are we missing any service offerings?" There's just so many different analytical things that they...they're not necessarily coming up with the ideas. That's us, seeing boots on the ground, what's going on in the business. But more, "Hey, we're thinking about this. What do you think? What have you seen?" Or, "We've gone down this path. Have you seen anything different?"

So, it's like having an outside... I mean, which they are as well, but it's like having an outside board of directors that's really looking at through little bit of a different lens. We're in it on a day-to-day basis, so having the ability to critically say like, "Have you guys thought about this? Strategically, we've seen other firms do this." Or even as we're looking at new systems and different technologies, not necessarily related to planning or advice, but what is the best CRM system out there? Have you been able to negotiate better rates than we've been able to negotiate? Just all the things that go around running a complex business, they've been very helpful with.

Michael: And so, how do you pick amongst PE firms? I'm sure everyone says they're wonderful and brilliant and have all this expertise.

Shannon: That's a good question. So, a couple things that were really important to us…same equity. So, I wanted their equity to be the same as ours because I didn't want to get in a boardroom and go, "Well, they've got a preferential treatment on the equity. They may think about things a little bit differently than we're thinking about it."

Michael: I was going to say, so no preferred shares, no pref liquidity, none of that stuff. They had to take good old common.

Shannon: Yeah. That was important to us. And that's not, by the way, common. Good old common is not common. But I think it changes maybe the conversation or maybe aligns the conversation better, in my opinion. Now, I'm sure there's other ways of doing it that also work well, but in my opinion, that was what Beacon Pointe needed at the time. The other thing that was really important to me personally was equity ownership across the organization. We have very broad-based equity across the firm. Then we have several hundred equity holders in the organization. KKR also was one of the original founders of Ownership Works, which is the model that allows every employee to participate in equity ownership at a transaction. So, a certain amount of equity is held to the side, and they will be bonused out a certain amount upon a transaction, which my feeling is, and my feeling since day one has been, since we founded the organization, was equity ownership does drive value. And KKR feels the same way.

Michael: Any other drivers for picking, from what I'm sure was a long list of a lot of suitors...

Shannon: Those were the two big ones. We had a huge list, but those were the two big ones. Aside from the partnership, we wanted somebody who understood the space, that could help us when we wanted to talk about what does our technology look like? What have you guys seen? What does the digital side look like? All these pieces, we wanted somebody to be able to share their expertise, and they have an amazing group that that's actually all they do. They basically have their own internal McKinsey team that you can just land them in your office and they can help you work through some of these things.

Michael: Mechanically, do you still have to hire them like consultants? Do you still have to pay them? Or from the PE firm's end, it's like, as long as it increases your capital growth, we don't care. We make our money on the growth.

Shannon: It depends on what the project is. You may be hiring some of the team, or they may help you find who's the best partner to bring on to help you with that particular area.

Michael: So, then I've got to ask, when you ran almost 20 years on your own, what's different when there's now a financial sponsor at the table, on the board?

Shannon: Well, I think certainly capital. So, having the capital to be able to continue to grow at the rates we were growing and have been continuing to grow, we wouldn't be able to do that. We just would not be able to do it if we didn't have the outside capital to do it. So, I think that is the biggest piece. And the other is having somebody else in the room. They're not in here running our business. They're additive to the business on a day-to-day basis. So, they're not saying, "Here's how you should be doing this, here's how you should be serving clients." They're…"How can we lift Beacon Pointe? How can we help you guys as an organization?" And we're calling them. We're saying, "Gosh, what have you seen? Here's what we're contemplating." They've been really good thought partners in the business.

Shannon’s Decision To Transition Out Of The CEO Role [1:10:26]

Michael: Now, I know part of this journey, you had put your own announcement out just a few months ago as of when we're recording this, of making your own transition after almost 25 years. So, can you share a little bit about what's going on in your world now?

Shannon: I'm still here. So, my goal through this transition, and I think... Look, I think for any organization, I've been leading Beacon Pointe. We have an incredible leadership team, so it's not even me leading. We've got an incredible team leading. But I think change is good. Change is good for organizations. It's really hard to do, and I know because I'm in it right now. It's hard to do, and it's hard to do, for many leaders to step away from something that they created and they built. Like I said, I raised my children alongside Beacon Pointe. I feel like I raised Beacon Pointe and my kids at the same time. It's really hard to let those kids leave the nest and do their thing. It's also hard to leave, and I'm not leaving. I'm still here doing some of the things that I want to focus on, but it's hard to make that transition. But I think ultimately for an organization, it's really healthy for the organization to change things up, especially after a 25-year run.

I think having new perspective and new ideas, and just maybe looking at things differently is really good. I'm still chair of the board, which I intend to do for the foreseeable future. I am really focused on leading and helping our women's initiative. Women are 51% of the population. I think we as an industry haven't done the best job of serving women, so I want to make sure that we're here to create the right resources and tools for women so that we can continue to serve that demographic as we see a seismic shift in control to women and a seismic dollar amount going to women. We surveyed more than 10,000 women across the U.S., and it wasn't under Beacon Pointe, it was under what we called HerWorth, to really understand how women are making financial decisions. What creates confidence for women? What creates stress? Are women currently underserved?

And then out of that survey, and it's not even published yet. It's written and done, but we haven't even gone to market with it yet. Only 31% of women feel confident managing their finances. So, we want to make sure that we change that confidence gap. I think it's not, we, Beacon Pointe, although we, Beacon Pointe, will do everything we can to help that, but we as an industry, how do we correct that? And so, I think there's a lot of things that can be done around that that ultimately will get implemented from Beacon Pointe as well as other firms to make sure that we're filling that confidence gap.

Michael: Were there other notable findings from the HerWorth survey?

Shannon: Yeah. There's four in ten women who said they didn't have enough time to manage their money. Well, okay, that's a problem. There's a lot of money being left in cash. Sixty-three percent said they had over $100,000 uninvested. You have to imagine what this ultimately leads to. If we're sitting on uninvested cash and we want to retire, well, we can't because we didn't...and then we don't have time to do it. So, how do we close the gap on some of these things that I think are easy to close. We're at an interesting time with more women being educated in college, more women in the workforce. We live longer than men. There's just a lot of demographic things that are saying, "Hey, we need to focus in this particular area." And I think a lot of people have said, "Oh yes, we're doing this thing for women," but I don't think it's been really well defined, and I think a lot of people have just sort of pink-washed things, and I think that we've got to really look at...

And the reason we did the study is...look, we started our women's initiative in 2011, and at that time, we heard from many saying, "This isn't a thing," and we're like, "No, it's a thing. We're women. We're telling you it's a thing." And people were like, "No, women don't want something different." And I think clearly women do want something different, and clearly women haven't been involved in the conversation for the most part. So, we just want to make sure that, again, we're closing that gap.

Michael: So, where do you see the difference gap of what the industry isn't doing well there that you feel like you're trying to solve for it with the women's initiative?

Shannon: I think education. It's not a matter of aptitude. It's just we have to figure out how do we build that confidence because historically, and this is not everywhere, it's not every household. But historically, there's been a division of labor in the household. So, we need to make sure that we're helping women figure out what those particular needs are. In our survey, I think it was somewhere around... I don't have it in front of me, but somewhere around 40% of women wanted help with retirement planning. Somewhere around 40% wanted help with estate planning. How do we get that knowledge to women? And now we're stuck in a situation where now these women don't have the time, they don't feel like they have the confidence, and now they're helping their aging parents.

And so, there's just all these forces at work that we want to make sure that we're providing the right tools. And I'm not saying we have. I think we have a lot of them. I think a still a lot needs to be created and ways of showing women what we can do for them is going to be really important in the future. And I think a lot of the advisors that are listening to this podcast, I think it's a significant opportunity for growth, but doing the right thing. This is really important. And I think we've got to make sure that we're on the front line helping women.

Michael: So, coming back for a moment to this shift you made from CEO to the board, how do you decide when it's time?

Shannon: I think that's really personal. I think it's personal. I had been thinking about this for a couple of years, and I think making sure that the firm is in a really...this firm is doing incredibly well, and I'm super proud of the people that we have in place and the things that we've done as an organization. Making sure you have the right leadership team in place, I think, is critical. I didn't want to leave the firm with anything. And I think also, can you...and this is the tricky part, and I don't have the answer. We should do a part two at some point. How does that transition work, and what does it look like after? I'm here for the foreseeable future to help where I can help, and to mentor where I can mentor, and to support and enhance our firm's culture. Those are things that are really important to me, and things I was working on anyway, but also hard to focus on a couple of key…it's like some of these smaller RIA firms that you're wearing so many multiple hats. I was getting to the point where I was wearing so many multiple hats in the organization that if I want to affect change in these couple key areas that were really important to me, and I think important to the industry, that I had to say, "You know what? I have to step into this and let somebody else take it from here."

What Surprised Shannon The Most On Her Journey [1:18:52]

Michael: So, as you reflect on this journey, what's surprised you the most about building this advisor enterprise?

Shannon: I think probably what surprised me...it's hard. It's hard work. And not that I didn't set out thinking like it was going to be hard work, but I think when you set out to build something and you've got a business plan, and I never envisioned close to 1,000 people, that creates complexity and stewardship. And I feel very responsible for the livelihoods of the people that work at Beacon Pointe, as well as our clients. Obviously I felt that when we were a smaller organization too, but I think the magnitude of it has surprised me. And then I think we talked a lot about culture, and I think just that compounding the culture, how important, that wasn't in my business plan, culture. It wasn't even a thought in my business plan. I didn't think that. It wasn't even in my business plan. But I think that's something that we've worked really hard at over the years and has been really important to the organization. So, I think that's a big surprise, too.

Michael: Can you just explain further, what does that mean, "We've worked hard at the culture"? What do you do? What's the working, effortful thing?

Shannon: It's a really good question. Throughout the years, we've done a number of things around culture, but I think it's being available as an organization. People say they have open doors, but really open doors? Can people connect with leadership across the organization? I think that's been really important to the firm, developing and building those relationships. I know we talked about just reaching out to every new employee. That doesn't happen. It just doesn't happen. I have not had one person ever across the firm say, "Oh gosh, at my last firm, they did this as well." Everyone's surprised and they get a little bit worried, like, "What's this call for?" We finally had to put a memo in there.

Michael: Oh, yeah. First day and I've already got a call with the CEO. This is either going really well or really badly.

Shannon: Yeah. I know it. But I think making sure you're doing the things that are important to your team. We do a Gallup survey every year for our...

Michael: Which? The Gallup Q12?

Shannon: It's just our own internal Gallup survey that we've run for the last, I don't know, several years. And we listen. And the survey is Better in Beacon, done through Gallup, and historically, I've gone through every single comment in that Gallup survey, like, what can we do better? So, we're asking, and then we're implementing. Now, can we do everything? No, we can't do everything. But we certainly try to do all the right things that we can actually do for our team.

The Low Point On Shannon’s Journey [1:22:00]

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

Shannon: Gosh, any transition is hard. This is probably the hardest. It's not a... I shouldn't say low point, because it's not a low point. I actually did this. This is something I set out to do. But I think any change is hard. No matter what the change is. So, along our journey, there's been lots of change through the organization. It wasn't a low point to centralize operations. It was the right thing to do, but it was different. Because then you're moving control out of a certain area and putting it somewhere else. Partnering with outside capital, change. Certainly just different. Not a low point per se, but I think change is always hard, so being able to adapt quickly to change I think has been good for Beacon Pointe and probably why we've done well is being so willing to adapt and easy to adapt. I think for me personally, there's been a lot of stuff along the way. I had a child that was really sick, and that's hard. It's hard to focus on the business, focus on your family, and make sure that you're doing all the things.

And people always say, and I don't love it because, like, "How do you get balance in your life? How'd you do it?" I'm like, "Well, there is never balance because you're always giving up something for something else." The question is can you have some sort of equilibrium around there, like, "This is where I need to be right in the moment," and try to do that. And I've tried to do that. I've been really focused and deliberate on that. The other area that I would challenge folks if they're not doing it is put some white space in your calendar. Because I think it's really hard to think when you're in it day after day after day. So, to be able to think about what you want personally and professionally to find the space to do that, really important.

Michael: What kind of space are we talking about? Is this put on two hours a week, put on 30 minutes a month? What kind of space do you try to create?

Shannon: I try to find at least an hour a day. And it's not perfect. Some days aren't going to be like, "Oh, I'm just solely focused on the business." But I also think it's a place where you're also decompressing about the things outside the business as well. I'm a big runner. I run marathons, and I think that's been an area for me that's been incredibly helpful to be able to take that time running and think through, listen to great podcasts like yours or listen to other podcasts that help me as a leader or they just help me rethink how we're thinking about the business.

Michael: So, marathon training time also gives you thinking brain space as you go for runs.

Shannon: Yes. You know this as well as I do, is you look at our calendars today there's no space. Because you can Zoom meeting, and Zoom meeting, and Zoom meeting. There's no even time to get up and walk away from your desk. So, I think being really intentional about those kinds of things is very important.

Shannon’s Advice For Her Younger Self And For Newer Advisors [1:25:10]

Michael: Are there other pearls of wisdom of things you know now from experience you wish you could go back and tell you making the business plan 25 years ago?

Shannon: Like I'd tell my younger self?

Michael: Yeah.

Shannon: I tell people today because I think, I don't know, it was helpful to me and maybe I didn't do it enough and I wish I would've done more of it, is lean in early, say yes to things that you otherwise that maybe would put you a little bit out of your comfort zone. Because I think that the biggest, at least for me, the biggest growth has come out of doing things I'm not comfortable with. Look how long it took us to get this on the calendar. Because I'm not super comfortable with sharing my story and giving a piece of me out there, because I don't like talking about myself. But I do know that when we do things that are outside of what we feel good doing or feel really comfortable doing, it makes us better people, and it likely makes us better leaders as well.

Michael: Any other advice you would give younger, newer advisors coming in and getting started in the profession today?

Shannon: I tell this to our young advisors, just say yes. I just said that earlier. But say yes to everything. You have other people in your office that don't want to take this particular client, say yes. Do it because you're going to grow through that and learn, and then people are going to think about you when they're looking to place a client somewhere or they're looking for help with something or they're looking for the next leader. The other thing, and we talked about this really early on, but is, you got to show up. Not being there is really hard. It's hard to see your next leader if they're not in front of you. And I think if you look at the whole...we talked about the confidence gap with women, which we will as an industry solve this, which I'm super excited about, but I think confidence follows action. It's not the other way around. So, you have to act, you have to do. And I think a lot of advisors coming out be like, "I'm not sure I can do this. I don't, what do I know?" Well, do it. Keep doing it, and then you'll get the confidence. And show up. Show up, be there and take your seat at that table. Otherwise, you won't get that confidence.

What Success Means To Shannon [1:27:31]

Michael: So, as we come to the end here, this is a podcast about success, and just one of the themes that often crops up that just literally that word success means different things to different people, can change for us as we go through our lives. And so, you've built this objectively incredibly successful business enterprise with the $60 billion and coming up on 1,000 people. It seems in a wonderful place. How do you define success for yourself at this point?

Shannon: Am I making a difference for the people around me? And what do I mean by that…am I adding to the values of their life? So, whether it's my children, whether it's my teammates I've worked with for 20-plus years, whether it's somebody I'm working with outside of the organization, am I adding value to them? Because they're not going to remember all this other stuff that we do on a day-to-day basis, but how did I treat them, and am I adding value to their life? And honestly, Michael, I'm so passionate about helping others. How can I help them live a better life or be a better human? Because ultimately, I think that helps me live a better life and be a better human.

Michael: Well, you have a lot of opportunities of people to help as that team grows in a positive way.

Shannon: Yeah. And I'm excited. I'm really excited about some of the things I'm working on, and I just think that there's a lot of opportunity to do good. And we've been blessed, and I want to be able to bless others with what I've been blessed with and the things I've learned along the way.

Michael: I love it. I love it. Well, thank you, Shannon, for joining us on the "Financial Advisor Success" Podcast.

Shannon: Thank you so much for having me.

Michael: Thank you.