Welcome everyone! Welcome to the 47th episode of the Financial Advisor Success Podcast!
My guest today is Shaun Kapusinski. Shaun is the Director of Operations for Sequoia Financial Group, a hybrid RIA based in Akron, Ohio, that manages more than $3.7 billion across private client and institutional divisions spanning four office locations.
What’s unique about Shaun, though, is that while he started out in the industry over 15 years ago like many advisors of the time – as a “financial advisor” selling life insurance for a career agent life insurance company – he made a shift early in his career to the operations side of the business, and has since been able to grow his career by following an Operations career track inside of an advisory firm, rather than the more traditional paraplanner, then associate advisor, then lead advisor career track.
In this episode, we talk in depth about the organizational structure of this mega advisory firm, how they split apart a division of “Shared Services” including centralized paraplanners, a centralized investment team, and centralized operations (all supporting advisors with local client service associates in multiple locations), the core technology stack of Tamarac, eMoney, and Microsoft Dynamics that Sequoia uses to run the business, and why the firm is looking to make a shift from Dynamics to Salesforce Financial Services Cloud for the next stage of growth.
We also talk about Shaun’s own fascinating career track, from starting out as a life insurance agent, transitioning to an operations role early in his career, why he believes that getting an MBA is even more valuable for those in an Operations role at an advisory firm than getting the degree as a financial advisor, and Shaun’s perspective on why “growth” is such an imperative for advisory firms – because it’s the growth that creates the career track opportunities in operations in the first place!
And be certain to listen to the end, where Shaun talks about the study group he created, called HIFON – short for High Impact Financial Operations Network – which gathers together operations team members from advisory firms across the country. And in recent years, HIFON has grown to the point that it’s no longer just a study group, but an emerging membership group for the operations staff of advisory firms, with not only study group opportunities, but also private discussion forums, private vendor webinars, and even shared data about what technology various advisory firms are using!
So whether you are trying to figure out how to grow the operations side of your business, interested in making a transition to operations yourself, or simply interested in learning about the resources such as HIFON that are available for operations team members, I hope you enjoy this episode of the Financial Advisor Success podcast!
What You’ll Learn In This Podcast Episode
- Sequoia Financial Group as it exists today. [4:19]
- How the leaders of two firms reached a “one-firm” approach that benefited both sides. [17:20]
- The core technology stack that Sequoia Financial Group has in place. [25:37]
- Why Shaun recommends advisors should be taking advantage of consulting opportunities from custodians and broker-dealers. [41:51]
- How Shaun transitioned from a life insurance agent into an operations role early in his career. [51:37]
- Where Shaun goes to gain outside perspectives. [1:03:19]
- Shaun’s advice for “finding your tribe”. [1:28:46]
- How you can get involved with the High Impact Financial Operations Network (HIFON). [1:31:57]
- What advisory firm owners often don’t understand when it comes to the operations side of the business. [1:43:38]
Resources Featured In This Episode:
- Shaun Kapusinski – Sequoia Financial Group
- HIFON – HIFON.org
- Bob Vere’s Insider’s Forum
- Schwab Institutional
- Fidelity Institutional
- Microsoft Dynamics CRM
- Financial Services Cloud – Salesforce
- Tamarac Advisor View
- Wealth Access
- eMoney Advisor
- NexGen Consultants
- Nudge by Richard Thaler and Cass Sunstein
- Episode 39 – Sarah Fallaw
Did you enjoy the Financial Advisor Success Podcast?
And if you have a moment, please Click Here to leave us a rating and review in iTunes!
Full Transcript: Pursuing An Operations Career Path In An Advisory Firm With HIFON Study Group Support With Shaun Kapusinski
Michael: Welcome, everyone. Welcome to the 47th episode the Financial Advisor Success podcast. My guest on today’s podcast is Shaun Kapusinski. Shaun is the Director of Operations for Sequoia Financial Group, a hybrid RIA based in Akron, Ohio that manages more $3.7 billion across Private Client and Institutional division spanning 4 office locations. What’s unique about Shaun, though, is that while he started out in the industry over 15 years ago, like most advisors at the time as a “financial advisor” selling life insurance for a career agent life insurance company, he made a shift early in his career to the operations side of the business and has since been able to grow his career by following an operations career track inside of the firm rather than the more traditional paraplanner or associate advisor or lead advisor career track.
In this episode, we talk about the organizational structure of this mega-advisory firm, how they split apart a division of shared services, including centralized paraplanner, centralized investment team and centralized operations, all supporting advisors with local client service associates in multiple locations, the core technology stack that Sequoia uses, including Tamarac, eMoney and Microsoft Dynamics, and why the firm is looking to make a shift from Dynamics to Salesforce Financial Services Cloud for their next stage of growth.
We also talk about Shaun’s own unique career track, from starting out as a life insurance agent, transitioning into that operations role early in his career, why he believes that getting an MBA may be even more valuable for those in the operations side of an advisory firm than getting the degree as a financial advisor, and Shaun’s perspective on why growth is such an imperative for advisory firms, because it’s the growth that creates the career track opportunities and operations.
And be certain to listen to the end, where Shaun talks about the unique study group that he created called HIFON, short for High Impact Financial Operations Network, which gathers together operations team members from advisory firms across the country, and how HIFON has grown to the point that it’s no longer just a study group, but an emerging membership group for the operations staff of advisory firms, with not only study group opportunities, but also private discussion forums, private vendor webinars, and even shared data about what technology various advisory firms are using. And so with that introduction, I hope you enjoy this episode of the Financial Advisor Success podcast with Shaun Kapusinski.
Welcome, Shaun Kapusinski to the Financial Advisor Success podcast.
Shaun: Thanks, Michael. Thanks for having me.
Michael: I’m excited for this episode because, over the past year, we’ve had a number of advisors on the podcast, we had some folks who started firms, we’ve had some kind of next-generation successors who’ve come in and want to take over the advisory firms and became the lead advisor and owner, we’ve had a lot of industry consultants that work with advisors going through all those transitions. But you’re a little bit unique because you’re actually the director of operations in a sizable advisory firm and live what I feel like is kind of the untold hero of what actually happens with most advisory firms, particularly in entrepreneurial environments like advisory firms, because entrepreneurs just tend to go out and promise a whole bunch of stuff that they’ll do and deliver and then they come back to the firm, it’s like, “So here’s what we said we’re going to do, now we actually have to do it,” and someone in charge of operations goes, “You said we’re going to do what? That we have to do now?” And has to put all the pieces together.
So I’m really excited just to tell the story and maybe share a little bit of perspective of what happens in the operations side of an advisory firm, which I suspect with, you know, much love to a lot of our fellow advisors that run some sizable advisory firms, I’m not even sure all of us in advisory firms actually understand what happens behind the scenes of our own firm sometimes.
Shaun: It could be true, yeah.
Sequoia Financial Group As It Exists Today [4:19]
Michael: So to get started, why don’t you just tell us a little bit about Sequoia Financial Group, the advisory firm you’re in today. So how would you describe Sequoia?
Shaun: So Sequoia is a comprehensive wealth planning firm. We’ve been in business for 26 years, and we manage about $3.7 billion of assets. We’ve got 4 office locations and 62 employees across those 4 offices. So we are duly registered. We do have some individuals that are registered with FINRA, but most of our firm is an RIA, registered under the SEC.
Michael: Right. And so who’s your broker-dealer on the BD side then?
Shaun: So we use a small boutique firm called Valmark Financial Group based here in Ohio.
Michael: Okay. And so Valmark is the BD and then are you a IAR? So they’re corporate RIA or they let you have, like, an entirely separate directly SEC-registered independent RIA?
Shaun: Yeah, we actually have a separate RIA from theirs.
Michael: Okay, so they’re, I guess, one of the few BDs left out there that lets you actually operate as a true hybrid and not just be duly registered under their umbrella.
Shaun: Yep, that’s correct.
Michael: Okay. And so $3.7 billion and 62 employees, so can you tell us a little bit more about the composition of that assets? Like, is that all in individuals, are you in institutions, are you active with 401(k) plans and that sort of channel? Like, what where does $3.7 billion come from?
Shaun: Sure. So yeah, we do have two sides to the business, our Private Client side and then our Institutional side. On the Private Client side, we break that up into three primary segments. So the first group would be called Financial Advisory. And this would be our clients with net worth under $1 million. So typical client there is a retiree, and really just wants money to be managed, you know, make sure they don’t run out of money. Also could include your accumulators, so those refer to these days as the HENRYs, right? The high earners but not rich yet. So they might have some planning needs, but they’re mainly in the accumulation phase.
Our second segment, we call Wealth Management. This is generally in the $2 million to $20 million of net worth. And often we’re seeing these as privately held business owners. Often professionals is kind of the other category. And they have a little bit more complex balance sheets, and there’s a few different reasons they might hire us. So we’re doing a lot more planning work with them. It is fee-based planning, we’re doing asset management, we might get into estate planning or tax work. Sequoia is partnered with an accounting firm, so that’s another component that we can bring to the table.
The last group, we refer to as Family Wealth. And this is your $25 million net worth and above. These are very custom engagements. It’s a smaller subset of our client base but makes up an important growing aspect of our firm. In the big city, big metro markets, it may not be as competitive to have $100 million or it may be kind of a different realm and maybe small money there, but in the Midwest, that’s sizeable money, and we certainly…yeah, we certainly have had good success in our markets being able to provide, you know, custom solutions to those clients.
Michael: Okay. And then what does the Institutional side of the business look like?
Shaun: So generally, we’re doing 401(k), profit sharing, defined benefit plans, advising on those. Really anything under the ERISA umbrella. So we might see some ESOPs, some non-core plans, but most of them are 401(k)s, profit sharing in both 3(21) or 3(38) fiduciary aspects.
Michael: How does the asset base split down between these, like in terms of $3.7 billion? Is this like $3 billion Institutional and a couple of hundred million Private Client or the other way around, or fairly even split?
Shaun: The bulk is actually on the Private Client side. So, yeah, that’s really where our base has been. And what we often find is the institutional clients, many of them do come from the Private Client side in terms of the small business owners or privately held businesses, and then we get involved on their business side as well. Not only that way, but that’s definitely a big aspect.
Michael: I was going to say was that actually part of the evolution of the business and how that business line came about? That you started with doing the private client business directly, and then you moved up market to wealth management clients, and then you got folks that had businesses and businesses that had retirement plans and said, “Hey, we should help them with their retirement plans and then morph that way,” or was it a more deliberate two-channel approach from the start?
Shaun: No, it was definitely the former. I’m sure there’s many advisors out there that find themselves coming across these opportunities. And for a number of years, that’s really all we treated it as was just an opportunity. So we got to a point where we realized, “This is getting to a point where it seems like it could be its own, effectively a business line and a growth channel for us,” and so we thought about how we were going to grow it if we were or whether it was something we didn’t actually want to do. And we decided that it was the right move to continue to grow that side of the business and invest in it ourselves and build a team around that. So it’s definitely a strong and vibrant area of Sequoia today.
Michael: And so, for the RIA side of the business, are you on one of the standard custodial platforms, Schwab or Fidelity or TD Ameritrade?
Shaun: We are. We actually have spent the past 12 years I believe with Schwab, and about 2 years ago we added Fidelity as well.
Michael: And so is all of your Institutional business on Schwab in particular or Fidelity, or is that the stuff that actually still goes through Valmark? Like, how do you…I find for a lot of advisors just figuring out how do you “do” 401(k) plans on the RIA side of the business is actually an interesting challenging question. So how do you actually get that business done?
Shaun: Yeah. So what’s interesting is a lot of new business is not startup business, right? So existing plans are often held somewhere, and when our team is looking at where those are at, I’d say what we found or when we really started to get serious about this business is that the idea of maybe limiting the number of custodians or the number of platforms that we were going to use to a very small low single-digit number was going to be challenging. It was going to be not only a huge change to where we were at, but it seemed like it might actually limit opportunities because that is a component that’s considered by the plan sponsors when they are looking at advisors. And for us, that became something that we thought, “Okay, to have 20 or 30 seems like it might be excessive, but to know that there’s probably a need to have multiple platforms has become acceptable to some extent.” So ideally, that would boil down, but reality is it hasn’t.
Michael: And so are those, like, broker-dealer platforms that you do through Valmark where, you know, someone had like a principal plan and you become broker of record on the principal plan or are you still doing this on the RIA side of the business just with various 401(k) providers in the RIA side?
Shaun: Yeah, most of them are done on the RIA side. There are instances where it either needs to stay or for whatever reason, it is on a BD platform, but that is few and far between at this point. Usually, that’s something if we see that coming in, there’s the ability to be able to transition it to an RIA platform and to have a little bit more control of that these days than we did maybe in our early years of having those plans.
Michael: So when we look overall then what’s the connection point for Valmark and keeping the broker-dealer in place it all? You know, it sounds like a lot of the business at this point is focused around RIA institutional business, RIA private client business, so what keeps broker-dealer involved for a firm like yours?
Shaun: So I’d say a few things. We actually had a history with Valmark before they did our BD work on the insurance side, and so we have some advisors that are insurance licensed. And that was a way that one of the advisors actually joined our firm many years ago and was already using Valmark. So when it came time, we were previously an LPL firm and used them for both the BD and the RIA, and when we made that switch in 2005 to go completely independent and utilizing Schwab on the RIA side, we also chose to take our BD work to Valmark. So you’re right that over the years, that business has maybe dwindled for us, but we have I’ll say a history at this point of accounts like 529 plans. There are some annuities that clients have where they may want the advisor to become, you know, the registered rep on it.
Michael: Right. And they don’t want to surrender it and move it to a direct fee-based annuity because they don’t want to walk away from guarantees or things that are already existing under the contract.
Shaun: Yep. And then you’ve got certain variable insurance products again that would need to go through the broker-dealer. So there’s been instances where it makes sense, and even though it’s not a growing aspect, it’s not a growing part of the business, it remains a piece that we do today.
Michael: Okay, interesting. And so of this structure with 62 employees, so can you give me a little bit of sense of what this organization looks like? Like, what do 62 employees do? That’s a lot of people to line up in different business lines, and obviously, everything that happens behind the scenes just to run business as a business. So what does this business look like organizationally?
Shaun: So we do have the Private Client side I’ll say somewhat split from the Institutional side, and then we have a…and that would be from an advisor standpoint. And then we’d have what we refer to as our shared services. So kind of like you mentioned, the support behind all the advisors. So at kind of a high-level, those would be maybe your groupings of Institutional advisors, Private Client services, and then our shared services kind of behind the scenes. I’d also throw out we have the different locations. So I’m based in our Akron office, our primary location, and then we have another Ohio location that’s near Cleveland, so a little bit outside of Cleveland, not too far away, and then an office up in Michigan near Detroit. It’s called St. Clair Shores. And then our last office is located in Florida, in Tampa. So each of those offices are going to have more advisor and CSA support, whereas the core of the shared services is based here in our Akron office.
Michael: Okay, and so it was kind of a hub-and-spoke model around the structure of the business, client service associate, so kind of like an endpoint operations person to support the advisor and, like, clients who physically walk into the office holding paperwork, that kind of thing?
Shaun: Right. So, yeah, each of our offices as it relates to advisors and client service folks, they’re going to be on site. A couple of instances where we have a few folks and more of the shared services that are out of those other offices, but for the most part, yeah, those are based here in our Akron location.
Michael: Okay. And so I get CSAs being out with advisors, what does shared services look like? Like, what’s actually in that grouping that you can effectively centralize for advisors across lots of locations?
Shaun: Sure. So over time, it’s been hard to imagine these as departments sometimes because on occasion it’s one person. Yeah, but each of these areas I can kind of go through and describe as some of them are. So we have a centralized planning team that actually does the bulk of the financial plan builds, so our wealth planning team, we call them. We also have an asset management department, so all the research, trading, and reporting. So there’s some operations there that are in this centralized department. You’ve got marketing, you’ve got finance, the technology side, general kind of administration of the firm, any compliance or legal aspect is run here in the home office, and then HR pieces as well. You know, we don’t have a specific person for that, but we do have connections with the accounting firm in a few different departments that we share some services with them as well. So finance, marketing, technology, and HR.
How Two Firms Came Together With A “One-Firm” Approach [17:20]
Michael: And so you’ve mentioned this kind of partnering with an accounting firm, so can you give us a little bit more context of what that looks like? Like, is this…they’re an owner of Sequoia, there’s, like, a shared ownership, they’re just good both friends and you interact and share some resources as partners? Like, what does that relationship actually look like?
Shaun: Yeah. So we’ve been formally partnered since 1999, and they are a minority shareholder in Sequoia. Physically, here in Ohio, we share offices with them, but they are two separately run companies. So we share resources, as I mentioned, in some of those areas. Obviously sharing offices is one of them. And from a business standpoint, you know, there’s definitely some very close client relationships where we’re able to do work together. And that going to market with that strength is definitely a positive for us. It’s very much a one-firm approach that helps both of us and our clients. Yeah.
Michael: Interesting. And so how did something like that come about? Like, just leaders of two firms said, “Hey, we should do stuff more closely together,” or is one of these actually a more direct spin-off of the other? Like, you were…you know, Sequoia was founded by X accountants who didn’t want to be under the accounting firm anymore so they made their own thing and the old accounting firm kept a piece of it?
Shaun: Yeah. So it was actually the former as well. So you had two separate companies, and they came together on a client relationship. I think they had known each other maybe friendly, socially, the CEOs of both companies at the time. And after doing some work together on a pretty significant client relationship, you know, spending a lot of time together, I don’t know if late ’90s, or early 2000s that was as popular, but, you know, getting into the industry myself, it was certainly an idea that I had heard of, at least for advisors to partner with CPA firms and knowing they’re such a trusted advisor. So that started the talks, I’d say is that really just casually getting along well, doing business together and having a good working relationship led to more and more conversations about the potential of having some type of formal partnership, and led to this, I’d say quite formal relationship that has been many years running.
Michael: Interesting. And so that’s why you get some kind of shared resources around things like finance and technology because you’re physically co-located and literally sharing some of those resources?
Shaun: Yeah. And I’d say it’s a choice. You know, we certainly could, you know, choose to do that other ways, but we certainly look at kind of the scale that they’ve built and the benefits of being run very similar in many ways. You know, it can present challenges at times just because they are two different businesses and they’re run, you know, based on each industry and the regulations being different for each. So there are times that we have challenges we need to work through, but yeah, it’s definitely unique, I’d say, in terms of the firms that I talk to hearing that what they might have to work on or there are some items that we’re thankful that we’ve got the resources essentially in-house.
Michael: So you mentioned these centralized department structures as part of the shared services support, so a wealth planning team, a centralized asset management team, so talk just a little bit more about how that works because, you know, there are certainly some firms out there that centralize financial planning, there are a lot of others that say, “How on earth can…how can the advisor who’s seeing the client not be the one that’s creating the plan? You can’t centralize it,” and kind of pushes back on that concept. So can you talk a little bit about what these shared resources look like and how they work within a firm?
Shaun: Sure. So from a planning standpoint, you know, I definitely don’t want to make it sound like if an advisor out there, let’s say, thinks that our advisors are not a part of that process, I’d say that’s quite the opposite. They are actively engaged and involved. When it comes to I’d say the expertise, you know, that is where we’ve invested in having a team of professionals that are educated specifically in many areas. So it’s not a large team, but the four individuals that we have, each have an area of specialty. So at some level, they can simply split up the work based on what’s coming through, but on another level they’re actually taking the specific requests that come in through the advisors or the type of client that’s coming in, and giving that work to the…essentially the subject matter expert for that particular case.
Michael: So what kind of specializations are formed? Just like, someone’s really good at executive stock options and someone else is really good at retirement plans? Like, those kinds of specializations?
Shaun: Yeah, probably more at a higher level where you’ve got someone that’s focusing on retirement planning versus someone who’s more focused on estate planning. You know, that’s where we’re going to see kind of this higher-level. We had another position that turned over this year, and it was more of actually an insurance focus, so kind of came from the estate planning side of things, but it was a little bit more unique into that area. And that was, again, just based on studies that led to some of that expertise.
Michael: Okay, interesting. But now I guess it evolved kind of organically, but now you’ve effectively institutionalized it in saying people on this team of specializations, that mean the next person who joins the wealth planning game, the question is going to be like, “So what are you going to start driving toward specializing over the next couple of years so you can win your share of caseload and make your mark?”
Shaun: Well, I’d say the good thing is being a growing company, the team is always looking for, you know, ways to do things better. And so I don’t know that that’s going to be as much of a, you know, a pressured situation to find where’s your area of expertise as it might be, “We need someone to do this and we’d like you to focus in that area.” So sometimes…
Michael: As in they will move in that direction, but it may be slightly less voluntary choice and slightly more, “We’re going to give you a nudge in this direction because this is what the firm needs so this is what your opportunity lies?”
Shaun: Yeah, it could be, yeah. I mean, I guess I’d say if it’s…you know, if somebody came in with an expertise and that was one of the reasons that we were talking to them, certainly we would try to highlight that. You know, showcase it and let them use that. You know, we’re always talking about having someone focus on what they do best and spend their time in that area, so, yeah, I think there are those openings in terms of opportunities that, yeah, we might be looking specifically for someone in that area. And I don’t think it’s ever been…you know, it shouldn’t be a surprise, right? It should be part of the conversation if somebody is joining the team and as we outline, “You know, here are the current specialties or areas, and either here’s where we’re going to need some additional help or here’s where we see a few options for where you could go.”
Michael: And what about the centralized asset management teams? So does that mean everything centralized, like standard models the firm creates that everybody has to use or just a shared resource but all the advisors still make their own portfolios?
Shaun: Now, so we do have shared portfolios, and that is centralized. So it’s providing that kind of in-house asset management to the advisors. So the advisors still hold ultimate responsibility and decision-making for what they’d like to put, you know, their clients in, but having built kind of the structure that we have, the majority of our client assets are going to be directed in those four models. So we don’t have any, like, proprietary funds or products, but we do have a, I don’t want to say typical, but you hear it often, a diversified asset allocation, you know, a very disciplined approach to that. And then that is essentially what is offered to the advisors. And a big component about how we, you know, again, leverage their time, not putting that on them, allowing them to spend more time with their clients, you know, building relationships there.
Sequoia’s Core Technology Stack [25:37]
Michael: So what’s the technology core for a firm like yours to run the business? Most of us end out with at least kind of the three core pieces, some financial planning software, some CRM, and some portfolio reporting, accounting trading system. So what does the core technology stack look like for you guys?
Shaun: Yeah. So on the CRM side, I’ll start there. So we have spent the last probably just over 10 years as a Microsoft Dynamics CRM firm. And to give a little background on that, this was so 2007 and going live with it I believe at the beginning of 2008. You know, back then there weren’t too many offerings in terms of a industry-specific, at least Dynamics offering. So you didn’t have Tamarac’s offering. I’m sure there were a few others that could have been kind of in the works, but we were using in our minds kind of an expired system previously, which I think still exists, but…
Michael: What did you move away from?
Shaun: We were using GoldMine.
Michael: Oh, okay. Yeah, we were…I’m thinking back for Pinnacle Advisory Group, for our firm, we were an Act4Advisors user right around the same time. From, like, 2003 to 2007 or so, and made a CRM shift at that time because likewise, for those who aren’t familiar, ACT! and GoldMine were kind of the Staples of advisor CRM. Frankly kind of in the 1990s and early 2000s they were kind of very good Rolodex database systems. That was sort of what they were built to be like in a world where well, frankly even at the time a lot of advisors still actually had, like, an address book of client contact information, like a physical book of names, and the industry was starting to go digitizing computers like, “No, no, no, why would you keep a physical book of file names, you can put this in a computer and they could just type in the name and it comes right up.”
And so they were these initial, you know, in technology terms like flat databases of client data, but, like, you’d gathered everything in one place as one big Rolodex, but it wasn’t really built to do workflows and a lot of the things…and integrations and a lot of the things that we expect of CRM today. Like, it just was an electronic version of a Rolodex. It was an improvement of an actual Rolodex, but I think a lot of us were kind of outgrowing those platforms by the mid to late 2000s.
Shaun: Exactly. So we were partnered obviously with Cohen at that time, and the idea was could we find a platform that would work for both sides? They had come from, again, probably even more simpler electronic Rolodex than we had in GoldMine, and the idea was, “Boy, we have a lot of…just a lot of shared information, and, you know, we needed something that could put up walls, right, and keep doors locked, so to speak.
Michael: Oh, because you actually wanted to, like, share a database and resource, but for client privacy purposes you can’t actually let the accounting clients…the accountants see the advisor clients, you can let the advisors see the accounting clients.
Shaun: Exactly, yep. So it was kind of like being able to access a file, and then really only having the keys to go into the rooms that you wanted or that you were allowed to. So like I said, Dynamics was the choice, and timing-wise, we happen to be in a transition phase right now, so we are actively going to be moving towards Salesforce in the coming year. And we’re kind of right in the midst of that right now. So I guess I’ll talk a little bit about just the history of that being a platform for us with Microsoft. You know, it was great in the sense that we could kind of do anything we wanted with it, but at the same time that’s limiting, right? Because you’re not getting that industry-specific provided solution.
Michael: Like, you can do anything with it as long as you take the time and resources to make it what you wanted to be and you needed to be.
Shaun: Yeah. So you’re not hiring the homebuilder that, you know, you look at the plans, it’s more, yeah, you can buy any of these tools. You have all the resources you need, you just have to go…
Michael: Check out the quality of these lumber supplies. You can make anything.
Shaun: Right, exactly.
Michael: It’s like, “But I don’t actually know how to build.”
Shaun: Yeah, pros and cons to that, right? So, you know, that’s an area that the accounting firm has the technology team. You know, they have handled our IT and have done a great job I’ll say customizing the program to both firms. So we’ve been happy with many of the things that we’ve been able to build over the years. And so that, I can easily say that has been a core technology for us.
I’ll jump over to portfolio management. So we were long-term PortfolioCenter users, and in 2013 moved to Tamarac. And so to this day we use their Advisor View and rebalancer products. And that falls more in terms of ownership. You know, CRM has been something that I’ve been actively involved with for the bulk of my…or the bulk of our time on it, so I have these regular conversations really with anybody in the firm as it relates to how we use it, from training to enhancements, to reporting we’re going to get out of it, whereas when we start talking about Tamarac, that actually…and a lot of our operations for the asset management side, the fact that we have that specific department, those details kind of fall under that department. So it’s, again, I’m more specialized in CRM, not so much on the asset management side in Tamarac.
Michael: Right, because that’s sort of the investment teams’ baby to run and execute.
Shaun: Right. And then our wealth planning team, the core product that we use there is eMoney. And so that we’ve been on I’m going to say about 10 years as well. And before that, I believe it was NaviPlan.
Michael: Okay. And that’s a transition I’ve seen a lot of people make, you know, the eMoney Advisor kind of tilts more towards the cash flow-based approach in a world of goals-based versus cash flow-based. NaviPlan was sort of the quintessential original deep cash flow- based analyze all the numbers and every cash flow along the way. And so firms that were comfortable with NaviPlan but liked eMoney capabilities, particularly all the account aggregation, the client portal way more common for advisors to go from NaviPlan to eMoney than it was to go from NaviPlan to MoneyGuidePro and sort of cross the cash flow versus goals-based divide. So for clients then, what do they interact with? I’m actually curious. Like, is eMoney actually your central client portal or do you put them through kind of Tamarac’s client-facing tools or some separate portal?
Shaun: Yeah. So we’ve used Tamarac’s as our primary. You know, eMoney’s has, I think, grown and become more popular with our department at least in terms of its capabilities and what they like to be involved in. A few years back, we actually looked at, I believe it was Wealth Access. Again, when we first looked at them they were pretty new. We kind of liked the offering, but we weren’t sure where it fit or where it was right, and so we used it in some of our engagements, but it didn’t become the norm.
And so since 2013, that was actually one of the reasons when we were moving away from PortfolioCenter, we didn’t have a great solution. And so Tamarac’s offering, not only at the time but through today, we’re very pleased with. So it’s been great as it relates to the reporting side, and then add onto that what we can do with rebalancer. The advisors’ access to it, that’s probably their…that and CRM, you know, they’re spending the most time in throughout the day. So clients are accessing the portal for their account information. You know, being able to have the accounts that we manage aggregated there in one spot has been really nice. And it was also a time that we shifted to electronic-based quarter reporting and just posting those out there instead of the paper mailings of the past. So that was another big change for us.
Michael: So at this point, quarterly reports just get posted in the clients’ Tamarac portal and they can just go look whenever they want because they’re there?
Shaun: Yes, exactly.
Michael: And does Tamarac queue that up automatically or is there some process where you have to, like, run batch reports and then kind of batch upload them into all the right, you know, vaults for each client across the platform?
Shaun: Yeah, so there is some work on our end. It’s not an automated aspect, but, I guess I compare it to what we were coming from, so about four years ago, just thinking back to the amount of time that was spent, I don’t know if I should call it hours or days, that was put into that, versus what it is now, which is, you know, maybe an hour or two kind of max in terms of checking some things as the company continues to grow and we have different kind of types of clients. Some of the households in the family office area get larger, and so making sure we’re double-checking things before they go out is really what they’re looking for.
Michael: Okay. And I’ve just got to ask, like, how hard was it to transition to not sending clients quarterly reports after however many years of sending them quarterly reports? That’s a big shift.
Shaun: Yeah. So I’ve got to remember sometimes, I’m the ops guy, right? So you ask me and I say, “Oh, it was easy,” right? But, you know, that’s a great question for advisors because they’re the ones dealing with the clients that might be responding. You know, our advisors have regular meetings with their clients, and they are generally either sending them or taking with them some reports out of Tamarac. So I think that aspect, you know, they’re also getting custodial reports every month, right? Again, either electronically or maybe some people still get it in paper.
So these days, having that ongoing relationship and anytime access, I think it makes the quarterly piece of paper showing up less important. Now, we’ve got a couple thousand clients so I’m not going to say that that’s the feeling across the board, but, you know, we didn’t get a lot of pushback, I guess I’ll say. So it wasn’t like it created some big thunderstorm. I mean, it was something to communicate, it’s changed, and I think it actually showed us that it was a positive mood just based on the reaction being so minimal.
Michael: Well, I think the striking thing I find for a lot of firms, we get really anxious about these changes, whether clients are going to get upset, and, you know, the ones that were used to paper reports are going to get really upset if we don’t send them to them anymore. And it almost never turned out to be as bad as we seemed to fear it is. You know, few clients that were used to getting the reports you’ve got to walk them through a couple of times how they get it online and they’ll understand it, and then that’s that, because, you know, we’re all creatures of habit and it’s kind of a pain not to change, but then everybody gets over it and they just move on.
So as you go through this transition, I’m curious, you know, it sounds like as I would expect CRM kind of lives in operations because it drives a lot of the workflows, you’ve got this Dynamics to Salesforce transition coming, so what led you to Salesforce as opposed to some of the other tools? And if you…particularly if you wanted industry-specific, like, you could have gone Junxure instead of Salesforce. What led you to Salesforce, and what are you actually doing to fit it into the business since you’re a pretty sizable business? I’m going to assume Salesforce off-the-shelf probably ain’t going to cut it for you.
Shaun: Yeah. So it was an interesting direction, I guess, that got us there, in the sense that we didn’t wake up some morning and say, “Let’s change systems for fun, right?”
Michael: It’s a slow year, we need a project, let’s change CRM. Sure.
Shaun: Right. So I’d say like anything, like any growing business maybe, the evolution of not just what technology can do, but maybe what the expectations of clients are, where things are going, I think for us our existing system, and it didn’t get us to a point of saying that we don’t like our existing system so we need to change to another one, we were asking questions about what our client base looks like and how we can serve those clients better in kind of each of those areas I mentioned at the beginning. And started thinking through some of the digital solutions that were out there and kind of exploring, “Could those be a solution for us?” And very quickly, as that kind of exploration was happening, we noticed that many of the solutions, or at least the direction that these solutions were kind of leading us toward pointed to having very integrated systems.
And when we thought about the technology platform that we were or are currently on, you know, you’ll notice I didn’t mention us having a fantastic document management system because we don’t. We obviously have documents and files on servers, but that was a…and as an example, that was an area that has provided a little bit of pain for us. And so when we started thinking through kind of where we wanted to go, how we could improve our clients’ experience with us at the different levels, and knowing that integration had to be a very big part of it, and also thinking through how to do like any ops, good ops person is going to be thinking how to do something more efficiently, it started to make us question, “If the CRM is that core system then we need to evaluate our core system.” And so as we kind of started to reach out, we were doing actually some consulting work with one of our custodians, and so they did a great job of kind of helping us look at what options were out there.
Michael: Very cool. Who did you work with? Was that part of a Fidelity service or a Schwab service?
Shaun: Yeah, actually it was fidelity that we were working with at the time.
Michael: So the internal practice management group that they’ve got there?
Shaun: Yes, yep, and then specific to the technology area. So they did a great job kind of just helping us walk through where we’re at today, understanding how we do things, and, you know, providing that technology consulting view of things to prepare us for what options lie ahead. So it was, you know, like most things I look at saying well, there’s pros and cons, right? So the pros were, boy, they helped point us in the right direction. The con is then they’re like, “Okay, off to school. You know, go do the work.” And, you know, letting go of the hand and having to jump in and, you know, get immersed in demos and everything from the price quotes to the different options that all these different providers have. I mean, we’ve looked at…we looked at many different offerings, and when it came down to why Salesforce, you know, we decided that what was being provided or what was being presented from the other vendors either didn’t match where we were currently at because, like I said, we had customized a lot, so we’re kind of coming from this expectation standpoint.
Why Advisors Should Be Taking Advantage Of Consulting Opportunities Available To Them [41:51]
Michael: Right, there’s a certain level of system and process and that you’re already accustomed to, so the starting point almost instantly becomes, “So here’s what we do now that you have to replicate, so now tell us what you can do.”
Shaun: Right. And so certainly areas of integration were missing, and that became a big point. Now, many of the providers offer that, so that may not have been the standalone, but once we started going deeper into where we’d like to see ourselves in the coming years, getting more deeply integrated directly with the custodians, you know, talking about the potential of doing straight through processing, seeing what was mobile for our advisors, just having I guess the industry providing that, not just ability to customize on top of it, but having support behind, you know, more and more of the integrations that are coming, let us to look at Microsoft as well as Salesforce as two of our top options. You know, when it came time to kind of see those roadmaps in terms of where they were going and talking with our custodians on where they were going and what they were thinking of doing with these two sides, we had very good experience even finding a consultant to work with specific to Salesforce. And that played in too, knowing that we’ll have a very good partner here moving forward to get us where we’d like to go.
Michael: And who is that consultant guys working with now that you’re upbeat about? Yeah.
Shaun: They’re called NextGen Consultants, and they’re out of Cincinnati, Ohio.
Michael: Okay, NextGen Consultants. And they specifically do Salesforce?
Michael: Okay, interesting. And how did you find them? They’re local to the area?
Shaun: No, they were actually referred to us. So in dealing with not only Fidelity on the consulting side but even talking with Salesforce and talking with references about Salesforce, we had really asked all three of those parties to give us who they had used. So when we talked with, like, referred firms that were on Salesforce, we had asked each of them, you know, who they were using as a consultant, if they were using one, and nearly everybody was. And both Fidelity as well as Salesforce had NextGen in their list. So after talking with a number of folks that referred them and then working with them and kind of comparing to some of the others that we had been referred to, we felt really good about moving forward with them.
Michael: All right, very cool. And, you know, you make an interesting point there as well that the practice management consulting resources at the custodial platforms, and frankly even a lot of sizable broker-dealers as well feel like are a resource that a lot of advisors have available and don’t necessarily use. And, you know, you sort of noted the limitation there, right? Like, there are a lot of advisors on their platforms that can only go so deep. So, like, they tend not to be implementation-style consultants, they tend to be kind of vendor identification consultants, which is still a huge help just to narrow down the list from a bajillion issues like, “Well, here’s two or three to talk to that we know do well, tie well to our platform, other advisors on the platform are using. We can put you in touch with some others who do.” And it really narrows the scope of what you’re searching for so that you can make a decision.
Shaun: Yeah, absolutely. I mean that’s something I’d recommend, you know, to anybody is if you aren’t utilizing their resources as it relates to just doing a current status of where you’re at with technology, I mean that to us is one of the best things that we’ve gotten out of our custodian relationships is every couple years whether they’re asking us or worse, “Hey, we think it’s time to do another kind of consultation as it relates to our kind of tech platform.” Now, some firms have more serious heavy tech folks. And, you know, and for our firm, that’s been something where we’ve looked for, I’ve got to say the industry to help us in that regard. So we certainly look at that as a kind of a practice management offering that, like you said, the custodians provide. And I’d say as much as those are being offered, advisors should be taking advantage of those.
Michael: So, as you look to Salesforce, are you going with one of the particular modules like Salesforce Financial Services Cloud or are you just doing the core Salesforce platform and NextGen consultants is going to customize that out for you?
Shaun: So we are going to use the Financial Services Cloud, and that was…I’ll say it was a tough decision, knowing that it’s on their new Lightning platform, knowing that it’s newer, and knowing that there are not…there’s not a huge number of advisors on it. But what we took a look at was again, where integrations sit today, we talked to our custodians about the potential, we talked to our different providers, Tamarac eMoney being a couple, and obviously talking directly with Salesforce and then pulling in NextGen, it was this compilation of really looking at those pros and cons and saying, “If we…” We knew that if we were on their Classic platform and the world shifted in three to five years to this new platform, it would be a whole new conversion. It would be a complete kind of what we’re about to do now, it would be doing it again.
And it almost became one of those…Wayne Gretzky quoted, “Going where the puck is going,” right? And also having a little bit of faith with that, and sharing with them the importance of us making this commitment as being something that, “You know, we want to dive in deep, and we might ask things that you’ve said haven’t been done yet.” And we’ve said that to our custodians as well as Salesforce and our consultants. So we accept the fact that, you know, there are some integrations that don’t exist, and we’re kind of letting it be known. We’re going to be asking that question because again, we believe that’s where the puck is going and we want to position ourselves to be there. So definitely excited, looking forward to moving forward, and we’re right at the early stages, so we’re just getting into it today.
Michael: Yeah, how do you roadmap out a project like that at a firm of your size, right? I mean, you’ve got 10-plus years of all sorts of data and internal operational stuff from Dynamics that you got early. I know it’s in the early stages of it, but, I mean, how do you even start a project like that to figure out how to do the transition?
Shaun: It’s hugely dependent on having a team effort. So, you know, although I have a big part in the implementation of it, there’s no way that I could try to figure this out on my own. So everyone, from having to keep key people in, I’d say each of those shared service departments as well as representation from our advisors on the Institutional side, on the Private Client side, and even in our different locations, we know that it’s going to be vital to have a big chunk of our team involved in a few key aspects. So we’ve put together a design team that will be involved in what’s actually kind of built-in, what we do expect from what we have had before, as well as kind of a communications promotive team, kind of almost your cheerleading team, the folks that we expect to be the first ones trained and who are going to be responsible for then kind of taking that to the rest of the team.
We know when we’ve done trainings in the past of, you know, tried to get all 35 people in Akron in 1 room and hold a, you know, a 4-hour marathon session that half the firm leaves, you know, half the people walk out and 2 hours later, you know, they forget 90% of what was just covered. So, you know, we spent more time than I guess I might have originally or could almost ever imagine thinking about how to make this successful. And that was a huge part. We were not ready to move forward, and not that we delayed or dragged our feet, but we were not ready to move forward until we knew that that was going to be thought through very well. And we spent a lot of time basically talking through how this was going to be done, and actually getting buy-in from those folks so that when we start to move forward from our executives down, we’re going to have buy-in.
And that’s just a huge component. I mean, talking about change management, that’s just a major topic for operations folks is that you deal with that kind of not just all day long, but in the big picture over time. That’s what you’re needing, that’s a big aspect that advisors or advisory firms need to get just really good at is how do you deal with the change? Clients have to deal with it, internally we have to deal with it. I don’t know. You know, my perspective is here from this larger firm. So sometimes I kind of imagine that it’s not much different if there were 16 people or 32 people, or 120 people. I don’t really know, I don’t have enough of that perspective if the roadmap or that process is different, but it does feel like the stakes are pretty big as it relates to, you know, us putting in a lot of time and investment, but we feel like we’re approaching it in a very systematic way, and believing that that approach is going to pay off.
How Shaun Transitioned From A Life Insurance Agent Into An Operations Role [51:37]
Michael: So let me shift tracks a little bit here and just can you talk just a little bit more about how you ended out in this role where you’re a director of operations for a $3.7 billion hybrid firm with all this stuff going on? Like, did you just always have a direction to go into business and managing a business and this was your path or did you kind of land here after going to school?
Shaun: So I’d love to say that when I was 12, you know, this is exactly what I wanted to do and I always dreamed of working for a multi-billion dollar RIA, but that’s not true. So I wanted to play in the NBA when I was 12, but things didn’t go so well in that direction. So I did go to school. I actually studied marketing and thought that I was going to have some type of job that was business-oriented. But really even through school, I was not sure what I was going to do with that.
One thing that I did know, and this was probably maybe not from 12, but from a couple of years later entering high school, for whatever reason, I was attracted to big cities and New York in particular kind of caught my eye. We had some family nearby so we had traveled for a few events that our church choir traveled, things like that, and so I was able to visit New York City just a number of times as a teenager and just became kind of enthralled with the concept of having a big-city job. Growing up in the Midwest, there’s not a lot of big cities like that at the east. You know, Cleveland’s a good-sized city and Akron is much smaller, but for whatever reason, that’s kind of the path that I wanted to try to attempt to get myself into.
So when I finished school, just on the personal side of life, I was actually getting married, right at the end of school, and had asked/told my wife that…you know, she knew. She knew my plans, she knew that that was kind of the desire, and she said, “Yeah, I’m up for it, let’s give it a go.” We’re both from here in Ohio, so we kind of knew long-term that we’d be back. And as it related to work, it was an interesting time. It was the summer of 2001 that we were searching for jobs in New York City.
Michael: Oh, well, that’s just a fantastic time to be searching. So the bear market is on, the recession is not quite full steam yet because you’re a few months before 9/11.
Shaun: Yeah. So I’d say the great news is that in, I must say kind of July, August timeframe, both of us found companies that were willing to hire us, and my wife actually had two offers, which was great, right? She had some options. I did not have options really. The only option that was given to me was a sales job, and it happened to be with MassMutual. So I didn’t really know much about the industry, I didn’t know much about the company, but I did know that if I took this job, I’d be in New York City. So that was really what kind of started my path into financial services is getting that job.
The office that I was in happened to be one of MassMutual’s top offices, so what was fantastic about it, again my pros and cons, the pros were I was surrounded by a lot of successful insurance salesmen essentially, but many of them did transform the practices to be more planning and advice-related, but certainly kind of the underlying core of insurance was a very big aspect of those practices. But nonetheless, it introduced me to this industry and taught me a few things. You know, number one, learned a lot about rejection. Obviously companies like that, at least at the time, they want you to reach out to your natural market. So a kid from Ohio in New York City is not going to have much of a natural market, so…
Michael: Yeah, I’m surprised you got the job frankly because the…I mean, the focus for the industry then, and frankly some firms still do it, but it was really the popular thing at the time was, you know, everyone was supposed to come with your list of your 50 to 100 friends and family, your “natural market,” and you’d either call on them yourself or a sales manager would call them with you. And part of that was for a training process, and part of that was because if you don’t know anybody else you may as well start with your friends and family. And part of that was because if it didn’t work out then you would leave the business and the firm would just keep all your friends and family clients, and your sales manager would get to run them. So it was a pretty good deal for a sales manager. You didn’t have to go do much marketing and business development because you got all the clients of your trainees that didn’t work out. But because of that, like, they really liked to hire people who had a good natural market opportunity because it was easier prospecting.
Shaun: Yeah, yeah.
Michael: So you were total transplant to New York City with no natural market, but they gave you a chance.
Shaun: Yeah. And so who knows, you know, they were just…I don’t know if I was filling a quota by some, you know, Midwest standard, but they had some success with some other guys that were…you know, there was a kid from Nebraska and he was one of the top folks, you know, two years before. So it was interesting sitting in a room where they said, you know, kind of like college, or maybe not to equate it to college graduation, but they just said, “In 4 years, you know, 4% of you or 8% of you,” whatever the stats were, they just said, “A huge chunk of you will not be here.” And I was like, “What kind of starting…you know, this is not a motivational day one type of speech I want to hear.” But once we got into it, it was almost saying like, “This is going to be hard and this is going to be tough, but if you work hard and you’re willing to work through the challenges, you can be successful. You can do well, you can help clients, and, you know, do well for yourself.” So I was up for the challenge.
It was a tough year, it was a very tough year. Extremely challenging for me, thankfully my wife had a stable job. You know, I was on a commission and a little bit of a stipend early on, but it was just…we still look back and kind of not sure how we survived there. You know, I had a rent at the time for a little place that was out in Forest Hills, you know, miles out of Midtown Manhattan where I worked, and I paid more for rent then than I do for a mortgage today. So it’s just thinking back I still have trouble fathoming how in the world we made it work. But we got through it. And really a little over a year later it was that decision that we want to move home. I’m sure if my career was a little bit different, we might have stayed longer, but it was just over a year later that we did move back.
So at that point, I kind of had a choice, I could either kind of revert back to try to get something entry-level in marketing or I could try to build upon this year of “financial services” experience and really look for jobs kind of on both sides. And at the time, so this is now late 2002, early 2003, the marketing jobs were sales jobs. That’s what was really there, at least at that time, and on the sales side, you also had that financial services potential. So they were, you know, talking to the MassMutual firms here in my area. They were super interested. They were like, “Yeah, you can do exactly what you did there for us here.”
Michael: You’ve got your natural market, it will go even better.
Shaun: Yeah. So they’re all smiles, they’re happy, they’d be excited to have me. And I think I made a good decision to say, “You know what? I’m learning what I’m good at, and I really know what I don’t like.” And what I learned in New York is that if I could go back and do it again, I would have walked over to the guys that were known as the most successful group within that office and I would have said, “I’d like to work for you guys. I’d like to be in your operations department.” That would put things on a totally different trajectory. But I didn’t know that at the time, right? So I didn’t do that.
When I came back and I was looking for jobs, Sequoia Financial Group happened to be hiring, and thought, “Okay, I’ll give this a try. Operations associate, not necessarily entry-level, but essentially replacing somebody that had many years of experience, so it could be a challenge.” Interviewing went really well. They actually told me after the fact, “We almost didn’t hire you because we thought there’s no way that a guy that came from New York City, that was selling again “as an advisor” is going to want to do an ops job, right? He’s going to want to be an advisor, and if we don’t make him that within 6, 12 months, he’s out of here.” You know, and again, the interview is over so I was able to say, “Man, I was, like, praying that you guys would at least hire me. Give me a chance because I knew that I did not want to be an advisor.” And I knew my skills were much more in kind of organization and just I’ll call it logistics. You know, running things behind the scenes, making sure things go well, and not having that kind of client presence that at my age was of no interest to me.”
So that is how I started at Sequoia. You know, did I know that a 10-person firm at the time that had maybe $100 million of assets and a couple hundred clients would grow to what it is today? No, I had no clue. I had people discouraging me from even taking the job because, you know, I was starting at a fairly low hourly basis, and it just seemed like, boy, with a four-year degree and a year of experience in New York, you know, you should have other options. And I thought, “I probably do, but I like what this is.” And there were a number of folks that we just connected really well. And that’s a huge part, right, of work, is who you work with. So being in a small firm that pretty much felt like a family and that was, yeah.
Michael: How small was it at the time?
Shaun: So they had…there were 10 employees, I was the 10th employee, and I believe there was about $100 million of assets. I don’t remember the exact client count, but I’m going to say probably a couple hundred.
Michael: Interesting. I have to admit it resonates a lot for me because I followed a very similar path. I started out as an insurance agent and was a terrible salesperson. I was a terrible prospector, I was a mediocre salesperson, but I was a terrible prospector. You know, if you can’t get anybody to talk to it doesn’t really work. And, you know, made some switches. I actually had one other intervening firm before landing where I am today as well, but same thing. I started there at the very end of 2002, you know, as employee number 9. We were somewhere between $150 million and $200 million under management and had no idea that I was joining a fee-based RIA firm, like, right on the cusp of all the growth of that entire business model and movement. And the firm took off like a rocket ship and, you know, now we’re 55 employees or something like that. Same thing.
Like, just I wish I could say I had some master plan back then that was like, “Oh, you know, I was looking at the dynamic shifts between the broker-dealer and the RIA movement and I just had a feeling that the RIA was going to be the channel that was going to win from 2002 going forward.” Like, no, I was…anyway, I was trying to skate where the puck was. Like, no it was dumb luck. I just showed up at the right firm at the right time and then it started growing so I held on and tried to continue to be useful and grow. And when you’re at a rapidly growing firm, a lot of opportunities tend to grow along with it for you.
Shaun: Yeah, sounds very similar.
Where Shaun Goes To Gain An Outside Perspective [1:03:19]
Michael: So you took this operations position with, you know, you and your 9 or 10 colleagues, and then I guess some growth started happening, if we ultimately connect the dots, from $100 million then to $3.7 billion now, so what did that growth trajectory look like for you and your role in the firm?
Shaun: So probably for about I must say three years roughly, you know, it was learning the ropes. It was just working hard, plugging out ton of paperwork and just understanding kind of what the heck was going on. But I really felt like it was just all new to me and I didn’t really understand what advisors, you know, were doing as it related to the relationships with the clients and what actually planning meant, but it was kind of just putting my head down, plugging away at opening asset management accounts. You know, there might have been some insurance work, but we had some people that focused on that a little bit more than I did. So it was just getting kind of intricately familiar with everything from the technology to how the custodians worked, to our own technology and, you know, what was possible there.
So kind of just a nice established baseline that when I look back I think, “Yeah, you need a baseline of just experience to be able to grow up on.” And having that at the same firm that I’m at today, again, pros and cons. The good of it is I know kind of where I came from, I know where we came from, and I know so much of the history that is kind of weaved into the fabric of who we are today. You know, the cons just might be I don’t have a lot of perspective. So for me, you know, I thrive on getting outside perspective because personally, I don’t have it, right? I mean, my year in New York with MassMutual, it was a great experience, but it was really different than what I came to.
So probably about, like I said, three years in is when knowing there was some growth coming, our president sat down with me and said, “We’d like to form essentially like a centralized operations group, and we’d like to know if you want to manage that group.” And, you know, I kind of asked what that entailed or what that meant, and there were a few other ops people, but we were a little bit more fragmented then. And he basically said, “It’s you guys coming together and trying to be, you know, one plus one plus one equals five, and we think you’ve got the potential to help us get there.” So I said, “Yeah, let’s go for it. I’m excited. I love what I’m doing.” You know, it wasn’t the shift in my work. They had offered a few during those early years a couple times. On one point it was kind of asking did I want, “You know, I know you said you don’t want to be an advisor,” but asking if I wanted to start getting in some meetings and doing some follow-up with clients. And I politely declined and said, “No, I enjoy this ops work.”
And then there was another offer to get involved and they actually had me spend some time with the girl who was kind of heading up the planning and starting to get into NaviPlan and try to work through some of these client…which at that point, you know, it was probably a lot of data entry. I don’t even remember. I just know that I wasn’t that intrigued with that process. I kind of liked the variety that was coming at me from the different types of accounts and the different types of even just tasks that clients were asking of their advisors.
So, you know, I think back and I still remember some of, like, the just interesting requests that we got that I had to figure out. And that to me even over the years has helped as we try to build our own team and make folks better, it’s hopefully having folks that can kind of think outside the typical box and be able to respond to some of those rare or unique questions that might come from clients and hopefully find solutions for them. So that management happened I think around 2005/2006, and for probably the next 3, 4 years it was kind of just steady growth as it related to the company. It didn’t add too many bodies to that team. We started having an internship program, so we would bring in a little bit of help there. Most of those folks would help on our ops team.
Right around that time, the kind of concept of growing within operations was becoming a bigger deal to the firm, the idea of going back to school came into play. And so that’s where the MBA came into play was that it was something that Sequoia was willing to invest in me, to be put through school. And that was a big deal because I had a young family and kind of a hard decision, but also one that I felt was worth it. You know, my kids being so young, just over two and just born when I started, that I thought, “Hey, if I can go to the university that I did my undergrad in,” which benefited me a little bit on some of their foundational courses, which kind of shortened the program to just over two years. And so being able to get through that, you know, with night and weekend classes and again thinking that, “Boy, is there going to be a better time in my career to do this? Probably not? So decided to move forward with that, and really helped kind of accelerate, I think, what I was able to do in terms of managing a team and starting to build some of the more firm operations outside of just what I was doing with specific investment accounts.
Michael: Yeah, it’s funny like that sort of infamous question, you know, when is it a good time to try to go back to school and get more education, right? Whether that’s CFP marks if you’re an advisor that didn’t do it early on or in an operations and business end and working on MBA, and, like, it’s just really never…there’s never really a time where it’s like, “Oh, you know, my life is just taking a pause and nothing interesting is happening and there’s nothing on the horizon, and I’m confident about that, so I’m going to go do this program now and learn.” Like, there’s never a good time. The longer you wait, pretty much the worse it gets. Just more life happens, you get married, you have kids, parents get older, health issues come on, like, just stuff happens, there’s never a good time. Either you just make the commitment that you’re going to do it and carve out some time and just start doing it or it’ll never happen if you’re waiting for it.
I mean my path through was similar. I actually did my master’s in tax even slower than you did. I did it over a three-plus-year time horizon where I just took the absolute minimum, like, one course per term because I could do it, like, a couple hours on a Sunday morning. I would just go to a local coffee house and kind of bury myself the morning into the early afternoon, and then maybe one or two evenings a week of some supplemental work, and I could keep up with the one-course minimum. And that was all I did because life was busy. A lot of stuff was going on, but then lo and behold a couple of years later it’s like, “Oh a degree popped out and the thing is actually really useful.” Like, there’s never a good time. You just kind of have to do it at some point if you want to push your career forward.
Shaun: Yeah. No, for sure, it’s definitely something that…you know, if that opportunity had not come along, I don’t know what would have pushed me on my own even to do that. So I think, yeah.
Michael: So, did the firm, like, pay for this to put you through? Did you pay for it because you just said, “Hey, if they’re going to give me this opportunity I’m going to go for it?” Was there a split here? Like, that’s a…I feel like that’s kind of a big deal thing just to get to do within a firm. I’m wondering what that looked like.
Shaun: Yeah. So it was…I don’t want to say it was unique, but when you put it all together, to me it made a lot of sense. And I’ll kind of explain the details. So continuing education was always a component of being an employee here. And that was certainly something that was kind of pushed, encouraged, right? And so the firm had always supported folks in saying, “You know, for your particular role, what we’ve designed kind of as a career path together, we will do our best to support those things and give you opportunities that, you know, we hope you take with us, not necessarily elsewhere.” And so the few factors I’d say that came into play are one, I was going back to the University of Akron here in town. That’s where I did my undergrad. The fact that a three-year program was almost immediately condensed into two years because of my undergrad and taking a couple exams essentially to kind of waive the final two classes, you know, that took a whole year of school away. So right there I think unless I’m remembering it wrong, but that cuts a third of the cost out for whoever is paying for it. You’re not actually taking those courses.
So you kind of say. “Okay, now there’s…” You know, University of Akron thankfully is a big public school. It’s not the most expensive school. It’s a fantastic school, has a very good business school, but I was thrilled that it wasn’t the most expensive school, number one. Number two, you got this down to two years, and then number three, which again, I thank God for this timing, nothing that I could have planned out, but just like the start of my career happening at kind of a bad economic time, we had these discussions in the summer of 2008, and maybe it was even the spring, but I enrolled in the summer, and so my first semester was fall of 2008.
Michael: You have, like, a good timing for these things. You joined MassMutual in the summer of 2001 and then you went off for your degree in the summer of 2008, right? Because life always lined up in these convenient ways.
Shaun: Yeah. It’s an interesting type of luck, right? So what happened was kind of the message across the firm in September, but I don’t remember the date, right, but we had a couple…there was a few bad months there. And yeah, the message across the firm was kind of like, “All CE is on hold. Like, we’re not spending for conferences, we’re not doing this, we’re not doing that. Like, let’s just…” You know, that was a very serious time in terms of how the business was. You know, there were big decisions to make. Kind of freaked me out because I thought, “If I don’t continue with this…” I mean again, I just had a daughter born in May, my family life was, you know, young and time-consuming, you could say, but I had just started studying, just started going to classes, felt kind of the initial pressure of getting into it, and, like, literally a month in, I hear, like, we’re going to pause everything. I’m thinking, “Oh man, if I don’t keep going, like, I’m kind of a momentum guy if I stop and I start something else or I get into another groove, like, there might not be any going back. This could be bad.” So basically started to brainstorm on what could be done.
Now, the initial thought on paying for it was going to be pay as we go and pay a semester at a time, just pay cash for it and it was going to be kind of like bonused out to me just to pay it direct. Well, that was the first time that I actually looked into, “What if I got a loan?” And realizing that the government loans that were available at the time were interest-free until six months after you graduated when you started having to pay it to then interest actually kick in. And so our business is looking at this saying, “Hold on a second, you mean we can get a two-year interest-free loan and get you through school, which is what we all wanted to accomplish, you know, and essentially, if we want to, start making payments or pay it off at that time?” And I was like, “Yeah, that’s what they’re telling me.” And that’s what we did. So thankfully, I got to continue on through it, and it worked out well…
Shaun: …timing-wise, I guess in the end.
Michael: They financed it on your credit rating basically.
Shaun: Yeah. I mean, it was all in my name. So we did have an agreement kind of both ways. One being me saying, “Okay, you said you’re going to pay for this, please don’t, you know, back out.”
Michael: Yeah, don’t ditch out.
Shaun: Right? But then also on the flip side, I was committing to…you know, they didn’t want to give me an MBA and then have me take it somewhere else, so there was kind of this mutual back and forth of I expected them to pay, they expected me to stay. You know, we want to keep that as a mutual agreement. And we did that right away early on. So I thought that was an important piece to have in place.
Michael: So now that you’ve been through it, I’ve got to ask, because I feel like this is even a somewhat controversial thing in some parts of our advisory industry, so the relevance of an MBA in an advisory firm.
Shaun: Oh, that’s a good age-old debate, right? I mean, I’m going to bring something else up. I’ve heard from some folks that you’d be a better ops person if you had your CFP. And I just think there’s cases on both sides for it. You know, yeah, I think I’d understand clients better, I’d understand planning better. I’d have more of a foundation of what we do and maybe solutions that I could help provide if I had a CFP.
As it relates to an MBA, you know, because that was more relevant, that’s the question you asked, I think for what I ended up doing with it, it was extremely relevant. I was managing a team. You know, you kind of have your core MBA classes and then you have your essentially electives or at least I did. I was able to specialize, I guess, in a particular area. It’s not a ton of classes, but I think it might have been, I don’t know, a third or a quarter of the classes that were, you know, not part of the kind of core MBA curriculum. So there were aspects about the MBA in general that helped me understand our business better. So it gave me just a firmer understanding of everything from our finances to the fact that I specialized in management, I was able to take more HR classes and more management classes.
And so there were aspects of just the HR component that was traditionally outsourced to the accounting firm. I developed kind of an in-house almost interest, I guess, more than anything because I, at the time, our team, the team that I was running was kind of the biggest department as it related to the quantity of people that were in it. And so it was important to me to really develop as much of an expertise as I could, and getting an education kind of on top of the little bit of experience to me was just a fantastic opportunity. So being 30 years old and having maybe 5 years of management experience plus some education on top of it, I think the next few years, you know, allowed me to use some of the skills that I had learned in school. So it was very applicable. I mean, I’ve been asked by maybe other interns that we’ve had or other young folks that are coming into our firm about, “Oh, yeah, I’d like to go back and get my MBA,” or, “I’d like to go back and, you know, would Sequoia support that?” And it’s really easy for me to answer and say…
Michael: You kind of set the precedent and now, right, all the employees are like, “So you let Shaun get his MBA.”
Shaun: Right. So being able to answer it kind of the same way consistently from, I think when I started here just hearing that, “We support continuing education.” And we’ve supported other folks going back getting masters in financial planning or, you know, against some other relevant degree to their particular area of expertise. And for most of the advisors, that’s the CFP. And so we don’t have a lot of other folks, I think, that have gone through to get an MBA in particular for what they do in our firm. And, you know, did I need it? I think I’ve even been questioned on that front. Like, some people saying, “Oh, you don’t need that to do what you’re doing.” And I’d agree with them. I’d say, “You’re right, I don’t need it.” But I do think it helped, at least for me where I was at and what I was able to do shortly thereafter.
Michael: I mean, are there particular things you look at and see differently now with your MBA versus what it was like previously?
Shaun: I mean, you’re asking me seven years after I graduated, right? So it’s hard to kind of think, “All right, what changed at that point?”
Michael: The old dark days.
Shaun: Yeah. I mean, I wish I could say, “Yeah, it was all cloudy and foggy before and I just came out, you know, with that diploma and it was like sunshine, I saw everything clearly.” You know, it wasn’t that clear, but what I can say is that, you know, there were aspects that I guess I knew I wanted to proactively focus on. And so I’d mentioned earlier about just change management being such a challenging component of a growing firm, and kind of knowing that we were going to have to get good at change management.
And we would just regularly tell people that, “Hey, change is our constant. You know, that’s one thing that we’re going to have to deal with ongoing, whether it’s technology, whether it’s a new office, whether it’s additional advisors.” And when you grow, you know, growth is hard, growth brings change, merging with other firms brings change. And we went into some areas that we backed out of. You know, mistakes you could almost look back and say. And, you know, could be from technology to advisors, to locations, to even business lines. You know, those were things that you kind of learn. Sometimes you learn as you go, you learn the hard way, but our ability to kind of react to that, I feel like that has gotten better over the years.
And so another thing would be, like, knowing and getting kind of acutely aware of the mindset differences between advisors and ops professionals. So I always, for whatever reason, I’m attracted…my dad was a psychologist, so I think that there’s something in me that always likes to hear about, and maybe learn about kind of the mindset behind the why of things happen. And so not that the MBA gave this to me necessarily, but I’ve always kind of said that the mindset of an advisor is just naturally different than the mindset of an ops person, and in a way, as a firm is growing and wants to kind of make the best use of both worlds, that’s the goal, right, is to mesh the two. You know, seek for each person to do what they’re best at.
And so and maybe in practicality, what does that look like. So I would say what I…and I can say this played in a lot after school and after kind of managing this team and seeing where our firm wanted to go. And one of the things that I often was approached with from other team members, let’s say, and think CRM, think there’s a lot of things that people would want me to do in our CRM, I was often approached with the solution. “Here’s what I’d like you to build.” And my approach became, and it’s kind of hard because, again, it’s like change management for the person coming to you, but over time, I tried to kind of guide people. Who was it? Is it Richard Thaler that wrote that book, “Nudge?” That concept of kind of getting people where you want them to go, I’m much more supportive of the concept of bringing someone your objective, at least as it relates to the internal operations. “Here’s the end result. We’d like to do X.”
And then, you know, I guess if I’m talking to another firm today, I’m looking out and saying, “Have advisors or have your owners, or whoever is asking for requests maybe from anybody, maybe, tell them what you’re trying to accomplish at the end. And don’t necessarily try to do their job. Don’t necessarily try to say, “Here’s the exact…here’s how I want you to build this,” right? Because the person being told what to do may not love…you know, there’s not much autonomy. And that I also like Daniel Pink. You know, in his book, “Drive,” he talks a lot about the autonomy being, “Man, that’s a huge component of what just drives people’s motivation.”
So being able to open that up to say, “Here’s where we want to go, and I’m going to let you have the freedom to use your skills, use your knowledge, use your experience.” And it doesn’t have to be a CRM technology thing, but just telling someone whether it’s a process or a way of doing something, “We want this type of event or we want our clients to feel this, or we want to see, you know, this outcome.” And then work together with them, right? I mean the ops person generally does not have as much exposure to the direct clients, and so it’s going to be this kind of marriage of the two. Bring that experience and make sure the ops person has this autonomy to kind of paint a picture or at least put a lot of puzzle pieces out there and then work together to kind of finish it off.
We had some scenarios that we did build things. I’ll even say the opposite. They were 100%, like, operationally efficient, and just made me and the person that worked on it initially, like, kind of the project person, thrilled with the outcome. And specifically, I’m referring to actually how we built our trade tickets in our CRM system. Every question that could have been asked, every specific detail down to the minute, this, that, you know, kind of a blotter of sorts, but extremely detailed. Well, guess what that means for advisors, extremely cumbersome. And so, you know, that was a case where knowing that that mindset was different, part of what we’re doing now in terms of looking at, “All right, this info was all relevant, but the way we do it and maybe who does it, it’s actually ops opening up to more of the advisors side saying, “All right, we’ve got to figure out a better solution because it might have been so efficient that it was inefficient,” right? It was so good for the ops folks but it was terrible to the point where it didn’t get used, and then you kind of don’t benefit at all from it.
Michael: And that’s essentially the…I mean, is that balancing point pretty much the driver of your world now? This, “How do we solve a problem that works for ops and also works for advisors and just trying to figure out what those common ground points are?”
Shaun: Yeah, that’s a big part of it. I mean, thankfully we’re…I’d say we’re at a good size now from my perspective as it relates to nothing’s done alone, right? I mean when you’re small and you wear so many hats…
Michael: You just get things done.
Shaun: Yeah, and you also have just so many things to do and everybody does that no one almost pays attention to anybody else. There’s almost less collaboration. At this point, like I said earlier about going to Salesforce, like, the stakes are really high. And we don’t want to…you know, I don’t want to put myself in just the driver’s seat and say, “I got it. I’m good. You know, I’ve got 15 years of experience. I’ll be fine. Just trust me, right?” That’s not the way we approach things. So it’s very nice to be part of a group where we’re putting teams together.
I mean, we’re talking just this year about how we’re going to be making decisions differently than we have in the past because it was often me working with the tech manager at the accounting firm to implement some of those ideas that were brought to me. And when you do that for 10 years, it leads you to a point where you can do a lot of different things, but it’s almost like some things work against each other or this person built it for themselves or for their office, but it doesn’t benefit anybody else, and then you’re kind of managing a bunch of separate pieces. And when you kind of look at where we want to go, you know, we want a better client experience, we want a more efficient kind of back operations, we want our advisors to have more kind of intuitive platforms to work off of, making them more productive, guess what? Where we’re at today is in need of a little bit of revamp to help us achieve those objectives. So that’s maybe another aspect of kind of looking at the big picture.
And that’s not all coming from me. I mean, certainly, our president thinks this way and our executive team all does. I mean, I’m actually thrilled I’m in a role today where I get to do what I do best. So we shifted our service team about a year ago, and, you know, we were a pooled group of operations folks previously, and that’s kind of who I managed. And we actually made a decision, it was related to segmentation, and again, a better client experience, and decided to put people directly with particular advisors and those particular clients. And that was a big change. So kind of we worked through that.
During that time it changed a couple of things for me personally. One was I did realize or actually I spent a lot of time dealing with kind of the data behind how the client segments would look and what the client service associates’ capacity would look like, and how the different offices would deal with all of this. And it was kind of…it was just very fulfilling to realize that you know what? That’s actually a really big component of what I’m going to be doing in the future. And the fact that this team was going away, that I wouldn’t have direct oversight because I’m not a CSA, I haven’t been in a CSA role, I’ve been in more of a management role, you know, I’m shifting to operations of the firm that’s heavily weighted on technology and has components of just our general administration and some HR components that still are there.
And so this area of focus, like I said, change is constant. And so I’ve found that it’s good for me personally to be able to evolve with the firm and see where the roles take you. You know, we’re growing, and that’s one of our kind of big principles as it relates to why we grow is we know that it’ll help attract talent. And I’d say it even helps retain, you know, the talent that we have. It’s opportunity, and that’s something that we find a lot of people are really drawn to.
Shaun’s Advice For “Finding Your Tribe” [1:28:46]
Michael: So you mentioned earlier that, you know, you’re someone that likes to draw on a lot of outside perspective and bring it in, and so I’m curious to know where you actually go for perspective because I know the…I mean, I think the challenge for a lot of us in general, in the advisory world, we kind of get caught up in our businesses, in our lives and just dealing with all the stuff that comes at us from day to day, which means it’s hard to go get perspective. Like, just it’s hard to find the time to go to a conference or several conferences and just get out from your four walls. And I’m someone that kind of pounds the table that you have to find a way to do that because it’s sort of a funny thing, like, you don’t get outside perspective until you actually get physically outside of your office. It’s just kind of strange mental phenomenon. So what’s outside perspective for you?
Shaun: So the biggest thing has been my study group. The study group is called HIFON, and this came from a concept that actually a number of folks reference, the concept of tribes, right, of a community. I think it was…was it Sarah Fallaw a couple of weeks back that was on your podcast? And she referenced tribes, and I thought, “Yeah, she knows what I’m talking about.” So 2010 was actually the year. So I was finishing up school, kind of closing that out, and that was a time when, you know, our company was growing, we had gotten to the point where we weren’t really small anymore, and yet even though I had some experience, you know, seven years of experience here, and this education to go along with it, as it related to really having confidence of what I was doing, I just lacked it. I didn’t have that. And I thought, “How can I get more of this? How can I almost get validation that what we’re doing is anywhere along the right path?” Like, I had no clue kind of where we fit in this RIA environment, and I just needed better perspective.
So this concept of finding your tribe, having gone to a few conferences up to that point, I knew that there were people out there that were in a very similar role. In fact, now I kind of always tell folks every RIA firm out there has somebody in this role. It could be the owner, it could be, you know, the compliance person, it could be really anybody, but most often they actually hire someone to do some type of administration/operations/office management even. And it leads to more, right? The smaller the firm, the more hats they wear. When I would go to a conference and sit down with folks like that in a roundtable or maybe sit beside someone in a session, and I would start talking with these folks and I’m like, “This is fantastic. I found my people. You know, these are the ones that I want to talk to.” And so basically to, I guess get into a little bit of what I did from there…
How Advisors Can Get Involved with HIFON [1:31:57]
Michael: Yeah, I mean, like, I think we all would say, like, “Yeah, it’s awesome to find your tribe.” So how do you find it?
Shaun: Right. So I guess I’ll share my experience of what happened next because you said it, not everybody goes to conferences, especially ops people. And what I did know is that I had heard there were advisor study groups, and advisors in my firm were in them. I’d go to these conferences and hear it referenced, it’s about study groups, and I thought, “Well, that’s it. That’s the way that’s going to keep me connected to these people. I don’t have to wait a year to come back and have the same conversation or have a similar conversation.” You know, those were very energizing, those were educational. It was it was a powerful connection, and kind of like feeling at home. Like getting into your…you know, the right group of people, people you can hang out with.
And professionally, you know, sometimes we feel like we are a particular, like, nerd group that loves RIA operations and we don’t always connect with the people that don’t feel the same way, so when you find someone that can, like, you can nerd out together, that’s kind of cool. I’d found some of those people. What I had a challenge finding was the study group that I was looking for. So study groups existed, right, but I found that there weren’t…I wasn’t finding any for operations folks. And that’s kind of what baffled me. Some people were saying, “Oh, I can get you involved in a study group or can have you, you know, possibly talk to somebody in my study group.” I thought, “No, I’ve got to join something that’s already established.” That was really the thought is this has got to exist. And I just came up short. I mean, I asked kind of the people I knew in study groups. I went to our custodial relationship managers and even asked them, asked the other relationship managers. I went through a broker-dealer ops people there, I scoured the internet. I kind of did everything I could, and really just came up short. So I thought, “Okay, this is a problem.”
Michael: That’s kind of depressing. Like, ops staff at advisory firms were so hidden you couldn’t find them when you looked?
Shaun: Right. And I knew they were out there, right, because I had seen them. It’s like I’ve seen…you know, if you see Bigfoot you’re going to tell people, “I saw him. I know he’s out there.” Well, I knew these folks were out there, but nobody had organized them. And I guess I came to a fork in the road, right? And it was that recognition that, “All right, there is a problem. This ability to regularly network and talk to like-minded operations folks apparently doesn’t exist,” or at least it didn’t exist. It wasn’t it wasn’t coming to my face quickly and easily. And maybe there were some small pockets out there that I never found, but again, fork in the road. I could either go down the route that says, “Well, I just accept that it doesn’t exist, oh well, and I’m just going to be depressed that it doesn’t exist and maybe I’ll get to go to a conference again, or I can look down the other path that I guess doesn’t really exist, but I decide do I want to go down a new path? Do I want to kind of blaze a new trail?”
And I thought, “I’m a cautious guy, I really don’t take a lot of risks.” So I was kind of thinking through it like, “What’s the downside?” And I kind of came up short there too, which was good because I couldn’t, like, talk myself out of it. I thought, “If I want this, I’ve just got to go get this.” And it’s not that hard. I mean, having worked at MassMutual and talking to, you know, 1,000 people that just hung up on me or slammed the door or said no, like, I felt fine about asking a few people if they wanted to talk to me for an hour a month, right? So I wasn’t too worried about the rejection.
Michael: Yeah, well it’s much more…like, you’re talking to your tribe people about a good thing. It’s not a, like, “Hey, I don’t know you, but do you have any life insurance?”
Shaun: Yeah, totally different, right?
Michael: Hope this is a much more comfortable conversation.
Shaun: And so what I found, yeah, what I ended up doing is I said, “I’m going to reach out.” There were five people that I had connected with over a couple of years, and I felt like they were friends, and so it was really comfortable for me to reach out. Once I decided, like, what I wanted to do, I wanted to have a monthly conference call with my people. And so I reached out to 5 other firms and so there were 6 of us that started at the end of 2010, and we started having that monthly call.
Michael: And, like, what would you talk about?
Shaun: So the idea was to share best practices with each other on topics of interest that we all had. Either things we were dealing with ourselves, things we were considering doing within our firms. And this could be, you know, almost pick any practice management topic. We definitely stayed away from, like, advisor-type discussions, whether it was how you deal directly with clients or investment-type stuff. Like, we didn’t get into any of that, and we definitely didn’t get into like the minutiae of forms at certain custodians. Like, it wasn’t that either. But it was everything from, like, technology is a huge part. So, “Tell me about your CRM and how do you use it. What document management system are you guys using and how do you, you know, benefit from it? How do your clients access your documents?”
It would get into HR things that could be related to how you do performance management, how often you are, you know, sitting down with every team member. And then it could flip totally to what client events do you do, kind of a marketing spin, and how do you prepare for those, and what lists are you on, and what parts of your segments do you pull for those? So kind of this huge spectrum of practice management concepts that again, each person would bring topics to the table, it was very much this user group, and I would just moderate it. It felt like I was just getting the right people in the room and saying, “Hey, let’s chat,” and I would kind of force everyone to say something. So it didn’t become asking a question and then…I learned pretty quickly because at first, I did do this. I’d ask the question, “So who could tell us about this?” Whatever the topic was, and it’d be crickets, right? Just nothing.
So then I realized these people are all pretty nice and they’re really smart, and sometimes they just don’t want to be impolite and jump in and interrupt someone, so it’s way easier to just say, “All right, Michael, tell us what you do at your firm.” And then you would go and say, “Here’s what we do at Pinnacle,” and you kind of go through a few minutes, and then we’d ask questions, probe a little bit, and then we’d go to the next person. “That’s great. Thanks for sharing. All right, next person. You know, Shaun, tell us about what you do at Sequoia.” So that was kind of the initial start of it. And we can fill in however much of this we want, but I’ll say today, you know, HIFON is at a point where there are…we’re at 157 members today, and…
Michael: One hundred and fifty-seven people in the study group?
Shaun: Yeah, so this is…yeah.
Michael: I’m going to presume you don’t do 157-person conference calls at this point.
Shan: No, no. At about 20 I realized that…I think, at one time I had somewhere in the high teens show up, and it was just utter chaos. It was a disaster. So that was a very easy point to say, “You know, like, light bulb, we need two groups.” And so I’ve just kind of let that drive how many groups we split up into. And so the call is now…you know, it usually stays high single digits, which is a great…I mean, if you think about going to a conference roundtable and you sit down, you’re generally sitting at a table of about eight. So it turned out to be kind of a perfect size.
Michael: And so, how do people get involved with this? Like, if someone is, you know, listening and is on the operations side or maybe I can imagine a few advisors are listening to this and thinking like, “I want my operations manager to be involved in this so that they can get connected and learn.” Like, is it open to join and get added to one of these at this point? How does it work?
Shaun: Yeah, it is. So I guess to be clear, at this point we actually do…we do more than just the monthly conference calls. So we actually run a discussion board, which is a really big aspect of how people communicate on a regular basis. I kind of like saying it’s almost like that conference community environment from the comfort of your chair and in little tidbits, you know, here and there. One of the members recently told me, she’s like, “This has become my Google for RIA operations questions.” And she just felt like, “I can get the answers I want quickly and from the right people, and it’s this random group of 150 people across the country. Like, this is fantastic.”
And so, over the years I thought, “All right, I love this, I’m getting benefit. Sequoia is benefiting, our clients at the end of the day are going to benefit. Like, this is really a win at many levels.” And so, you know, today actually I’m working on transitioning it to be a true professional organization. You know, I want this to be the top operations network for RIA operations folks. So in addition to the discussion board, you know, I’ve had I can say vendors or folks from the custodians ask about being involved. And, you know, what I’ve kind of not figured out is how to perfectly include them because we keep it kind of pure, pure user group, but I have done like what the vendors allow them to do, like a private webinar, and that’s gone over really well. So people can attend if they want, but they don’t have to. You know, a nice Q&A session at the end of those always works out well.
It’s led to things like conference discounts. So we offer our members conference discounts. We’ve got some job postings, so whether people are…the consultants might send me a job and say, “Hey, do you know anyone? I know you’ve got this group.” So they’ve kind of tapped into that. And then the opposite, people that are in the group saying, “Hey, we’re looking for someone to join our team, do you know anybody?” And it’s that networking among ops folks that I don’t think really exists that much outside. So being able to put these right people together, we collect a little bit of data, we share that so people can get to, you know, all the particular CRM users or all the particular portfolio management system users that they want to tap into, whether it’s questions for software you currently use or whether it’s that…
You know, we benefited a ton this year through this whole vendor selection process because we just tapped into HIFON, and people who were either on Salesforce or on another company that we were looking at or dealt with this particular custodian, or dealt with, you know, a consultant, it was hugely valuable to be able to get to this random group. You know, we did ask the vendors for their references, and, you know, who did they send you? The happiest people, right? They’re just like, “Oh yeah, you could talk to Bob. He just happens to be thrilled with us,” right?
Michael: Yeah, nothing like having a way to get directly to real reviews of software and tools and what people thought. How does someone find you if they want to get involved in this? I guess there’s a standalone HIFON website at this point or do they contact you directly?
Shaun: Yeah, so up to this point, it’s been contacting me directly, but I’m just on the cusp of opening up our membership site, hifon.org. So right now that’s where somebody would go, and basically, they just put their name in or just their email in and gets them in touch with me and starts to kind of get them some information about the group. And then right now it’s still this free trial period to kind of get a feel for what HIFON is like, and the goal is to move into the new year with, you know, folks making a commitment if they’re interested.
What Advisory Firm Owners Don’t Understand About The Operations Side Of The Business [1:43:38]
Michael: Excellent. We’ll make sure we put a link out to that in the show notes as well so anyone who’s listening, who’s curious, can go and check it out or send their operations team members to go and check it out.
So as we come to the end, so a couple of questions I do have. One, just you’ve been involved with HIFON, you’ve got all this perspective now of what’s going on in advisory firms from the operations end, and sort of I’ve got to ask, like, from the operations side, like, what would you tell advisory firm owners that they need to hear and don’t understand when it comes to actually running the operations of an advisory firm?
Shaun: I mean, I guess the reason I hesitate is one thing that has been, I guess very clear is that we are all dealing with the same challenges. And I’ve got to go back to what I was saying before about kind of investing in your team, and as it relates to the ops team growing and actually having somebody in charge of it to help build it, you know, maybe small firms that’s not as relevant because they might say, “Well, we just have one ops person.” Okay, well, I’d say, “Well, what are you doing for that person or what are you allowing them to do?” Some items that we did over the years when had…we called it our service excellence group, the SEG, that was the name of our kind of pooled group, and we did everything from read books together, have off-site formal training sessions, have off-site informal fun sessions. We had and still have bi-weekly operations meetings that are treated as training, and there’s an expectation that everyone is there and sees that as an ongoing training component.
Again, that’s kind of part of what I’d like HIFON to become is more of this education for operations folks because it doesn’t easily exist in the…getting the kind of experience requirement under your belt, how do you replicate, you know, 5 or 10 or 15 years of experience? It’s really hard to do. So being able to somehow invest in your people, putting them in a spot where they’re comfortable asking or you identify some industry event that they can go to, or even just some other general business training that they might benefit from, whether it’s technology-related or just, you know, like, MBA maybe it’s a high end of that, but just some type of business training. And, you know, there’s not a ton of designations that fit easily into this realm for ops folks. So, you know, we’ve had some folks become registered paraplanners, and that helps them kind of understand more the planning side and do some of the CSA support work.
And so again, knowing that there’s not a ton outside of maybe going to conferences or going to some of the custodial events I’d say either take advantage of those that are offered like through the custodians. Certainly webinars. You know, making it known that it’s okay that people can spend time, spend that 45-minute, you know, webinar with a particular…with our, whatever your vendor is on your CRM system or your portfolio management system, and investing in that team. You know, career path is always kind of hot topic as it relates to where ops people can go, and knowing that, at least many of the young folks that have come through Sequoia as interns and talk about their careers, especially those that have gone through, like, the planning programs in the schools, they often are thinking they have to be an advisor. And, you know, thinking back to your experience, my experience, we know that’s just not the case. That’s not where all of us are going to end up.
And Sequoia is a great example. We are split almost down the middle. About half our firm is in an advisor role and about half is not. So I always like to point that out, that, you know, whatever area you end up in… One of the my favorite things that our president told me right when I started, he said, “You’re young and I don’t I guess care if somebody is young or not, but when you start with a firm, if they can say to you, “We hope to provide you with career opportunities that allow you to want to stay with us and grow with us.” That was really encouraging. So just making it known that, you know, someone is appreciated, and being able to show them not just, you know, through money, but being able to support them in their growth, in the career, that’s a huge aspect. And I think that does mean a lot.
Michael: So as we wrap up here, this is a podcast about success, and one thing I’ve long observed is that success means different things to different people, and so you’ve had a great career path and trajectory in a good and growing firm and have gotten to take on more responsibilities, and now you’re, you know, expanding the scope of that with HIFON, and so I’m curious, as you look forward from here, what does success mean to you?
Shaun: I’m going to ask you to clarify if that is more on the personal side with me at Sequoia or if you’re asking from, you know, our firm standpoint.
Michael: From the personal side for you, what’s next for your journey?
Shaun: Well, for me personally, being a part of a growing firm that has aspirations to continue to grow and continue to do great things for our clients, I don’t know that it gets better than that. To me, you know, that makes me feel like I’ve already been successful, being able to be a part of this journey that I’ve been on, but I have a lot of confidence that this journey is not over, and it’s not something that’s going to quickly, you know, change paths or change directions. So, you know, future success for me personally, you know, I want to be content where I’m at. I don’t necessarily strive for, you know, any particular fame or glory, but I really want to do…I do want to grow in my career, and I like to take opportunities that are given. So as we talked about HIFON and kind of how I started, there was that risk a little bit of taking a path less traveled and starting a study group, which is really just picking up the phone and calling a couple people and saying, “Hey, do you want to talk?” You know, it’s not that hard.
Michael: I find a lot of advisors are like, “I want to make a study group, but I’m not sure how, and it seems really hard.” And, like, it’s, “No, it’s really not much more than just actually taking the initiative to pick up the phone and call some other people and organizing something, and just actually getting started on organizing something.”
Shaun: I’ll tell you, I really think that’s the reason there’s 157 members at HIFON today is because if there’s this hurdle of…like, everyone says, “Oh, this is fantastic, this is a great idea. Wow.” Like, almost like, “How did you do this?” And I’m thinking, “I don’t know. I picked up the phone, I told people what we were doing and they were like, “Can I join?” Like, it is easier to join something that exists, right? It’s easier to, you know, read your blog than to maybe go start my own. I get that, right? It’s just that’s a natural tendency. So I understand that maybe going out and finding it is probably not the easiest thing, but you can ask. And if you don’t ask, “You know, do you know of one?” then asking, “Do you want to start one?” It’s almost not much different. So just that activity right there, I mean, there’s, again, 10,000, 12,000 RIAs out there that could be in HIFON, theoretically. The fact that there’s a super small percentage of that that’s actually in it tells me one, maybe that’s a lot of opportunity, but two, not everybody just wants it, so.
Michael: Well, and I love the way that you frame it. Just, you know, if you ask someone and they can’t find it then ask them if you want to start it instead.
Shaun: There you go.
Michael: Well, thank you. Thank you so much for joining us here on the Financial Advisor Success podcast and sharing your story.
Shaun: Oh, you’re welcome. This was fun. I really enjoyed it. Thanks for having me.
Michael: Absolutely. Thank you.