David Bahnsen, Founder & Managing Partner, The Bahnsen Group

From $600mm to $10.5B, David Bahnsen built The Bahnsen Group almost entirely through organic growth. He shares the decisions behind that growth, the value of reinvesting in the business, and why selling to longtime partner Hightower became the right next step.

In Summary

David Bahnsen left Morgan Stanley in 2015 with eight people and $600mm in client assets, motivated less by dissatisfaction than by what he calls being “intoxicated by the idea of freedom.” Eleven years later, The Bahnsen Group has grown to $10.5B in assets, 106 employees, and 13 offices—with virtually all of that expansion driven organically. 

But the more instructive story is how that growth happened. David explains how original content and thought leadership became a powerful source of new business, why attracting clients only matters if the firm can deliver an experience that keeps them, and how continual reinvestment in people, tax, planning, investment management, and family office services helped turn a founder-led practice into a national enterprise.

He also shares the thinking behind his decision to sell The Bahnsen Group to Hightower after more than a decade of working within its ecosystem. The transaction gives the firm greater resources for technology, HR, supervision, and future inorganic growth while allowing David to maintain control over the brand, P&L, strategy, and client experience. 

The Storyline

When David Bahnsen first appeared on the Diamond Podcast in April 2020, The Bahnsen Group was five years removed from its Morgan Stanley breakaway and had grown from $600mm to roughly $2B.

Today, the firm manages $10.5B across 13 offices with more than 100 employees.

The numbers are notable, but David’s approach to building the business provides the real lessons.

Rather than pursue acquisitions, The Bahnsen Group built an organic growth engine around content, thought leadership, and a distinct investment philosophy. David’s Dividend Cafe now reaches roughly 35,000 subscribers organically, but he is clear that attracting prospective clients was only half of the equation. The firm continually invested in the people, capabilities, and services necessary to deliver on what the content promised. 

That philosophy extended to how David structured the business. He chose to keep functions that created what Louis describes as “surplus value” inside the firm while relying on Hightower for areas such as supervision, regulatory support, and technology. At the same time, David resisted the temptation to maximize current margins, instead investing in advisor capacity, planning, tax, investment management, family office capabilities, and infrastructure.

The result was a business with significant organic growth and enterprise value.

Now the story enters its transact phase. After years of operating within Hightower’s ecosystem, David agreed to sell The Bahnsen Group to Hightower. Yet the transaction is less an endpoint than another evolution of the model: Hightower becomes owner while David retains substantial operating autonomy and gains resources to professionalize the firm further and supplement its organic growth with carefully selected acquisitions.

It’s the full Build, Grow & Transact arc—and an example of what can happen when independence is treated as the beginning of building a business rather than the destination. 

Topics Covered

• How The Bahnsen Group grew from $600mm to $10.5B
• Building an organic growth engine through content and thought leadership
• Why attracting clients is only the beginning of sustainable growth
• Reinvesting profits to build long-term enterprise value
• Creating advisor capacity without sacrificing the client relationship
• Deciding what capabilities to own versus outsource
• Why maximizing margins can limit the business you ultimately build
• The evolution of David’s relationship with Hightower
• Why Hightower became the natural buyer of The Bahnsen Group
• Preserving autonomy and continuity after a transaction
• Balancing organic growth with future acquisitions
• Why independence can be a starting point rather than an end goal

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

Why freedom – not dissatisfaction – drove the breakaway. [04:44]
David explains why he left Morgan Stanley despite being successful and well served there. The appeal was ownership: the ability to control how the business operated, how clients were served, and what the firm could ultimately become.

How authentic content became an organic growth engine. [09:34]
What began as written market updates during the 2008 financial crisis eventually evolved into Dividend Cafe, books, television, podcasts, and other thought leadership. David explains why the content works precisely because attracting clients was never its primary purpose.

Why attracting clients isn’t enough. [15:59]
A strong content engine can create interest, but the business still needs to deliver. David describes the continual investment in planners, tax capabilities, investment management, family office services, and client experience that allowed the firm to retain and serve the clients its content attracted.

Knowing what creates “surplus value.” [22:03]
David and Louis discuss the importance of identifying what a firm does exceptionally well and what is better handled by an outside partner. For The Bahnsen Group, that meant keeping investment management, business development, branding, and the client experience close while outsourcing functions such as supervision, regulatory support, and technology.

Why maximizing income and building enterprise value are different objectives. [25:08–35:26]
David explains why he has continually reinvested in the firm rather than optimizing margins, while Louis connects that philosophy to a recurring Build, Grow & Transact theme: owners willing to sacrifice some current income can create capacity, growth, and greater enterprise value over time.

How the advisor role changes in a scalable enterprise. [29:15]
With advisors limited to roughly 80 households, The Bahnsen Group surrounds them with planning, tax, estate, operations, marketing, content, and business development resources so they can concentrate on client relationships. David also explains why he believes the industry has more of an “opening business” problem than a closing problem.

Why Hightower became the buyer. [37:09]
David wasn’t looking to sell. He explains why maintaining control over the brand, P&L, hiring, strategy, and business was non-negotiable—and how Hightower structured a transaction that preserved that autonomy while adding resources the firm needs for its next phase.

Why inorganic growth is now entering the picture. [44:01]
At $10.5B, the law of large numbers changes what 30% growth requires. David explains why acquisitions will become a supplement to—not a replacement for—the firm’s organic growth engine, with cultural fit playing a critical role in the strategy.

Why independence was always the beginning. [50:51]
David never viewed breaking away as the achievement itself. Independence gave him the ability to build the business he envisioned, and he now sees the Hightower transaction as the beginning of another phase of that journey.

Key Takeaways

Organic growth is more than business development. The Bahnsen Group’s content creates awareness and opportunity, but its growth has been sustained by building the capabilities necessary to deliver an increasingly sophisticated client experience.

Enterprise value often requires sacrificing current income. Hiring ahead of need, expanding services, creating capacity, and investing in infrastructure may compress margins today while building a stronger and more valuable business over time.

Scale should support relationships, not replace them. David rejects the idea that client relationships themselves can be scaled indefinitely. Instead, the firm scales the resources surrounding its advisors so those advisors can remain focused on clients.

Outsourcing can be a strategic advantage. The goal is not necessarily to own every capability. David’s approach is to retain the functions where the firm has passion, expertise, or differentiation and leverage outside scale for others.

The right transaction can preserve what already works. David’s decision to sell was contingent on maintaining meaningful control over the brand, strategy, P&L, and operating model rather than changing the formula that created the firm’s growth.

Organic and inorganic growth don’t have to be competing strategies. The next phase will combine The Bahnsen Group’s existing organic engine with selective acquisitions designed to add scale without creating a collection of disconnected businesses.

Independence is a means, not necessarily an end. The larger lesson from David’s story is that independence created the freedom to build. What mattered afterward was how that freedom was used.

https://youtu.be/_s8MFJtrbS0

Quotable Moments

“I was very intoxicated by the idea of freedom.” — David Bahnsen [04:44]

“Relationships don’t scale.” — David Bahnsen [29:15]

“Twenty cents of something big is a lot more than 40% of something small.” — David Bahnsen [33:31]

“I did not want to go to independence as an ending point. It was a beginning.” — David Bahnsen [50:51]

FAQs

How did The Bahnsen Group grow from $600mm to $10.5B?

The firm’s growth was overwhelmingly organic. David attributes much of the business development engine to original content and thought leadership, supported by continual investment in advisors, planning, tax, investment management, family office capabilities, and the broader client experience.

How did content creation contribute to The Bahnsen Group’s growth?

David began writing regular market commentary during the 2008 financial crisis. After becoming independent, he developed that work into Dividend Cafe and expanded into books, television, video, and podcasts. Dividend Cafe now has approximately 35,000 subscribers, which David says were acquired organically.

Why does David Bahnsen believe in reinvesting in a wealth management business?

Rather than maximizing current profit margins, David has invested in people and capabilities when he believes they will improve the client experience or create a better environment for advisors. His philosophy favors building a larger, more durable enterprise over extracting the maximum amount of current income.

Why did David Bahnsen sell The Bahnsen Group to Hightower?

David says he was not actively looking to sell. The transaction became attractive once Hightower was willing to preserve the firm’s autonomy while providing additional resources in areas including HR, technology, AI, supervision, and future inorganic growth.

Will The Bahnsen Group continue to operate independently after the Hightower transaction?

According to David, the firm will operate as a wholly owned independent subsidiary. He expects to retain authority over the P&L, hiring and firing, strategy, branding, and other core aspects of the business while drawing more extensively on Hightower’s resources.

How will The Bahnsen Group grow after the Hightower transaction?

David expects organic growth to remain the foundation. However, as the firm becomes larger, he plans to supplement that growth with selective acquisitions and advisor additions that fit The Bahnsen Group’s system and culture rather than simply aggregating assets.

What can financial advisors learn from David Bahnsen’s independence journey?

His experience illustrates the importance of defining what independence is intended to accomplish. For David, leaving the wirehouse was not the destination; it provided the control necessary to invest, create, hire, build services, and develop an enterprise around the client experience.

The firm’s growth was overwhelmingly organic. David attributes much of the business development engine to original content and thought leadership, supported by continual investment in advisors, planning, tax, investment management, family office capabilities, and the broader client experience.

David began writing regular market commentary during the 2008 financial crisis. After becoming independent, he developed that work into Dividend Cafe and expanded into books, television, video, and podcasts. Dividend Cafe now has approximately 35,000 subscribers, which David says were acquired organically.

Rather than maximizing current profit margins, David has invested in people and capabilities when he believes they will improve the client experience or create a better environment for advisors. His philosophy favors building a larger, more durable enterprise over extracting the maximum amount of current income.

David says he was not actively looking to sell. The transaction became attractive once Hightower was willing to preserve the firm’s autonomy while providing additional resources in areas including HR, technology, AI, supervision, and future inorganic growth.

According to David, the firm will operate as a wholly owned independent subsidiary. He expects to retain authority over the P&L, hiring and firing, strategy, branding, and other core aspects of the business while drawing more extensively on Hightower’s resources.

David expects organic growth to remain the foundation. However, as the firm becomes larger, he plans to supplement that growth with selective acquisitions and advisor additions that fit The Bahnsen Group’s system and culture rather than simply aggregating assets.

His experience illustrates the importance of defining what independence is intended to accomplish. For David, leaving the wirehouse was not the destination; it provided the control necessary to invest, create, hire, build services, and develop an enterprise around the client experience.

Related Resources

The RIA Builder’s Blueprint

How the Freedom to Communicate During a Crisis and Beyond Translated to 4x Growth for this ex-Morgan Stanley Team

Mentioned in This Episode

Dividend Café
The Bahnsen Group
Hightower

David L. Bahnsen
Founder, Managing Partner, and Chief Investment Officer

David L. Bahnsen is the founder, Managing Partner, and Chief Investment Officer of The Bahnsen Group, a national private wealth management firm with offices in Newport Beach, New York City, Bend, Nashville, Minneapolis, Austin, Phoenix, West Palm Beach, Dallas, and Grand Rapids, managing over $10 billion in client assets.

Prior to launching The Bahnsen Group, he spent eight years as a Managing Director at Morgan Stanley and six years as a Vice President at UBS. He is consistently named one of the top financial advisors in America by Barron’s, Forbes, and the Financial Times.

He is a frequent guest on CNBC, Bloomberg, Fox News, and Fox Business, and is a regular contributor to National Review. He hosts the popular weekly podcast, Capital Record, dedicated to a defense of free enterprise and capital markets. He writes a weekly macro commentary at dividendcafe.com.

David is a founding Trustee for Pacifica Christian High School of Orange County and serves on the Board of Directors for the Acton Institute, National Review, and Hightower Advisors.

He is the author of several best-selling books including Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It (2018), There’s No Free Lunch: 250 Economic Truths (2021), and Full-Time: Work and the Meaning of Life (2024). His newest book, Profit from the Profit: The Past, Present & Future of Dividend Growth Investing, was released in August 2026.

David’s true passions include anything related to USC football, the financial markets, and politics. His ultimate passions are his wife of 24 years, Joleen, their children, Mitchell, Sadie, and Graham, and the life they’ve created together on both coasts.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

Build, Grow & Transact: David Bahnsen on Building a $10.5B Business Worth Selling

A conversation with Louis Diamond and David Bahnsen, Founder & Managing Partner of The Bahnsen Group.    

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Build, Grow & Transact: David Bahnsen on Building a $10.5B Business Worth Selling. It’s a conversation with the founder and managing partner of the Bahnsen Group. I’m Louis Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual Advisor Transition Report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

There’s a big difference between breaking away to create a better version of the business you already have and breaking away because you see an entirely different business you want to build. And I think that distinction becomes even more important as we look at what creates real enterprise value in the wealth management industry today.

My guest, David Bahnsen, is a pretty remarkable example. David first joined us in April of 2020, five years after leaving Morgan Stanley with eight people and 600 million in assets. At that time, the Bahnsen Group had grown to roughly two billion. Today, it’s a $10.5 billion business with more than 100 people and 13 offices across the country.

Perhaps the most interesting part of that growth story is that virtually all of it has been organic. David didn’t build the firm by buying AUM. He built it by creating an authentic voice, an incredibly effective content engine, investing heavily back into the business, adding services clients actually wanted, and being very deliberate about what his team should own versus what was better outsourced. There’s a lot in that playbook for any advisor who wants to build a business with real enterprise value.

But David’s story also gives us something we often don’t get to examine, the full build, grow, and transact arc. For more than a decade, Hightower went from employer to service provider while David maintained ownership and control of the business. Now, the Bahnsen Group is being sold to Hightower, giving David additional resources to pursue the next stage of growth while preserving much of what made the firm successful in the first place.

So we get into the decisions behind that extraordinary organic growth, why maximizing current income can work against building long-term enterprise value, how David thinks about content, clients, and scale, and ultimately why someone who was once intoxicated by the idea of freedom decided the next right move was to transact. It’s a great case study in what can happen when independence becomes a starting point rather than the destination. So let’s get to it.

David, thank you for coming on our show again.

David Bahnsen:

Well, it’s wonderful to be back with you. I love listening to the show every week.

Louis Diamond:

Oh, there you go. Just flattering us now. So for anyone who probably, myself included, doesn’t remember the last time you were on our show, it was April of 2020, a time warp into a crazy time. It was the five-year anniversary of your breakaway in the very, very beginning of the pandemic. Then you still had an amazing business, two billion in assets. But for listeners who may have missed it, and even just to catch us up, can you give us the quick version of your origin story of leaving Morgan Stanley in 2015 with 600 million and eight people and why you did it, just the speed round of compressing a stressful and very important time in your business arc?

David Bahnsen:

So I was one of those people that in an almost cliche, typical way, the types of folks that your business deals with all the time, left because I wanted independence. I wasn’t unhappy at Morgan Stanley. I wasn’t in need of any particular change, but I was very intoxicated by the idea of freedom and became very committed to the idea that if I were going to run my own business, I needed to run my own business.

It started in 2014. We made our official exit in early 2015. And as you said, there were eight people, all of which were folks on my team at Morgan Stanley and 600 million of client assets, and we basically moved 100% of that.

When I was on the podcast, April 2020, it’s funny when you were saying that, I can visualize myself at my home office at that point in time in Southern California recording this. And we would’ve been our five-year anniversary, couple billion, so we had a little bit over tripled. We probably had, if I remember correctly at that time, 25, 30 employees. And it’s interesting the linear arc of it, because you fast-forward now, we’re at 10.5 billion and 106 employees. And so it’s just proportionate, the AUM and the headcount and the time gone by, it’s been a very nice, steady arc.

But I really loved the idea of being independent. I turned 40 years old in 2014 when I began the extensive due diligence that led to me leaving Morgan Stanley. And it really was that moment that I said, “If I’m going to stay as a corner office guy at a wirehouse, I will stay at Morgan Stanley forever.” I had no issues there. My manager at the time is still, to this day, my best friend in the world. We’re like brothers. I just dedicated my new book to him. I wasn’t unhappy with Morgan. I just liked the idea of having my own business and haven’t looked back since.

Louis Diamond:

Amazing. Seems like it was probably a pretty good move based upon what you shared, but I think it’s an interesting perspective because I feel like I’m starting to see that more and more is the profile of the advisor who doesn’t have these intense pain points and is relatively well served, is going to be successful, knows how to operate at their firm, but they just want something more. There’s an intangible that staying isn’t going to solve for them. For many, it’s being a business owner, like the path you took. For others it’s, hey, I just want to be recharged. I don’t want to be static. I want something different. I want to monetize. I want to work in a bit of a different way.

I think you’re early on that trend, to be honest with you. You were probably right in the middle, even probably even the beginning innings of the independent movement, and I am very excited to dig into how you got from 600 million in 2015 to over 10.5 billion, 11-ish years later. So let’s jump to today, and we’ll spend some time going through dissecting that growth. But today, like you said, 10 and a half billion under management, 100 plus people, 13 offices, including Santa Barbara where you just opened, but Newport Beach, New York City, Nashville, Tennessee, Palm Beach. It’s a real national firm. And I read that you’ve grown over 30% organically over the last decade. So when you look at the firm now versus 2015, what stands out the most? Let’s really dive into that.

David Bahnsen:

Well, a lot of this is where we’re going to end up going later in the conversation with where I see the next iteration of the company. But when you talk about the last 10 years, it has been the textbook definition of organic growth. There are 13 offices open and zero of them came by acquisition or merger or purchase. We’ve hired two or three advisors out of our 26 advisors that had a little bit of a book, but I mean under 100 million. We never paid for it. I’m talking about hiring people.

But you’re looking at an organic story, and I am proud of that, but I also recognize that it wasn’t intentional. And what I mean by that is I didn’t have this strategy in 2014, ’15 where I said, if I can just go independent, I have this evil genius behind me that is going to drive a mousetrap that will get me up to 10.5 Billion.

I’ve been as surprised, as many outside observers, but I have a lot of gratitude for it. I understand now why it has worked, and I think that there are people inside of our business that are a little more qualified to understand how the business works than people who are outside of it. Your consultants and professional investors are very smart at what they do, but they don’t necessarily always understand that advisor-client dynamic. And I get why we’ve been successful with it. But I also don’t want to take credit for it as if it were this master strategy. We just tried things and those things that worked, we kept doing more of, and this is where we are.

A lot of it, and I spoke to Mindy about this six years ago, it’s been content creation, thought leadership, and the voice that, much to my surprise, has attracted people and never doing it for the purpose of attracting people. This very natural and sincere delivery of a belief system about markets, about the economy, about the world around us, I share things sometimes about my faith, politics in a public square. I’m on television, this podcast.

And then the major driver is the written word, which some people might be shocked to hear as we’re talking about a podcast still even exists. But my weekly Dividend Cafe, which is my weekly market commentary, is up to 35,000 subscribers, 100% organic. We’ve never done anything to get any subscribers. And our video and our podcast and everything, the books I write, the television hits, they all have their audience. But most of it goes through that written word. That’s where I get to connect with people that if they like me, they may end up becoming a client. And if they don’t, they won’t, but that’s really been our story though.

Louis Diamond:

That’s absolutely amazing. There’s so much to unpack there. That amount of growth without anything inorganic, especially the way this industry is going, I don’t think I’ve ever heard that before. That’s amazing in and of itself. But just the way you can track back your meteoric rise to content creation, I think for many listening, it’s either, “Oh my God, that seems so daunting and so crazy.” Others would be like, “Well, I can’t do that, but that sounds great. Of course, he’s been able to grow because he can have an original voice.”

As a firm that puts out a lot of original content, podcasts written, Mindy wrote a book, white papers, et cetera, I know the amount of work and dedication and commitment it takes to stick with that for so long. So if you don’t mind, can we double-click into that written word story? How did you get started with it and what’s been the arc or the growth journey? Someone who’s listening who would love to do that, where did you get started? You didn’t just all of a sudden have a book and show up on TV. How did you get started?

David Bahnsen:

In the truest sense of the word, I grew up loving writing. My father died in his 40s and I was only 20, but he was an intellectual, a brilliant writer, had several books, and I was a nerd in high school. Luckily, I had basketball so that I could still meet a girl here and there and have friends on the team. But I mean, if it were up to me, I would’ve been home reading books and writing papers, and I would turn in extra credit papers more than I would study for a test because I loved writing. So the written thing was there. I don’t know if I was ever good at it or not, but I know I loved doing it, and I would credit my late father with the early seeds of that.

When the financial crisis happened in September, the actual week of Lehman’s bankruptcy, September of ’08, about three, four days later, Morgan Stanley’s credit default swaps were blowing out, and now it was not just the market was crashing every day. And of course at that point, Merrill had gone down, AIG had gone down. We were in this cascade, and everybody who lived through it remembers it all well. I remember every detail of it like it were yesterday.

But all that happened was once I got my 80th call about what the hell was going on with Morgan, I decided to write up a piece, not send it to compliance for approval and send it out to everyone. And if the firm was at risk of not making it for another day, I wasn’t especially worried about compliance getting mad at me at the time. And I did that, and then a couple days later did it again, just broad update on everything going on, and I never stopped doing it. That’s what it was, just every Friday since September 2008.

And then when we left Morgan, at some point along the way I started getting compliance approval and getting a bit more of an audience. We had hundreds of clients that were reading it, and we’d have a few guests that would ask to be signed up as clients were forwarding it around, but that was it. It didn’t have a website, it didn’t have a subscribe feature, it wasn’t a real blog or anything like that.

So then in going independent, I was able to incubate it, and we branded it as Dividend Cafe. We’re Dividend Growth investors at my firm. So we put a brand around it. We had a website, and I think we started a podcast and video that was becoming a very large medium around the mid-tens as well, and so we added that shortly later, but it was just because I had the freedom to do it.

And then I did do some hit on CNBC like Asia or CNBC World or something. It wasn’t anything with a big audience, but then we sent the clip to someone at Fox and they really liked it, and then they had me, and then I started getting invited more regularly. So now the TV thing was happening, and I always say that TV can be a really good thing for a very small number of people. Obviously, Josh Brown has been incredibly successful with it. He’s very good at it, and it’s done okay. It’s done well for me, but it’s different than people think.

You do not go on TV and then get done and all of a sudden the phone rang and someone said, “I saw you. You’re so handsome. I want you to be my advisor.” What it does is it might drive them to other content. It might drive them to the internet where they’re going to find other things about you. And if my name was David Johnson instead of David Bahnsen, I think I would’ve got lost in the SEO and nothing would’ve come of it. I really believe that. But it enabled some people that liked what they heard on TV to start following me in other more substantive and perpetual mediums.

And then in 2017, I wrote a book that I wouldn’t have been able to write at Morgan Stanley. I had very strong opinions about the origins of the financial crisis. And I did not believe the left-wing narrative that it was caused by unfettered markets, and I didn’t really believe the right-wing narrative entirely either that it was exclusively caused by government intervention. I believed that all of those things were true but were missing this cultural and moral component about Main Street. I wrote a book on it and I thought there might be 200 clients of my firm that would read it, and it ended up being a bestseller, and that created more television invitations and just to a slightly larger audience. And at this point now, I realized that all of these things were dovetailed together, content, the mediums, coming to Dividend Cafe, coming to an authentic point of view about markets.

And then, and this is the thing that is so important because of what you do and do so well in your business and within the kind of practitioners that listen, it wasn’t enough to have a mousetrap that drew people to us. We had to keep them. We had to deliver an advisory experience, and so we were just relentlessly reinvesting back in the business, adding planners, adding tax, adding more investment sophistication, family office, just improving our business, and that’s why we’ve added so much to headcount because we have just constantly wanted to really be what we were attracting people to.

Louis Diamond:

It’s amazing. The key themes I heard there, there’s a lot, but is it’s not one thing that works. It’s a coordinated strategy. I can attest to that for the content work that we do. There isn’t one single point of growth that comes from content creation. It’s everything working together. You don’t know, especially in this day and age, how people consume information or how a message gets across to them, whether they’re a reader, whether they find you in AI, whether they watch video, whether they saw CNBC in their barbershop. So I think that’s absolutely amazing, and congratulations.

Let’s talk a little bit about your breakaway setup, if you will. So when you broke in 2015, you signed on with Hightower, but in a bit of a different way, certainly different than today. You paid Hightower an override on your revenue, or basis points and assets, to be on their platform. But you owned 100% of your business, ran your own P&L, and they provided certain services to you. Thinking back to 2015, and then even up until your recent decision to sell to Hightower, why did you structure it that way rather than under their brand or as an employee or even just having your own RIA, especially given your size and scale?

David Bahnsen:

There’s actually one piece missing there. You may not have known, but I think is important to the story. When we came in 2015, we were employees and they had a 50/50 net model, and we joined in that capacity. And then when they recapped in 2017, brought a new investor on, eventually changed CEO about a year later, at that point, we were growing. I felt very comfortable with the independent space. I now knew what I didn’t know. I knew what I thought they did well, and I knew what I thought we could do well, and I took advantage of that moment to say, “Guys, I need to be on my own. We need to run our own firm, our own finances, our own payroll, our own brand.” And what the investors wanted at that time was some sort of affiliation that they could count on and not be vulnerable, but I didn’t want to sell and I wanted full control.

So I got control, much better control than I had had in my first couple years, and they got a extension of agreement of these services that they could feel good I was going to be a part of their ecosystem. And the cash flows were pretty meaningful as we grew from, at that point, a billion to over 10 billion, and we became obviously a very meaningful contributor to their earnings and revenues.

And the CEO who came in was the second CEO in the history of the company. And they now have a third, but that individual, Bob Oros, I knew well because he had been at Fidelity when I chose Fidelity as our primary custodian. Bob and I got along very well. And so over the years, there’d be things that we had impediments that we had to work through, and we worked through them just like adults, like businessmen and women and got stuff done. So it was a good relationship.

But we were really quite independent. Very few of my people that worked at Bahnsen Group even knew who Hightower was because we had our own brand, we had our own investment process, the HR, the payroll. And unlike a lot of the other platform teams, they didn’t have too many platform teams, but ours, the accounts payable were massive. I mean, we had to have a whole finance department just because of our growth. So it became a difficult thing for them at this stage to have such a meaningful company within their ecosystem not aligned and not harmonized within the economic model of the rest of the firm. But I would say that decision for 2017 until this year, I don’t regret it at all. Hightower doesn’t regret it at all. They benefited immensely from this growth we’ve gone through, and I very much desired that freedom.

Look, if I’m being very candid, Louis, you brought up why didn’t go on my own ADV? At the time in ’14 and ’15, I didn’t know enough. I didn’t understand. And I met with Focus, I met with Dynasty, I met with some others, and you just meet with different people, hear the stories, and the one I went with was Hightower, and there’s pros and cons to all the models. It’s one of the things I wasn’t joking at the beginning. I listen to your guys’ show every week. I’m a sucker for everything happening in our industry. I hear the stories of different successful advisors, and every one of them resonate with me in one way. There might be nine ways it doesn’t resonate, but one way that does because there’s always something that each person’s looking for that some of us can connect with.

And at the time, I didn’t know what I didn’t know, but I felt good about the Hightower story, went in that path, and I would argue that we got the best of all worlds in that 2017 to 2026 story because we really got to function independently. We were under their corporate RIA, but other than that, felt very independent. And that’s a testimony to Hightower that they honored that autonomy, but I think it gave me the entrepreneurial thing I needed, and I’m grateful for it.

Louis Diamond:

Fantastic. So let’s say from the 2017 to 2026 timeframe when you decided to finally sell to Hightower, how did you weigh the leverage that outsourcing certain things provided your business versus paying a fee, obviously, more than what it cost Hightower and not having complete and utter control over your business? How do you track that to your growth, if at all?

David Bahnsen:

The criteria was always anything we like doing or are good at doing, we’re going to do it, whether Hightower offers it or not. So for example, I’m sitting here in a beautiful office. We have the 31st floor of a building on 54th Street and 6th Avenue, and Hightower has a whole facilities department. We’ve done 13 office leases with no involvement from their facilities department because my wife loves designing the offices. She’s an interior designer. My team loved picking our own locations. I didn’t find negotiating with a broker all that hard. So we were able to do it, we liked it, so we did it.

But then the supervision side, the regulatory side, and candidly, a lot of the technology side, which is where some of our talk is about to go in terms of the new transaction, those things I felt more comfortable outsourcing to Hightower who had entire departments and resources geared towards it. And we would do them if we had to, but we weren’t passionate about it. I didn’t want to go understand all the nooks and crannies of the regulatory apparatus. So that was part of their ecosystem, and we were happy to utilize their services there. Investing money, financial facilities, the business development mousetrap we built, those things we were good at, and so we held onto that, and that’s how we viewed the division of labor.

Every firm, RIA, IBD, a wire, W, it doesn’t matter. Everyone who optimizes this challenge of doing what you like and not doing what you don’t like is going to grow. It’s hard to do. It’s easier said than done, but that’s the challenge right there.

Louis Diamond:

I absolutely love that. I think it’s so true, knowing what’s actually going to add surplus value relative to the amount of time you’re doing versus what’s commoditized or back of house or isn’t something that lights you up. Because there’s plenty of RIAs that I’ve interviewed or that I know where they enjoy building technology, they like designing their own compliance organization, and to them, that’s their superpower. That’s what makes them different.

For you, it sounds like it was very clear. You knew exactly what you wanted to do. As long as you’re able to still do it, you’re very comfortable with outsourcing certain things that would’ve been a distraction or something that you and your team weren’t world-class at.

I want to talk a little bit about some of the deliberate choices you made to take the business from, I would assume it was you as the rainmaker, and now you said you have over 25 advisors. So just thinking about hiring, structuring the business, investing in the business and platform, because I’m sure you’ve had the temptation, maybe not because you’re a business builder, but I think a lot of people love, “Hey, I can make a ton of money if I don’t make that second, third, 125th hire, and instead I just take cash flow. I don’t necessarily need this person. I can make more money or distribute more to my partners.” So I’d love to hear a little bit about some of the deliberate choices you made on hiring and investing in your business.

David Bahnsen:

There’s two things that I am very hesitant to take credit for, even though they’re true. You had mentioned before when we left in 2014 that we were early innings of wirehouse defections to the independent movement. I was early, but I wasn’t a first inning guy. The real trailblazers were going in 2006, 2007, 2009. 2014 is a lot earlier than those that have gone in the last two or three years, but I was like a third or fourth inning guy, and I don’t deserve credit to be a first inning guy.

The other issue is that I reinvest in the business constantly and have not been greedy about maximizing all the margin, but that is easy to say once you’ve already scaled the business, right? You’re already in a place where things are going very well, and then from there, deciding you just really want to run the business the way you want to run it. It’s not as selfless a decision as people may think. It was a luxury.

And at the same time, I cannot tell you how bizarre I think it is when people are focusing on maximizing margin versus running the business that they want to have. It’s a high-margin business. There is not a lot of operating leverage in it. More or less, not completely, but more or less expenses go up in proportion to revenue. Particularly for us opening new offices and hiring a lot of new people, our biggest overhead far and away is people. And we started an ETF a couple years ago and I got a chance to learn the polar opposite where my business has tons of pricing power and very little operating leverage and asset management has unbelievable operating leverage. I basically have zero dollars of expenses on my next dollar of revenue, but no pricing power.

Louis Diamond:

So interesting.

David Bahnsen:

Yeah. I mean, it really is just two different business models. When we have hired more people, we’ve always done it based on are we going to serve our clients better and enjoy running our business better with these people? We don’t want wasteful positions, but we want the maximum optimization for how to service clients and how to give advisors an ecosystem to function in. So a one-to-one operations to advisor, having planners that are not the client-facing advisor themselves, but are devoted to the behind the scenes planning process. Having a full tax department that does not provide tax services to non-wealth clients, that is only there, a robust tax consulting, tax preparation, tax advisory arm to drive a better client experience for us. These things all erode at margin, and I wouldn’t do it any other way. And the biggest thing, by the way, is the investment management, because then you’re not just talking about profit margin. We’re talking about time.

I am a 3:45 AM guy every day because we’re inside markets. We have analysts, traders, investment folks. I think it’s something like 10 or 11 people on the org chart. It costs me millions of dollars a year for us to manage money in-house. There’s no justification for that other than it’s what we want to do, what we believe in. And those that have a outsourced Vanguard DFA-type model, I have no criticism of it in the world, but it just wasn’t us, and so we had to do what we liked doing.

Louis Diamond:

Yep. And once again, the authenticity shines through.

Can we talk a little bit about the financial advice part of the business? I would assume when you’re at Morgan Stanley, you were probably the driver of growth, you were serving personally probably every client or just about all of them. Today, with 10 and a half billion, 25 advisors, just the immense scale of the organization, how do advisors advise? Are you still providing financial advice to clients directly? Are you more of just the CEO, the rainmaker, the strategist? I mean, how do you think about, I guess, allocating clients to your advisors? How have you grown your capacity for financial advice?

David Bahnsen:

So our leverage is entirely limited by my ability to find like-minded advisors who can go deliver our client experience and be in relationship to clients. It’s why I’m not a big believer in this notion of scalability. I think technology helps scale. I think there’s all kinds of processes you can do more efficiently, but it’s a relationship business and relationships don’t scale.

And we have an internal policy philosophy preference, if you will, that no advisor will cover more than 80 households. And so for us to continue growing at the number of households, number of AUM, and therefore number of revenues, all those numbers, of course, have some proportionate relationship with one another, we have to have the advisors to do it.

And so as we find advisors that can not drool on themselves and be professionals and deliver an experience to clients, we want them to be generalists. We want them to be very good at what they do, but we don’t want them entering trades. We don’t want them doing their own operations work. We don’t want them having to pick stocks. We’re providing this ecosystem of the tax, the planning, the estate, the operations, the content, the marketing, and the biz dev. They don’t have to go try to rainmake at their kid’s soccer game or join the chamber of commerce or things like that. That we believe we have enough internal biz dev opportunity that what they need to do is cultivate the relationships with the prospective clients we give them.

They do have to close that business, but our industry, for all of the talk about this, people diagnose it wrong. We do not have a problem with closing business in our industry. We have a problem with opening business. And so the sourcing is the issue. And for whatever reason, it’s a mystery to me, it’s been a mystery for 27 years, I’ve been pretty good at sourcing business. And so we can share that with our advisors and then expect them to, their job when they wake up and go to bed and everything in between is to be in relationship with clients.

Louis Diamond:

If I think about, just think of 20 highly successful RIAs and think of some of the biggest and best names in the space, I think a critical connection point or commonality for all those firms is they’ve somehow figured out lead flow or some mechanism or capacity to bring in clients for their advisors. To me, that’s the truly only scalable way to keep adding advisors and growing a business is if there’s enough inbound lead flow that’s cultivated or created by the firm to really feed all the different advisors, and it’s not snap our fingers and it happens.

But if you compare that to many other models, the wirehouse model where it’s all on the advisors to go out and find clients, that’s great. And if you find some amazing rainmakers, amazing, and it’s additive, et cetera, but you eventually hit a ceiling because it’s hard to find advisors who have that knack. You’re not bringing in the ideal client every time, and it’s an unpredictable way to grow.

So I think I wouldn’t gloss over the fact that you’ve been able to create enough inbound traffic or lead flow through all of your content and thought leadership that you’re able to sustain that type of model. Because it is the best way to grow a business is keep your advisors focused on just being advisors, solve for organic growth, solve for the other things they have to do. And then when you open up a new market or hire an advisor, boom, you got capacity, you got someone trained up, and it’s predictable, your close rate and your ability to scale it from there.

So I’ll get off my soapbox, but I think that’s such an important element of the biggest and best and most valuable firms in our industry today.

David Bahnsen:

I agree with you a thousand percent. And even if you put numbers around it, somebody who has to go make their own rain and service the client, they will expect, if you use wirehouse-like grids around it, this is just round numbers, I know you could turn a knob a little bit, but I view the business as more or less it costs something in the range of 40 cents of a dollar revenue to run the business. There’s 20 cents available to the owner, 20 cents to the person who makes rain and 20 cents to the person servicing the client. It’s back of napkin math.

If you are a wirehouse advisor, you’re making the rain and servicing the client, you’re getting two of the 20 cents, you’re getting 40 cents, let’s say. And if you’re the person who owns the business and makes the rain and is the advisor, you can make 60 cents on the dollar. That’s a wonderful margin, and you cap out at a certain level where you just cannot grow any further. I would rather make 20 cents on where we are now. My advisors would rather make 20 cents on where they are because 20 cents of something big is a lot more than 40% of something small. And again, and my numbers are, I’m rounding, but you get the idea. That’s really the kind of business model we’ve done here.

Louis Diamond:

I think it’s brilliant. And some would argue about the percentages and would say, oh, it costs 40 cents to 30 cents to run a business and we have a small team, but I think philosophically that’s exactly right.

And I think something you said too, which is there’s been a common thread in our “Build, Grow, Transact” series. You think about Jason Fertitta of Americana Partners or Matt Kilgroe from Cyndeo and many others that we’ve had or will have, it’s really playing the long game. No one we’ve had on the show is optimizing for how much money can I make this year, next year or the year after. It’s the intentional decisions to invest in capacity, invest in growth, and by choice take less as the owner of the business, but doing it because what you’re building is enterprise value that will sell at a dramatic multiple of that growth and have room to run.

So I think that’s the big thing is, again, it sounds easy, it sounds great, but it’s not an easy decision to say, “Hey, I’m going to make less money today and over the next few years because I want to hire the next person or invest in an organic growth funnel.” That’s discipline, for sure. But I think it’s a great takeaway for anyone listening is play the long game, invest where it makes sense, and the riches will follow you later. They don’t have to follow you today or tomorrow.

David Bahnsen:

And it’s a whole business of playing the long game, not only in the value creation and enterprise value of being independent. But even for wirehouse advisors, I remember back as I was entering the business, that debate about fee-based business versus transactional, and all it was, are you going to play the long game or get more money quickly? There’s temptations in both ways. There’s goals, there’s overhead, reality. Anyone who played the long game in that story from 30 years ago benefited immensely. And now you see it, of course, in what we’re talking about here, playing the long game in the way you run your business has just been the smartest thing anybody could do.

Louis Diamond:

Absolutely. Especially in this industry where each new client that’s brought on, there’s a lifetime value of a client. That success compounds with market appreciation, with them adding new monies, and then ultimately they’re going to give you referrals hopefully. And then over time, that’s where the real money is. It’s the compounding nature of doing the next right thing rather than, we’ll say, taking a shortcut or not making that investment in the business.

I have a ton more questions for you on this topic, but I want to spend enough time on your important decision to sell the business, sell the Bahnsen Group to Hightower in April of 2026. So after more than a decade of being an employee of Hightower, being affiliated with them but really owning your own business, you decided to not just sell the business, but to sell it to the very platform that you’re operating on. So can you just talk about that decision? Why was 2026 the right time? Why did you decide to stay with Hightower rather than any of the other 100 acquirers or a random private equity firm that would love to buy a business that’s growing 30% per year?

David Bahnsen:

It’s interesting to think about as our deal gets ready to close here at the end of September, if I had gone out and run a process, if I was looking to sell, would I have been interested in conversations with others? And I don’t know the answer to that because I wasn’t looking to sell. There was nothing broken, in my mind, in what we were doing. But when Hightower and her investors came to me, the entire conversation centered not around what we needed and wanted to be a seller, but on what we didn’t want or couldn’t have.

And I’ll share the story because I haven’t shared it publicly with anyone. As we were having conversations about a variety of things in the relationship between Hightower and the Bahnsen Group and Hightower’s investor and so forth, there were a couple of different meetings and things and we ended up having a pretty significant meeting in person in their conference rooms here in Midtown. And I’ve had seven eye surgeries, and I have challenges with my eyes and there are all these numbers up on a screen in the conference room. I couldn’t see any of them.

And it occurred to me that there was an offer on the screen they wanted to buy the business. We had not discussed that. And I turned to the folks and said, “I don’t really know exactly what it says, but I just want to make something very clear to save time and drive our conversation constructively. There’s no amount of money that I would sell for if I can’t be fully in charge of what we’re doing. Our brand, our business, our autonomy is what I care most about. If there’s a way to have that, protect it, enhance it and do a commercial transaction, I’m open to it.” And I didn’t really think that would be possible, but I will say to their credit, they did not want to interfere with that autonomy and what they believe to be a successful formula inside our company at all.

And so while they’re doing a lot right now to build their Hightower Signature Wealth brand, both internally and externally, and are coming up on $50 billion of assets that they’ll have moved onto that platform in trying to create more centralization and consolidation, which I think has a lot of commercial rationalization behind it, what they’re looking to do with the Bahnsen Group is have a wholly owned independent subsidiary where I still have plenary authority to run the business, control of the P&L, hiring and firing, strategy, branding, and yet the resources of Hightower at my disposal more now in the HR front. That gets a little trickier with 106 people that will soon be 150 than it was when it was 20. I’m committed, Louis, to knowing every one of my employees’ names forever and it’s getting harder, but luckily I have a pretty good memory.

But the technology side, the AI moment, the way in which a tech stack all intersects, I hate this stuff. And they not only are good at it and like it, but are heavily invested in it. And so it felt to me like if they’re really going to allow me to continue running this and have that control of the P&L, it could be best of all worlds and certainly very value additive to the enterprise of Hightower. And that’s what we worked a few months to put together and everybody is really pleased with the outcome.

Louis Diamond:

Amazing. I mean it’s an interesting shift in the way I’m seeing a lot of these platforms, that they start off as a fee-for-service affiliation platform and then over time they morph to being buyers of businesses, investors in businesses. And Hightower is definitely, they’re probably at the forefront of really completely shifting or re-identifying themself in the market, especially on buying practices. So I think it’s very interesting that you had this long-term relationship and ultimately having such an amazing business, they were the ultimate buyer of the business.

David Bahnsen:

And I think it’s important to say for our listeners, you know as well as I do, if we went to market, there would’ve been a lot of interested parties.

Louis Diamond:

That was going to be my question.

David Bahnsen:

The organic growth alone would’ve commanded something pretty attractive. We were under Hightower’s ADV. I not only had a positive relationship with them and a good cultural dynamic, which I wouldn’t want to risk changing, but I don’t want to re-paper the size of this business, and so it was just a non-starter. I talked to a couple investment bankers after we were already in LOI and they all said the same thing. You had your most natural buyer. It was the one you were already dating. And that’s how I feel, is if there was going to be a transaction, it made the most sense for us to do it with the one we were already partnered with.

Louis Diamond:

So was it like, hey, you know exactly who we’re getting in bed with because they’ve already been our partner in this business for a while, and as long as I get what I think is fair value for the business, that’s good enough? I’m sure you could have gotten a turn or two more to have 50 bids and to have the shark circling to push Hightower higher. But it sounds like for you, that was of course important, but that wasn’t the number one driver. It was more how do we preserve what we like, preserve our autonomy and do it with people that we like and trust?

David Bahnsen:

Yeah, that continuity, in a funny way, I did it the wrong order. I ran a process after I was already at LOI, meaning I did enough to find out, hey, did I just do a good deal or not after I’d already done the deal. And the good news is I did, but it wasn’t the way most people go about doing it.

But the continuity thing is there’s always two fronts to it at our size of business. There’s the client continuity and the team. Our team is going to move the payroll from being under Bahnsen Group to Hightower, and there’s benefits and changes and things. But the clients don’t know any difference whatsoever. Custodial, the G numbers, the ADV, there’s no signature required, no negative consent required because they already were under the Hightower ADV before. So this transaction all at once allows us to go into the next iteration of our business, which I’m very excited about, and I think is a wonderful deal for Hightower and what their goals are, but we didn’t have to bother clients with it. And when we say to clients, “Nothing’s going to change,” we can actually mean it.

Louis Diamond:

Yeah, that’s the definition of it. You mentioned there you’re excited for this next iteration or the next chapter of the company. Can you explain that? I would imagine just continuing your strategy that’s worked so well for the last decade plus, you keep doing that, I mean, you’re going to have a 20, 25, $30 billion business over the next handful of years. So what’s the next chapter? Why change it at all? What are you thinking about?

David Bahnsen:

Well, it’s funny in a moment now where, first of all, I’ve went out of my way to say that we didn’t grow at all inorganically, and a lot of people have now decided that inorganic growth is a little bit less impressive than organic growth.

One of the issues with the law of large numbers is growing 30% at two billion meant adding 600 million and growing 30% at 10 billion means adding three billion in a year.

Louis Diamond:

That’s fair.

David Bahnsen:

And then 3.6 billion, the exponential nature of it. And I believe that there are… I’ve never gone to a meeting with an advisor with a checkbook or with a balance sheet, and we want to find some folks that want to join us, join our system, join our culture, not merely aggregate a bunch of unified parts, but in some cases doing that with other people demographically would mean some monetization events.

So I do believe that there will be some inorganic growth that we will add to our toolbox as a supplement to our core underlying strategy, which we think is industry leading organic growth. So we want to continue doing more of what we’re doing. And then just as we continue to professionalize based on our size and scale more of those things that are not passions for us, technology, supervision and HR, utilize the mousetrap Hightower has that they do well while maintaining the things that make us uniquely us, which is our branding, our business development, our investment strategy, our delivery of services to clients.

I’m not naive enough to think that there won’t be some growing pains and some hiccups and whatnot, but we believe that model, all the parties are very committed to it, and we believe it’s the right model for us.

Louis Diamond:

Absolutely. I think what’s really cool about what you said was, one, I agree with the concept of law of large numbers. I mean, it’s a fact, right? No matter how much content you put out, it’s going to be hard to bring in 10 billion of net new assets eventually without going inorganic.

But I think to me at least the big trap in the industry today is firms either completely ignoring the organic and just focusing on buying and growing that way and pointing to, oh, we grew by this amount. But what you said, which is really cool and important I think is we’re going to continue the organic side to the best of our ability. That’s not going to change. Inorganic is a supplement. It’s not the replacement. I think that’s a really important lesson or discipline that it’s the combination of the two that really builds an enterprise and builds scale.

You already had your transaction, but anyone who’s weighing a transaction in the future, buyers will always value a dollar of organic growth than they would inorganic growth. So if you can hit both and you do transactions strategically, you’re not just trying to buy anyone or everyone, but you’re doing it to add the right capacity, add a new discipline, diversify the talent pool, honestly, you can’t lose. Because worst case, it’s not that successful, you still got the organic engine. Or I think knowing you it’s going to be very successful and now all you’ve done is ratcheted up what you’re able to do. So I think it’s a very smart way to look at the decision to go inorganic after all this time.

David Bahnsen:

Well, I appreciate that. It means a lot coming from you, and of course I agree and you would know a lot more about this than I would. I also believe that some of the things people are afraid of in going inorganic are a byproduct of people hitting the buy button that are not the ones who have to deal with the cultural integration afterwards. When you remove the skin in the game factor, anybody we choose to buy, they’re going to be people I got to have breakfast, lunch, and dinner with. And inorganic growth is a lot more successful when you care about culture than when you don’t. And we’re not planning to just care about it, but to obsess over it.

So I feel very excited about it. We have a couple deals that we’ll be announcing here in the fourth quarter to kick things off. And in the meantime, it’s funny, the valuation period of my transaction ended June 30th. My deal closes September 30th, and in this quarter in between, we just had our biggest organic growth ever. So we’re already off to a great start in making money for our new owners.

Louis Diamond:

There we go. That’s amazing. So was for you the pivot point then the realization that in order to protect our 30% or more growth per year, that we’re going to have to supplement with acquisitions? Was that really the we’ll say the critical link that was the why now moment? Because I would imagine, I mean, given the size of your firm, you could have gotten debt to buy businesses, you could have gone and sold 10%, 20% to a PE firm or a family office. So was it really like, we really want to lean into the inorganic side? Was that what you thought Hightower, and being owned by them, would really unlock for you?

David Bahnsen:

That is a true statement, but even then that wasn’t true until we got over the original hump of control. That once it was clear that they authentically wanted, not like they were willing to let me run it, but they were willing to memorialize to that they valued what we had done and did not want to disrupt it. And when I became convinced that they were convinced that it was not just best for me, I mean, that’s what I cared about, but they wanted our autonomy out of self-interest because they viewed that it was best for their enterprise to let us continue running independently, that was the sine qua non of everything. And then on the other side of it, it opened up the benefits of the inorganic growth.

And I also think I felt a burden to properly professionalize and scale our internal team without me working eight jobs. And I felt that there became a need for specialization in the technology supervision and HR functions that I didn’t have an interest in building in-house. We built in-house our investment, our tax, our family office, our content, all of those things, and I loved it. But these other areas, I felt like we had it good enough, but we were going to benefit from the strategic partnership with them going forward. And so all of those factors together allowed us to put this deal together.

Louis Diamond:

It makes complete sense. So I mean, there’s this version of your story, and you’ll probably be like, “That’s not my story, clearly.” But you broke away in 2015, you keep doing your thing, grow a couple points here or there. It compounds, you’re at two, three billion without really breaking much of a sweat. Take a lot of vacations, make a lot of money, but you did the opposite, right? You really took independence as a signal like, let’s go, let’s build something, let’s build a real company, a real business. So can you talk about basically how you thought about treating independence as the starting point rather than the terminal destination?

David Bahnsen:

Well, I think that your question itself, it has the answer in it. It’s so important. I mean, without us knowing each other, you’re really capturing something very biographical. I did not want to go to independence as an ending point. It was a beginning. I intend to do this the rest of my life. I was already financially comfortable, but I didn’t realize that when people talk about payouts like, oh, you’re going to have a higher margin of what you keep as an RIA than W-2 at a wire, I never even thought about that. It was purely for me the type of business I wanted to have, the way in which we went about servicing clients.

I’ve said this to good friends of mine over the years. Greg Fleming ran Morgan Stanley Wealth Management at the time, and now of course is CEO of Rockefeller. One of the things the wirehouses did so well was convince me about teaming, about having a business. I’d go to Chairman’s Club every year and they would talk about you build out your team and you have your own little mini group and you’re adding a planner into this, and yet you couldn’t really do it. You couldn’t really hire and fire who you wanted. So they tantalized it. They gave me enough to know that this would be a wonderful way to run an advisory business versus the pure vertical type team that I had. And yet to go be able to pick our own furniture and do our own creative marketing work and all that, you had to be able to have your own checkbook.

Independence was the start of a journey, and I really view this next phase of where we’re going as a new journey. I don’t know if I’m going to be good at doing inorganic transactions. We’ll see. But I do want to find out, and I’m determined to become good at running a 150-person company the way I think I was good at running a 30 or 40-person company. And so I’m up for that new challenge.

And one thing I’ll say over 27 years from being an independent self-practitioner at PaineWebber through the Morgan Stanley years, through this last phase on our own at Bahnsen Group, it’s always been client-centric. And I just think that those advisors that somehow have that in their DNA, that if you keep everything focused on the client, the rest comes together, it does come together.

Louis Diamond:

Amazing. There’s been a number of episodes where that’s been a through line is if you do right by the client, that’s your North Star, you’re never really going to lose. Will you grow slower sometimes? Sure. Will it cost you money sometimes? Absolutely. But in the end, the goodwill, we’ll say the spirit, the culture of generosity, it always shines through. Think of any company, even outside of our industry, that’s been their North Star and they don’t lose. It’s brilliant.

Last question for you. I think I can probably go for another four hours, but you got some content to create and some new households to bring in, so I’ll let you go after this. For an advisor who’s sitting where you were, let’s say 2012, 2013, 2014, who’s successful, growing, comfortable, they make a lot of money, but sensing that maybe there’s something missing, there’s a business to build, there’s something that’s not really charging them up the way that it used to, what’s one thing you’d tell them?

David Bahnsen:

You have to overcome the inertia because I think it is a universally true thing in our business that when there’s something holding them back, there’s something not right, there’s something that’s off, it’s still usually pretty good, especially in a good market. You have recurring cash flows, you make a good living, for most people, they’re probably making a better living than they ever thought they’d make doing anything else, and so to say it’s good enough is to me a hallmark of mediocrity.

But to say even though it’s already good, I want it to be better. I’m going to have to go dig in to create the right ecosystem, the right apparatus, the right partnerships, the right strategic fit, whether it’s going to a new firm, whether it’s starting your own firm, whether it’s partnering with one of the aggregators or doing your own thing, I mean, there’s so many choices to walk through.

But I don’t believe most people say, “Oh no, I’ve just decided where I am is the best.” I think most people decide where I am is good enough. And overcoming that inertia, you will be glad you did because there is a better world waiting when you take that step. And not only a better world for you and your family and enterprise value and cash flow, all that matters, but I’m saying a better world for your peace of mind, for your internal fulfillment of what you’re doing and for the experience you’re able to give a client. Everybody, every advisor worthy of the name should desire to optimize the ecosystem in which they work.

Louis Diamond:

That is absolute gold and brilliant. I couldn’t agree more. I mean, I feel like the great thing about being an advisor is even if you’re in the most captive environment, you’re the one who gets to choose. Is it good enough and does that work for me? I want to golf four days a week and this works, this checks all my boxes. Or if there’s something more, something that good enough isn’t solving for, that you have the optionality and the ability to go out and do it.

And it’s not going to be easy. It’s a lot of work to transition or to build and to do something like you’re doing, but I think every advisor owes it to themself to at least test out that thesis. Is good enough really good enough or is there something better that makes me better, makes my team better, lets me serve clients better, and ultimately is going to be more fulfilling in the end?

David, this has been absolutely amazing. We will definitely have you on again soon. I mean, I want to just talk to you every day because I’ve learned so much from this episode. But to me, a couple of the key themes to take away here is focusing everything on clients. It’s the compounding effect of organic growth, playing the long game, optimizing for enterprise value and building a sustainable business rather than income, and ultimately picking your partners and outsourcing, et cetera, wisely. And if you do that as the North Star, you become pretty unstoppable. So congratulations on everything. Congrats on the upcoming closing of your transaction with Hightower and can’t wait to see where you go from here.

David Bahnsen:

Thank you so much. I really appreciate your kind words and appreciate all the great work you guys do.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibility seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firm’s or could a better option exist? Should I Stay or Should I Go is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

Build, Grow & Transact: David Bahnsen on Building a $10.5B Business Worth Selling

A conversation with Louis Diamond and David Bahnsen, Founder & Managing Partner of The Bahnsen Group.    

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Build, Grow & Transact: David Bahnsen on Building a $10.5B Business Worth Selling. It’s a conversation with the founder and managing partner of the Bahnsen Group. I’m Louis Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual Advisor Transition Report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

There’s a big difference between breaking away to create a better version of the business you already have and breaking away because you see an entirely different business you want to build. And I think that distinction becomes even more important as we look at what creates real enterprise value in the wealth management industry today.

My guest, David Bahnsen, is a pretty remarkable example. David first joined us in April of 2020, five years after leaving Morgan Stanley with eight people and 600 million in assets. At that time, the Bahnsen Group had grown to roughly two billion. Today, it’s a $10.5 billion business with more than 100 people and 13 offices across the country.

Perhaps the most interesting part of that growth story is that virtually all of it has been organic. David didn’t build the firm by buying AUM. He built it by creating an authentic voice, an incredibly effective content engine, investing heavily back into the business, adding services clients actually wanted, and being very deliberate about what his team should own versus what was better outsourced. There’s a lot in that playbook for any advisor who wants to build a business with real enterprise value.

But David’s story also gives us something we often don’t get to examine, the full build, grow, and transact arc. For more than a decade, Hightower went from employer to service provider while David maintained ownership and control of the business. Now, the Bahnsen Group is being sold to Hightower, giving David additional resources to pursue the next stage of growth while preserving much of what made the firm successful in the first place.

So we get into the decisions behind that extraordinary organic growth, why maximizing current income can work against building long-term enterprise value, how David thinks about content, clients, and scale, and ultimately why someone who was once intoxicated by the idea of freedom decided the next right move was to transact. It’s a great case study in what can happen when independence becomes a starting point rather than the destination. So let’s get to it.

David, thank you for coming on our show again.

David Bahnsen:

Well, it’s wonderful to be back with you. I love listening to the show every week.

Louis Diamond:

Oh, there you go. Just flattering us now. So for anyone who probably, myself included, doesn’t remember the last time you were on our show, it was April of 2020, a time warp into a crazy time. It was the five-year anniversary of your breakaway in the very, very beginning of the pandemic. Then you still had an amazing business, two billion in assets. But for listeners who may have missed it, and even just to catch us up, can you give us the quick version of your origin story of leaving Morgan Stanley in 2015 with 600 million and eight people and why you did it, just the speed round of compressing a stressful and very important time in your business arc?

David Bahnsen:

So I was one of those people that in an almost cliche, typical way, the types of folks that your business deals with all the time, left because I wanted independence. I wasn’t unhappy at Morgan Stanley. I wasn’t in need of any particular change, but I was very intoxicated by the idea of freedom and became very committed to the idea that if I were going to run my own business, I needed to run my own business.

It started in 2014. We made our official exit in early 2015. And as you said, there were eight people, all of which were folks on my team at Morgan Stanley and 600 million of client assets, and we basically moved 100% of that.

When I was on the podcast, April 2020, it’s funny when you were saying that, I can visualize myself at my home office at that point in time in Southern California recording this. And we would’ve been our five-year anniversary, couple billion, so we had a little bit over tripled. We probably had, if I remember correctly at that time, 25, 30 employees. And it’s interesting the linear arc of it, because you fast-forward now, we’re at 10.5 billion and 106 employees. And so it’s just proportionate, the AUM and the headcount and the time gone by, it’s been a very nice, steady arc.

But I really loved the idea of being independent. I turned 40 years old in 2014 when I began the extensive due diligence that led to me leaving Morgan Stanley. And it really was that moment that I said, “If I’m going to stay as a corner office guy at a wirehouse, I will stay at Morgan Stanley forever.” I had no issues there. My manager at the time is still, to this day, my best friend in the world. We’re like brothers. I just dedicated my new book to him. I wasn’t unhappy with Morgan. I just liked the idea of having my own business and haven’t looked back since.

Louis Diamond:

Amazing. Seems like it was probably a pretty good move based upon what you shared, but I think it’s an interesting perspective because I feel like I’m starting to see that more and more is the profile of the advisor who doesn’t have these intense pain points and is relatively well served, is going to be successful, knows how to operate at their firm, but they just want something more. There’s an intangible that staying isn’t going to solve for them. For many, it’s being a business owner, like the path you took. For others it’s, hey, I just want to be recharged. I don’t want to be static. I want something different. I want to monetize. I want to work in a bit of a different way.

I think you’re early on that trend, to be honest with you. You were probably right in the middle, even probably even the beginning innings of the independent movement, and I am very excited to dig into how you got from 600 million in 2015 to over 10.5 billion, 11-ish years later. So let’s jump to today, and we’ll spend some time going through dissecting that growth. But today, like you said, 10 and a half billion under management, 100 plus people, 13 offices, including Santa Barbara where you just opened, but Newport Beach, New York City, Nashville, Tennessee, Palm Beach. It’s a real national firm. And I read that you’ve grown over 30% organically over the last decade. So when you look at the firm now versus 2015, what stands out the most? Let’s really dive into that.

David Bahnsen:

Well, a lot of this is where we’re going to end up going later in the conversation with where I see the next iteration of the company. But when you talk about the last 10 years, it has been the textbook definition of organic growth. There are 13 offices open and zero of them came by acquisition or merger or purchase. We’ve hired two or three advisors out of our 26 advisors that had a little bit of a book, but I mean under 100 million. We never paid for it. I’m talking about hiring people.

But you’re looking at an organic story, and I am proud of that, but I also recognize that it wasn’t intentional. And what I mean by that is I didn’t have this strategy in 2014, ’15 where I said, if I can just go independent, I have this evil genius behind me that is going to drive a mousetrap that will get me up to 10.5 Billion.

I’ve been as surprised, as many outside observers, but I have a lot of gratitude for it. I understand now why it has worked, and I think that there are people inside of our business that are a little more qualified to understand how the business works than people who are outside of it. Your consultants and professional investors are very smart at what they do, but they don’t necessarily always understand that advisor-client dynamic. And I get why we’ve been successful with it. But I also don’t want to take credit for it as if it were this master strategy. We just tried things and those things that worked, we kept doing more of, and this is where we are.

A lot of it, and I spoke to Mindy about this six years ago, it’s been content creation, thought leadership, and the voice that, much to my surprise, has attracted people and never doing it for the purpose of attracting people. This very natural and sincere delivery of a belief system about markets, about the economy, about the world around us, I share things sometimes about my faith, politics in a public square. I’m on television, this podcast.

And then the major driver is the written word, which some people might be shocked to hear as we’re talking about a podcast still even exists. But my weekly Dividend Cafe, which is my weekly market commentary, is up to 35,000 subscribers, 100% organic. We’ve never done anything to get any subscribers. And our video and our podcast and everything, the books I write, the television hits, they all have their audience. But most of it goes through that written word. That’s where I get to connect with people that if they like me, they may end up becoming a client. And if they don’t, they won’t, but that’s really been our story though.

Louis Diamond:

That’s absolutely amazing. There’s so much to unpack there. That amount of growth without anything inorganic, especially the way this industry is going, I don’t think I’ve ever heard that before. That’s amazing in and of itself. But just the way you can track back your meteoric rise to content creation, I think for many listening, it’s either, “Oh my God, that seems so daunting and so crazy.” Others would be like, “Well, I can’t do that, but that sounds great. Of course, he’s been able to grow because he can have an original voice.”

As a firm that puts out a lot of original content, podcasts written, Mindy wrote a book, white papers, et cetera, I know the amount of work and dedication and commitment it takes to stick with that for so long. So if you don’t mind, can we double-click into that written word story? How did you get started with it and what’s been the arc or the growth journey? Someone who’s listening who would love to do that, where did you get started? You didn’t just all of a sudden have a book and show up on TV. How did you get started?

David Bahnsen:

In the truest sense of the word, I grew up loving writing. My father died in his 40s and I was only 20, but he was an intellectual, a brilliant writer, had several books, and I was a nerd in high school. Luckily, I had basketball so that I could still meet a girl here and there and have friends on the team. But I mean, if it were up to me, I would’ve been home reading books and writing papers, and I would turn in extra credit papers more than I would study for a test because I loved writing. So the written thing was there. I don’t know if I was ever good at it or not, but I know I loved doing it, and I would credit my late father with the early seeds of that.

When the financial crisis happened in September, the actual week of Lehman’s bankruptcy, September of ’08, about three, four days later, Morgan Stanley’s credit default swaps were blowing out, and now it was not just the market was crashing every day. And of course at that point, Merrill had gone down, AIG had gone down. We were in this cascade, and everybody who lived through it remembers it all well. I remember every detail of it like it were yesterday.

But all that happened was once I got my 80th call about what the hell was going on with Morgan, I decided to write up a piece, not send it to compliance for approval and send it out to everyone. And if the firm was at risk of not making it for another day, I wasn’t especially worried about compliance getting mad at me at the time. And I did that, and then a couple days later did it again, just broad update on everything going on, and I never stopped doing it. That’s what it was, just every Friday since September 2008.

And then when we left Morgan, at some point along the way I started getting compliance approval and getting a bit more of an audience. We had hundreds of clients that were reading it, and we’d have a few guests that would ask to be signed up as clients were forwarding it around, but that was it. It didn’t have a website, it didn’t have a subscribe feature, it wasn’t a real blog or anything like that.

So then in going independent, I was able to incubate it, and we branded it as Dividend Cafe. We’re Dividend Growth investors at my firm. So we put a brand around it. We had a website, and I think we started a podcast and video that was becoming a very large medium around the mid-tens as well, and so we added that shortly later, but it was just because I had the freedom to do it.

And then I did do some hit on CNBC like Asia or CNBC World or something. It wasn’t anything with a big audience, but then we sent the clip to someone at Fox and they really liked it, and then they had me, and then I started getting invited more regularly. So now the TV thing was happening, and I always say that TV can be a really good thing for a very small number of people. Obviously, Josh Brown has been incredibly successful with it. He’s very good at it, and it’s done okay. It’s done well for me, but it’s different than people think.

You do not go on TV and then get done and all of a sudden the phone rang and someone said, “I saw you. You’re so handsome. I want you to be my advisor.” What it does is it might drive them to other content. It might drive them to the internet where they’re going to find other things about you. And if my name was David Johnson instead of David Bahnsen, I think I would’ve got lost in the SEO and nothing would’ve come of it. I really believe that. But it enabled some people that liked what they heard on TV to start following me in other more substantive and perpetual mediums.

And then in 2017, I wrote a book that I wouldn’t have been able to write at Morgan Stanley. I had very strong opinions about the origins of the financial crisis. And I did not believe the left-wing narrative that it was caused by unfettered markets, and I didn’t really believe the right-wing narrative entirely either that it was exclusively caused by government intervention. I believed that all of those things were true but were missing this cultural and moral component about Main Street. I wrote a book on it and I thought there might be 200 clients of my firm that would read it, and it ended up being a bestseller, and that created more television invitations and just to a slightly larger audience. And at this point now, I realized that all of these things were dovetailed together, content, the mediums, coming to Dividend Cafe, coming to an authentic point of view about markets.

And then, and this is the thing that is so important because of what you do and do so well in your business and within the kind of practitioners that listen, it wasn’t enough to have a mousetrap that drew people to us. We had to keep them. We had to deliver an advisory experience, and so we were just relentlessly reinvesting back in the business, adding planners, adding tax, adding more investment sophistication, family office, just improving our business, and that’s why we’ve added so much to headcount because we have just constantly wanted to really be what we were attracting people to.

Louis Diamond:

It’s amazing. The key themes I heard there, there’s a lot, but is it’s not one thing that works. It’s a coordinated strategy. I can attest to that for the content work that we do. There isn’t one single point of growth that comes from content creation. It’s everything working together. You don’t know, especially in this day and age, how people consume information or how a message gets across to them, whether they’re a reader, whether they find you in AI, whether they watch video, whether they saw CNBC in their barbershop. So I think that’s absolutely amazing, and congratulations.

Let’s talk a little bit about your breakaway setup, if you will. So when you broke in 2015, you signed on with Hightower, but in a bit of a different way, certainly different than today. You paid Hightower an override on your revenue, or basis points and assets, to be on their platform. But you owned 100% of your business, ran your own P&L, and they provided certain services to you. Thinking back to 2015, and then even up until your recent decision to sell to Hightower, why did you structure it that way rather than under their brand or as an employee or even just having your own RIA, especially given your size and scale?

David Bahnsen:

There’s actually one piece missing there. You may not have known, but I think is important to the story. When we came in 2015, we were employees and they had a 50/50 net model, and we joined in that capacity. And then when they recapped in 2017, brought a new investor on, eventually changed CEO about a year later, at that point, we were growing. I felt very comfortable with the independent space. I now knew what I didn’t know. I knew what I thought they did well, and I knew what I thought we could do well, and I took advantage of that moment to say, “Guys, I need to be on my own. We need to run our own firm, our own finances, our own payroll, our own brand.” And what the investors wanted at that time was some sort of affiliation that they could count on and not be vulnerable, but I didn’t want to sell and I wanted full control.

So I got control, much better control than I had had in my first couple years, and they got a extension of agreement of these services that they could feel good I was going to be a part of their ecosystem. And the cash flows were pretty meaningful as we grew from, at that point, a billion to over 10 billion, and we became obviously a very meaningful contributor to their earnings and revenues.

And the CEO who came in was the second CEO in the history of the company. And they now have a third, but that individual, Bob Oros, I knew well because he had been at Fidelity when I chose Fidelity as our primary custodian. Bob and I got along very well. And so over the years, there’d be things that we had impediments that we had to work through, and we worked through them just like adults, like businessmen and women and got stuff done. So it was a good relationship.

But we were really quite independent. Very few of my people that worked at Bahnsen Group even knew who Hightower was because we had our own brand, we had our own investment process, the HR, the payroll. And unlike a lot of the other platform teams, they didn’t have too many platform teams, but ours, the accounts payable were massive. I mean, we had to have a whole finance department just because of our growth. So it became a difficult thing for them at this stage to have such a meaningful company within their ecosystem not aligned and not harmonized within the economic model of the rest of the firm. But I would say that decision for 2017 until this year, I don’t regret it at all. Hightower doesn’t regret it at all. They benefited immensely from this growth we’ve gone through, and I very much desired that freedom.

Look, if I’m being very candid, Louis, you brought up why didn’t go on my own ADV? At the time in ’14 and ’15, I didn’t know enough. I didn’t understand. And I met with Focus, I met with Dynasty, I met with some others, and you just meet with different people, hear the stories, and the one I went with was Hightower, and there’s pros and cons to all the models. It’s one of the things I wasn’t joking at the beginning. I listen to your guys’ show every week. I’m a sucker for everything happening in our industry. I hear the stories of different successful advisors, and every one of them resonate with me in one way. There might be nine ways it doesn’t resonate, but one way that does because there’s always something that each person’s looking for that some of us can connect with.

And at the time, I didn’t know what I didn’t know, but I felt good about the Hightower story, went in that path, and I would argue that we got the best of all worlds in that 2017 to 2026 story because we really got to function independently. We were under their corporate RIA, but other than that, felt very independent. And that’s a testimony to Hightower that they honored that autonomy, but I think it gave me the entrepreneurial thing I needed, and I’m grateful for it.

Louis Diamond:

Fantastic. So let’s say from the 2017 to 2026 timeframe when you decided to finally sell to Hightower, how did you weigh the leverage that outsourcing certain things provided your business versus paying a fee, obviously, more than what it cost Hightower and not having complete and utter control over your business? How do you track that to your growth, if at all?

David Bahnsen:

The criteria was always anything we like doing or are good at doing, we’re going to do it, whether Hightower offers it or not. So for example, I’m sitting here in a beautiful office. We have the 31st floor of a building on 54th Street and 6th Avenue, and Hightower has a whole facilities department. We’ve done 13 office leases with no involvement from their facilities department because my wife loves designing the offices. She’s an interior designer. My team loved picking our own locations. I didn’t find negotiating with a broker all that hard. So we were able to do it, we liked it, so we did it.

But then the supervision side, the regulatory side, and candidly, a lot of the technology side, which is where some of our talk is about to go in terms of the new transaction, those things I felt more comfortable outsourcing to Hightower who had entire departments and resources geared towards it. And we would do them if we had to, but we weren’t passionate about it. I didn’t want to go understand all the nooks and crannies of the regulatory apparatus. So that was part of their ecosystem, and we were happy to utilize their services there. Investing money, financial facilities, the business development mousetrap we built, those things we were good at, and so we held onto that, and that’s how we viewed the division of labor.

Every firm, RIA, IBD, a wire, W, it doesn’t matter. Everyone who optimizes this challenge of doing what you like and not doing what you don’t like is going to grow. It’s hard to do. It’s easier said than done, but that’s the challenge right there.

Louis Diamond:

I absolutely love that. I think it’s so true, knowing what’s actually going to add surplus value relative to the amount of time you’re doing versus what’s commoditized or back of house or isn’t something that lights you up. Because there’s plenty of RIAs that I’ve interviewed or that I know where they enjoy building technology, they like designing their own compliance organization, and to them, that’s their superpower. That’s what makes them different.

For you, it sounds like it was very clear. You knew exactly what you wanted to do. As long as you’re able to still do it, you’re very comfortable with outsourcing certain things that would’ve been a distraction or something that you and your team weren’t world-class at.

I want to talk a little bit about some of the deliberate choices you made to take the business from, I would assume it was you as the rainmaker, and now you said you have over 25 advisors. So just thinking about hiring, structuring the business, investing in the business and platform, because I’m sure you’ve had the temptation, maybe not because you’re a business builder, but I think a lot of people love, “Hey, I can make a ton of money if I don’t make that second, third, 125th hire, and instead I just take cash flow. I don’t necessarily need this person. I can make more money or distribute more to my partners.” So I’d love to hear a little bit about some of the deliberate choices you made on hiring and investing in your business.

David Bahnsen:

There’s two things that I am very hesitant to take credit for, even though they’re true. You had mentioned before when we left in 2014 that we were early innings of wirehouse defections to the independent movement. I was early, but I wasn’t a first inning guy. The real trailblazers were going in 2006, 2007, 2009. 2014 is a lot earlier than those that have gone in the last two or three years, but I was like a third or fourth inning guy, and I don’t deserve credit to be a first inning guy.

The other issue is that I reinvest in the business constantly and have not been greedy about maximizing all the margin, but that is easy to say once you’ve already scaled the business, right? You’re already in a place where things are going very well, and then from there, deciding you just really want to run the business the way you want to run it. It’s not as selfless a decision as people may think. It was a luxury.

And at the same time, I cannot tell you how bizarre I think it is when people are focusing on maximizing margin versus running the business that they want to have. It’s a high-margin business. There is not a lot of operating leverage in it. More or less, not completely, but more or less expenses go up in proportion to revenue. Particularly for us opening new offices and hiring a lot of new people, our biggest overhead far and away is people. And we started an ETF a couple years ago and I got a chance to learn the polar opposite where my business has tons of pricing power and very little operating leverage and asset management has unbelievable operating leverage. I basically have zero dollars of expenses on my next dollar of revenue, but no pricing power.

Louis Diamond:

So interesting.

David Bahnsen:

Yeah. I mean, it really is just two different business models. When we have hired more people, we’ve always done it based on are we going to serve our clients better and enjoy running our business better with these people? We don’t want wasteful positions, but we want the maximum optimization for how to service clients and how to give advisors an ecosystem to function in. So a one-to-one operations to advisor, having planners that are not the client-facing advisor themselves, but are devoted to the behind the scenes planning process. Having a full tax department that does not provide tax services to non-wealth clients, that is only there, a robust tax consulting, tax preparation, tax advisory arm to drive a better client experience for us. These things all erode at margin, and I wouldn’t do it any other way. And the biggest thing, by the way, is the investment management, because then you’re not just talking about profit margin. We’re talking about time.

I am a 3:45 AM guy every day because we’re inside markets. We have analysts, traders, investment folks. I think it’s something like 10 or 11 people on the org chart. It costs me millions of dollars a year for us to manage money in-house. There’s no justification for that other than it’s what we want to do, what we believe in. And those that have a outsourced Vanguard DFA-type model, I have no criticism of it in the world, but it just wasn’t us, and so we had to do what we liked doing.

Louis Diamond:

Yep. And once again, the authenticity shines through.

Can we talk a little bit about the financial advice part of the business? I would assume when you’re at Morgan Stanley, you were probably the driver of growth, you were serving personally probably every client or just about all of them. Today, with 10 and a half billion, 25 advisors, just the immense scale of the organization, how do advisors advise? Are you still providing financial advice to clients directly? Are you more of just the CEO, the rainmaker, the strategist? I mean, how do you think about, I guess, allocating clients to your advisors? How have you grown your capacity for financial advice?

David Bahnsen:

So our leverage is entirely limited by my ability to find like-minded advisors who can go deliver our client experience and be in relationship to clients. It’s why I’m not a big believer in this notion of scalability. I think technology helps scale. I think there’s all kinds of processes you can do more efficiently, but it’s a relationship business and relationships don’t scale.

And we have an internal policy philosophy preference, if you will, that no advisor will cover more than 80 households. And so for us to continue growing at the number of households, number of AUM, and therefore number of revenues, all those numbers, of course, have some proportionate relationship with one another, we have to have the advisors to do it.

And so as we find advisors that can not drool on themselves and be professionals and deliver an experience to clients, we want them to be generalists. We want them to be very good at what they do, but we don’t want them entering trades. We don’t want them doing their own operations work. We don’t want them having to pick stocks. We’re providing this ecosystem of the tax, the planning, the estate, the operations, the content, the marketing, and the biz dev. They don’t have to go try to rainmake at their kid’s soccer game or join the chamber of commerce or things like that. That we believe we have enough internal biz dev opportunity that what they need to do is cultivate the relationships with the prospective clients we give them.

They do have to close that business, but our industry, for all of the talk about this, people diagnose it wrong. We do not have a problem with closing business in our industry. We have a problem with opening business. And so the sourcing is the issue. And for whatever reason, it’s a mystery to me, it’s been a mystery for 27 years, I’ve been pretty good at sourcing business. And so we can share that with our advisors and then expect them to, their job when they wake up and go to bed and everything in between is to be in relationship with clients.

Louis Diamond:

If I think about, just think of 20 highly successful RIAs and think of some of the biggest and best names in the space, I think a critical connection point or commonality for all those firms is they’ve somehow figured out lead flow or some mechanism or capacity to bring in clients for their advisors. To me, that’s the truly only scalable way to keep adding advisors and growing a business is if there’s enough inbound lead flow that’s cultivated or created by the firm to really feed all the different advisors, and it’s not snap our fingers and it happens.

But if you compare that to many other models, the wirehouse model where it’s all on the advisors to go out and find clients, that’s great. And if you find some amazing rainmakers, amazing, and it’s additive, et cetera, but you eventually hit a ceiling because it’s hard to find advisors who have that knack. You’re not bringing in the ideal client every time, and it’s an unpredictable way to grow.

So I think I wouldn’t gloss over the fact that you’ve been able to create enough inbound traffic or lead flow through all of your content and thought leadership that you’re able to sustain that type of model. Because it is the best way to grow a business is keep your advisors focused on just being advisors, solve for organic growth, solve for the other things they have to do. And then when you open up a new market or hire an advisor, boom, you got capacity, you got someone trained up, and it’s predictable, your close rate and your ability to scale it from there.

So I’ll get off my soapbox, but I think that’s such an important element of the biggest and best and most valuable firms in our industry today.

David Bahnsen:

I agree with you a thousand percent. And even if you put numbers around it, somebody who has to go make their own rain and service the client, they will expect, if you use wirehouse-like grids around it, this is just round numbers, I know you could turn a knob a little bit, but I view the business as more or less it costs something in the range of 40 cents of a dollar revenue to run the business. There’s 20 cents available to the owner, 20 cents to the person who makes rain and 20 cents to the person servicing the client. It’s back of napkin math.

If you are a wirehouse advisor, you’re making the rain and servicing the client, you’re getting two of the 20 cents, you’re getting 40 cents, let’s say. And if you’re the person who owns the business and makes the rain and is the advisor, you can make 60 cents on the dollar. That’s a wonderful margin, and you cap out at a certain level where you just cannot grow any further. I would rather make 20 cents on where we are now. My advisors would rather make 20 cents on where they are because 20 cents of something big is a lot more than 40% of something small. And again, and my numbers are, I’m rounding, but you get the idea. That’s really the kind of business model we’ve done here.

Louis Diamond:

I think it’s brilliant. And some would argue about the percentages and would say, oh, it costs 40 cents to 30 cents to run a business and we have a small team, but I think philosophically that’s exactly right.

And I think something you said too, which is there’s been a common thread in our “Build, Grow, Transact” series. You think about Jason Fertitta of Americana Partners or Matt Kilgroe from Cyndeo and many others that we’ve had or will have, it’s really playing the long game. No one we’ve had on the show is optimizing for how much money can I make this year, next year or the year after. It’s the intentional decisions to invest in capacity, invest in growth, and by choice take less as the owner of the business, but doing it because what you’re building is enterprise value that will sell at a dramatic multiple of that growth and have room to run.

So I think that’s the big thing is, again, it sounds easy, it sounds great, but it’s not an easy decision to say, “Hey, I’m going to make less money today and over the next few years because I want to hire the next person or invest in an organic growth funnel.” That’s discipline, for sure. But I think it’s a great takeaway for anyone listening is play the long game, invest where it makes sense, and the riches will follow you later. They don’t have to follow you today or tomorrow.

David Bahnsen:

And it’s a whole business of playing the long game, not only in the value creation and enterprise value of being independent. But even for wirehouse advisors, I remember back as I was entering the business, that debate about fee-based business versus transactional, and all it was, are you going to play the long game or get more money quickly? There’s temptations in both ways. There’s goals, there’s overhead, reality. Anyone who played the long game in that story from 30 years ago benefited immensely. And now you see it, of course, in what we’re talking about here, playing the long game in the way you run your business has just been the smartest thing anybody could do.

Louis Diamond:

Absolutely. Especially in this industry where each new client that’s brought on, there’s a lifetime value of a client. That success compounds with market appreciation, with them adding new monies, and then ultimately they’re going to give you referrals hopefully. And then over time, that’s where the real money is. It’s the compounding nature of doing the next right thing rather than, we’ll say, taking a shortcut or not making that investment in the business.

I have a ton more questions for you on this topic, but I want to spend enough time on your important decision to sell the business, sell the Bahnsen Group to Hightower in April of 2026. So after more than a decade of being an employee of Hightower, being affiliated with them but really owning your own business, you decided to not just sell the business, but to sell it to the very platform that you’re operating on. So can you just talk about that decision? Why was 2026 the right time? Why did you decide to stay with Hightower rather than any of the other 100 acquirers or a random private equity firm that would love to buy a business that’s growing 30% per year?

David Bahnsen:

It’s interesting to think about as our deal gets ready to close here at the end of September, if I had gone out and run a process, if I was looking to sell, would I have been interested in conversations with others? And I don’t know the answer to that because I wasn’t looking to sell. There was nothing broken, in my mind, in what we were doing. But when Hightower and her investors came to me, the entire conversation centered not around what we needed and wanted to be a seller, but on what we didn’t want or couldn’t have.

And I’ll share the story because I haven’t shared it publicly with anyone. As we were having conversations about a variety of things in the relationship between Hightower and the Bahnsen Group and Hightower’s investor and so forth, there were a couple of different meetings and things and we ended up having a pretty significant meeting in person in their conference rooms here in Midtown. And I’ve had seven eye surgeries, and I have challenges with my eyes and there are all these numbers up on a screen in the conference room. I couldn’t see any of them.

And it occurred to me that there was an offer on the screen they wanted to buy the business. We had not discussed that. And I turned to the folks and said, “I don’t really know exactly what it says, but I just want to make something very clear to save time and drive our conversation constructively. There’s no amount of money that I would sell for if I can’t be fully in charge of what we’re doing. Our brand, our business, our autonomy is what I care most about. If there’s a way to have that, protect it, enhance it and do a commercial transaction, I’m open to it.” And I didn’t really think that would be possible, but I will say to their credit, they did not want to interfere with that autonomy and what they believe to be a successful formula inside our company at all.

And so while they’re doing a lot right now to build their Hightower Signature Wealth brand, both internally and externally, and are coming up on $50 billion of assets that they’ll have moved onto that platform in trying to create more centralization and consolidation, which I think has a lot of commercial rationalization behind it, what they’re looking to do with the Bahnsen Group is have a wholly owned independent subsidiary where I still have plenary authority to run the business, control of the P&L, hiring and firing, strategy, branding, and yet the resources of Hightower at my disposal more now in the HR front. That gets a little trickier with 106 people that will soon be 150 than it was when it was 20. I’m committed, Louis, to knowing every one of my employees’ names forever and it’s getting harder, but luckily I have a pretty good memory.

But the technology side, the AI moment, the way in which a tech stack all intersects, I hate this stuff. And they not only are good at it and like it, but are heavily invested in it. And so it felt to me like if they’re really going to allow me to continue running this and have that control of the P&L, it could be best of all worlds and certainly very value additive to the enterprise of Hightower. And that’s what we worked a few months to put together and everybody is really pleased with the outcome.

Louis Diamond:

Amazing. I mean it’s an interesting shift in the way I’m seeing a lot of these platforms, that they start off as a fee-for-service affiliation platform and then over time they morph to being buyers of businesses, investors in businesses. And Hightower is definitely, they’re probably at the forefront of really completely shifting or re-identifying themself in the market, especially on buying practices. So I think it’s very interesting that you had this long-term relationship and ultimately having such an amazing business, they were the ultimate buyer of the business.

David Bahnsen:

And I think it’s important to say for our listeners, you know as well as I do, if we went to market, there would’ve been a lot of interested parties.

Louis Diamond:

That was going to be my question.

David Bahnsen:

The organic growth alone would’ve commanded something pretty attractive. We were under Hightower’s ADV. I not only had a positive relationship with them and a good cultural dynamic, which I wouldn’t want to risk changing, but I don’t want to re-paper the size of this business, and so it was just a non-starter. I talked to a couple investment bankers after we were already in LOI and they all said the same thing. You had your most natural buyer. It was the one you were already dating. And that’s how I feel, is if there was going to be a transaction, it made the most sense for us to do it with the one we were already partnered with.

Louis Diamond:

So was it like, hey, you know exactly who we’re getting in bed with because they’ve already been our partner in this business for a while, and as long as I get what I think is fair value for the business, that’s good enough? I’m sure you could have gotten a turn or two more to have 50 bids and to have the shark circling to push Hightower higher. But it sounds like for you, that was of course important, but that wasn’t the number one driver. It was more how do we preserve what we like, preserve our autonomy and do it with people that we like and trust?

David Bahnsen:

Yeah, that continuity, in a funny way, I did it the wrong order. I ran a process after I was already at LOI, meaning I did enough to find out, hey, did I just do a good deal or not after I’d already done the deal. And the good news is I did, but it wasn’t the way most people go about doing it.

But the continuity thing is there’s always two fronts to it at our size of business. There’s the client continuity and the team. Our team is going to move the payroll from being under Bahnsen Group to Hightower, and there’s benefits and changes and things. But the clients don’t know any difference whatsoever. Custodial, the G numbers, the ADV, there’s no signature required, no negative consent required because they already were under the Hightower ADV before. So this transaction all at once allows us to go into the next iteration of our business, which I’m very excited about, and I think is a wonderful deal for Hightower and what their goals are, but we didn’t have to bother clients with it. And when we say to clients, “Nothing’s going to change,” we can actually mean it.

Louis Diamond:

Yeah, that’s the definition of it. You mentioned there you’re excited for this next iteration or the next chapter of the company. Can you explain that? I would imagine just continuing your strategy that’s worked so well for the last decade plus, you keep doing that, I mean, you’re going to have a 20, 25, $30 billion business over the next handful of years. So what’s the next chapter? Why change it at all? What are you thinking about?

David Bahnsen:

Well, it’s funny in a moment now where, first of all, I’ve went out of my way to say that we didn’t grow at all inorganically, and a lot of people have now decided that inorganic growth is a little bit less impressive than organic growth.

One of the issues with the law of large numbers is growing 30% at two billion meant adding 600 million and growing 30% at 10 billion means adding three billion in a year.

Louis Diamond:

That’s fair.

David Bahnsen:

And then 3.6 billion, the exponential nature of it. And I believe that there are… I’ve never gone to a meeting with an advisor with a checkbook or with a balance sheet, and we want to find some folks that want to join us, join our system, join our culture, not merely aggregate a bunch of unified parts, but in some cases doing that with other people demographically would mean some monetization events.

So I do believe that there will be some inorganic growth that we will add to our toolbox as a supplement to our core underlying strategy, which we think is industry leading organic growth. So we want to continue doing more of what we’re doing. And then just as we continue to professionalize based on our size and scale more of those things that are not passions for us, technology, supervision and HR, utilize the mousetrap Hightower has that they do well while maintaining the things that make us uniquely us, which is our branding, our business development, our investment strategy, our delivery of services to clients.

I’m not naive enough to think that there won’t be some growing pains and some hiccups and whatnot, but we believe that model, all the parties are very committed to it, and we believe it’s the right model for us.

Louis Diamond:

Absolutely. I think what’s really cool about what you said was, one, I agree with the concept of law of large numbers. I mean, it’s a fact, right? No matter how much content you put out, it’s going to be hard to bring in 10 billion of net new assets eventually without going inorganic.

But I think to me at least the big trap in the industry today is firms either completely ignoring the organic and just focusing on buying and growing that way and pointing to, oh, we grew by this amount. But what you said, which is really cool and important I think is we’re going to continue the organic side to the best of our ability. That’s not going to change. Inorganic is a supplement. It’s not the replacement. I think that’s a really important lesson or discipline that it’s the combination of the two that really builds an enterprise and builds scale.

You already had your transaction, but anyone who’s weighing a transaction in the future, buyers will always value a dollar of organic growth than they would inorganic growth. So if you can hit both and you do transactions strategically, you’re not just trying to buy anyone or everyone, but you’re doing it to add the right capacity, add a new discipline, diversify the talent pool, honestly, you can’t lose. Because worst case, it’s not that successful, you still got the organic engine. Or I think knowing you it’s going to be very successful and now all you’ve done is ratcheted up what you’re able to do. So I think it’s a very smart way to look at the decision to go inorganic after all this time.

David Bahnsen:

Well, I appreciate that. It means a lot coming from you, and of course I agree and you would know a lot more about this than I would. I also believe that some of the things people are afraid of in going inorganic are a byproduct of people hitting the buy button that are not the ones who have to deal with the cultural integration afterwards. When you remove the skin in the game factor, anybody we choose to buy, they’re going to be people I got to have breakfast, lunch, and dinner with. And inorganic growth is a lot more successful when you care about culture than when you don’t. And we’re not planning to just care about it, but to obsess over it.

So I feel very excited about it. We have a couple deals that we’ll be announcing here in the fourth quarter to kick things off. And in the meantime, it’s funny, the valuation period of my transaction ended June 30th. My deal closes September 30th, and in this quarter in between, we just had our biggest organic growth ever. So we’re already off to a great start in making money for our new owners.

Louis Diamond:

There we go. That’s amazing. So was for you the pivot point then the realization that in order to protect our 30% or more growth per year, that we’re going to have to supplement with acquisitions? Was that really the we’ll say the critical link that was the why now moment? Because I would imagine, I mean, given the size of your firm, you could have gotten debt to buy businesses, you could have gone and sold 10%, 20% to a PE firm or a family office. So was it really like, we really want to lean into the inorganic side? Was that what you thought Hightower, and being owned by them, would really unlock for you?

David Bahnsen:

That is a true statement, but even then that wasn’t true until we got over the original hump of control. That once it was clear that they authentically wanted, not like they were willing to let me run it, but they were willing to memorialize to that they valued what we had done and did not want to disrupt it. And when I became convinced that they were convinced that it was not just best for me, I mean, that’s what I cared about, but they wanted our autonomy out of self-interest because they viewed that it was best for their enterprise to let us continue running independently, that was the sine qua non of everything. And then on the other side of it, it opened up the benefits of the inorganic growth.

And I also think I felt a burden to properly professionalize and scale our internal team without me working eight jobs. And I felt that there became a need for specialization in the technology supervision and HR functions that I didn’t have an interest in building in-house. We built in-house our investment, our tax, our family office, our content, all of those things, and I loved it. But these other areas, I felt like we had it good enough, but we were going to benefit from the strategic partnership with them going forward. And so all of those factors together allowed us to put this deal together.

Louis Diamond:

It makes complete sense. So I mean, there’s this version of your story, and you’ll probably be like, “That’s not my story, clearly.” But you broke away in 2015, you keep doing your thing, grow a couple points here or there. It compounds, you’re at two, three billion without really breaking much of a sweat. Take a lot of vacations, make a lot of money, but you did the opposite, right? You really took independence as a signal like, let’s go, let’s build something, let’s build a real company, a real business. So can you talk about basically how you thought about treating independence as the starting point rather than the terminal destination?

David Bahnsen:

Well, I think that your question itself, it has the answer in it. It’s so important. I mean, without us knowing each other, you’re really capturing something very biographical. I did not want to go to independence as an ending point. It was a beginning. I intend to do this the rest of my life. I was already financially comfortable, but I didn’t realize that when people talk about payouts like, oh, you’re going to have a higher margin of what you keep as an RIA than W-2 at a wire, I never even thought about that. It was purely for me the type of business I wanted to have, the way in which we went about servicing clients.

I’ve said this to good friends of mine over the years. Greg Fleming ran Morgan Stanley Wealth Management at the time, and now of course is CEO of Rockefeller. One of the things the wirehouses did so well was convince me about teaming, about having a business. I’d go to Chairman’s Club every year and they would talk about you build out your team and you have your own little mini group and you’re adding a planner into this, and yet you couldn’t really do it. You couldn’t really hire and fire who you wanted. So they tantalized it. They gave me enough to know that this would be a wonderful way to run an advisory business versus the pure vertical type team that I had. And yet to go be able to pick our own furniture and do our own creative marketing work and all that, you had to be able to have your own checkbook.

Independence was the start of a journey, and I really view this next phase of where we’re going as a new journey. I don’t know if I’m going to be good at doing inorganic transactions. We’ll see. But I do want to find out, and I’m determined to become good at running a 150-person company the way I think I was good at running a 30 or 40-person company. And so I’m up for that new challenge.

And one thing I’ll say over 27 years from being an independent self-practitioner at PaineWebber through the Morgan Stanley years, through this last phase on our own at Bahnsen Group, it’s always been client-centric. And I just think that those advisors that somehow have that in their DNA, that if you keep everything focused on the client, the rest comes together, it does come together.

Louis Diamond:

Amazing. There’s been a number of episodes where that’s been a through line is if you do right by the client, that’s your North Star, you’re never really going to lose. Will you grow slower sometimes? Sure. Will it cost you money sometimes? Absolutely. But in the end, the goodwill, we’ll say the spirit, the culture of generosity, it always shines through. Think of any company, even outside of our industry, that’s been their North Star and they don’t lose. It’s brilliant.

Last question for you. I think I can probably go for another four hours, but you got some content to create and some new households to bring in, so I’ll let you go after this. For an advisor who’s sitting where you were, let’s say 2012, 2013, 2014, who’s successful, growing, comfortable, they make a lot of money, but sensing that maybe there’s something missing, there’s a business to build, there’s something that’s not really charging them up the way that it used to, what’s one thing you’d tell them?

David Bahnsen:

You have to overcome the inertia because I think it is a universally true thing in our business that when there’s something holding them back, there’s something not right, there’s something that’s off, it’s still usually pretty good, especially in a good market. You have recurring cash flows, you make a good living, for most people, they’re probably making a better living than they ever thought they’d make doing anything else, and so to say it’s good enough is to me a hallmark of mediocrity.

But to say even though it’s already good, I want it to be better. I’m going to have to go dig in to create the right ecosystem, the right apparatus, the right partnerships, the right strategic fit, whether it’s going to a new firm, whether it’s starting your own firm, whether it’s partnering with one of the aggregators or doing your own thing, I mean, there’s so many choices to walk through.

But I don’t believe most people say, “Oh no, I’ve just decided where I am is the best.” I think most people decide where I am is good enough. And overcoming that inertia, you will be glad you did because there is a better world waiting when you take that step. And not only a better world for you and your family and enterprise value and cash flow, all that matters, but I’m saying a better world for your peace of mind, for your internal fulfillment of what you’re doing and for the experience you’re able to give a client. Everybody, every advisor worthy of the name should desire to optimize the ecosystem in which they work.

Louis Diamond:

That is absolute gold and brilliant. I couldn’t agree more. I mean, I feel like the great thing about being an advisor is even if you’re in the most captive environment, you’re the one who gets to choose. Is it good enough and does that work for me? I want to golf four days a week and this works, this checks all my boxes. Or if there’s something more, something that good enough isn’t solving for, that you have the optionality and the ability to go out and do it.

And it’s not going to be easy. It’s a lot of work to transition or to build and to do something like you’re doing, but I think every advisor owes it to themself to at least test out that thesis. Is good enough really good enough or is there something better that makes me better, makes my team better, lets me serve clients better, and ultimately is going to be more fulfilling in the end?

David, this has been absolutely amazing. We will definitely have you on again soon. I mean, I want to just talk to you every day because I’ve learned so much from this episode. But to me, a couple of the key themes to take away here is focusing everything on clients. It’s the compounding effect of organic growth, playing the long game, optimizing for enterprise value and building a sustainable business rather than income, and ultimately picking your partners and outsourcing, et cetera, wisely. And if you do that as the North Star, you become pretty unstoppable. So congratulations on everything. Congrats on the upcoming closing of your transaction with Hightower and can’t wait to see where you go from here.

David Bahnsen:

Thank you so much. I really appreciate your kind words and appreciate all the great work you guys do.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibility seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firm’s or could a better option exist? Should I Stay or Should I Go is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

Michael Kim — CEO & President, AssetMark

AssetMark CEO Michael Kim explains why advisor growth increasingly depends on creating capacity—and using outsourcing, technology, and AI to spend more time where advisors add the greatest value.

In Summary

Growth is a priority for nearly every advisory firm. But as client expectations expand and the business of wealth management becomes more complex, growth increasingly depends on an advisor’s ability to create capacity.

Jason Diamond speaks with Michael Kim, CEO and President of AssetMark, about why the strongest firms are intentional about where advisors spend their time—and equally intentional about what they delegate, outsource, or automate.

Drawing on AssetMark’s work with more than 12,000 independent financial advisors, Michael shares his perspective on organic growth, outsourcing investment management, AI, client experience, scale, and the evolving role of the advisor. His central message is straightforward: Advisors can do almost anything, but they can’t do everything. Sustainable growth requires deciding where they create the greatest value and building the business around it. 

The Storyline

Michael Kim calls himself a “growth guy.” But his definition of growth goes well beyond adding assets, buying another practice, or simply getting bigger.

After working with thousands of independent advisors throughout his career at Fidelity and AssetMark, Michael sees organic growth as one of the clearest measures of the health and durability of an advisory business. And the firms that consistently achieve it tend to have something in common: They treat growth as an intentional business priority rather than something they hope will happen.

That creates a more fundamental question: Where should advisors actually spend their time?

Michael argues that clients increasingly value the advisor—not simply the portfolio. They want guidance around taxes, wealth transfer, estate planning, business decisions, and the broader issues surrounding their wealth. Yet delivering that level of advice requires capacity. AssetMark’s Annual Impact of Outsourcing Survey, he says, finds that advisors who outsource gain more than nine hours per week—essentially another working day. 

AI potentially adds another layer of leverage. Michael sees its opportunity in two areas: productivity and experience. AssetMark’s developing Talk Tracks capability, for example, uses AI to prepare potential talking points and planning opportunities before client meetings. But Michael also cautions against allowing technology to depersonalize the relationship. As clients themselves become more informed through AI, the advisor’s ability to deliver deeply personal, trusted guidance may become even more important. 

That brings the discussion back to growth. Advisors are increasingly both trusted counselors and business owners. Building a scalable enterprise means making deliberate decisions about technology, outsourcing, talent, client experience, and where their own time produces the greatest return.

Topics Covered

• Organic growth in wealth management
• Advisor capacity and productivity
• Outsourcing investment management
• AI in wealth management
• AssetMark Talk Tracks
• Advisor client experience
• The advisor as “wealth counselor”
• Scaling an advisory firm
• Fee compression and operating leverage
• RIA growth and independence
• M&A and access to capital

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

What separates advisory firms that consistently grow from those that plateau? (12:36)
Michael says the most successful growth-oriented firms are intentional about growth. They develop a plan, experiment with new approaches, and—most importantly—execute consistently.

Why does Michael consider organic growth such an important measure of an advisory business? (15:27)
Organic growth is not simply about adding clients. Michael describes it as a predictor of the health and durability of the business—something that also matters to potential investors and buyers.

Should investment management still be a core part of an advisor’s value proposition? (18:42)
Michael argues that clients increasingly want something broader: a trusted “wealth counselor” who can help them navigate taxes, wealth transfer, estate planning, and other complex financial decisions.

How much capacity can outsourcing actually create for advisors? (23:05)
According to AssetMark’s Annual Impact of Outsourcing Survey, advisors who outsource report gaining more than nine hours per week. Michael argues that time can be redirected toward clients and higher-impact business activities.

Where does Michael see the greatest opportunity for AI in wealth management? (25:34)
He identifies two areas: productivity and experience. AssetMark is embedding AI into advisor workflows, including its Talk Tracks capability designed to surface insights and potential planning conversations before client meetings.

Could AI make the advisor-client relationship less personal? (30:12)
Michael acknowledges the risk but sees a larger opportunity. As clients arrive better informed through AI, advisors can differentiate through more personal, emotionally connected guidance around the issues that matter most.

How should advisors think about scale as fee pressure continues? (41:12)
For Michael, scale does not simply mean cutting costs. It means using technology, people, outsourcing, and other resources to deliver a better client experience more efficiently.

Where would Michael invest first if he were running an independent RIA? (43:11)
Existing clients come first. Before M&A or other growth investments, he would invest in making the client experience stronger and the firm easier to do business with.

Key Takeaways

• Growth requires intention. The firms Michael sees growing most successfully do not treat growth as a side project; they plan for it, invest in it, and consistently execute against it.
• Organic growth is a measure of business health. Beyond adding assets, it can signal the durability and potential enterprise value of an advisory firm.
• Capacity has become a strategic advantage. Advisors need to determine which activities require their direct involvement and which can be delegated, outsourced, or automated.
• The advisor’s value proposition is expanding. Portfolio management increasingly sits alongside tax planning, wealth transfer, estate planning, and other advice that clients expect from a trusted “wealth counselor.”
• AI should create better conversations, not simply greater efficiency. Michael sees the bigger opportunity in using AI to improve both productivity and the client experience.
• Scale is not synonymous with cost-cutting. Strategic investments in technology, talent, and outside expertise can allow firms to serve clients better while managing economic pressure.
• Client experience remains the foundation. Even when presented with opportunities to pursue M&A or other investments, Michael would prioritize strengthening relationships with existing clients first. 

https://youtu.be/vqlWGWAD08o

Quotable Moments

“Growth isn’t something that the advisors do as a hobby. It is arguably the number one priority.” — Michael Kim, 13:18

“Organic growth is the number one predictor of the health of the business.” — Michael Kim, 15:27

“The most important thing that the clients want from that advisor is the advisor, not the portfolio or which ETF that they selected.” — Michael Kim, 19:23

“The advisors can do anything, but they can’t do everything.” — Michael Kim, 23:05

FAQs

Why is capacity so important for financial advisor growth?

Advisors face expanding client expectations while still having a finite amount of time. Michael Kim argues that creating capacity through outsourcing, technology, AI, and delegation allows advisors to spend more time on client relationships and the activities that have the greatest impact on growth.

What does Michael Kim believe drives organic growth for advisory firms?

He emphasizes intentionality, planning, creativity, and consistent execution. Rather than treating growth as something that happens naturally through referrals, successful firms make it an ongoing business priority.

How can outsourcing investment management help financial advisors?

Outsourcing can shift research, portfolio management, trading, reporting, technology, and other functions to providers with greater scale. Michael says AssetMark’s Annual Impact of Outsourcing Survey found that advisors who outsource gain more than nine hours per week.

How is AssetMark using AI for financial advisors?

AssetMark is embedding AI into advisor workflows with the goal of improving productivity and client experience. Michael discusses Talk Tracks, a capability designed to surface relevant client insights and potential planning conversations before meetings.

Will AI replace financial advisors?

Michael does not believe it will. Instead, he expects clients to use AI themselves and arrive at advisor meetings better informed. That could make an advisor’s ability to provide trusted, personal, emotionally connected guidance even more valuable.

How can advisory firms scale without sacrificing client experience?

Michael describes scale as more than lowering costs. Firms can invest in technology, specialized personnel, outsourcing, and other resources that allow them to operate more efficiently while improving the quality and breadth of the client experience. 

Advisors face expanding client expectations while still having a finite amount of time. Michael Kim argues that creating capacity through outsourcing, technology, AI, and delegation allows advisors to spend more time on client relationships and the activities that have the greatest impact on growth.

He emphasizes intentionality, planning, creativity, and consistent execution. Rather than treating growth as something that happens naturally through referrals, successful firms make it an ongoing business priority.

Outsourcing can shift research, portfolio management, trading, reporting, technology, and other functions to providers with greater scale. Michael says AssetMark’s Annual Impact of Outsourcing Survey found that advisors who outsource gain more than nine hours per week.

AssetMark is embedding AI into advisor workflows with the goal of improving productivity and client experience. Michael discusses Talk Tracks, a capability designed to surface relevant client insights and potential planning conversations before meetings.

Michael does not believe it will. Instead, he expects clients to use AI themselves and arrive at advisor meetings better informed. That could make an advisor’s ability to provide trusted, personal, emotionally connected guidance even more valuable.

Michael describes scale as more than lowering costs. Firms can invest in technology, specialized personnel, outsourcing, and other resources that allow them to operate more efficiently while improving the quality and breadth of the client experience. 

Related Resources

When Growth Starts Working Against Your Business

The RIA Builder’s Blueprint: Four Pillars of a Strong Independent Firm

Michael Kim
Chief Executive Officer and President of AssetMark

With more than 30 years of industry experience, he has set the strategic vision for the firm, which encompasses AssetMark’s platform of curated investments, technology solutions, business consulting, operations support, and M&A that serve the best interests of financial advisors and their investors. 

Michael joined AssetMark in 2010 and has held a number of leadership positions, including Head of National Sales and Consulting, Chief Client Officer, and President / CEO (2021–Present). Michael was instrumental during AssetMark’s leveraged buyout transition to Genstar in 2013, its sale to Huatai Securities in 2016, its IPO in 2019, and its sale to GTCR in 2024. 

Before joining AssetMark, Michael was an executive at Fidelity’s Institutional Wealth Services, serving over 3,000 advisory firms. He began his career in public accounting at Coopers & Lybrand, LLC. 

Michael received his Bachelor of Arts in Economics from the University of California, Los Angeles.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

Unleashing Potential: Why Capacity is an Advisor’s Biggest Competitive Advantage

A conversation with Jason Diamond and Michael Kim, CEO & President of AssetMark.    

Jason Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Unleashing Potential: Why Capacity Is an Advisor’s Biggest Competitive Advantage. It’s a conversation with Michael Kim, the CEO and president of AssetMark. I’m Jason Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002. Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent.

Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Jason Diamond:

One of the biggest challenges facing advisory firms today isn’t finding more opportunities, it’s creating enough capacity to pursue them. For years, advisors have tried to solve that problem by working harder, adding staff, or becoming more efficient. Today, technology, outsourcing, and AI are creating an entirely different playbook. The question isn’t simply how to do more, it’s how to spend more time doing things that actually matter. That’s why I’m excited to welcome Michael Kim to the podcast. Michael is CEO and president of AssetMark. Founded in 1996, it provides some 12,000 independent advisors and registered investment advisors, RIAs, with outsourced investment strategies, AI tools, and digital workflows, custodial integration, and practice management consulting. Over the last 16 years, he’s had a front row seat to the evolution of independent wealth management and has developed a reputation as what many know him as the growth guy.

And Michael’s perspective is a practical one. He doesn’t think about growth as simply gathering more assets or acquiring more firms, he sees it as building an intentional business, one where advisors spend more time where they add the greatest value while leveraging technology, outsourcing and AI to expand their capacity without losing sight of what matters most, delivering an exceptional client experience. Our conversation covers where advisors should and shouldn’t be spending their time, why organic growth remains the best measure of a healthy business, how AI can strengthen rather than replace client relationships, and why the advisors who thrive over the next decade may look much more like CEOs than portfolio managers. I think you’ll come away with a different way of approaching growth, and perhaps more importantly what it actually takes to achieve it. So, let’s dive in. Michael, thanks again for joining us. Before we dive into the business, let’s talk about the personal.

Tell us about your background, what brought you to the world of wealth management.

Michael Kim:

Yeah, first of all, Jason, thrilled to be here. Thank you for having me, I’m looking forward to our conversation. My goodness, what brought me to this industry? There’s several reasons. First and foremost, I love working with other people and specifically in a position where we can help others. How fortunate are we, Jason, where we get to work with, in my opinion, the best financial advisors where their core mission is to help others, and specifically helping their clients’ goals and dreams come true, and we get to be part of that? And just for me to be and our teams to be part of that, that is just humbling and exciting. That’s one of the big reasons. Let’s see, I love working with the business owners and entrepreneurs. I have a little bit of entrepreneurial gene, both of my parents are entrepreneurs as well. So Jason, I know you could appreciate that.

Working with entrepreneurs, and for me it is all about relationships. Really being able to build deep, personal, professional relationships where we can learn off of each other, help each other, and really do good for clients, the community, and the industry. My goodness, what a perfect industry to be in. I mean, those are just some of the reasons that brought me to this great place. I’ve been with AssetMark for, gosh, now 16 years. Just still feels like day number one here, Jason, but I know we’ll get into a lot more details, but so many different things that have brought me here to this industry.

Jason Diamond:

Wow, 16 years. I definitely want to double click into that. I’m sure you’ve seen the firm evolve a lot. By the way, I feel like you feel, what a blessing and what an amazing industry. Of all the industries in the world and of all the kind of verticals and niches, I just think it’s such an incredible, not only industry, but an incredible time in our industry. Part of that is the proliferation of choice for advisors, and how many different ways there are for an advisor to run a sophisticated, successful, entrepreneurial business. No matter what that could mean within a wirehouse, by the way. I don’t mean that to mean independent. So, I want to talk about all of that. I think your perspective is unique. Whole career at AssetMark or did you start elsewhere? That’s the last question we’ll ask on background.

Michael Kim:

Yeah, so like I said, 16 years here at AssetMark, and I’ve had pretty much all the different leadership responsibilities here. I became president and CEO a few years ago. The other interesting part of my journey here at AssetMark is over that 16-year period, Jason, five different owners. My goodness, five different sort of capital providers and owners and investors coming into the business. We’ve had the fortune of working with large strategic firms to great private equity firms. We even took the company public, so we did the whole New York Stock Exchange, ringing the bell and the whole nine yards. And in 2024, we took the company private again, and we’re just super excited. Our current owner is GTCR, just incredible private equity investors, partners, friends. And we’ve actually known those guys for a number of years before the deal. And through series of different conversations, it was just the right fit.

And we’ve been with them for over two years now, and I just feel like we’re just barely scratch the surface, Jason, in terms of all the different things that we can do with them. And let’s see, prior to AssetMark, I was with Fidelity, we were talking a little earlier, and that’s where I cut my teeth. And I had a chance to work with RIA firms, I was managing all the RIA wealth management relationships at Fidelity for a number of years, spent a big portion of my Fidelity tenure in Boston, as all roads go through Boston for Fidelity.

Jason Diamond:

We’re going Boston, baby.

Michael Kim:

Exactly. And Jason, you know what’s really interesting is I started with Fidelity back in the late ’90s, and back then, my goodness, people really didn’t know the RIA industry. We’d have to remind them it’s RIA, not IRA, that whole nine yards. And it’s just really special to see the RIA and the independent industry just grow to what it is today and just really making that impact to the clients. I know we’ll dig into a lot more of those details. And then actually prior to Fidelity, I’m a CPA by training. So, I’m a recovering CPA, as I like to say, and no accounting jokes, Jason, today here. All right?

Jason Diamond:

I didn’t prepare any. No promises though. A couple things I want to ask you about. First of all, position the positives of the various owners you’ve had. That sounds also though potentially disruptive, 5 different owners in 15 years. Thoughts on that? And then, the other thing is not a question, more of a compliment. I always think people of Fidelity Schwab in the ’90s, early 2000s, part of me feels like you must want to say a little bit like, “I told you so. We were right about this call and this movement.” So, if you want to use this platform to do so, you’re welcome to.

Michael Kim:

Well, it’s funny, I’ll take the second part of the question first. It is interesting just reflecting back on the earlier days of the RIA industry. Back in the ’90s, I mean, it was such a cottage industry. Most of our time was really spent on educating not just advisors but other players in the industry about what it means to be an independent, trusted, fiduciary advisor to the clients. And again, in this day and age, Jason, I mean that is just part of our everyday vernacular.

Jason Diamond:

You take that for granted.

Michael Kim:

Exactly. But back then, educating the advisor that, yes, they get to control their own destiny and they get to own the economics. And most importantly, they get to really control the client experience and helping that client really fulfill their goals and dreams and the outcomes that they’ve been working together on. And so, really having that type of both a advisory discussion but also a business discussion, it’s just been super fulfilling. And I too have learned quite a bit just in terms of what it means to be both a business owner and an advisor. But that’s one of the big things that we’ve all experienced, especially in the earlier days and as this industry continues to mature. Even back then, Jason, I saw the potential and it was interesting.

I remember thinking to myself, “My goodness,” not just the wires and the banks and other brokerage firms, but really again, going back to the benefit to the end client, that investor to have that trusted advisor where there was no conflict, that advisor was sitting on the same side of the table as himself and really doing what was clearly in the best interest of the client. Again, today it’s part of our DNA, part of what we talk about, but back then it was a newer concept. And so, we just feel very humble to have been part of that in the early days. I think your first question was about the different series of owners and investors that we’ve had. And again, as I reflect back on this, Jason, five different firms. We had a life insurance company, we had private equity, actually two different PE firms come together for joint ownership.

We actually had a foreign brokerage firm that owned us for a number of years, and then also the being publicly traded and now being private again. My view, Jason, is that every type of capital structure, there’s pros and cons, but two things that I want to just maybe share with you and your audience is that first and foremost, regardless of the capital structure, it really is incumbent on the management team to do what’s in the best interest of the client. Again, it’s a no-brainer, but really reminding your teams that do always do what’s in the best interest of the client, and then you execute to the T and the rest should usually take care of itself, number one. And then number two, what we’ve learned is never forget about the culture of your firm.

Regardless of, again, the capital structure and the type of priorities that different owners, investors ask you to focus on, absolutely those are important business priorities, but none of that would be possible, Jason, without the right culture, and really all the different employees and colleagues and teammates growing in the same direction, Jason. And again, we’ll get into a lot more because there’s actually a great level of parallel in terms of the lessons that we learn to what we’re seeing in the advisor community as they’re operating their own businesses. So, I know we’ll unpack a lot of that, but those are just some of the themes that I recall as I think about our journey here.

Jason Diamond:

That’s a really thoughtful answer, thank you. I want to ask you a question on clarifying. You used the term clients. When you think about your clients, you are talking about financial advisors who in turn are serving their end clients. Is that correct?

Michael Kim:

That’s right.

Jason Diamond:

Let’s talk about this. You’ve worked with, whether it’s Fidelity or now the last 16 years I would imagine thousands of advisors, probably mostly independent advisors. And growth, at least today is the number one thing in our conversations that comes up of advisors that want to grow. What do you think separates advisors who are able to grow from those who are not, or are less effective at it?

Michael Kim:

Yeah, great question. So just by the way, context, today at AssetMark we work with over 12,000 individual financial advisors, and at Fidelity, thousands of independent RIA firms. And so, we’ve been very fortunate to have seen, Jason, a lot of different models and best practices. And to your point about growth-

Jason Diamond:

And worst practices.

Michael Kim:

Well, we’ll keep it best practices here, and lots of incredible lessons learned as well. Jason, what’s interesting is I think one of the common threads that we see in the most successfully growth-oriented firms has been the advisors and their teams are intentional about growth. And what I mean by that is growth isn’t something that the advisors do as a hobby. It is arguably the number one priority. In fact, we have a saying here at AssetMark that growth is life. And if you’re not growing, you’re dead. So, a big part of the focus is, okay, how do we put the right plan together? A simple thing like a marketing plan. I mean, Jason, it is amazing the opportunity that we have to help advisors really craft their own marketing narrative and the unique capabilities that they bring. So, let’s talk about it and let’s figure out ways to leverage that secret sauce to drive referrals and other new opportunities.

And so, really having that intentional focus starting with a marketing plan. And to me, I always suggest to our advisors that let’s get creative. Let’s not try to do the same old things and keep banging our head against the wall. Let’s try new things, let’s learn from it, let’s fine-tune it. I mean, things like digital leads and really leveraging the social media aspect. Most advisors still are not, I would say comfortable or confident in leveraging the digital platforms or different channels. To me, this is a huge opportunity for advisors, for other enterprises to leverage the digital platforms to get their word out and really leverage that in a way to drive new opportunities. And then the third is execution. My goodness, you can get creative, you can have all kinds of great marketing strategies, but if you’re not executing and doing the things that you say you’re going to do, and do it right and do it again the next day, it’s all for show.

And so, we always talk about how do we help our advisors come up with the best marketing strategy, get creative in some of those ideas, and then let’s go roll up our sleeves and let’s go execute, let’s really bring those great ideas to reality, and let’s figure out a way to fine-tune it, sharpen it, do it better, and the next day do it all over again. And just being intentional, Jason, to sum it all up, I think is a huge part of what growth is all about. And I guess last thing I’ll mention here is, Jason, you know this, but I just can’t stress this enough. Organic growth is the number one predictor of the health of the business. I’m speaking from experience. I mean, the five different owners and the capital provider changes that we’ve experienced, one of the key things that they’ve always asked for and we’ve demonstrated in the early parts of our conversations is our ability to grow the business. That organic growth, again, it is a huge part of that strategic business consideration.

Jason Diamond:

Well, I totally agree with that. There’s an element of organic growth is probably the number one predictor of a healthy, vibrant business. And also to your point, because some advisors say, “Okay, great. Who cares? My business is good enough for me.” But to your point, a buyer cares about it so it impacts valuation as well. You gave a really thoughtful answer as to the question of growth and intentionality around growth, I maybe should have started here. Your answer was broader than I maybe expected, so give us the elevator pitch for AssetMark. What does your company do?

Michael Kim:

Yeah, so at AssetMark we are in the business of serving independent financial advisors as the premier wealth platform. We focus on delivering the best investment experience with the most integrated digital technology and the most personalized service and experience. The last thing that we always talk about is really the community of like-minded advisors that we support. As I mentioned, we are fortunate to serve over 12,000 plus individual financial advisors in the independent space. And we talk a lot about community. And the reason for that, Jason, is in many cases the advisors are out there on the island to themselves and they are wondering about things like growth. And so, what we try to bring in is really a lot of the peer-to-peer type of learning, opportunity for different advisors to connect with one another, learn from each other, and really sharpen their value proposition or their narrative.

And so that community aspect, it is something special. And we actually have many advisors, Jason, where it’s the third generation advisor that have been working with AssetMark that have been connecting with one another. When you go to some of our conferences and events, I always like to say it is the industry’s largest study group out there. And so, we get to be part of that and we get to host that. And so anyway, that’s a little bit about the AssetMark store, we are in business of serving independent financial advisors.

Jason Diamond:

I think there’s a lot of different elements of that value prop that we can talk about, but the one that I think is probably most closely associated in the market is investment management. Let’s talk about investment management, or more specifically the idea of outsourcing investment management to somebody else. Because especially for wirehouse advisors, I think there’s this perception, real or not, that’s a core part of what an advisor does. And I’ve seen the statistics, I know that most advisors are not particularly good at investment management, but they’ve sold their clients on this is a part of what we do for you, financial planning, investment management, and the like. So, what say you? What are your thoughts on the idea that investment management has to be a part of the core financial advisor experience?

Michael Kim:

Yeah. No, totally get it. And I mean, we have thousands and thousands of conversations about this very issue. And Jason, you’re right. I mean, so many advisors believe that their value to their clients is about building the best 60/40 balance portfolio. And with all that in mind, in this day and age with technology and really accessibility to the different investment products and strategies, what advisors have to realize is that the most important thing that the clients want from that advisor is the advisor, not the portfolio or which ETF that they selected. The number one thing, and this is based on the most recent spectrum survey, the number one thing that particularly the higher net worth investors, what they ask and what they expect from their advisors isn’t a investment product or a portfolio design, it’s actually advice on taxes and wealth transfer. Think about that.

They want to know how that advisor is going to help them optimize their taxes, they want to know how the wealth that they worked so hard their entire life, how that’s going to be passed on in the most tax-efficient and the most consistent way, consistent with their goals and objectives to their adult children, et cetera. And so, part of I think the new age perspective has to be that the advisor really positioning themselves as that trusted, holistic advisor. A wealth counselor is really the term that I like to use. As a wealth counselor, yes, investment management is an important part, but it’s one of number of different components that the clients are expecting. And Jason, when I think about the more successful advisors in our ecosystem, they’re leading with taxes, they’re leading with creating trust for their grandchildren, they’re leading with creating family LLCs and how all of that fits into the broader picture.

Because in this day and age of creating a good 60/40 portfolio, I think those are table stakes at this point. And so, a big part of this is how do we help the advisors really broaden their expertise so that they feel confident in talking about these other array of services? Frankly, these services that their clients are expecting and demanding that their advisors deliver. And last thing I’ll mention is here’s the cold harsh reality. If that advisor isn’t delivering those types of services, especially to that next gen client, guess what? That next gen client who’s about to inherit a lot of the wealth from their parents and so forth, they’re probably looking and in conversations with other advisors as well. And so, we just want to ensure that there’s a longevity of the client relationships by helping that advisor deliver a full array of the wealth planning capabilities.

You could tell I’m pretty passionate about this, Jason, I can go on, but yeah, this is a very important part of one of the key developments that we’re seeing in the industry.

Jason Diamond:

I could tell I’m not the first person to ask you, I wouldn’t have expected that I’d be the first person to ask you this. It was a very thoughtful answer. I think part of what you’re saying is because advisors need to deliver so much, probably more than ever, because a lot of what you’re describing is table stakes, outsourcing investment management is the only way to get there. It’s a zero-sum game, you have finite amount of time, and what your clients are saying is they want more of you. So, by giving up some of what’s table stakes into a more systematic kind of process, you’re able to do more. Is that a fair summary?

Michael Kim:

Absolutely, and you hit the nail on the head. I mean, it is all about time management and capacity. Yes, the advisors can do anything, but they can’t do everything. And so, what they have to really make a strategic decision on is what are the activities that will generate the highest level of impact to the clients, and frankly to their business? And so, delegate and outsource the other activities, whether it be research, portfolio management, trading, reporting, technology, et cetera, to a provider that has the scale and really delivering those types of capabilities so that advisor can spend the extra time with a client. And just one last unique stat or insight to share. We do a survey every year, Jason, and I would be happy to make this study available to your audience. It’s called Annual Impact of Outsourcing Survey, and it measures the amount of extra time created by those advisors who’ve made a conscious decision to outsource.

This year it’s over nine hours per week. So, think about that. Nine extra hours per week today. And so, that’s like having an extra day in a week plus. And so, that’s just an example of the type of capacity that outsourcing creates. The other important benefit to this is not just freeing up time and creating capacity, but now you get to deliver other experts and other resources to your clients, and you get to be, you meaning the advisor, becomes really the quarterback for all those different experts that are serving that client relationships. And so again, it’s something that we believe is fundamental. We absolutely believe that’s going to be a key part that will fuel the advisor’s growth going forward as well.

Jason Diamond:

So it’s a perfect segue, because I agree. The capacity conversation, it comes up over and over again. In fact, one of the ways it manifests itself is obviously as a recruiter, we hear about movement and it becomes a catalyst for movement. Like, “Hey, I’m spending all my time doing the wrong things and I need to spend more time doing XYZ.” The other thing that comes to mind when we think about capacity, yes, I hear you, outsourcing. There’s clearly elements like compliance. Yeah, you don’t need to be doing that yourself, you can outsource that. But what about AI would be the other obvious way to me that advisors can force multiply themselves? Give me your thoughts on A, what are you guys doing in this space? And then B, what are your thoughts just on the impact on the wealth management industry at large?

Michael Kim:

Yeah, great question. You can’t have a podcast or any conversation this day and age without AI, right?

Jason Diamond:

No. You knew it was coming, sorry.

Michael Kim:

No, this is great. And look, I mean, personally I believe that AI is going to change everything. Now, what does that really mean? Two areas that we think a lot about both internally at AssetMark, but also what we believe we can expect to see in the industry. Number one, it’s all about productivity. And then number two, it’s about experience. So, how do we think about positioning AI, leveraging AI to improve productivity, and more importantly, delivering even a better experience? And so, internally at AssetMark, we’re doing all the different things in terms of all of our Zoom meetings, the virtual meetings, the note-taking and so forth. To me, again, those are table stakes now.

And advisors themselves as well, as they’re having these types of meetings, using all the usual products in the industry that we’re all very familiar with, making sure that is a core part of, I guess the workflow to really streamline and expedite the follow-up process, the notes and summaries of the conversations. A specific example, one of the things that we launched is really around Slack, our enterprise level for ChatGPT and so forth. Again, it is just something that is accelerating the pace of business internally at AssetMark. From an experience point of view, Jason, oh my goodness, we can go on and on on this. At AssetMark, a big part of what we think about is how do we embed AI into the workflow so that it’s just regular part of how we do things as opposed to going somewhere, maybe figuring out how to work with an agent and this and that?

We are in the process of launching a new capability called Talk Tracks. And so, this is actually for advisors. So, an advisor who taps into our website right before a client meeting, we will literally create talk tracks for that advisor on what are some of the insights that they should share with their client on their portfolio? Maybe they should be taking a required minimum distribution. Maybe they should be thinking about opening up a 529 because they have grandchildren, or maybe they should be doing some other planning activities. The point is it uses AI to gather the different data points, not just from the client but really just scouring the entire industry and other clients with similar profiles, and bringing in different suggestions literally as bullet point talk points for the advisor.

And just based on early feedback, man, Jason, this is like our advisors love it. I mean, our advisors are saying that program alone, Talk Tracks, has really saved about two hours per day, because normally they would have to figure out the talking points for the upcoming meeting, and we will be doing all of that for that advisor. And so again, we believe that productivity will be super enhanced. And then the experience is, to me, that is where the gold mine is in terms of opportunities for AI to contribute.

And last thing I’ll mention here, you and I, we often get the question of, “Okay, what does this mean for advisors? Will AI replace advisors and so forth?” No, because investors, at the end of the day they want that emotional security of knowing that they’re going to be okay. Now having said that, I do believe that advisors need to change how they engage with their clients, because that client is going to be coming into that meeting with the advisor having done their research, having asked their best friend ChatGPT about what to expect in that upcoming meeting. It’s very analogous to, I don’t know about you, but if I go see my doctor, I go to WebMD and I’m asking WebMD, “Okay, what should I be thinking about? These are my symptoms,” et cetera, so that I can actually have a much more intelligent, impactful conversation with my physician.

I don’t see anything different in that the clients, the end clients will come in with some level of preliminary research, virtual conversation with their friend Chat, and then that allows that engagement with their trusted advisor to be that much It’s more meaningful. And so, I absolutely believe that it will really enhance the client experience provided that the advisors are prepared for this type of a change in the industry.

Jason Diamond:

And that’s an interesting spin, the idea that clients themselves will use the tool to get better educated, to basically become better clients for advisors. One thing that comes to mind with some of your talk points, I think it’s a brilliant idea. I think it’s clearly another obvious example of capacity saver. Do you think there’s a risk with that and with just AI tools in general of depersonalizing the relationship and just almost making things a little bit cookie cutter? I’ll tell you what comes to mind for me is I can tell in some cases when I get an AI email, and it makes me cringe. I’m not even talking about a spam email, I’m talking about an email that somebody tried to write to me but they used AI as a way to basically write me three paragraphs. So, give me your thoughts on is there a risk here that this just becomes this really depersonalized experience?

Michael Kim:

Absolutely, I do think that there’s that risk there. I do believe that it’s actually happening already. If you think about just the basics of portfolio construction and just different investment vehicles, whether it’s an ETF fund, security, what have you, chances are that advisor will come into that meeting having done some research and they may know or be more familiar with the underlying vehicles than the past generation. So, the advisors who’s hanging their hat on portfolio construction, that 60/40 balance portfolio that I alluded to earlier as really the reason why that client should be working with them, that is going to be a very non-personal or less personal relationship. Now, imagine even with AI though, that the advisor has cracked a code on how to humanize that engagement and really deliver much more of an emotionally connected experience. That’s where I think the advisors will have an opportunity to really elevate.

So as I said earlier, think about those advisors that have not only built really a durable portfolio to help that client achieve their portfolio goals, but wrapping that with tax planning, wrapping that with family planning or estate planning, and really being that first call that the clients make in the event of something, something happens, that’s where the real emotions come in. And part of it is this evolution that the advisors are on where Jason, you know this better than I do, in the past they were brokers and now recently they were more the investment portfolio managers. And then really going forward it’s about how do they deliver that real deeply personal and that trusted engagement about wealth transfer, about tax management, about business exit planning if they’re business owners. And really those are the moments where the advisors will not only earn their keep, but elevate themselves from rest of the pack.

I absolutely believe that this evolution and the opportunity that frankly AI and other developments are catalyzing, if positioned properly the advisors can benefit from this type of a change in an incredible way.

Jason Diamond:

I think there’s tremendous opportunity for advisors that harness this the right way. It brings me to an interesting question. I don’t think everybody who listens to our show is contemplating change or making a change of firms, but certainly there’s a subset of advisors who are at least curious. And technology is one area. It always comes up. I wonder, advisors don’t know what they don’t know in this realm. So, I think about a wirehouse advisor who’s been conditioned to think that the sandbox is the sandbox and it works well enough, and it probably does. They can service clients within that sandbox. So, how is that wirehouse advisor supposed to think about this new world that you’re talking about where he doesn’t even know the right questions to ask because it’s so completely foreign?

Michael Kim:

It’s such a great question, and it’s an important question that all advisors, particularly ones that are in a wirehouse or captive type of environment should be asking. And I think if you double click that question, it’s about how do they become even a better trusted advisor to their clients? Number one. And then number two, could they also build their own business as well? Meaning could they become a business owner or entrepreneur and control their own destiny? And to me, as we were talking earlier about the growth of the independent space, the independent, the industry is, I mean, this is where these two themes are hitting the road. One of the biggest opportunities that I see is for advisors to not only fulfill the goals and dreams of their end clients, but actually for themselves and for their office mates and for their colleagues as well.

Why not? Why not create their own entity that they can control, and really control their own destiny in terms of the desired business outcomes? Now to your point, most advisors don’t know how to really plug in a CRM with a financial planning, with a portfolio management system and how all those things work. And compliance, you mentioned that earlier is such an important part. So, the big thing is how does that advisor continue to focus first and foremost on their clients, but bringing in outsource partners that can help them deliver to this fully integrated tech stack, this workflow that will actually create a better experience for their team, but also for their clients as well? And then growth. How do they really think about growth within the firm, but also leveraging outside experts like AssetMark and others to really get that next high net worth client?

And so, the point is the advisor shouldn’t feel like they have to do all of this work on their own. Really leverage the different experts that are out there. And Jason, I mean, you know exactly all the different things that wirehouse advisors should do as they’re contemplating different affiliation models. Similarly, if the advisor is looking for that easy button on investments, or technology, or growth or what have you, leverage the different industry experts out there that are in the business of helping advisors achieve those goals. So, it’s one of those things where it may feel daunting initially, but really the opportunity that we have is to educate those advisors and share with them on how we can really help their business goals come true as well.

Jason Diamond:

Yeah, it’s a good answer. To me, there’s two ways to think about the Kitces map, if you will, of the massive ecosystem. On the one hand, it’s overwhelming and daunting. But on the other hand, you mentioned the term cottage industry. Think about how far from a FinTech perspective and an investment tech perspective, and just a wealth management tech perspective the industry has come where it’s a blessing that all of these different solutions exist. And also, part and parcel to all these solutions is there’s a lot of different education solutions out there also. So, I think that’s the number one takeaway is advisors not feeling like they need to do this alone because there are so many different options. I think your lens into this is unique given the number of advisors, that you need literally thousands of advisors.

So, we spoke about AI, we spoke about this outsourcing. What is another maybe trend or something you’re keeping your eye on, or something you’re hearing from your advisors that our audience might not be aware of? Give us a preview.

Michael Kim:

Yeah. So for me, I’m a growth guy, Jason, and I always come back to growth. And the number one, I think about the organic growth aspect. And we can spend hours on this, but probably two things that I just want to share with your audience. Organic growth, not only is it the best measure on the health and really the durability of the business, but it also is really like the north star. It should be the north star of any business. I mean, new clients is a lifeblood of any business out there. And so, part of being a business owner means thinking strategically about how do I continue to lead this new teammates and the new firm to ensure that there’s continuous pipeline of new clients coming in for all the different reasons that we talked about. Number two, have a plan. I know it sounds simple, but have a plan.

And there are people like yourselves and our firm and others that can help. When I think about what does that plan should entail, just start with existing clients. How do I help retain and grow my existing clients? And then number two, how do I get a few more new clients? And that could be referrals, that could be other lead generation programs, but just really put those thoughts on paper. Anyway, so organic growth. And then, on the inorganic growth side, this is, Jason, where there’s just so much activity and here’s the best part. I still feel like, Jason, we are in the bottom of first inning of this massive pace of not just consolidation, but really the growth of this independent segment. Experts like yourselves and others that are helping the wire or others, advisors in other ecosystems come in to this independent space. Succession, we haven’t talked about that today, but succession I think is going to be a massive tailwind behind many of these consolidations.

And then the third thing that I’ll mention is the access to capital. I heard someone say the other day that capital is commodity. Before, that was the key thing that was either a catalyst or maybe a headwind for this type of inorganic growth. Today, capital is somewhat of a commodity. And so, there’s so many different PE investors or institutional firms that are coming into this space. And so, part of it is to really thinking about what your right target audience is and how your structure and your strategy is going to be different than the guy next door and making sure that you execute. And the capital will be there. Believe me, the capital will be there. And I just think, Jason, that the inorganic growth opportunity is going to continue to accelerate in this space here.

Jason Diamond:

There’s PE money coming into the space? I hadn’t heard that before.

Michael Kim:

Yeah, it’s maybe one or two.

Jason Diamond:

Let me ask you a few follow-ups there. I think that the tie-in there, the thing that people might be worried about then would be decompression, whether it’s because firms need to just spend more because advisor needs, whatever the case may be. Do you think that it’s the same playbook for advisors to avoid that? Lean into AI tools, lean into things like outsourcing, lean into M&A inorganic, things like that? Or is there more to it? Or is this just something that you don’t worry about at all?

Michael Kim:

No, I mean, we worry, we study, we keep a very close eye on the fee trends out there. And there is always pressure on the fees, and I think it’s healthy that there’s pressure on the fees. I think a big part of when we talk about fees, the other word that is synonymous with the fee compression is scale. Are we able to scale? Are the advisors able to scale in terms of their delivery mechanisms and their operations? And so, what scale means is being … Doesn’t necessarily mean cutting expenses and doing it with lower costs. To me, it is thinking more strategically about are there areas in terms of different technology that we can invest in so that over time we can deliver even a better experience in a more scaled way? Are there personnel that we can bring in to the firm that can bring a certain level of expertise that will help us take the business and the client experience to the next level?

And so, there’s many different ways to scale it, but decompression is synonymous with scale. And so, as a business owner, which now advisors are both trusted advisors but also business owners, they should be thinking a lot more about how they can scale their operation. We at AssetMark, we have over 1,100 employees and we’re expecting to grow at least 20% year over year. And our view is how do we leverage AI? How do we leverage technology? How do we leverage some of the offshore contractors and other scale levers to make sure that we’re doing it without creating additional fee pressure, economic pressure to ourselves and to our clients? And so, it’s always a fun exercise to go through. We’re actually starting a planning process already, but scale aspect, Jason, is an important part of this conversation.

Jason Diamond:

Good answer, yep. All right, two more. I’m going to give you a fun one here. I’m giving you a lateral, I don’t know if this is a demotion, but let’s say you’re hypothetically you’re now CEO of a small to medium-sized independent firm, an RIA. You’ve got capital. To your point, capital is somewhat easy to come by. Here are your choices. A, you explore M&A, go buy a business right now. B, trip to Hawaii for all the founders. Or C, is there some business reinvestment that excites you that you think businesses should be doing?

Michael Kim:

That trip to Hawaii is very enticing, but when I think about the opportunity as a leader of the firm, call me a little bit of old-fashioned here but I go back to our existing clients as the number one place of investments. For me, we can do all kinds of really fun, sexy things, but if we don’t take care of our current base of clients, everything falls apart. And so, first and foremost, how do we take care of our clients? And for me, what that really means is how do we deliver the best service experience? At AssetMark, one of the key things that we are maniacal about is how do we continue to be known as the easiest place to do business for advisors? Similarly, for an advisory firm and the leaders of that advisory firm, I would submit that they should be thinking about how do they serve their clients so that the clients view that firm as the firm that all clients should be working with.

And generally we think a lot about that day-to-day experience, delighting that client, that unexpected delight. I mean, my God, things like that. It doesn’t cost a lot, but it goes so far in terms of just really strengthening that experience. So that is, to me, the foundation. And after that, I also want to invest in additional organic growth capabilities. I think things like retirement is an incredibly underserved market. It is one of the largest segments of our wealth space, but arguably one of the more underserved markets.

Jason Diamond:

It’s not the sexiest space.

Michael Kim:

It’s not the sexiest, but it is an important … I mean, retirement is important, Jason. So we at AssetMark, we recently launched our self-directed brokerage program, and this is really opportunity for advisors to tap into the 401k accounts. It’s almost like a pre-rollover type of strategy, but that’s an example where we believe that there’s tons of opportunities even for advisors to serve their clients. And then, with whatever’s left in the checkbook, we love to look at the right advisors that we can potentially tuck into that firm and really branch out in terms of our presence. So, those are just some of the things that I think we would prioritize with some of the extra capital that may be coming into it.

Jason Diamond:

You’re hired.

Michael Kim:

And then we take that trip to Hawaii.

Jason Diamond:

Time for one more, this has been fantastic. I really appreciate the wisdom you’ve shared. Let’s fast-forward now 10 years. What are you hoping that people are saying about AssetMark and the role you’ve played in helping advisors to build businesses? And let’s go beyond just from a portfolio management, investment management perspective.

Michael Kim:

Yeah. As we look forward, and we actually have these types of conversations as part of our strategic planning session, let’s just say 10 years from now, what we want to be known as really that premier wealth platform, a business partner, a trusted business partner, a friend that advisors will view as a partner that helped them achieve their business goals. Meaning, let’s just say a wirehouse advisor who decided to come into the independent space, we were the firm that really helped them serve their clients better through our investments, digital and service, and then really help them grow to that next level. And so, we want to be known as a premier wealth platform that has really propelled the growth of the independent advisory firms to levels that they would not have been able to do on their own. And by the way, have some fun along the way.

So have some fun, really be part of that special AssetMark community, that community of like-minded advisors by really helping that advisory firm achieve their strategic growth objectives. I hope that, Jason, with all of our employees, 1,100 employees coming in every day, our mission is to make a difference in the lives of our advisors and their clients, and I hope that we’re fulfilling that mission. I hope that we are working hard in 10 years as we are now, delivering on that promise and really making that impact each and every day for our valued advisors.

Jason Diamond:

I have no doubt you will. Thank you so much, Michael. This has been an absolute blast. Appreciate you coming on.

Michael Kim:

Thank you, Jason. That was a lot of fun.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously, and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms, or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions, and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

 

Unleashing Potential: Why Capacity is an Advisor’s Biggest Competitive Advantage

A conversation with Jason Diamond and Michael Kim, CEO & President of AssetMark.    

Jason Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Unleashing Potential: Why Capacity Is an Advisor’s Biggest Competitive Advantage. It’s a conversation with Michael Kim, the CEO and president of AssetMark. I’m Jason Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002. Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent.

Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Jason Diamond:

One of the biggest challenges facing advisory firms today isn’t finding more opportunities, it’s creating enough capacity to pursue them. For years, advisors have tried to solve that problem by working harder, adding staff, or becoming more efficient. Today, technology, outsourcing, and AI are creating an entirely different playbook. The question isn’t simply how to do more, it’s how to spend more time doing things that actually matter. That’s why I’m excited to welcome Michael Kim to the podcast. Michael is CEO and president of AssetMark. Founded in 1996, it provides some 12,000 independent advisors and registered investment advisors, RIAs, with outsourced investment strategies, AI tools, and digital workflows, custodial integration, and practice management consulting. Over the last 16 years, he’s had a front row seat to the evolution of independent wealth management and has developed a reputation as what many know him as the growth guy.

And Michael’s perspective is a practical one. He doesn’t think about growth as simply gathering more assets or acquiring more firms, he sees it as building an intentional business, one where advisors spend more time where they add the greatest value while leveraging technology, outsourcing and AI to expand their capacity without losing sight of what matters most, delivering an exceptional client experience. Our conversation covers where advisors should and shouldn’t be spending their time, why organic growth remains the best measure of a healthy business, how AI can strengthen rather than replace client relationships, and why the advisors who thrive over the next decade may look much more like CEOs than portfolio managers. I think you’ll come away with a different way of approaching growth, and perhaps more importantly what it actually takes to achieve it. So, let’s dive in. Michael, thanks again for joining us. Before we dive into the business, let’s talk about the personal.

Tell us about your background, what brought you to the world of wealth management.

Michael Kim:

Yeah, first of all, Jason, thrilled to be here. Thank you for having me, I’m looking forward to our conversation. My goodness, what brought me to this industry? There’s several reasons. First and foremost, I love working with other people and specifically in a position where we can help others. How fortunate are we, Jason, where we get to work with, in my opinion, the best financial advisors where their core mission is to help others, and specifically helping their clients’ goals and dreams come true, and we get to be part of that? And just for me to be and our teams to be part of that, that is just humbling and exciting. That’s one of the big reasons. Let’s see, I love working with the business owners and entrepreneurs. I have a little bit of entrepreneurial gene, both of my parents are entrepreneurs as well. So Jason, I know you could appreciate that.

Working with entrepreneurs, and for me it is all about relationships. Really being able to build deep, personal, professional relationships where we can learn off of each other, help each other, and really do good for clients, the community, and the industry. My goodness, what a perfect industry to be in. I mean, those are just some of the reasons that brought me to this great place. I’ve been with AssetMark for, gosh, now 16 years. Just still feels like day number one here, Jason, but I know we’ll get into a lot more details, but so many different things that have brought me here to this industry.

Jason Diamond:

Wow, 16 years. I definitely want to double click into that. I’m sure you’ve seen the firm evolve a lot. By the way, I feel like you feel, what a blessing and what an amazing industry. Of all the industries in the world and of all the kind of verticals and niches, I just think it’s such an incredible, not only industry, but an incredible time in our industry. Part of that is the proliferation of choice for advisors, and how many different ways there are for an advisor to run a sophisticated, successful, entrepreneurial business. No matter what that could mean within a wirehouse, by the way. I don’t mean that to mean independent. So, I want to talk about all of that. I think your perspective is unique. Whole career at AssetMark or did you start elsewhere? That’s the last question we’ll ask on background.

Michael Kim:

Yeah, so like I said, 16 years here at AssetMark, and I’ve had pretty much all the different leadership responsibilities here. I became president and CEO a few years ago. The other interesting part of my journey here at AssetMark is over that 16-year period, Jason, five different owners. My goodness, five different sort of capital providers and owners and investors coming into the business. We’ve had the fortune of working with large strategic firms to great private equity firms. We even took the company public, so we did the whole New York Stock Exchange, ringing the bell and the whole nine yards. And in 2024, we took the company private again, and we’re just super excited. Our current owner is GTCR, just incredible private equity investors, partners, friends. And we’ve actually known those guys for a number of years before the deal. And through series of different conversations, it was just the right fit.

And we’ve been with them for over two years now, and I just feel like we’re just barely scratch the surface, Jason, in terms of all the different things that we can do with them. And let’s see, prior to AssetMark, I was with Fidelity, we were talking a little earlier, and that’s where I cut my teeth. And I had a chance to work with RIA firms, I was managing all the RIA wealth management relationships at Fidelity for a number of years, spent a big portion of my Fidelity tenure in Boston, as all roads go through Boston for Fidelity.

Jason Diamond:

We’re going Boston, baby.

Michael Kim:

Exactly. And Jason, you know what’s really interesting is I started with Fidelity back in the late ’90s, and back then, my goodness, people really didn’t know the RIA industry. We’d have to remind them it’s RIA, not IRA, that whole nine yards. And it’s just really special to see the RIA and the independent industry just grow to what it is today and just really making that impact to the clients. I know we’ll dig into a lot more of those details. And then actually prior to Fidelity, I’m a CPA by training. So, I’m a recovering CPA, as I like to say, and no accounting jokes, Jason, today here. All right?

Jason Diamond:

I didn’t prepare any. No promises though. A couple things I want to ask you about. First of all, position the positives of the various owners you’ve had. That sounds also though potentially disruptive, 5 different owners in 15 years. Thoughts on that? And then, the other thing is not a question, more of a compliment. I always think people of Fidelity Schwab in the ’90s, early 2000s, part of me feels like you must want to say a little bit like, “I told you so. We were right about this call and this movement.” So, if you want to use this platform to do so, you’re welcome to.

Michael Kim:

Well, it’s funny, I’ll take the second part of the question first. It is interesting just reflecting back on the earlier days of the RIA industry. Back in the ’90s, I mean, it was such a cottage industry. Most of our time was really spent on educating not just advisors but other players in the industry about what it means to be an independent, trusted, fiduciary advisor to the clients. And again, in this day and age, Jason, I mean that is just part of our everyday vernacular.

Jason Diamond:

You take that for granted.

Michael Kim:

Exactly. But back then, educating the advisor that, yes, they get to control their own destiny and they get to own the economics. And most importantly, they get to really control the client experience and helping that client really fulfill their goals and dreams and the outcomes that they’ve been working together on. And so, really having that type of both a advisory discussion but also a business discussion, it’s just been super fulfilling. And I too have learned quite a bit just in terms of what it means to be both a business owner and an advisor. But that’s one of the big things that we’ve all experienced, especially in the earlier days and as this industry continues to mature. Even back then, Jason, I saw the potential and it was interesting.

I remember thinking to myself, “My goodness,” not just the wires and the banks and other brokerage firms, but really again, going back to the benefit to the end client, that investor to have that trusted advisor where there was no conflict, that advisor was sitting on the same side of the table as himself and really doing what was clearly in the best interest of the client. Again, today it’s part of our DNA, part of what we talk about, but back then it was a newer concept. And so, we just feel very humble to have been part of that in the early days. I think your first question was about the different series of owners and investors that we’ve had. And again, as I reflect back on this, Jason, five different firms. We had a life insurance company, we had private equity, actually two different PE firms come together for joint ownership.

We actually had a foreign brokerage firm that owned us for a number of years, and then also the being publicly traded and now being private again. My view, Jason, is that every type of capital structure, there’s pros and cons, but two things that I want to just maybe share with you and your audience is that first and foremost, regardless of the capital structure, it really is incumbent on the management team to do what’s in the best interest of the client. Again, it’s a no-brainer, but really reminding your teams that do always do what’s in the best interest of the client, and then you execute to the T and the rest should usually take care of itself, number one. And then number two, what we’ve learned is never forget about the culture of your firm.

Regardless of, again, the capital structure and the type of priorities that different owners, investors ask you to focus on, absolutely those are important business priorities, but none of that would be possible, Jason, without the right culture, and really all the different employees and colleagues and teammates growing in the same direction, Jason. And again, we’ll get into a lot more because there’s actually a great level of parallel in terms of the lessons that we learn to what we’re seeing in the advisor community as they’re operating their own businesses. So, I know we’ll unpack a lot of that, but those are just some of the themes that I recall as I think about our journey here.

Jason Diamond:

That’s a really thoughtful answer, thank you. I want to ask you a question on clarifying. You used the term clients. When you think about your clients, you are talking about financial advisors who in turn are serving their end clients. Is that correct?

Michael Kim:

That’s right.

Jason Diamond:

Let’s talk about this. You’ve worked with, whether it’s Fidelity or now the last 16 years I would imagine thousands of advisors, probably mostly independent advisors. And growth, at least today is the number one thing in our conversations that comes up of advisors that want to grow. What do you think separates advisors who are able to grow from those who are not, or are less effective at it?

Michael Kim:

Yeah, great question. So just by the way, context, today at AssetMark we work with over 12,000 individual financial advisors, and at Fidelity, thousands of independent RIA firms. And so, we’ve been very fortunate to have seen, Jason, a lot of different models and best practices. And to your point about growth-

Jason Diamond:

And worst practices.

Michael Kim:

Well, we’ll keep it best practices here, and lots of incredible lessons learned as well. Jason, what’s interesting is I think one of the common threads that we see in the most successfully growth-oriented firms has been the advisors and their teams are intentional about growth. And what I mean by that is growth isn’t something that the advisors do as a hobby. It is arguably the number one priority. In fact, we have a saying here at AssetMark that growth is life. And if you’re not growing, you’re dead. So, a big part of the focus is, okay, how do we put the right plan together? A simple thing like a marketing plan. I mean, Jason, it is amazing the opportunity that we have to help advisors really craft their own marketing narrative and the unique capabilities that they bring. So, let’s talk about it and let’s figure out ways to leverage that secret sauce to drive referrals and other new opportunities.

And so, really having that intentional focus starting with a marketing plan. And to me, I always suggest to our advisors that let’s get creative. Let’s not try to do the same old things and keep banging our head against the wall. Let’s try new things, let’s learn from it, let’s fine-tune it. I mean, things like digital leads and really leveraging the social media aspect. Most advisors still are not, I would say comfortable or confident in leveraging the digital platforms or different channels. To me, this is a huge opportunity for advisors, for other enterprises to leverage the digital platforms to get their word out and really leverage that in a way to drive new opportunities. And then the third is execution. My goodness, you can get creative, you can have all kinds of great marketing strategies, but if you’re not executing and doing the things that you say you’re going to do, and do it right and do it again the next day, it’s all for show.

And so, we always talk about how do we help our advisors come up with the best marketing strategy, get creative in some of those ideas, and then let’s go roll up our sleeves and let’s go execute, let’s really bring those great ideas to reality, and let’s figure out a way to fine-tune it, sharpen it, do it better, and the next day do it all over again. And just being intentional, Jason, to sum it all up, I think is a huge part of what growth is all about. And I guess last thing I’ll mention here is, Jason, you know this, but I just can’t stress this enough. Organic growth is the number one predictor of the health of the business. I’m speaking from experience. I mean, the five different owners and the capital provider changes that we’ve experienced, one of the key things that they’ve always asked for and we’ve demonstrated in the early parts of our conversations is our ability to grow the business. That organic growth, again, it is a huge part of that strategic business consideration.

Jason Diamond:

Well, I totally agree with that. There’s an element of organic growth is probably the number one predictor of a healthy, vibrant business. And also to your point, because some advisors say, “Okay, great. Who cares? My business is good enough for me.” But to your point, a buyer cares about it so it impacts valuation as well. You gave a really thoughtful answer as to the question of growth and intentionality around growth, I maybe should have started here. Your answer was broader than I maybe expected, so give us the elevator pitch for AssetMark. What does your company do?

Michael Kim:

Yeah, so at AssetMark we are in the business of serving independent financial advisors as the premier wealth platform. We focus on delivering the best investment experience with the most integrated digital technology and the most personalized service and experience. The last thing that we always talk about is really the community of like-minded advisors that we support. As I mentioned, we are fortunate to serve over 12,000 plus individual financial advisors in the independent space. And we talk a lot about community. And the reason for that, Jason, is in many cases the advisors are out there on the island to themselves and they are wondering about things like growth. And so, what we try to bring in is really a lot of the peer-to-peer type of learning, opportunity for different advisors to connect with one another, learn from each other, and really sharpen their value proposition or their narrative.

And so that community aspect, it is something special. And we actually have many advisors, Jason, where it’s the third generation advisor that have been working with AssetMark that have been connecting with one another. When you go to some of our conferences and events, I always like to say it is the industry’s largest study group out there. And so, we get to be part of that and we get to host that. And so anyway, that’s a little bit about the AssetMark store, we are in business of serving independent financial advisors.

Jason Diamond:

I think there’s a lot of different elements of that value prop that we can talk about, but the one that I think is probably most closely associated in the market is investment management. Let’s talk about investment management, or more specifically the idea of outsourcing investment management to somebody else. Because especially for wirehouse advisors, I think there’s this perception, real or not, that’s a core part of what an advisor does. And I’ve seen the statistics, I know that most advisors are not particularly good at investment management, but they’ve sold their clients on this is a part of what we do for you, financial planning, investment management, and the like. So, what say you? What are your thoughts on the idea that investment management has to be a part of the core financial advisor experience?

Michael Kim:

Yeah. No, totally get it. And I mean, we have thousands and thousands of conversations about this very issue. And Jason, you’re right. I mean, so many advisors believe that their value to their clients is about building the best 60/40 balance portfolio. And with all that in mind, in this day and age with technology and really accessibility to the different investment products and strategies, what advisors have to realize is that the most important thing that the clients want from that advisor is the advisor, not the portfolio or which ETF that they selected. The number one thing, and this is based on the most recent spectrum survey, the number one thing that particularly the higher net worth investors, what they ask and what they expect from their advisors isn’t a investment product or a portfolio design, it’s actually advice on taxes and wealth transfer. Think about that.

They want to know how that advisor is going to help them optimize their taxes, they want to know how the wealth that they worked so hard their entire life, how that’s going to be passed on in the most tax-efficient and the most consistent way, consistent with their goals and objectives to their adult children, et cetera. And so, part of I think the new age perspective has to be that the advisor really positioning themselves as that trusted, holistic advisor. A wealth counselor is really the term that I like to use. As a wealth counselor, yes, investment management is an important part, but it’s one of number of different components that the clients are expecting. And Jason, when I think about the more successful advisors in our ecosystem, they’re leading with taxes, they’re leading with creating trust for their grandchildren, they’re leading with creating family LLCs and how all of that fits into the broader picture.

Because in this day and age of creating a good 60/40 portfolio, I think those are table stakes at this point. And so, a big part of this is how do we help the advisors really broaden their expertise so that they feel confident in talking about these other array of services? Frankly, these services that their clients are expecting and demanding that their advisors deliver. And last thing I’ll mention is here’s the cold harsh reality. If that advisor isn’t delivering those types of services, especially to that next gen client, guess what? That next gen client who’s about to inherit a lot of the wealth from their parents and so forth, they’re probably looking and in conversations with other advisors as well. And so, we just want to ensure that there’s a longevity of the client relationships by helping that advisor deliver a full array of the wealth planning capabilities.

You could tell I’m pretty passionate about this, Jason, I can go on, but yeah, this is a very important part of one of the key developments that we’re seeing in the industry.

Jason Diamond:

I could tell I’m not the first person to ask you, I wouldn’t have expected that I’d be the first person to ask you this. It was a very thoughtful answer. I think part of what you’re saying is because advisors need to deliver so much, probably more than ever, because a lot of what you’re describing is table stakes, outsourcing investment management is the only way to get there. It’s a zero-sum game, you have finite amount of time, and what your clients are saying is they want more of you. So, by giving up some of what’s table stakes into a more systematic kind of process, you’re able to do more. Is that a fair summary?

Michael Kim:

Absolutely, and you hit the nail on the head. I mean, it is all about time management and capacity. Yes, the advisors can do anything, but they can’t do everything. And so, what they have to really make a strategic decision on is what are the activities that will generate the highest level of impact to the clients, and frankly to their business? And so, delegate and outsource the other activities, whether it be research, portfolio management, trading, reporting, technology, et cetera, to a provider that has the scale and really delivering those types of capabilities so that advisor can spend the extra time with a client. And just one last unique stat or insight to share. We do a survey every year, Jason, and I would be happy to make this study available to your audience. It’s called Annual Impact of Outsourcing Survey, and it measures the amount of extra time created by those advisors who’ve made a conscious decision to outsource.

This year it’s over nine hours per week. So, think about that. Nine extra hours per week today. And so, that’s like having an extra day in a week plus. And so, that’s just an example of the type of capacity that outsourcing creates. The other important benefit to this is not just freeing up time and creating capacity, but now you get to deliver other experts and other resources to your clients, and you get to be, you meaning the advisor, becomes really the quarterback for all those different experts that are serving that client relationships. And so again, it’s something that we believe is fundamental. We absolutely believe that’s going to be a key part that will fuel the advisor’s growth going forward as well.

Jason Diamond:

So it’s a perfect segue, because I agree. The capacity conversation, it comes up over and over again. In fact, one of the ways it manifests itself is obviously as a recruiter, we hear about movement and it becomes a catalyst for movement. Like, “Hey, I’m spending all my time doing the wrong things and I need to spend more time doing XYZ.” The other thing that comes to mind when we think about capacity, yes, I hear you, outsourcing. There’s clearly elements like compliance. Yeah, you don’t need to be doing that yourself, you can outsource that. But what about AI would be the other obvious way to me that advisors can force multiply themselves? Give me your thoughts on A, what are you guys doing in this space? And then B, what are your thoughts just on the impact on the wealth management industry at large?

Michael Kim:

Yeah, great question. You can’t have a podcast or any conversation this day and age without AI, right?

Jason Diamond:

No. You knew it was coming, sorry.

Michael Kim:

No, this is great. And look, I mean, personally I believe that AI is going to change everything. Now, what does that really mean? Two areas that we think a lot about both internally at AssetMark, but also what we believe we can expect to see in the industry. Number one, it’s all about productivity. And then number two, it’s about experience. So, how do we think about positioning AI, leveraging AI to improve productivity, and more importantly, delivering even a better experience? And so, internally at AssetMark, we’re doing all the different things in terms of all of our Zoom meetings, the virtual meetings, the note-taking and so forth. To me, again, those are table stakes now.

And advisors themselves as well, as they’re having these types of meetings, using all the usual products in the industry that we’re all very familiar with, making sure that is a core part of, I guess the workflow to really streamline and expedite the follow-up process, the notes and summaries of the conversations. A specific example, one of the things that we launched is really around Slack, our enterprise level for ChatGPT and so forth. Again, it is just something that is accelerating the pace of business internally at AssetMark. From an experience point of view, Jason, oh my goodness, we can go on and on on this. At AssetMark, a big part of what we think about is how do we embed AI into the workflow so that it’s just regular part of how we do things as opposed to going somewhere, maybe figuring out how to work with an agent and this and that?

We are in the process of launching a new capability called Talk Tracks. And so, this is actually for advisors. So, an advisor who taps into our website right before a client meeting, we will literally create talk tracks for that advisor on what are some of the insights that they should share with their client on their portfolio? Maybe they should be taking a required minimum distribution. Maybe they should be thinking about opening up a 529 because they have grandchildren, or maybe they should be doing some other planning activities. The point is it uses AI to gather the different data points, not just from the client but really just scouring the entire industry and other clients with similar profiles, and bringing in different suggestions literally as bullet point talk points for the advisor.

And just based on early feedback, man, Jason, this is like our advisors love it. I mean, our advisors are saying that program alone, Talk Tracks, has really saved about two hours per day, because normally they would have to figure out the talking points for the upcoming meeting, and we will be doing all of that for that advisor. And so again, we believe that productivity will be super enhanced. And then the experience is, to me, that is where the gold mine is in terms of opportunities for AI to contribute.

And last thing I’ll mention here, you and I, we often get the question of, “Okay, what does this mean for advisors? Will AI replace advisors and so forth?” No, because investors, at the end of the day they want that emotional security of knowing that they’re going to be okay. Now having said that, I do believe that advisors need to change how they engage with their clients, because that client is going to be coming into that meeting with the advisor having done their research, having asked their best friend ChatGPT about what to expect in that upcoming meeting. It’s very analogous to, I don’t know about you, but if I go see my doctor, I go to WebMD and I’m asking WebMD, “Okay, what should I be thinking about? These are my symptoms,” et cetera, so that I can actually have a much more intelligent, impactful conversation with my physician.

I don’t see anything different in that the clients, the end clients will come in with some level of preliminary research, virtual conversation with their friend Chat, and then that allows that engagement with their trusted advisor to be that much It’s more meaningful. And so, I absolutely believe that it will really enhance the client experience provided that the advisors are prepared for this type of a change in the industry.

Jason Diamond:

And that’s an interesting spin, the idea that clients themselves will use the tool to get better educated, to basically become better clients for advisors. One thing that comes to mind with some of your talk points, I think it’s a brilliant idea. I think it’s clearly another obvious example of capacity saver. Do you think there’s a risk with that and with just AI tools in general of depersonalizing the relationship and just almost making things a little bit cookie cutter? I’ll tell you what comes to mind for me is I can tell in some cases when I get an AI email, and it makes me cringe. I’m not even talking about a spam email, I’m talking about an email that somebody tried to write to me but they used AI as a way to basically write me three paragraphs. So, give me your thoughts on is there a risk here that this just becomes this really depersonalized experience?

Michael Kim:

Absolutely, I do think that there’s that risk there. I do believe that it’s actually happening already. If you think about just the basics of portfolio construction and just different investment vehicles, whether it’s an ETF fund, security, what have you, chances are that advisor will come into that meeting having done some research and they may know or be more familiar with the underlying vehicles than the past generation. So, the advisors who’s hanging their hat on portfolio construction, that 60/40 balance portfolio that I alluded to earlier as really the reason why that client should be working with them, that is going to be a very non-personal or less personal relationship. Now, imagine even with AI though, that the advisor has cracked a code on how to humanize that engagement and really deliver much more of an emotionally connected experience. That’s where I think the advisors will have an opportunity to really elevate.

So as I said earlier, think about those advisors that have not only built really a durable portfolio to help that client achieve their portfolio goals, but wrapping that with tax planning, wrapping that with family planning or estate planning, and really being that first call that the clients make in the event of something, something happens, that’s where the real emotions come in. And part of it is this evolution that the advisors are on where Jason, you know this better than I do, in the past they were brokers and now recently they were more the investment portfolio managers. And then really going forward it’s about how do they deliver that real deeply personal and that trusted engagement about wealth transfer, about tax management, about business exit planning if they’re business owners. And really those are the moments where the advisors will not only earn their keep, but elevate themselves from rest of the pack.

I absolutely believe that this evolution and the opportunity that frankly AI and other developments are catalyzing, if positioned properly the advisors can benefit from this type of a change in an incredible way.

Jason Diamond:

I think there’s tremendous opportunity for advisors that harness this the right way. It brings me to an interesting question. I don’t think everybody who listens to our show is contemplating change or making a change of firms, but certainly there’s a subset of advisors who are at least curious. And technology is one area. It always comes up. I wonder, advisors don’t know what they don’t know in this realm. So, I think about a wirehouse advisor who’s been conditioned to think that the sandbox is the sandbox and it works well enough, and it probably does. They can service clients within that sandbox. So, how is that wirehouse advisor supposed to think about this new world that you’re talking about where he doesn’t even know the right questions to ask because it’s so completely foreign?

Michael Kim:

It’s such a great question, and it’s an important question that all advisors, particularly ones that are in a wirehouse or captive type of environment should be asking. And I think if you double click that question, it’s about how do they become even a better trusted advisor to their clients? Number one. And then number two, could they also build their own business as well? Meaning could they become a business owner or entrepreneur and control their own destiny? And to me, as we were talking earlier about the growth of the independent space, the independent, the industry is, I mean, this is where these two themes are hitting the road. One of the biggest opportunities that I see is for advisors to not only fulfill the goals and dreams of their end clients, but actually for themselves and for their office mates and for their colleagues as well.

Why not? Why not create their own entity that they can control, and really control their own destiny in terms of the desired business outcomes? Now to your point, most advisors don’t know how to really plug in a CRM with a financial planning, with a portfolio management system and how all those things work. And compliance, you mentioned that earlier is such an important part. So, the big thing is how does that advisor continue to focus first and foremost on their clients, but bringing in outsource partners that can help them deliver to this fully integrated tech stack, this workflow that will actually create a better experience for their team, but also for their clients as well? And then growth. How do they really think about growth within the firm, but also leveraging outside experts like AssetMark and others to really get that next high net worth client?

And so, the point is the advisor shouldn’t feel like they have to do all of this work on their own. Really leverage the different experts that are out there. And Jason, I mean, you know exactly all the different things that wirehouse advisors should do as they’re contemplating different affiliation models. Similarly, if the advisor is looking for that easy button on investments, or technology, or growth or what have you, leverage the different industry experts out there that are in the business of helping advisors achieve those goals. So, it’s one of those things where it may feel daunting initially, but really the opportunity that we have is to educate those advisors and share with them on how we can really help their business goals come true as well.

Jason Diamond:

Yeah, it’s a good answer. To me, there’s two ways to think about the Kitces map, if you will, of the massive ecosystem. On the one hand, it’s overwhelming and daunting. But on the other hand, you mentioned the term cottage industry. Think about how far from a FinTech perspective and an investment tech perspective, and just a wealth management tech perspective the industry has come where it’s a blessing that all of these different solutions exist. And also, part and parcel to all these solutions is there’s a lot of different education solutions out there also. So, I think that’s the number one takeaway is advisors not feeling like they need to do this alone because there are so many different options. I think your lens into this is unique given the number of advisors, that you need literally thousands of advisors.

So, we spoke about AI, we spoke about this outsourcing. What is another maybe trend or something you’re keeping your eye on, or something you’re hearing from your advisors that our audience might not be aware of? Give us a preview.

Michael Kim:

Yeah. So for me, I’m a growth guy, Jason, and I always come back to growth. And the number one, I think about the organic growth aspect. And we can spend hours on this, but probably two things that I just want to share with your audience. Organic growth, not only is it the best measure on the health and really the durability of the business, but it also is really like the north star. It should be the north star of any business. I mean, new clients is a lifeblood of any business out there. And so, part of being a business owner means thinking strategically about how do I continue to lead this new teammates and the new firm to ensure that there’s continuous pipeline of new clients coming in for all the different reasons that we talked about. Number two, have a plan. I know it sounds simple, but have a plan.

And there are people like yourselves and our firm and others that can help. When I think about what does that plan should entail, just start with existing clients. How do I help retain and grow my existing clients? And then number two, how do I get a few more new clients? And that could be referrals, that could be other lead generation programs, but just really put those thoughts on paper. Anyway, so organic growth. And then, on the inorganic growth side, this is, Jason, where there’s just so much activity and here’s the best part. I still feel like, Jason, we are in the bottom of first inning of this massive pace of not just consolidation, but really the growth of this independent segment. Experts like yourselves and others that are helping the wire or others, advisors in other ecosystems come in to this independent space. Succession, we haven’t talked about that today, but succession I think is going to be a massive tailwind behind many of these consolidations.

And then the third thing that I’ll mention is the access to capital. I heard someone say the other day that capital is commodity. Before, that was the key thing that was either a catalyst or maybe a headwind for this type of inorganic growth. Today, capital is somewhat of a commodity. And so, there’s so many different PE investors or institutional firms that are coming into this space. And so, part of it is to really thinking about what your right target audience is and how your structure and your strategy is going to be different than the guy next door and making sure that you execute. And the capital will be there. Believe me, the capital will be there. And I just think, Jason, that the inorganic growth opportunity is going to continue to accelerate in this space here.

Jason Diamond:

There’s PE money coming into the space? I hadn’t heard that before.

Michael Kim:

Yeah, it’s maybe one or two.

Jason Diamond:

Let me ask you a few follow-ups there. I think that the tie-in there, the thing that people might be worried about then would be decompression, whether it’s because firms need to just spend more because advisor needs, whatever the case may be. Do you think that it’s the same playbook for advisors to avoid that? Lean into AI tools, lean into things like outsourcing, lean into M&A inorganic, things like that? Or is there more to it? Or is this just something that you don’t worry about at all?

Michael Kim:

No, I mean, we worry, we study, we keep a very close eye on the fee trends out there. And there is always pressure on the fees, and I think it’s healthy that there’s pressure on the fees. I think a big part of when we talk about fees, the other word that is synonymous with the fee compression is scale. Are we able to scale? Are the advisors able to scale in terms of their delivery mechanisms and their operations? And so, what scale means is being … Doesn’t necessarily mean cutting expenses and doing it with lower costs. To me, it is thinking more strategically about are there areas in terms of different technology that we can invest in so that over time we can deliver even a better experience in a more scaled way? Are there personnel that we can bring in to the firm that can bring a certain level of expertise that will help us take the business and the client experience to the next level?

And so, there’s many different ways to scale it, but decompression is synonymous with scale. And so, as a business owner, which now advisors are both trusted advisors but also business owners, they should be thinking a lot more about how they can scale their operation. We at AssetMark, we have over 1,100 employees and we’re expecting to grow at least 20% year over year. And our view is how do we leverage AI? How do we leverage technology? How do we leverage some of the offshore contractors and other scale levers to make sure that we’re doing it without creating additional fee pressure, economic pressure to ourselves and to our clients? And so, it’s always a fun exercise to go through. We’re actually starting a planning process already, but scale aspect, Jason, is an important part of this conversation.

Jason Diamond:

Good answer, yep. All right, two more. I’m going to give you a fun one here. I’m giving you a lateral, I don’t know if this is a demotion, but let’s say you’re hypothetically you’re now CEO of a small to medium-sized independent firm, an RIA. You’ve got capital. To your point, capital is somewhat easy to come by. Here are your choices. A, you explore M&A, go buy a business right now. B, trip to Hawaii for all the founders. Or C, is there some business reinvestment that excites you that you think businesses should be doing?

Michael Kim:

That trip to Hawaii is very enticing, but when I think about the opportunity as a leader of the firm, call me a little bit of old-fashioned here but I go back to our existing clients as the number one place of investments. For me, we can do all kinds of really fun, sexy things, but if we don’t take care of our current base of clients, everything falls apart. And so, first and foremost, how do we take care of our clients? And for me, what that really means is how do we deliver the best service experience? At AssetMark, one of the key things that we are maniacal about is how do we continue to be known as the easiest place to do business for advisors? Similarly, for an advisory firm and the leaders of that advisory firm, I would submit that they should be thinking about how do they serve their clients so that the clients view that firm as the firm that all clients should be working with.

And generally we think a lot about that day-to-day experience, delighting that client, that unexpected delight. I mean, my God, things like that. It doesn’t cost a lot, but it goes so far in terms of just really strengthening that experience. So that is, to me, the foundation. And after that, I also want to invest in additional organic growth capabilities. I think things like retirement is an incredibly underserved market. It is one of the largest segments of our wealth space, but arguably one of the more underserved markets.

Jason Diamond:

It’s not the sexiest space.

Michael Kim:

It’s not the sexiest, but it is an important … I mean, retirement is important, Jason. So we at AssetMark, we recently launched our self-directed brokerage program, and this is really opportunity for advisors to tap into the 401k accounts. It’s almost like a pre-rollover type of strategy, but that’s an example where we believe that there’s tons of opportunities even for advisors to serve their clients. And then, with whatever’s left in the checkbook, we love to look at the right advisors that we can potentially tuck into that firm and really branch out in terms of our presence. So, those are just some of the things that I think we would prioritize with some of the extra capital that may be coming into it.

Jason Diamond:

You’re hired.

Michael Kim:

And then we take that trip to Hawaii.

Jason Diamond:

Time for one more, this has been fantastic. I really appreciate the wisdom you’ve shared. Let’s fast-forward now 10 years. What are you hoping that people are saying about AssetMark and the role you’ve played in helping advisors to build businesses? And let’s go beyond just from a portfolio management, investment management perspective.

Michael Kim:

Yeah. As we look forward, and we actually have these types of conversations as part of our strategic planning session, let’s just say 10 years from now, what we want to be known as really that premier wealth platform, a business partner, a trusted business partner, a friend that advisors will view as a partner that helped them achieve their business goals. Meaning, let’s just say a wirehouse advisor who decided to come into the independent space, we were the firm that really helped them serve their clients better through our investments, digital and service, and then really help them grow to that next level. And so, we want to be known as a premier wealth platform that has really propelled the growth of the independent advisory firms to levels that they would not have been able to do on their own. And by the way, have some fun along the way.

So have some fun, really be part of that special AssetMark community, that community of like-minded advisors by really helping that advisory firm achieve their strategic growth objectives. I hope that, Jason, with all of our employees, 1,100 employees coming in every day, our mission is to make a difference in the lives of our advisors and their clients, and I hope that we’re fulfilling that mission. I hope that we are working hard in 10 years as we are now, delivering on that promise and really making that impact each and every day for our valued advisors.

Jason Diamond:

I have no doubt you will. Thank you so much, Michael. This has been an absolute blast. Appreciate you coming on.

Michael Kim:

Thank you, Jason. That was a lot of fun.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously, and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms, or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions, and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

 

With Louis Diamond and Mindy Diamond

Louis and Mindy Diamond explore why successful financial advisors can feel stuck despite thriving businesses—and how agency, enterprise value, risk, legacy, and a clear true north can help them evaluate what comes next.

In Summary

Successful advisors by definition have thriving businesses, loyal clients, and enviable careers—yet still wonder whether comfort has replaced energy. Louis and Mindy Diamond examine why success itself can make change harder, how the desire for agency competes with the disruption of a transition, and why record practice valuations, longer careers, and expanded optionality are prompting more advisors to question the status quo. They also offer practical questions to help advisors clarify their true north, risk tolerance, time horizon, and legacy before deciding whether to stay or explore something new.

The Storyline

By every external measure, top advisors today are doing exceptionally well. They have strong production, loyal clients, growing teams, and successful businesses. Yet some privately wonder why the work no longer feels as satisfying as they expected.

Louis and Mindy explain that the tension is not a sign of failure. For many advisors, it appears after they have succeeded and can see another 15 or 20 years of more of the same ahead. The question becomes whether their business still gives them the agency, control, and professional energy they want.

That distinction between comfort and energy can be difficult to recognize. An advisor may enjoy an excellent quality of life and a business that runs smoothly while still feeling comfortably uncomfortable. The catalyst is often not a breaking point, but a renewed desire to build, grow, create enterprise value, or leave a different legacy.

Success also creates powerful reasons to stay. A healthy pipeline, loyal clients, unvested compensation, retire-in-place programs, and the short-term disruption of a transition can make change difficult to justify. At the same time, record valuations, longer careers, multigenerational teams, and a broader range of firm and affiliation models have made the opportunity cost of staying more visible.

The discussion does not assume that every advisor should move. Instead, Louis and Mindy focus on how to make an intentional decision: define your true north, identify what you are trying to solve for, assess your tolerance for risk and disruption, and learn what is possible before committing to a change.

Topics Covered

• Why successful advisors can feel stuck
• Agency, control, and professional satisfaction
• Comfort versus energy in a thriving business
• Defining an advisor’s true north
• When more of the same becomes a constraint
• Fear of change versus fear of standing still
• Recruiting deals, practice valuations, and enterprise value
• Longer careers and multigenerational teams
• Risk tolerance, disruption, and client portability
• Creating clarity without committing to a move

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

What feels different for successful advisors today? (02:09)
Mindy explains why top advisors are increasingly willing to examine the status quo as their choices expand and the value of their businesses rises.

Why can objectively successful advisors still feel unsettled? (04:51)
Mindy identifies agency as a central need for top advisors and explains why a loss of control can create deep frustration even when the business is performing well.

What does a fire in the belly reveal? (08:22)
Mindy shares the example of a highly successful wirehouse team whose interest in change comes from a desire for renewed energy and legacy, not from a final breaking point.

How is being comfortable different from being energized? (11:53)
Louis and Mindy explore the difference between a business that provides an excellent life and one that still feels professionally satisfying, including the feeling of being comfortably uncomfortable.

When does more of the same become a constraint? (17:49)
They discuss how repeating a successful formula can continue to produce results while limiting growth, ownership, or the entrepreneurial spark an advisor wants to pursue.

How do advisors reconcile fear of change with fear of standing still? (27:16)
Mindy and Louis explain why those competing concerns can persist for years and how a firm decision, a compelling opportunity, or a moment of personal clarity can shift the balance.

Why is this question surfacing more often now? (29:48)
Record valuations, elevated recruiting deals, expanded optionality, peer movement, longer careers, and next-generation needs are changing how advisors assess the cost of staying.

Which questions should advisors ask before considering a move? (36:35)
Mindy and Louis outline questions about true north, frustration, risk appetite, disruption, legacy, time horizon, and the regret of never testing what might be possible.

Key Takeaways

Success and professional fulfillment are not the same thing. An advisor can have strong growth, loyal clients, and an excellent quality of life while still feeling that comfort has replaced energy.

Agency is a core need for many top advisors. Firm policies, compensation changes, technology limits, or other decisions can feel especially disruptive when they reduce control over the business or client experience.

Good enough can become a constraint. A proven business model may continue to work financially while limiting growth, ownership, enterprise value, or the professional satisfaction an advisor wants next.

Success creates powerful inertia. A strong pipeline, unvested compensation, retire-in-place programs, client relationships, and the disruption of a transition can all make the status quo difficult to challenge.

The opportunity cost of staying has become more visible. Record valuations, elevated recruiting deals, broader affiliation choices, longer careers, and peer movement give advisors more reasons to understand what else may be possible.

True north should come before due diligence. Advisors need to define what they want to solve for and how they weigh control, risk, enterprise value, legacy, and time horizon before evaluating firms or models.

Education does not require a move. Self-awareness and a clear view of the available options can help an advisor make an intentional decision, including the decision to stay.

https://youtu.be/nrmtRBlJJVs

Quotable Moments

“I’m comfortably uncomfortable.” — Mindy Diamond

“You’ve always got to be really clear on what your true north is.” — Mindy Diamond

“Which regret is bigger to you, trying something and failing or never testing what’s possible?” — Louis Diamond

“It’s okay to want more. There’s nothing wrong with you for wanting more. At the same time, there’s nothing wrong about being comfortable.” — Louis Diamond

FAQs

Why do successful financial advisors feel stuck even when their businesses are thriving?

External success does not always create professional energy or fulfillment. Some advisors have excellent businesses but feel they have lost agency, stopped growing in ways that matter to them, or settled into a version of success that no longer fits their goals.

What does agency mean for a financial advisor?

Agency is control over an advisor’s professional life and business. It can include how the advisor serves clients, uses technology, builds a team, makes decisions, and plans for growth or succession.

Is being comfortable in a business the same as being energized by it?

Not always. Comfort can reflect a strong business, good income, loyal clients, and a healthy quality of life. Energy comes from feeling engaged by what the advisor is building and where the business is headed.

Why can success make it harder for an advisor to change firms?

Successful advisors often have more to disrupt, including client relationships, team dynamics, a growing pipeline, unvested compensation, and valuable retire-in-place benefits. The immediate costs and risks of a transition can outweigh a benefit that may be larger over the long term.

Why are more successful advisors questioning the status quo now?

Practice valuations and recruiting deals are high, the range of affiliation models has expanded, and advisors see respected peers make changes. Longer careers and the needs of next-generation partners also give many teams more time and reason to reconsider their future.

What is an advisor’s true north?

True north is the set of priorities that should guide an advisor’s decision. It defines what the advisor wants to build, what needs to change, and how factors such as control, ownership, legacy, risk, and time horizon should be weighted.

What should an advisor ask before considering a move?

Key questions include what is causing frustration, how significant it is, what outcome the advisor wants, how much disruption and client risk the team can tolerate, and whether staying in the same place for another 10 or 15 years would still feel satisfying.

How can an advisor create clarity without committing to change?

Start with self-awareness, then learn what options exist through informed conversations and competitive analysis. Understanding the landscape can strengthen a decision to stay or reveal a better fit without obligating the advisor to move.

External success does not always create professional energy or fulfillment. Some advisors have excellent businesses but feel they have lost agency, stopped growing in ways that matter to them, or settled into a version of success that no longer fits their goals.

Agency is control over an advisor’s professional life and business. It can include how the advisor serves clients, uses technology, builds a team, makes decisions, and plans for growth or succession.

Not always. Comfort can reflect a strong business, good income, loyal clients, and a healthy quality of life. Energy comes from feeling engaged by what the advisor is building and where the business is headed.

Successful advisors often have more to disrupt, including client relationships, team dynamics, a growing pipeline, unvested compensation, and valuable retire-in-place benefits. The immediate costs and risks of a transition can outweigh a benefit that may be larger over the long term.

Practice valuations and recruiting deals are high, the range of affiliation models has expanded, and advisors see respected peers make changes. Longer careers and the needs of next-generation partners also give many teams more time and reason to reconsider their future.

True north is the set of priorities that should guide an advisor’s decision. It defines what the advisor wants to build, what needs to change, and how factors such as control, ownership, legacy, risk, and time horizon should be weighted.

Key questions include what is causing frustration, how significant it is, what outcome the advisor wants, how much disruption and client risk the team can tolerate, and whether staying in the same place for another 10 or 15 years would still feel satisfying.

Start with self-awareness, then learn what options exist through informed conversations and competitive analysis. Understanding the landscape can strengthen a decision to stay or reveal a better fit without obligating the advisor to move.

Related Resources

How to Free Yourself from the “If Only” Mindset
Here are the 5 most common self-limiting statements that advisors share—and ways to reframe your thinking.

Limitless Growth: Building the Business You Want and the Life to Match
Stephanie Bogan, founder of Limitless Advisor, offers a glimpse into the advice and perspective she shares with advisors and business leaders in the wealth management world, focusing on mindset and methods, and their relationship to achieving one’s best business life.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

Best of Replay: Why So Many Successful Advisors Feel Stuck

An Industry Update with Louis Diamond and Mindy Diamond.     

Louis Diamond:

Welcome to a replay of one of the most popular episodes from our podcast series for financial advisors. Why So Many Successful Advisors Feel Stuck. It’s a Special Industry Update with Mindy Diamond. I’m Louis Diamond and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven, and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

We spend a lot of time talking with advisors who, by every external measure, are doing exceptionally well. They’ve built real businesses with strong production, loyal clients and teams that continue to grow, and yet behind closed doors, many of these same advisors are quietly asking a different set of questions. Not how do I fix what’s broken, but why doesn’t this feel as good as I expected? That tension is showing up more frequently than it did five or 10 years ago, and it’s not because advisors are failing. In many cases, it’s because they’ve won and now find themselves staring at another 15 to 20 years of more the same, unsure whether comfort has slowly replaced energy.

This industry update is about that very moment. I asked Mindy to join me to unpack what we’re hearing from successful advisors across the industry, why success itself can become a constraint, how fear of change competes with fear of standing still, and why record valuations, longer careers and the maturity of the independent space are changing the psychology of decision-making. We also talk about the right questions to ask before considering a move, questions about control, enterprise value, legacy and time horizon, and how advisors can create clarity without forcing a decision. There’s lot to explore here, so let’s get into it. Mindy, thanks for joining us.

Mindy Diamond:

Oh, I’m so happy to be here. Always.

Louis Diamond:

This is a fun topic. So today we’re just going to dive right in. I’m curious, from your vantage point and talking and working with many of the best advisors in the industry at a high level, what are you hearing from successful advisors today that feels different from five or 10 years ago?

Mindy Diamond:

First of all, for the most part, I think that top advisors are loathe to move. And they may have a bunch of frustrations or things that they wish were different, but generally speaking, they’ve always been well taken care of. They have the bat phone to the top, it’s good enough and nobody wants to mess with success. But two things are true today more than ever before, that the competitive landscape, there are more options than ever before, that their businesses are worth more than before. I guess it’s more than two things. That they’re thinking about their business as a business and saying, “Yeah, it’s a hassle to move, but if I can maximize the value of my business more elsewhere and at the same time solve for what I want to, maybe I really do need to consider it. And so I think that it’s a time of more consideration, that top advisors, in particular, are just not willing to settle for the status quo.

Louis Diamond:

Yeah, no doubt. The only thing I would add, but I completely agree, is that today the retire in place or succession opportunities for a wirehouse advisor to transition or sell their business to their next generation or to another team or even an independent advisor, to sell their business to their broker dealer or to someone within their firm, those opportunities, the internal options, I think are more compelling than ever. So we hear a lot from really successful advisors who, that actually doesn’t matter if they’re successful or let’s say they’re mid-tier in the industry, where it’s much easier to stay. And the firms are smart. They’ve made these internal deals better for the retiring advisor at the expense of the inheriting advisor, but they definitely try to create the easy button for someone who’s successful and might be fairly close to the end zone of their career.

Mindy Diamond:

And yeah, unequivocally. And so I think what happens is that, as these senior advisors are weighing the notion of will I eventually take my firm’s retire in place program, hit that easy button, if you will, take the path of lease resistance? Before they do, most of them will, and absolutely should, at least get educated about what else is out there. Not with an eye toward moving necessarily, but with an eye toward knowing what their value is before they sign on for the next seven to 10 years.

Louis Diamond:

No doubt about it. So I think for the most part, we’re talking about mostly top two, advisors who are objectively winning. They have amazing businesses, they’re growing, they have loyal clients. Work-life balance is probably pretty good. So why do so many of these advisors still feel unsettled at the end of the day?

Mindy Diamond:

Because I think that without question, the number one thing that every advisor, but definitely the most successful advisors want, is agency. Agency over their professional life and anything, any day, any event that smacks of loss of agency or less agency than they would like, less control than they would like, makes them feel unsettled is a good word. Unsettled is probably a euphemism for exceedingly frustrated, really angry, ready to go. So look, our job in talking to these folks is, first of all, to say to them, there is no perfection anywhere. So the first thing is you may be annoyed that your firm did X, Y and Z, or you don’t have control over A, B, and C, or you may want more of A, B and C, but at the end of the day, you need to be sure that you’re aware of the hassle factor, you’re willing to trade one set of problems for potentially another. I guess what I’m saying is you got to really be sure that you want it. That’s the bottom line.

Louis Diamond:

No doubt. I would also add a bit of a different spin that a lot of advisors, these folks that I think by any objective measure, they’re killing it. You look at any of their friends outside the industry, their friends probably look at them and say, “Wow, this advisor has an amazing life.” And I think we’d probably say the same, but I think we see it where there’s a difference between being professionally motivated and energized versus just being comfortable. And I think with a lot of folks, especially if it’s a fee-based business, their clients are mostly friends. They grinded in the early years. They still work hard, but now things are on autopilot. So I think some people around unsettled because they have 10, 15, 20, 25 years left to work and they look and say, “This is great. I make a good living. Life’s not that hard,” but they’re missing that spark that they used to have.

Mindy Diamond:

I couldn’t agree more. I actually love that spin, and if I can, I’ll share an example of a conversation I had literally just last week. So talking with one of three senior partners on a very successful wirehouse team, without a doubt, one of the top teams in the industry, and this is a team that absolutely has a bat phone to the top. This is a team that gets referrals from their firm. So if another advisor leaves, they’re the go-to. If someone has an investment banking deal and needs to bring in a wealth advisor, they would go to this team. This is the team or one of a few teams. And I talked to them probably every six months for the last 10 years, and I’m not kidding, and we just have a nice relationship. They trust me. No, I would never sell them. And so they just want to understand the pulse on things.

And for years, that’s essentially what they’ve said is, “We’re killing it, we’re crushing it. We are the go-to team and everything is hitting on all cylinders. And we know that we’ve got our firm’s retire in place programs when two of our senior partners are ready to cash out.” But just last week, not even the senior most member, probably the second to senior most member called and said, “It’s all working well, but I have this fire in my belly.” That’s a good way to say it, right? I have the sense that I’m missing something. And so some of the time, it’s about just getting to that place, say, when the straw that breaks the camel’s back. Something happens, you can’t take it any more, time to go. But with those top advisors, more often than not, it’s not about straw that breaks the camel’s back. It’s much more about fire in my belly. I realize that will I feel good if, at the end of the day, five minutes, five years or 20 years from now, will I feel good if I leave it all behind? We’re right here.

Louis Diamond:

Yep, exactly. Yeah, I think part of it is legacy, but the other part is just fast forwarding the tape. If you say 20 years from now, and you look back in the last 20 years, is you plus 20 years going to feel satisfied and encouraged and excited about what you were accomplishing? Or was it more of a, yeah, it was good, it was easy. I bought three houses and I have a boat. Or was it more about the personal joy of growing and building something and being part of something?

Mindy Diamond:

That’s actually a very good way to say it. Where can the top advisor find that joy? So let’s say I’m hitting on all cylinders, top of the food chain at fill in the blank firm, a traditional firm. What are typically the things that advisor, the options that advisor might consider that could ignite that joy?

Louis Diamond:

Yeah, I mean, honestly, probably a bad nonspecific answer, but it really could be anything. I mean, we see plenty of teams that are with one major wirehouse, they move to another one and just the act of transitioning is re-energizing. They have backend bonuses to hit. This new firm has a bit of a different culture, they feel more important again, and that’s their spark. Others, it would be we’re building something, we’re creating our own firm. Others might be I’m now an equity partner in something that I have a hand in, I have a voice. They actually listen to me. So I think it can be all of the above. It’s more about what is it that an advisor is most interested in? And then at this point in the industry, it’s choose your own adventure. If you have some sort of feeling or urge, whether it’s I want to do something different, I want to grow faster, I’m frustrated by X, Y, Z, it’s more about filling in the blanks of what your next journey looks like. And my guess is just thinking about that is going to provide that natural spark or ignition.

Mindy Diamond:

Yeah. And if I can, the piece of advice that I gave to this team, and I think is worth mentioning here, you’re absolutely right. Choose your own adventure. To us, I think we would both say that most exciting thing about being in our position and being the counselor or the guide or the Sherpa to advisors as they consider what comes next is the amount of choice that they have and how exciting the next chapter can be. But what I said to this team or the one advisor on this team is, “You’ve always got to be really clear on what your true north is.” So yes, there’s a lot of options. An advisor can find joy or reignite the spark at any number of choices, more than ever before. But being really clear before you begin to take meetings or think about it on what you’re looking to solve for, what’s most important to you really matters or else you wind up just spinning your wheels for a lot of time.

Louis Diamond:

Clearly agree. How do you distinguish between being comfortable in your business and being energized by a business? Do you think there’s a difference?

Mindy Diamond:

Yeah, look, I think in some cases, they could be one and the same. I think somebody can be comfortable because they feel energized. They’re hitting on all cylinders. They’ve got a lot of agency and professional control over their business. They’re where they want to be. They’re living their true north. But I think in many cases, and many of the advisors we’ve counseled, they aren’t one of the same.

I’m comfortable because, as you said, I have a great quality of life, I’m making great money, I have a lot of freedom to coach my kids’ basketball team. I can work from home, I can travel when I want to, I have great clients. I may not technically own my business, but I feel as though I do. I’m comfortable enough. But what this advisor last week said to me, and what we hear a lot, is I’m comfortably uncomfortable. That I am comfortable enough. If I retired from here, I will have made a ton of money, I will have done good work and it all would be good enough. But whether or not good enough is really good enough in terms of professionally satisfying and everything you want it to be is a very different question.

Louis Diamond:

Exactly. I’ll give an example of that. I have an advisor I speak to who’s independent. So he’s been independent for his entire career at a broker dealer. He’s an absolute stone-cold killer. I told him that. He’s probably top three advisors at his BD, so it’s great for the ego. He’s on the conference circuit and sharing his best practices, but he’s in his 40s and said to me, “I can continue to rinse, repeat, I can continue to get the accolades and be on the main stage, but I feel like I’m missing something. I just know how to run the same place and I don’t really see how that’s going to change.” So he has a pretty hard decision because it’s nice to feel important, it’s nice to grow without a lot of extra effort, but for this individual, it’s becoming clear that spark or feeling energized again is his true north.

Mindy Diamond:

And so what would he look at? In other words, if you are already top of the food chain at your broker dealer, and by the way, we see that a lot, that advisors in the independent space that work under broker dealer that are number one, they are the one at the conference that everybody goes up to and said, “Oh my God, I hear such great things about you. I want to learn from you.” So what is it he’s missing?

Louis Diamond:

For this individual, what he thinks he’s missing is the chance to really build his own platform. So if this gentleman decides to make a change, it’s definitively going to be to build his own RIA, where he can pick and choose all the technology. He’s really bullish about his personal network and being able to recruit like-minded folks in to do acquisitions. And his North Star is going to be, how do I build the most valuable enterprise that I can sell for a whole boatload of money 15 years from now?

It’s a great example because this person has everything that most people would want, but he’s still wanting more. And what he’s looking to accomplish is probably similar to a lot of people, but the means that he’s going to get there and the weighting that he’s putting on his criteria are different. And that’s what, I think, the best part of being an advisor is you have so much choice. There’s no one telling you, “You have to grow, you have to do this, you have to care about money, you have to onboard X number of clients.” It’s much more about how do you listen to your heart and then make intentional choices to make it happen, essentially.

Mindy Diamond:

Yeah, and I think that’s the calculus. His calculus is it’s more than enough here. The question is, am I willing to upset what’s more than good enough, upset that apple cart in order to get something that is marginally better? And his answer, or our advice to somebody like that, is it really depends upon how much you want it. If it will feel soulful to you, if, at the end of the day, you will feel better about the professional legacy you left behind, having built something bigger and better with less limitations, then you’ll do it. You have to decide how much you want it. It’s interesting, if I can go back to this example, this team’s true north is a little different and it’s worth contrasting. So while, for sure, they would love nothing more than to maximize enterprise value, and they recognize that if they and any of their partners retire through their firm’s retire in place program, it’s a way of monetizing, but they look at their firm as a monopolistic buyer. That was the term that they used.

My comment to them is, “So what? Monopolistic or not, if, at the end of the day, it allows you to do what you need to do when you get paid a fair value, who cares if they’re monopolistic?” That really is the truth. But their true north is they would love to build something. They don’t need to build their own platform. In fact, they would want nothing more than to plug into an already existing platform. And they recognize that by doing so, they’re giving up some enterprise value. And the way to maximize enterprise value the fullest is to go out and build your own. But in this particular instance, they don’t want to do that. They’ve got partners that some are in their 60s and that’s not going to be appealing to them. So their true north might be something a little bit different. I think the point here is being really clear on what you’re true north is really important because it guides the set of choices.

Louis Diamond:

No doubt. At what point do you think more of the same stops being a growth strategy and starts becoming a constraint?

Mindy Diamond:

Oh, well, just that. Your example was the perfect example, right? That I am doing incredibly well. I could keep on doing this, but in some way, it’s not only constraining my growth, but in some way it’s constraining my professional satisfaction. And I think more often than not, it’s about that. Because the audience I think we’re talking to in this podcast are really successful folks. There’s no question that there’s nothing we can tell them that would suggest that they’re not successful as they are. So if they decide to upset the apple cart or they decide to look for more, it’s because there is that fire in your belly, that something, that entrepreneurial spark or that something that’s not being satisfied.

Louis Diamond:

I agree. Yeah. I think sometimes it’s a matter of time says to me, if someone finds something that works, it’s a pretty sound business strategy to rinse, repeat, and keep doing it, focus on what’s essential, cut out the rest. You read any business book, it’s going to tell you double down on what’s working, cut out the rest. The 80/20, et cetera. But I think eventually you keep doing the same thing over and over again, and it might still yield results, but is it yielding the growth? Is it yielding exponential results? And at some point, does just doing the same thing, is it still driving you in the same way?

Mindy Diamond:

Yeah, and I think a lot of times people don’t really know what they’re missing. In other words, the growth strategy is working. I’m growing X amount per year. I’m living a good life. I’m consistently in the top five advisors in my firm. It’s working and nobody could argue that it isn’t. I think it’s just more about a lot of times as advisors, one of two things, either one of their friends move, a professional colleague that they respect and they say, “Holy cow, he was here or she was here for 30 years, like me, killing it. She would’ve been the last person I would’ve thought would move.” And then suddenly she does, and it makes them say, “What am I missing? What did she see that I am not aware of?”

Or a lot of times these folks will, another example I’ll give you. An advisor that I’ve worked with for many years, probably 25 years, who is top of the food chain, doing incredibly well, never really thought about moving, talked over the years, “Boy, it would be nice to build something of my own, but the truth of the matter is that success and the thought of having to go back to zero and build something from scratch, no way.” But you and I came across an opportunity that was unbelievably compelling, and without going into too much detail about the opportunity, suddenly when we talked about that opportunity with this advisor, what he said was, “You can’t be what you can’t see.” All of a sudden we painted the picture of something that’s really compelling I didn’t even know I wanted, but holy cow, now I know I really want it.

Louis Diamond:

Yeah, because something, this dream was made tangible. It put a face on something that this advisor didn’t realize they were missing. I mean, I see this every day, this next question, I’d love to get your opinion. I feel like most advisors, they may sense something is off or something’s changing or shifting under their feet, but they say anyway, why do you think success is often the very thing that keeps advisors stuck?

Mindy Diamond:

Yeah, I think it’s more than good enough. And for most of us, most of the time, I might have that little voice in me or that little inkling that says, gee, maybe it could be better. Or gee, I wonder if or something of the sort, but I have a zillion competing priorities. I’m a dad or I’m a mom or I want to travel, or I’m 60 years old, or I’m filling any blank at any time. And I think that it’s really hard to give up on that. And I think that the example we just gave, of this advisor that saw an opportunity, a unique opportunity that solved for a lot of the things that he didn’t even know he was missing, that happens more often than not.

Louis Diamond:

Yep, I agree. I think too, what happens is a lot of advisors think about moving as strictly a financial trade. My grid rate is this and my fees are that I can get 3.5X here, but only 2X up front have Y in deferred comp. And I think when advisors are thinking about that, which is a reasonable lens to look through, end of the day, they’re business people. If the business is growing and they have to place Y or they know how to get things done, it’s much harder to justify that change.

It’s like people who sell their house top of the market, it’s like, hey, it’s this thing and keep growing, and do you feel like you’re missing out because you’re leaving at this point in time? Typically, too, when things are good, clients are happy, the reviews are easier. We see it a lot with the market being up. In 2025, the market was up almost 20%, much harder for some folks to justify moving because they feel like, whether it’s artificial or it’s real, that their business is really cranking. So I think that’s a big part of it as well.

Mindy Diamond:

Yeah. And maybe another little spin on it is a lot of times to move is really, from a financial perspective, may only be marginally better in the short-term, whether it be because after taxes, the amount of tabs you get upfront is not that much greater than the deal you could get by retiring through your firm’s sunset program. Or if you move, you’re going to be leaving some clients behind. So if you factor in the breakage from losing clients and the short-term upside, the delta may not be that great. We see a lot of times when an advisor is already independent and they’re at a net 60 or 65% payout and they’re looking at something that gives them a 70% net payout and they say, “Yeah, okay, so those extra basis points are nice, but is it nice enough? Is it worth the hassle?” The answer to that is it is entirely an inside job.

For some that delta, even if that delta was only 2 cents, would be more than enough to justify the change. And for others, if the delta was 2000000%, it wouldn’t be enough. So what’s this positive? What’s this positive or determinant is how badly they want it. How badly, beyond the financial piece, they want what another opportunity would give them. Either that I really have this fire in my belly, and I love that term, and I just can’t solve for it. I can’t extinguish that fire here. I can’t feed that fire here. Or opportunistically, I want to be something I just can’t here, and I want it so badly that even if, financially, it’s only marginally better in the short-term, I’m willing to go through the hassle to get it.

Louis Diamond:

No doubt. And one last point to put a bow on this segment is I think there’s also an element that advisors who are growing or they have a big pipeline, and to me, the best advisors always have a big pipeline. They always have the next big prospect. There’s definitely some, I think, real fear that I’m going from growing 10% per year to reflexively choosing to make my life really hard for a couple of months to slow down growth, perhaps lose some of the pipeline, lose some of the big clients I just onboarded. And that’s really hard to justify because the trade-off is that much more apparent to them.

Mindy Diamond:

Yeah. Which you really want it.

Louis Diamond:

But that’s always going to be the case. That’s the point. The good advisors, for the most part, are always growing and always doing these things. So it’s like running on a treadmill. The same thing with unvested deferred compensation. I have 2 million of unvested deferred, it’s so hard to walk away from. The counterpoint is you’re always going to have that. If anything, it’s just going to grow. So again, it’s taking a step back to take multiple steps forward. Some people want that and are excited by it. Some people aren’t, but that’s okay.

Mindy Diamond:

Yeah, and I think that’s the whole point. While we get paid to move people, our position and the relationships we’ve had for years with top advisors, with every advisor, is they trust us because we’re never looking to just sell them on a hot opportunity. We’ll bring opportunities to them and say, “Here’s what’s available, here’s what the upside could be,” but we know and respect better than anyone that you got to really want it. It is a hassle. It’s hard work to move, and you’ve got to have a real confidence in your clients, your current clients, that they’re going to follow you. You’ve got to have real confidence that your pipeline will follow you, that what’s not certain. You’ve got to have confidence that you can tolerate the risk, and you’ve got to have confidence that your team’s going to follow you and that you’ve got the support you need. And not everyone has the appetite for it, nor should they.

Louis Diamond:

Exactly. I mean, I would say there’s two competing, I guess, thoughts that oftentimes go through an advisor’s mind, and they’re both extremely reasonable. The first one is the fear of change, but at the same time it’s the fear of staying exactly where they are for another 10, 15, 20 years. How do you think advisors can reconcile the tensions, like the angel on one shoulder, the devil on the other? One’s super comfortable and safe. The other one is an unknown. One’s exciting, one, et cetera. So how would you reconcile that?

Mindy Diamond:

Well, first of all, the short answer is it takes years. The two examples I just raised, and I’ll ask you the same question, are advisors that I’ve been talking to for 10 years plus. In one case, it could be 15 or 20. So for 10 or 15 years, there was always a certain amount of angst, a certain amount of curiosity, but not at all a willingness to do anything about it until in one case, something happened. Something happened that made them realize that they’re paying an awful lot of money to their firm for value they’re not getting anymore, feeling limited. And so they decided to pick up their head and look elsewhere.

In the other case, it was opportunistic. Really was perfectly happy doing their thing and heard or saw an opportunity that sounded compelling and began exploring. Now, I don’t know whether either one of these teams will ultimately move, so let’s say that, but these conversations are many years in the making. So I think the point I’m making is that devil on one side, an angel on the other are those two competing voices. They exist for a long time until either, in some cases, they never get reconciled and the advisor just retires and it is what it is. In other cases, they get reconciled, but sometimes five, 10 years after the voices begin to surface and they don’t happen, they don’t get reconciled until something happens to force it.

Louis Diamond:

Yeah. I also look at this concept as we’ll call it a midlife career crisis. So I’m 40 years old. Instead of buying three motorcycles and a Porsche and going skydiving, I’m thinking about my business. And sometimes, I think people just wake up and say, “Wow, I don’t really know what my identity is and I need to do something different. I need that additional spark.” So I think sometimes too, it’s just either an age thing or a certain birthday comes up or it’s just that a moment of clarity that pops into the mind.

Mindy Diamond:

Totally agree.

Louis Diamond:

Why do you think this feeling is showing up now more than ever? Is it because of recruiting deals? Is it because of the movement toward independence? Is it something else or somethings else?

Mindy Diamond:

Yes, I think it’s all of the above, and I think that’s the cool thing. Valuations are at an all-time high. So even if an advisor has zero interest in going independent, you have to be living under a rock not to know that your business has real value. That business, outside of the constraints of a major firm, is worth much more than it is on the inside. Now, that doesn’t mean that everybody should go independent, or will, but the fact that those multiples are hanging out there and that recruiting deals are at an all-time high, and they are, the fact that there’s more optionality, which means an advisor, if they go out and explore, is more likely to find their personal version of Utopia or something closest to it.

The fact that movement begets movement. That’s something we haven’t talked about, but it’s worth mentioning that all you have to do is read AdvisorHub or just be sitting in your office and every day, watch somebody you respect make a move. And so the more you see top advisors move, the more you say maybe there really is something else out there for me as well. And then you and I always say that the big firms are one policy change, one comp change, one mandate, one something away from frustrating the heck out of a large constituency because the bottom line is, as long as you’re an employee, you’re vulnerable or captive to whatever choices the firm makes.

Louis Diamond:

Yeah. I think you’re talking about, in a very nice way, what happened with UBS at the end of 2024, but we even see it outside of the wirehouses. There’s independent firms that layer in new fees or they don’t allow their advisors to text. There’s always that risk that something big coming down the pike that motivates someone. I’ll give you two other reasons why they think this is happening with more frequency. The first one is advisors’ careers are oftentimes longer, either because they’re bringing their kids into the business or the business is so lucrative, and if the business is mostly fee-based and it’s on autopilot, it’s like, why should I hang up the old boots when I can just work for another handful of years? So I think with longer advisor careers and the pot of gold at the end of the rainbow, which is either a big exit or a retire in place deal, I think advisors just grapple with more and they grapple with it for longer.

Mindy Diamond:

Yeah, you brought up a point. I’m so happy you brought it up. I’m sitting here next to my son, my next generation. I have said oftentimes that, without my sons coming into the business, I don’t know that I would’ve had the same relationship to the business as I aged. As I got older, and I’ll be transparent, I’m 63-year-old now, if 10 years ago, my sons had not decided to join me, I think that I might have said, “I’ll work as long as it feels soulful and good, and if something better comes along, great.” But it wasn’t until they came along that I really began to think about everything through their lens. It was less about me because by the time I was 50, from a financial perspective, I could have left if I wanted to. But as long as my kids weren’t in the business, there’s no way I was going to do that.

There was no way I wouldn’t want what was the absolute best for the business. And I guess that’s a long-winded way of saying in an industry where there’s so many multigenerational businesses, father-son, mother-daughter, whatever it is, senior advisors that really care, even if they’re not family, about their next generation, when they begin to look at their business through the lens of their next generation, the technology may be good enough for me, but it’s sure not cutting edge enough. Or they say things like, “The bureaucracy is killing me, but I work three hours a day,” or, “I have such a good life, I don’t want to upset the apple cart.”

But then all of a sudden, one day we get a call either from that senior advisor, for whom it was more than good enough for years, or from the next generation that says, “This is not what I want. It may have been good enough for my dad and my mom, but it’s not good enough for me.” So it’s a long-winded way of saying I think that the next generation really forces the senior advisors, the elder states, G1 to grapple with whether or not this is good enough.

Louis Diamond:

Yep. I’ll answer my own question first and then get your opinion, because I feel pretty strongly about my answer. In thinking about our four to five point list here of why this is a bigger deal now, I tap in with more frequency. The question for both of us is which one do you think has the biggest psychological impact on advisors right now? I’m going to go first because I’m excited about my answer. I think by far, it’s practice valuations by far.

Because what’s happening is advisors are reading news articles, hearing from their friend, getting cold-called from corporate development folks at firms, and they hear what used to be just ludicrous multiples. These were multiples that were reserved 100, $200 million revenue business are now getting paid to a three to $5 million practice. And any advisor, even ones who aren’t super financially motivated, I think just hearing about this, knowing what’s possible has a major psychological impact. It’s making it that much harder for folks to say, “You know what? It’s comfortable. It’s easy. I can retire here because the opportunity cost of staying put has accelerated that much.” What do you think?

Mindy Diamond:

So unequivocally, and I am money motivated for sure, so I agree with you. But at my stage and age, if I were an advisor, I absolutely wouldn’t be able to ignore the impact that maximizing enterprise value might have and how awesome it would be to be building a business that could be worth more. But I would equally, if not more so, be really concerned about, A, how it would feel. Like am I going to be able to live the professional life, do what’s soulful for me? Am I going to be able to build the business I want to? Is this going to be the business, the legacy I’m going to feel good about? Is this going to be the business that I want my sons to take over? And that, to me, would be equally important. And I’m making it about me, but I think that’s what a lot of senior advisors would say.

Louis Diamond:

No doubt. So for folks that are questioning their situation, what do you think is a question or three or four or five of the right questions they should start asking themselves before even thinking about making a move?

Mindy Diamond:

Yeah. Well, one is, listen, what’s your true north? And even before, I mean question two, and I think what I just said, assessing your true north, figuring out where your true north is, one, because question two is what is it that’s bothering you? What is it that you’re frustrated by? And simultaneously, to what extent does it frustrate you? Like how, okay, so I feel mildly annoyed that I have to do X, but is it enough to make me want to move? So being clear on that is important. But I think even before you begin to delineate how frustrated you are, you have to be really clear on what you want to be when you grow up. What is it that would feel soulful? What are you trying to solve for? What are the parameters or realities that you need to take into account? You’d love to do X, but you have a senior partner that you know is never going to want that, whatever it is. So what is the true north? What are you frustrated by? Then it’s what risk appetite do I have?

Louis Diamond:

To take risks, yeah.

Mindy Diamond:

What risk appetite and what appetite in general do I have for disruption to my life? How tolerant will I be if one of my clients doesn’t follow with me, because that is really possible? How tolerant will I be if I spend a few months and I’m working harder than I’ve ever worked in my life, whatever it may be. And then I think it’s that question, what I want to be when I grow up is really what’s just positive. Do I want to be a business owner or am I a big corporate person and that’s just who I am and I’m comfortable with leveraging the name that’s on the door?

Louis Diamond:

No doubt. I think an interesting one is ask yourself, if I stayed exactly where I am for the next 15 years, would I be proud of what I built? I think it’s a really important one sometimes too, when I’m speaking with advisors who are worried about a transition, and honestly people should be worried about a transition. It’s terrible. There’s no sugar-coating it. It’s a lot of work. It’s scary. It’s a risk. You’re disrupting your life, all your client’s life, et cetera. But sometimes, I’d say, the reframe is the three months, four months, whatever it is of backbreaking work that you put in, is that worth it for the next 10, 15, 20 years of doing something that really sparks you more? And I think, again, it comes back to your question of risk appetite, but I think just thinking about that is a lot of people get lost in the immediacy of the risk and of the work, but they forget to look beyond that work to what’s possible on the other side of the rainbow.

Mindy Diamond:

And how important it is to get it. In other words, I may be very clear that I would like to have X. I’d like to do Y. I would love, I mean we hear this all the time. I’d love to be independent and build my own business. Boy, if I were 20 years younger or I was, whatever it was. So the point of the matter is you can be aware of wanting those things. It’s admirable to want them, but whether or not you actually should go after them, that’s an inside job.

Louis Diamond:

No doubt. I think another one I like is which regret is bigger to you, trying something and failing or never testing what’s possible? I think that’s a good one. Another philosophical one. Okay. Let’s change gears a little bit here. So for successful, we’ll say mid-career advisors, why do you think the biggest risk is oftentimes not making the wrong move, but choosing the status quo by default?

Mindy Diamond:

Answering it from the perspective, we’ve had a lot of senior advisors that say, “I look back on my career and if only I had made the move or gone to this 15 years ago.” So I think that’s the you get comfortable in the discomfort, it’s easier to stay put, and then before you know it in your head, you’re too old or you’re too settled or you’re too entrenched and you can’t go or it’s too late to go. Or in some cases, you’ve got so much unvested deferred comp, it’s too expensive to go. And so I don’t think that’s only about mid-career. I think you want to make sure that you’ve lived a professional life that’s not filled with regret. That’s really what I think.

Louis Diamond:

No doubt about it. I think too, the fear of making the wrong move, call it buyer’s remorse, if you will. I honestly don’t really see it happen all that often. When I see it happen, it’s because someone went to their second or third choice firm because they got paid an extra 10% of their production. That’s where the wrong decision comes in. I usually find when advisors are thorough, they’re thoughtful, they’re making decisions for the right reasons, and there is a base level of motivation to do something different. You can’t really make the wrong choice. And I think, but again, it’s risk tolerance, et cetera. Let me give you two more questions here. What’s one step an advisor can take today to create clarity without committing to change?

Mindy Diamond:

Well, that question is the fundamental definition of how you and I see the world. So we traffic in advisors that are 10 years, 20 years from making a move or may never move. To us, it’s just about the relationship. That may sound foofy and crazy, but it is the truth. And so those conversations are all about being self-aware. That’s number one. Know thyself. Being self-aware of what’s important to me, what can I live with, how much risk tolerance do I have, et cetera. And then it’s also about having a clear understanding about what’s possible. So continuing to have conversation with people like you and I, continuing to read AdvisorHub or whatever it is about transitions that happen. Understanding the opportunities that are out there is not necessarily because you’re going to go take one of them or you’re going to change, but knowledge is power. It empowers you where you are. It’s competitive analysis, and that’s smart. That can only serve you well.

Louis Diamond:

Yep. I completely agree. One last question here, and I think probably a lot of people listening to this are thinking this personification of an advisor or advisors that we’re describing, are they just complainers? Are they just being ungrateful? On the one hand, there’s probably folks that are early in their careers working their butt up who are saying, “Hey, just be grateful for what you have. It’s really hard to get to where you are. So why are you looking a gift horse in the mouth?” So what would you say to that line of thinking, that questioning the status quo or questioning something that’s really good, does that means someone’s ungrateful or restless?

Mindy Diamond:

Oh my God, no. I think that the smartest and most successful, and honestly most grounded and grateful people are those that question the status quo. You can be, can and should be, simultaneously grateful for what you have. We say to advisors all the time, “We’re not from Merrill Lynch’s training program that catapulted you to the seat you are in now to become a 3 million, 5 million, $7 million advisor. You may be mad at Merrill Lynch now, or you may want something more than Merrill Lynch can give you today, but it doesn’t mean you’re ungrateful for what Merrill gave you.” And that’s the answer. I think that you can be grateful for this wonderful life that you’ve been afforded, but at the same time, aware of the fact that you may want more, and that’s a healthy, wonderful thing.

Louis Diamond:

Completely agree. Yeah. I mean, it’s similar to any large Fortune 500 company. You think of Apple, how many times they’ve reinvented themselves or everything that’s happening with AI. I think a big part of this too is future-proofing, right? It’s okay. It’s not being ungrateful. It’s more I’m taking proactive action to make sure I do have a business in 15 to 20 years, and that I’m positioning to myself and my clients to do the best possible work together.

This is the fun topic. It’s obviously something on the mind of a live of advisor. It comes up probably in every group that we ever consult with, whether they’re a wirehouse advisor, they’re a private banker, they’re independent, et cetera. So I think a lot to learn here. My big takeaway from today is it’s okay to want more. There’s nothing wrong with you for wanting more. At the same time, there’s nothing wrong about being comfortable. Thank you very much for today.

Mindy Diamond:

Amen. My pleasure. Good topic.

Louis Diamond:

Thank you for joining us. We’ll be back with a new episode next week, so be sure to listen in.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firm’s, or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Best of Replay: Why So Many Successful Advisors Feel Stuck

An Industry Update with Louis Diamond and Mindy Diamond.     

Louis Diamond:

Welcome to a replay of one of the most popular episodes from our podcast series for financial advisors. Why So Many Successful Advisors Feel Stuck. It’s a Special Industry Update with Mindy Diamond. I’m Louis Diamond and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven, and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

We spend a lot of time talking with advisors who, by every external measure, are doing exceptionally well. They’ve built real businesses with strong production, loyal clients and teams that continue to grow, and yet behind closed doors, many of these same advisors are quietly asking a different set of questions. Not how do I fix what’s broken, but why doesn’t this feel as good as I expected? That tension is showing up more frequently than it did five or 10 years ago, and it’s not because advisors are failing. In many cases, it’s because they’ve won and now find themselves staring at another 15 to 20 years of more the same, unsure whether comfort has slowly replaced energy.

This industry update is about that very moment. I asked Mindy to join me to unpack what we’re hearing from successful advisors across the industry, why success itself can become a constraint, how fear of change competes with fear of standing still, and why record valuations, longer careers and the maturity of the independent space are changing the psychology of decision-making. We also talk about the right questions to ask before considering a move, questions about control, enterprise value, legacy and time horizon, and how advisors can create clarity without forcing a decision. There’s lot to explore here, so let’s get into it. Mindy, thanks for joining us.

Mindy Diamond:

Oh, I’m so happy to be here. Always.

Louis Diamond:

This is a fun topic. So today we’re just going to dive right in. I’m curious, from your vantage point and talking and working with many of the best advisors in the industry at a high level, what are you hearing from successful advisors today that feels different from five or 10 years ago?

Mindy Diamond:

First of all, for the most part, I think that top advisors are loathe to move. And they may have a bunch of frustrations or things that they wish were different, but generally speaking, they’ve always been well taken care of. They have the bat phone to the top, it’s good enough and nobody wants to mess with success. But two things are true today more than ever before, that the competitive landscape, there are more options than ever before, that their businesses are worth more than before. I guess it’s more than two things. That they’re thinking about their business as a business and saying, “Yeah, it’s a hassle to move, but if I can maximize the value of my business more elsewhere and at the same time solve for what I want to, maybe I really do need to consider it. And so I think that it’s a time of more consideration, that top advisors, in particular, are just not willing to settle for the status quo.

Louis Diamond:

Yeah, no doubt. The only thing I would add, but I completely agree, is that today the retire in place or succession opportunities for a wirehouse advisor to transition or sell their business to their next generation or to another team or even an independent advisor, to sell their business to their broker dealer or to someone within their firm, those opportunities, the internal options, I think are more compelling than ever. So we hear a lot from really successful advisors who, that actually doesn’t matter if they’re successful or let’s say they’re mid-tier in the industry, where it’s much easier to stay. And the firms are smart. They’ve made these internal deals better for the retiring advisor at the expense of the inheriting advisor, but they definitely try to create the easy button for someone who’s successful and might be fairly close to the end zone of their career.

Mindy Diamond:

And yeah, unequivocally. And so I think what happens is that, as these senior advisors are weighing the notion of will I eventually take my firm’s retire in place program, hit that easy button, if you will, take the path of lease resistance? Before they do, most of them will, and absolutely should, at least get educated about what else is out there. Not with an eye toward moving necessarily, but with an eye toward knowing what their value is before they sign on for the next seven to 10 years.

Louis Diamond:

No doubt about it. So I think for the most part, we’re talking about mostly top two, advisors who are objectively winning. They have amazing businesses, they’re growing, they have loyal clients. Work-life balance is probably pretty good. So why do so many of these advisors still feel unsettled at the end of the day?

Mindy Diamond:

Because I think that without question, the number one thing that every advisor, but definitely the most successful advisors want, is agency. Agency over their professional life and anything, any day, any event that smacks of loss of agency or less agency than they would like, less control than they would like, makes them feel unsettled is a good word. Unsettled is probably a euphemism for exceedingly frustrated, really angry, ready to go. So look, our job in talking to these folks is, first of all, to say to them, there is no perfection anywhere. So the first thing is you may be annoyed that your firm did X, Y and Z, or you don’t have control over A, B, and C, or you may want more of A, B and C, but at the end of the day, you need to be sure that you’re aware of the hassle factor, you’re willing to trade one set of problems for potentially another. I guess what I’m saying is you got to really be sure that you want it. That’s the bottom line.

Louis Diamond:

No doubt. I would also add a bit of a different spin that a lot of advisors, these folks that I think by any objective measure, they’re killing it. You look at any of their friends outside the industry, their friends probably look at them and say, “Wow, this advisor has an amazing life.” And I think we’d probably say the same, but I think we see it where there’s a difference between being professionally motivated and energized versus just being comfortable. And I think with a lot of folks, especially if it’s a fee-based business, their clients are mostly friends. They grinded in the early years. They still work hard, but now things are on autopilot. So I think some people around unsettled because they have 10, 15, 20, 25 years left to work and they look and say, “This is great. I make a good living. Life’s not that hard,” but they’re missing that spark that they used to have.

Mindy Diamond:

I couldn’t agree more. I actually love that spin, and if I can, I’ll share an example of a conversation I had literally just last week. So talking with one of three senior partners on a very successful wirehouse team, without a doubt, one of the top teams in the industry, and this is a team that absolutely has a bat phone to the top. This is a team that gets referrals from their firm. So if another advisor leaves, they’re the go-to. If someone has an investment banking deal and needs to bring in a wealth advisor, they would go to this team. This is the team or one of a few teams. And I talked to them probably every six months for the last 10 years, and I’m not kidding, and we just have a nice relationship. They trust me. No, I would never sell them. And so they just want to understand the pulse on things.

And for years, that’s essentially what they’ve said is, “We’re killing it, we’re crushing it. We are the go-to team and everything is hitting on all cylinders. And we know that we’ve got our firm’s retire in place programs when two of our senior partners are ready to cash out.” But just last week, not even the senior most member, probably the second to senior most member called and said, “It’s all working well, but I have this fire in my belly.” That’s a good way to say it, right? I have the sense that I’m missing something. And so some of the time, it’s about just getting to that place, say, when the straw that breaks the camel’s back. Something happens, you can’t take it any more, time to go. But with those top advisors, more often than not, it’s not about straw that breaks the camel’s back. It’s much more about fire in my belly. I realize that will I feel good if, at the end of the day, five minutes, five years or 20 years from now, will I feel good if I leave it all behind? We’re right here.

Louis Diamond:

Yep, exactly. Yeah, I think part of it is legacy, but the other part is just fast forwarding the tape. If you say 20 years from now, and you look back in the last 20 years, is you plus 20 years going to feel satisfied and encouraged and excited about what you were accomplishing? Or was it more of a, yeah, it was good, it was easy. I bought three houses and I have a boat. Or was it more about the personal joy of growing and building something and being part of something?

Mindy Diamond:

That’s actually a very good way to say it. Where can the top advisor find that joy? So let’s say I’m hitting on all cylinders, top of the food chain at fill in the blank firm, a traditional firm. What are typically the things that advisor, the options that advisor might consider that could ignite that joy?

Louis Diamond:

Yeah, I mean, honestly, probably a bad nonspecific answer, but it really could be anything. I mean, we see plenty of teams that are with one major wirehouse, they move to another one and just the act of transitioning is re-energizing. They have backend bonuses to hit. This new firm has a bit of a different culture, they feel more important again, and that’s their spark. Others, it would be we’re building something, we’re creating our own firm. Others might be I’m now an equity partner in something that I have a hand in, I have a voice. They actually listen to me. So I think it can be all of the above. It’s more about what is it that an advisor is most interested in? And then at this point in the industry, it’s choose your own adventure. If you have some sort of feeling or urge, whether it’s I want to do something different, I want to grow faster, I’m frustrated by X, Y, Z, it’s more about filling in the blanks of what your next journey looks like. And my guess is just thinking about that is going to provide that natural spark or ignition.

Mindy Diamond:

Yeah. And if I can, the piece of advice that I gave to this team, and I think is worth mentioning here, you’re absolutely right. Choose your own adventure. To us, I think we would both say that most exciting thing about being in our position and being the counselor or the guide or the Sherpa to advisors as they consider what comes next is the amount of choice that they have and how exciting the next chapter can be. But what I said to this team or the one advisor on this team is, “You’ve always got to be really clear on what your true north is.” So yes, there’s a lot of options. An advisor can find joy or reignite the spark at any number of choices, more than ever before. But being really clear before you begin to take meetings or think about it on what you’re looking to solve for, what’s most important to you really matters or else you wind up just spinning your wheels for a lot of time.

Louis Diamond:

Clearly agree. How do you distinguish between being comfortable in your business and being energized by a business? Do you think there’s a difference?

Mindy Diamond:

Yeah, look, I think in some cases, they could be one and the same. I think somebody can be comfortable because they feel energized. They’re hitting on all cylinders. They’ve got a lot of agency and professional control over their business. They’re where they want to be. They’re living their true north. But I think in many cases, and many of the advisors we’ve counseled, they aren’t one of the same.

I’m comfortable because, as you said, I have a great quality of life, I’m making great money, I have a lot of freedom to coach my kids’ basketball team. I can work from home, I can travel when I want to, I have great clients. I may not technically own my business, but I feel as though I do. I’m comfortable enough. But what this advisor last week said to me, and what we hear a lot, is I’m comfortably uncomfortable. That I am comfortable enough. If I retired from here, I will have made a ton of money, I will have done good work and it all would be good enough. But whether or not good enough is really good enough in terms of professionally satisfying and everything you want it to be is a very different question.

Louis Diamond:

Exactly. I’ll give an example of that. I have an advisor I speak to who’s independent. So he’s been independent for his entire career at a broker dealer. He’s an absolute stone-cold killer. I told him that. He’s probably top three advisors at his BD, so it’s great for the ego. He’s on the conference circuit and sharing his best practices, but he’s in his 40s and said to me, “I can continue to rinse, repeat, I can continue to get the accolades and be on the main stage, but I feel like I’m missing something. I just know how to run the same place and I don’t really see how that’s going to change.” So he has a pretty hard decision because it’s nice to feel important, it’s nice to grow without a lot of extra effort, but for this individual, it’s becoming clear that spark or feeling energized again is his true north.

Mindy Diamond:

And so what would he look at? In other words, if you are already top of the food chain at your broker dealer, and by the way, we see that a lot, that advisors in the independent space that work under broker dealer that are number one, they are the one at the conference that everybody goes up to and said, “Oh my God, I hear such great things about you. I want to learn from you.” So what is it he’s missing?

Louis Diamond:

For this individual, what he thinks he’s missing is the chance to really build his own platform. So if this gentleman decides to make a change, it’s definitively going to be to build his own RIA, where he can pick and choose all the technology. He’s really bullish about his personal network and being able to recruit like-minded folks in to do acquisitions. And his North Star is going to be, how do I build the most valuable enterprise that I can sell for a whole boatload of money 15 years from now?

It’s a great example because this person has everything that most people would want, but he’s still wanting more. And what he’s looking to accomplish is probably similar to a lot of people, but the means that he’s going to get there and the weighting that he’s putting on his criteria are different. And that’s what, I think, the best part of being an advisor is you have so much choice. There’s no one telling you, “You have to grow, you have to do this, you have to care about money, you have to onboard X number of clients.” It’s much more about how do you listen to your heart and then make intentional choices to make it happen, essentially.

Mindy Diamond:

Yeah, and I think that’s the calculus. His calculus is it’s more than enough here. The question is, am I willing to upset what’s more than good enough, upset that apple cart in order to get something that is marginally better? And his answer, or our advice to somebody like that, is it really depends upon how much you want it. If it will feel soulful to you, if, at the end of the day, you will feel better about the professional legacy you left behind, having built something bigger and better with less limitations, then you’ll do it. You have to decide how much you want it. It’s interesting, if I can go back to this example, this team’s true north is a little different and it’s worth contrasting. So while, for sure, they would love nothing more than to maximize enterprise value, and they recognize that if they and any of their partners retire through their firm’s retire in place program, it’s a way of monetizing, but they look at their firm as a monopolistic buyer. That was the term that they used.

My comment to them is, “So what? Monopolistic or not, if, at the end of the day, it allows you to do what you need to do when you get paid a fair value, who cares if they’re monopolistic?” That really is the truth. But their true north is they would love to build something. They don’t need to build their own platform. In fact, they would want nothing more than to plug into an already existing platform. And they recognize that by doing so, they’re giving up some enterprise value. And the way to maximize enterprise value the fullest is to go out and build your own. But in this particular instance, they don’t want to do that. They’ve got partners that some are in their 60s and that’s not going to be appealing to them. So their true north might be something a little bit different. I think the point here is being really clear on what you’re true north is really important because it guides the set of choices.

Louis Diamond:

No doubt. At what point do you think more of the same stops being a growth strategy and starts becoming a constraint?

Mindy Diamond:

Oh, well, just that. Your example was the perfect example, right? That I am doing incredibly well. I could keep on doing this, but in some way, it’s not only constraining my growth, but in some way it’s constraining my professional satisfaction. And I think more often than not, it’s about that. Because the audience I think we’re talking to in this podcast are really successful folks. There’s no question that there’s nothing we can tell them that would suggest that they’re not successful as they are. So if they decide to upset the apple cart or they decide to look for more, it’s because there is that fire in your belly, that something, that entrepreneurial spark or that something that’s not being satisfied.

Louis Diamond:

I agree. Yeah. I think sometimes it’s a matter of time says to me, if someone finds something that works, it’s a pretty sound business strategy to rinse, repeat, and keep doing it, focus on what’s essential, cut out the rest. You read any business book, it’s going to tell you double down on what’s working, cut out the rest. The 80/20, et cetera. But I think eventually you keep doing the same thing over and over again, and it might still yield results, but is it yielding the growth? Is it yielding exponential results? And at some point, does just doing the same thing, is it still driving you in the same way?

Mindy Diamond:

Yeah, and I think a lot of times people don’t really know what they’re missing. In other words, the growth strategy is working. I’m growing X amount per year. I’m living a good life. I’m consistently in the top five advisors in my firm. It’s working and nobody could argue that it isn’t. I think it’s just more about a lot of times as advisors, one of two things, either one of their friends move, a professional colleague that they respect and they say, “Holy cow, he was here or she was here for 30 years, like me, killing it. She would’ve been the last person I would’ve thought would move.” And then suddenly she does, and it makes them say, “What am I missing? What did she see that I am not aware of?”

Or a lot of times these folks will, another example I’ll give you. An advisor that I’ve worked with for many years, probably 25 years, who is top of the food chain, doing incredibly well, never really thought about moving, talked over the years, “Boy, it would be nice to build something of my own, but the truth of the matter is that success and the thought of having to go back to zero and build something from scratch, no way.” But you and I came across an opportunity that was unbelievably compelling, and without going into too much detail about the opportunity, suddenly when we talked about that opportunity with this advisor, what he said was, “You can’t be what you can’t see.” All of a sudden we painted the picture of something that’s really compelling I didn’t even know I wanted, but holy cow, now I know I really want it.

Louis Diamond:

Yeah, because something, this dream was made tangible. It put a face on something that this advisor didn’t realize they were missing. I mean, I see this every day, this next question, I’d love to get your opinion. I feel like most advisors, they may sense something is off or something’s changing or shifting under their feet, but they say anyway, why do you think success is often the very thing that keeps advisors stuck?

Mindy Diamond:

Yeah, I think it’s more than good enough. And for most of us, most of the time, I might have that little voice in me or that little inkling that says, gee, maybe it could be better. Or gee, I wonder if or something of the sort, but I have a zillion competing priorities. I’m a dad or I’m a mom or I want to travel, or I’m 60 years old, or I’m filling any blank at any time. And I think that it’s really hard to give up on that. And I think that the example we just gave, of this advisor that saw an opportunity, a unique opportunity that solved for a lot of the things that he didn’t even know he was missing, that happens more often than not.

Louis Diamond:

Yep, I agree. I think too, what happens is a lot of advisors think about moving as strictly a financial trade. My grid rate is this and my fees are that I can get 3.5X here, but only 2X up front have Y in deferred comp. And I think when advisors are thinking about that, which is a reasonable lens to look through, end of the day, they’re business people. If the business is growing and they have to place Y or they know how to get things done, it’s much harder to justify that change.

It’s like people who sell their house top of the market, it’s like, hey, it’s this thing and keep growing, and do you feel like you’re missing out because you’re leaving at this point in time? Typically, too, when things are good, clients are happy, the reviews are easier. We see it a lot with the market being up. In 2025, the market was up almost 20%, much harder for some folks to justify moving because they feel like, whether it’s artificial or it’s real, that their business is really cranking. So I think that’s a big part of it as well.

Mindy Diamond:

Yeah. And maybe another little spin on it is a lot of times to move is really, from a financial perspective, may only be marginally better in the short-term, whether it be because after taxes, the amount of tabs you get upfront is not that much greater than the deal you could get by retiring through your firm’s sunset program. Or if you move, you’re going to be leaving some clients behind. So if you factor in the breakage from losing clients and the short-term upside, the delta may not be that great. We see a lot of times when an advisor is already independent and they’re at a net 60 or 65% payout and they’re looking at something that gives them a 70% net payout and they say, “Yeah, okay, so those extra basis points are nice, but is it nice enough? Is it worth the hassle?” The answer to that is it is entirely an inside job.

For some that delta, even if that delta was only 2 cents, would be more than enough to justify the change. And for others, if the delta was 2000000%, it wouldn’t be enough. So what’s this positive? What’s this positive or determinant is how badly they want it. How badly, beyond the financial piece, they want what another opportunity would give them. Either that I really have this fire in my belly, and I love that term, and I just can’t solve for it. I can’t extinguish that fire here. I can’t feed that fire here. Or opportunistically, I want to be something I just can’t here, and I want it so badly that even if, financially, it’s only marginally better in the short-term, I’m willing to go through the hassle to get it.

Louis Diamond:

No doubt. And one last point to put a bow on this segment is I think there’s also an element that advisors who are growing or they have a big pipeline, and to me, the best advisors always have a big pipeline. They always have the next big prospect. There’s definitely some, I think, real fear that I’m going from growing 10% per year to reflexively choosing to make my life really hard for a couple of months to slow down growth, perhaps lose some of the pipeline, lose some of the big clients I just onboarded. And that’s really hard to justify because the trade-off is that much more apparent to them.

Mindy Diamond:

Yeah. Which you really want it.

Louis Diamond:

But that’s always going to be the case. That’s the point. The good advisors, for the most part, are always growing and always doing these things. So it’s like running on a treadmill. The same thing with unvested deferred compensation. I have 2 million of unvested deferred, it’s so hard to walk away from. The counterpoint is you’re always going to have that. If anything, it’s just going to grow. So again, it’s taking a step back to take multiple steps forward. Some people want that and are excited by it. Some people aren’t, but that’s okay.

Mindy Diamond:

Yeah, and I think that’s the whole point. While we get paid to move people, our position and the relationships we’ve had for years with top advisors, with every advisor, is they trust us because we’re never looking to just sell them on a hot opportunity. We’ll bring opportunities to them and say, “Here’s what’s available, here’s what the upside could be,” but we know and respect better than anyone that you got to really want it. It is a hassle. It’s hard work to move, and you’ve got to have a real confidence in your clients, your current clients, that they’re going to follow you. You’ve got to have real confidence that your pipeline will follow you, that what’s not certain. You’ve got to have confidence that you can tolerate the risk, and you’ve got to have confidence that your team’s going to follow you and that you’ve got the support you need. And not everyone has the appetite for it, nor should they.

Louis Diamond:

Exactly. I mean, I would say there’s two competing, I guess, thoughts that oftentimes go through an advisor’s mind, and they’re both extremely reasonable. The first one is the fear of change, but at the same time it’s the fear of staying exactly where they are for another 10, 15, 20 years. How do you think advisors can reconcile the tensions, like the angel on one shoulder, the devil on the other? One’s super comfortable and safe. The other one is an unknown. One’s exciting, one, et cetera. So how would you reconcile that?

Mindy Diamond:

Well, first of all, the short answer is it takes years. The two examples I just raised, and I’ll ask you the same question, are advisors that I’ve been talking to for 10 years plus. In one case, it could be 15 or 20. So for 10 or 15 years, there was always a certain amount of angst, a certain amount of curiosity, but not at all a willingness to do anything about it until in one case, something happened. Something happened that made them realize that they’re paying an awful lot of money to their firm for value they’re not getting anymore, feeling limited. And so they decided to pick up their head and look elsewhere.

In the other case, it was opportunistic. Really was perfectly happy doing their thing and heard or saw an opportunity that sounded compelling and began exploring. Now, I don’t know whether either one of these teams will ultimately move, so let’s say that, but these conversations are many years in the making. So I think the point I’m making is that devil on one side, an angel on the other are those two competing voices. They exist for a long time until either, in some cases, they never get reconciled and the advisor just retires and it is what it is. In other cases, they get reconciled, but sometimes five, 10 years after the voices begin to surface and they don’t happen, they don’t get reconciled until something happens to force it.

Louis Diamond:

Yeah. I also look at this concept as we’ll call it a midlife career crisis. So I’m 40 years old. Instead of buying three motorcycles and a Porsche and going skydiving, I’m thinking about my business. And sometimes, I think people just wake up and say, “Wow, I don’t really know what my identity is and I need to do something different. I need that additional spark.” So I think sometimes too, it’s just either an age thing or a certain birthday comes up or it’s just that a moment of clarity that pops into the mind.

Mindy Diamond:

Totally agree.

Louis Diamond:

Why do you think this feeling is showing up now more than ever? Is it because of recruiting deals? Is it because of the movement toward independence? Is it something else or somethings else?

Mindy Diamond:

Yes, I think it’s all of the above, and I think that’s the cool thing. Valuations are at an all-time high. So even if an advisor has zero interest in going independent, you have to be living under a rock not to know that your business has real value. That business, outside of the constraints of a major firm, is worth much more than it is on the inside. Now, that doesn’t mean that everybody should go independent, or will, but the fact that those multiples are hanging out there and that recruiting deals are at an all-time high, and they are, the fact that there’s more optionality, which means an advisor, if they go out and explore, is more likely to find their personal version of Utopia or something closest to it.

The fact that movement begets movement. That’s something we haven’t talked about, but it’s worth mentioning that all you have to do is read AdvisorHub or just be sitting in your office and every day, watch somebody you respect make a move. And so the more you see top advisors move, the more you say maybe there really is something else out there for me as well. And then you and I always say that the big firms are one policy change, one comp change, one mandate, one something away from frustrating the heck out of a large constituency because the bottom line is, as long as you’re an employee, you’re vulnerable or captive to whatever choices the firm makes.

Louis Diamond:

Yeah. I think you’re talking about, in a very nice way, what happened with UBS at the end of 2024, but we even see it outside of the wirehouses. There’s independent firms that layer in new fees or they don’t allow their advisors to text. There’s always that risk that something big coming down the pike that motivates someone. I’ll give you two other reasons why they think this is happening with more frequency. The first one is advisors’ careers are oftentimes longer, either because they’re bringing their kids into the business or the business is so lucrative, and if the business is mostly fee-based and it’s on autopilot, it’s like, why should I hang up the old boots when I can just work for another handful of years? So I think with longer advisor careers and the pot of gold at the end of the rainbow, which is either a big exit or a retire in place deal, I think advisors just grapple with more and they grapple with it for longer.

Mindy Diamond:

Yeah, you brought up a point. I’m so happy you brought it up. I’m sitting here next to my son, my next generation. I have said oftentimes that, without my sons coming into the business, I don’t know that I would’ve had the same relationship to the business as I aged. As I got older, and I’ll be transparent, I’m 63-year-old now, if 10 years ago, my sons had not decided to join me, I think that I might have said, “I’ll work as long as it feels soulful and good, and if something better comes along, great.” But it wasn’t until they came along that I really began to think about everything through their lens. It was less about me because by the time I was 50, from a financial perspective, I could have left if I wanted to. But as long as my kids weren’t in the business, there’s no way I was going to do that.

There was no way I wouldn’t want what was the absolute best for the business. And I guess that’s a long-winded way of saying in an industry where there’s so many multigenerational businesses, father-son, mother-daughter, whatever it is, senior advisors that really care, even if they’re not family, about their next generation, when they begin to look at their business through the lens of their next generation, the technology may be good enough for me, but it’s sure not cutting edge enough. Or they say things like, “The bureaucracy is killing me, but I work three hours a day,” or, “I have such a good life, I don’t want to upset the apple cart.”

But then all of a sudden, one day we get a call either from that senior advisor, for whom it was more than good enough for years, or from the next generation that says, “This is not what I want. It may have been good enough for my dad and my mom, but it’s not good enough for me.” So it’s a long-winded way of saying I think that the next generation really forces the senior advisors, the elder states, G1 to grapple with whether or not this is good enough.

Louis Diamond:

Yep. I’ll answer my own question first and then get your opinion, because I feel pretty strongly about my answer. In thinking about our four to five point list here of why this is a bigger deal now, I tap in with more frequency. The question for both of us is which one do you think has the biggest psychological impact on advisors right now? I’m going to go first because I’m excited about my answer. I think by far, it’s practice valuations by far.

Because what’s happening is advisors are reading news articles, hearing from their friend, getting cold-called from corporate development folks at firms, and they hear what used to be just ludicrous multiples. These were multiples that were reserved 100, $200 million revenue business are now getting paid to a three to $5 million practice. And any advisor, even ones who aren’t super financially motivated, I think just hearing about this, knowing what’s possible has a major psychological impact. It’s making it that much harder for folks to say, “You know what? It’s comfortable. It’s easy. I can retire here because the opportunity cost of staying put has accelerated that much.” What do you think?

Mindy Diamond:

So unequivocally, and I am money motivated for sure, so I agree with you. But at my stage and age, if I were an advisor, I absolutely wouldn’t be able to ignore the impact that maximizing enterprise value might have and how awesome it would be to be building a business that could be worth more. But I would equally, if not more so, be really concerned about, A, how it would feel. Like am I going to be able to live the professional life, do what’s soulful for me? Am I going to be able to build the business I want to? Is this going to be the business, the legacy I’m going to feel good about? Is this going to be the business that I want my sons to take over? And that, to me, would be equally important. And I’m making it about me, but I think that’s what a lot of senior advisors would say.

Louis Diamond:

No doubt. So for folks that are questioning their situation, what do you think is a question or three or four or five of the right questions they should start asking themselves before even thinking about making a move?

Mindy Diamond:

Yeah. Well, one is, listen, what’s your true north? And even before, I mean question two, and I think what I just said, assessing your true north, figuring out where your true north is, one, because question two is what is it that’s bothering you? What is it that you’re frustrated by? And simultaneously, to what extent does it frustrate you? Like how, okay, so I feel mildly annoyed that I have to do X, but is it enough to make me want to move? So being clear on that is important. But I think even before you begin to delineate how frustrated you are, you have to be really clear on what you want to be when you grow up. What is it that would feel soulful? What are you trying to solve for? What are the parameters or realities that you need to take into account? You’d love to do X, but you have a senior partner that you know is never going to want that, whatever it is. So what is the true north? What are you frustrated by? Then it’s what risk appetite do I have?

Louis Diamond:

To take risks, yeah.

Mindy Diamond:

What risk appetite and what appetite in general do I have for disruption to my life? How tolerant will I be if one of my clients doesn’t follow with me, because that is really possible? How tolerant will I be if I spend a few months and I’m working harder than I’ve ever worked in my life, whatever it may be. And then I think it’s that question, what I want to be when I grow up is really what’s just positive. Do I want to be a business owner or am I a big corporate person and that’s just who I am and I’m comfortable with leveraging the name that’s on the door?

Louis Diamond:

No doubt. I think an interesting one is ask yourself, if I stayed exactly where I am for the next 15 years, would I be proud of what I built? I think it’s a really important one sometimes too, when I’m speaking with advisors who are worried about a transition, and honestly people should be worried about a transition. It’s terrible. There’s no sugar-coating it. It’s a lot of work. It’s scary. It’s a risk. You’re disrupting your life, all your client’s life, et cetera. But sometimes, I’d say, the reframe is the three months, four months, whatever it is of backbreaking work that you put in, is that worth it for the next 10, 15, 20 years of doing something that really sparks you more? And I think, again, it comes back to your question of risk appetite, but I think just thinking about that is a lot of people get lost in the immediacy of the risk and of the work, but they forget to look beyond that work to what’s possible on the other side of the rainbow.

Mindy Diamond:

And how important it is to get it. In other words, I may be very clear that I would like to have X. I’d like to do Y. I would love, I mean we hear this all the time. I’d love to be independent and build my own business. Boy, if I were 20 years younger or I was, whatever it was. So the point of the matter is you can be aware of wanting those things. It’s admirable to want them, but whether or not you actually should go after them, that’s an inside job.

Louis Diamond:

No doubt. I think another one I like is which regret is bigger to you, trying something and failing or never testing what’s possible? I think that’s a good one. Another philosophical one. Okay. Let’s change gears a little bit here. So for successful, we’ll say mid-career advisors, why do you think the biggest risk is oftentimes not making the wrong move, but choosing the status quo by default?

Mindy Diamond:

Answering it from the perspective, we’ve had a lot of senior advisors that say, “I look back on my career and if only I had made the move or gone to this 15 years ago.” So I think that’s the you get comfortable in the discomfort, it’s easier to stay put, and then before you know it in your head, you’re too old or you’re too settled or you’re too entrenched and you can’t go or it’s too late to go. Or in some cases, you’ve got so much unvested deferred comp, it’s too expensive to go. And so I don’t think that’s only about mid-career. I think you want to make sure that you’ve lived a professional life that’s not filled with regret. That’s really what I think.

Louis Diamond:

No doubt about it. I think too, the fear of making the wrong move, call it buyer’s remorse, if you will. I honestly don’t really see it happen all that often. When I see it happen, it’s because someone went to their second or third choice firm because they got paid an extra 10% of their production. That’s where the wrong decision comes in. I usually find when advisors are thorough, they’re thoughtful, they’re making decisions for the right reasons, and there is a base level of motivation to do something different. You can’t really make the wrong choice. And I think, but again, it’s risk tolerance, et cetera. Let me give you two more questions here. What’s one step an advisor can take today to create clarity without committing to change?

Mindy Diamond:

Well, that question is the fundamental definition of how you and I see the world. So we traffic in advisors that are 10 years, 20 years from making a move or may never move. To us, it’s just about the relationship. That may sound foofy and crazy, but it is the truth. And so those conversations are all about being self-aware. That’s number one. Know thyself. Being self-aware of what’s important to me, what can I live with, how much risk tolerance do I have, et cetera. And then it’s also about having a clear understanding about what’s possible. So continuing to have conversation with people like you and I, continuing to read AdvisorHub or whatever it is about transitions that happen. Understanding the opportunities that are out there is not necessarily because you’re going to go take one of them or you’re going to change, but knowledge is power. It empowers you where you are. It’s competitive analysis, and that’s smart. That can only serve you well.

Louis Diamond:

Yep. I completely agree. One last question here, and I think probably a lot of people listening to this are thinking this personification of an advisor or advisors that we’re describing, are they just complainers? Are they just being ungrateful? On the one hand, there’s probably folks that are early in their careers working their butt up who are saying, “Hey, just be grateful for what you have. It’s really hard to get to where you are. So why are you looking a gift horse in the mouth?” So what would you say to that line of thinking, that questioning the status quo or questioning something that’s really good, does that means someone’s ungrateful or restless?

Mindy Diamond:

Oh my God, no. I think that the smartest and most successful, and honestly most grounded and grateful people are those that question the status quo. You can be, can and should be, simultaneously grateful for what you have. We say to advisors all the time, “We’re not from Merrill Lynch’s training program that catapulted you to the seat you are in now to become a 3 million, 5 million, $7 million advisor. You may be mad at Merrill Lynch now, or you may want something more than Merrill Lynch can give you today, but it doesn’t mean you’re ungrateful for what Merrill gave you.” And that’s the answer. I think that you can be grateful for this wonderful life that you’ve been afforded, but at the same time, aware of the fact that you may want more, and that’s a healthy, wonderful thing.

Louis Diamond:

Completely agree. Yeah. I mean, it’s similar to any large Fortune 500 company. You think of Apple, how many times they’ve reinvented themselves or everything that’s happening with AI. I think a big part of this too is future-proofing, right? It’s okay. It’s not being ungrateful. It’s more I’m taking proactive action to make sure I do have a business in 15 to 20 years, and that I’m positioning to myself and my clients to do the best possible work together.

This is the fun topic. It’s obviously something on the mind of a live of advisor. It comes up probably in every group that we ever consult with, whether they’re a wirehouse advisor, they’re a private banker, they’re independent, et cetera. So I think a lot to learn here. My big takeaway from today is it’s okay to want more. There’s nothing wrong with you for wanting more. At the same time, there’s nothing wrong about being comfortable. Thank you very much for today.

Mindy Diamond:

Amen. My pleasure. Good topic.

Louis Diamond:

Thank you for joining us. We’ll be back with a new episode next week, so be sure to listen in.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firm’s, or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Andy Schwartz CEO, OnePoint BFG Wealth Partners  |  Kevin Spahn Founder, Spahn Financial (now OnePoint BFG)

Two former Northwestern Mutual advisors, two very different paths. Andy Schwartz and Kevin Spahn share what it takes to build, grow, merge, and create lasting enterprise value.

In Summary

What separates a successful advisory practice from an enterprise with the ability to grow well beyond its founders?

Andy Schwartz and Kevin Spahn offer two different perspectives on that question. Both spent decades at Northwestern Mutual, but their paths eventually diverged. Andy left to help build what is now OnePoint BFG Wealth Partners, an $18B+ firm expected to surpass $20B by year-end. Kevin built one of Northwestern Mutual’s top practices before deciding to merge his business into OnePoint and become an equity partner.

Louis talks with Andy and Kevin about the decisions behind both journeys: creating a true firm rather than an aggregation of practices, transitioning advisors from 1099 to W-2, using outside capital without relinquishing control, rethinking succession, and determining when equity in a larger enterprise can offer greater opportunity than continuing to build alone.

Underlying it all is a factor that’s much harder to quantify: trust.

The Storyline

Andy Schwartz and Kevin Spahn have known each other for roughly 30 years. They met while both were building careers at Northwestern Mutual, where Andy became an important mentor to Kevin as Kevin transitioned from practicing law and estate planning into wealth management.

After roughly 30 years at Northwestern Mutual, Andy and his partners left in 2015 with approximately $3B in assets to launch independently. What began as Bleakley Financial eventually became OnePoint BFG Wealth Partners, an $18B+ enterprise that Andy expects will surpass $20B by the end of 2026.

That kind of growth required more than attracting assets. Andy describes the evolution from a predominantly 1099 structure into a firm where more than 85% of advisors and AUM are now W-2. The shift created a more cohesive enterprise, gave advisors access to equity, and ultimately positioned OnePoint to bring in minority capital from Joe Duran’s Rise Growth Partners.

Andy makes an important distinction about that relationship: OnePoint is “private equity invested,” not “private equity owned.” The structure gave the firm capital and expertise while allowing its partners to retain control.

Kevin faced a different decision. After more than 30 years at Northwestern Mutual, his practice had grown to 18 people and approximately $2B in assets. He was happy at the firm, but his clients had evolved, his business had become increasingly complex, and the internal succession plan he once envisioned carried risks he could no longer ignore.

He could have built an independent firm himself. Instead, he chose to merge with OnePoint.

The decision wasn’t driven by the largest possible check. Kevin saw the opportunity to become an equity partner in a larger enterprise, give his team and clients a more durable future, and leverage infrastructure he didn’t want to recreate himself.

For both men, the story ultimately comes back to the same principle: The right economics matter, but sustainable partnerships require trust, shared philosophy, and the belief that everyone involved can create more value together than separately.

Topics Covered

• Building an enterprise versus building a practice
• Northwestern Mutual and the path to independence
• OnePoint BFG Wealth Partners’ growth from ~$3B to $18B+
• Organic growth versus M&A
• Creating a growth-oriented advisor culture
• Moving from a 1099 model to a predominantly W-2 structure
• Equity ownership and advisor alignment
• Minority private equity investment
• Rise Growth Partners and Joe Duran
• Internal succession versus an external merger
• Selling versus merging an advisory business
• Merging versus teaming versus going it alone
• Evaluating equity versus cash in a transaction
• The economics of leaving a captive firm
• Centralization versus advisor autonomy
• Trust as a factor in partnerships and transactions

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

How did Andy and Kevin’s 30-year relationship ultimately lead to a transaction? (04:11)
Kevin explains how Andy helped him transition from attorney and estate planner into wealth management, beginning a professional relationship that would eventually make their partnership possible decades later.

Why did Andy leave Northwestern Mutual after roughly 30 years? (08:45)
Andy describes wanting greater flexibility, a multi-custodial platform, and more optionality for clients and the business—a decision that ultimately led to the creation of OnePoint BFG.

Why did Kevin decide his longtime Northwestern Mutual practice needed something different? (15:49)
Kevin explains how his clients, service needs, and business evolved over time, while concerns about his original internal succession plan led him to consider a different path.

What has driven OnePoint’s growth from approximately $3B to $18B+? (21:41)
Andy outlines the firm’s emphasis on client experience, advisor experience, organic growth, and carefully selected inorganic growth—and why helping advisors grow is fundamental to the model.

Why does Andy say OnePoint is a firm rather than an aggregator? (23:54)
The distinction comes down to alignment, shared responsibility, centralized resources, equity, and a partnership structure in which advisors are accountable to one another.

How did OnePoint convert a predominantly 1099 advisor base into a W-2 enterprise? (29:26)
Andy explains why capital and equity became necessary to build the next stage of the business and why trust was essential to bringing advisors into a more integrated structure.

Why did OnePoint choose minority private equity investment? (33:13)
Andy shares why Rise Growth Partners offered something previous potential buyers had not: a structure designed to benefit the broader advisor partnership while preserving control.

Why did Kevin merge with OnePoint rather than shop his practice broadly? (36:43)
For Kevin, maximizing price wasn’t the objective. His decision centered on trust in Andy, confidence in OnePoint’s infrastructure, and creating a strong future for clients and employees.

Why did Kevin choose equity in the larger firm instead of simply cashing out? (40:57)
Kevin explains why he believes participating in the future growth of a larger enterprise offers a compelling alternative to relying solely on the future growth of his own practice.

How should advisors evaluate the “golden handcuffs” that can make leaving difficult? (46:42)
Andy argues that the analysis needs to compare what an advisor gives up with the potential growth, economics, equity, and leverage available on the other side.

How much conformity does a true enterprise require? (49:06)
Andy explains why OnePoint sits somewhere between complete advisor autonomy and complete centralization, seeking enough consistency to create enterprise value without eliminating entrepreneurial flexibility.

What would Andy and Kevin tell their younger selves? (52:06)
Kevin emphasizes surrounding yourself with the best people possible, while Andy reflects on having the courage to make a difficult change after a successful 30-year run.

Key Takeaways

• Building enterprise value requires more than asset growth. OnePoint’s evolution included changing its ownership structure, integrating advisor practices, creating equity opportunities, and investing in centralized capabilities.
• Organic growth remains central even in an M&A-driven market. OnePoint targets approximately 10% organic growth and evaluates prospective partners partly on whether they are growth-oriented and whether the firm can meaningfully help them grow.
• A collection of successful advisors does not automatically make a firm. Andy sees shared ownership, alignment, accountability, infrastructure, and centralized services as critical distinctions between an enterprise and an aggregator.
• Outside capital does not have to mean giving up control. OnePoint chose a minority investment from Rise Growth Partners that provided capital and strategic support while leaving control with its operating partners.
• Succession can expose risks that growth may obscure. Kevin began reconsidering his internal succession strategy when he recognized its dependence on his continued production, key employees, and the future economics of an aging client base.
• The highest purchase price isn’t always the most valuable transaction. Kevin prioritized equity participation, infrastructure, continuity for his employees and clients, and confidence in his future partners over broadly shopping his business for the highest bid.
• Trust can determine whether structural change is possible. From OnePoint’s 1099-to-W-2 conversion to Kevin’s decision to merge, both guests repeatedly point to established trust as the foundation that allowed significant business decisions to happen.

https://youtu.be/jkIoynpZj6Y

Quotable Moments

“The biggest mistake advisors make is they buy their own bullshit.”
— Andy Schwartz

“We’re not an aggregator, we’re a firm.”
— Andy Schwartz

“The biggest issue is trust. Either they trust you or they don’t.”
— Andy Schwartz

“I wasn’t looking to sell my business. I was looking to merge it.”
— Kevin Spahn

“You have to trust them. You have to see that they provide value. And you need to be on the same page philosophically.”
— Kevin Spahn

“Associate yourselves with the best people you can… It accelerates your trajectory in ways that you can’t do on your own.”
— Kevin Spahn

FAQs

Why did Andy Schwartz leave Northwestern Mutual?

After approximately 30 years at Northwestern Mutual, Andy and his partners wanted greater flexibility, the ability to operate on a multi-custodial basis, and more optionality for clients and the business. They left in 2015 with approximately $3B in assets and launched the independent firm that ultimately became OnePoint BFG Wealth Partners.

How large is OnePoint BFG Wealth Partners?

At the time of the interview, Andy says OnePoint manages more than $18B and expects to exceed $20B by the end of 2026, even without additional organic growth.

What has driven OnePoint’s growth?

Andy points to three priorities: client experience, advisor experience, and growth. The firm targets approximately 10% organic growth while also expanding through acquisitions and partnerships with advisors it believes fit the OnePoint model.

Why did OnePoint move advisors from 1099 to W-2?

The firm wanted to evolve from a platform supporting individual practices into a more integrated enterprise. That required creating firm-level economics and equity that could be used to attract, retain, and align advisors. Today, Andy says more than 85% of OnePoint’s advisors and AUM are W-2.

What does “private equity invested, not private equity owned” mean?

Rise Growth Partners holds a minority, non-controlling interest in OnePoint. The investment provides capital, expertise, and strategic support while the operating partners retain majority ownership and control of the business.

Why did Kevin Spahn leave Northwestern Mutual?

Kevin says he remained happy at Northwestern Mutual, but his practice and clients had evolved. His work had shifted increasingly toward investments and complex high-net-worth planning, while he also began identifying risks in his intended internal succession plan.

Why did Kevin merge with OnePoint rather than launch his own independent RIA?

OnePoint already had the infrastructure, people, and capabilities Kevin would have needed to build himself. The merger allowed him to focus on clients while becoming an equity partner in a larger enterprise he believed could grow faster than his standalone practice.

Why didn’t Kevin shop his practice to multiple buyers?

Kevin says his decision was driven primarily by trust. He had known Andy and other OnePoint partners for decades and believed the firm offered the right future for his clients and employees. His choice ultimately came down to staying at Northwestern Mutual or joining OnePoint.

How do Andy and Kevin suggest advisors evaluate a potential partner?

Their discussion points to three fundamental considerations: trust, demonstrable value, and philosophical alignment. Economics matter, but both argue that a sustainable partnership depends on confidence in the people and business on the other side of the transaction.

After approximately 30 years at Northwestern Mutual, Andy and his partners wanted greater flexibility, the ability to operate on a multi-custodial basis, and more optionality for clients and the business. They left in 2015 with approximately $3B in assets and launched the independent firm that ultimately became OnePoint BFG Wealth Partners.

At the time of the interview, Andy says OnePoint manages more than $18B and expects to exceed $20B by the end of 2026, even without additional organic growth.

Andy points to three priorities: client experience, advisor experience, and growth. The firm targets approximately 10% organic growth while also expanding through acquisitions and partnerships with advisors it believes fit the OnePoint model.

The firm wanted to evolve from a platform supporting individual practices into a more integrated enterprise. That required creating firm-level economics and equity that could be used to attract, retain, and align advisors. Today, Andy says more than 85% of OnePoint’s advisors and AUM are W-2.

Rise Growth Partners holds a minority, non-controlling interest in OnePoint. The investment provides capital, expertise, and strategic support while the operating partners retain majority ownership and control of the business.

Kevin says he remained happy at Northwestern Mutual, but his practice and clients had evolved. His work had shifted increasingly toward investments and complex high-net-worth planning, while he also began identifying risks in his intended internal succession plan.

OnePoint already had the infrastructure, people, and capabilities Kevin would have needed to build himself. The merger allowed him to focus on clients while becoming an equity partner in a larger enterprise he believed could grow faster than his standalone practice.

Kevin says his decision was driven primarily by trust. He had known Andy and other OnePoint partners for decades and believed the firm offered the right future for his clients and employees. His choice ultimately came down to staying at Northwestern Mutual or joining OnePoint.

Their discussion points to three fundamental considerations: trust, demonstrable value, and philosophical alignment. Economics matter, but both argue that a sustainable partnership depends on confidence in the people and business on the other side of the transaction.

Related Resources

Rise and Reinvent: Joe Duran on Building and Rebuilding World-Class Firms

From Insurance Sales to $8B RIA: A Northwestern Mutual Breakaway Story

The 4th Annual Advisor Transition Report

Andy Schwartz
Co-Founder, Managing Partner, and Chief Executive Officer

Andy Schwartz is the Co-Founder, Managing Partner, and Chief Executive Officer of OnePoint BFG Wealth Partners, where he also serves as a Wealth Management Advisor. A CERTIFIED FINANCIAL PLANNER® with more than 40 years of experience, Andy has built his career around helping clients make confident, well-informed financial decisions at every stage of life. He works extensively with physicians and business owners on wealth building, retirement planning, and tax-efficient asset transfer across generations.

A 2026 finalist for Wealth Management Awards CEO of the Year (under $25B AUM), Andy brings the same discipline to leading the firm that he brings to client relationships: comprehensive planning, long-term thinking, and an unwavering commitment to independence and integrity.

Beyond his client work, Andy is deeply invested in the advisory profession itself. He co-hosts The Advisor’s Compass podcast, offering candid, practical guidance on the business and responsibilities of being an advisor. His mentorship philosophy is straightforward: pass the ladder back down.

His industry recognition spans more than a decade, including Top 1,200 Advisor by Barron’s (2018–2024), Top 250 Wealth Advisor and Best-In-State Wealth Advisor by Forbes (2018–2024), Top 400 Financial Advisor by the Financial Times (2018–2020), and Top 100 Independent Advisor (2020–2023). He was named Executive of the Year by NJBIZ in 2019 and was a finalist for the Invest in Others Lifetime Achievement Award for more than 20 years of service with NJ SEEDS.

Andy holds a B.S. in Finance and Marketing from Rowan University and is actively involved with Nourish NJ, the Navy SEAL Foundation, the Jewish Federation of Greater MetroWest NJ, and JSDD. Outside the office, he enjoys golf, reading, and time with his family at the beach.

 

Kevin Spahn
Partner and Wealth Advisor

Kevin Spahn is a Partner and Wealth Advisor at OnePoint BFG Wealth Partners, bringing more than three decades of experience in comprehensive financial planning to his clients and the firm.

Kevin’s path to wealth management is rooted in the law. After earning degrees from the University of Notre Dame and the University of Wisconsin, he began his career as a practicing attorney before making a deliberate pivot toward financial planning in 1993. He joined Northwestern Mutual, then founded Spahn Financial, building a practice centered on thoughtful, holistic planning for families and business owners. That practice joined OnePoint BFG Wealth Partners in 2025.

His approach has remained consistent throughout: help clients build and protect wealth not just for themselves, but for the generations that follow. Kevin works with clients on comprehensive financial plans that account for the full picture, understanding that the impact of good planning extends well beyond an individual portfolio to families, businesses, employees, and the broader community.

Kevin is based in the greater Chicago area.

 

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

Build, Grow & Transact: Making the Leap from Northwestern Mutual to a $20B Enterprise

A conversation between Louis Diamond, Andy Schwartz, CEO of OnePoint BFG Wealth Partners and Kevin Spahn, Founder of Spahn Financial (now OnePoint BFG).

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Build, Grow & Transact: Making the Leap from Northwestern Mutual to a $20B Enterprise. It’s a conversation with Andy Schwartz, CEO of OnePoint BFG Wealth Partners, and Kevin Spahn, founder of Spahn Financial, now OnePoint BFG. I’m Louis Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. Each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions, and more, inspired us to create our annual Advisor Transition Report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

There’s a big difference between building a successful practice and building an enterprise. I think Andy Schwartz and Kevin Spahn offer a unique perspective on that distinction from two very different sides. Both spent decades in the Northwestern Mutual system. Andy ultimately left to build what became OnePoint BFG Wealth Partners, taking the firm from roughly three billion to nearly 20 billion and transforming just about every aspect of the business along the way. Kevin built one of Northwestern Mutual’s top practices before reaching a different inflection point, deciding what he wanted the next phase of his career and business to look like. Rather than go independent on his own or simply monetize what he had built, he chose to become part of Andy’s growing enterprise.

That makes their story particularly relevant for our Build, Grow, and Transact series. Andy can speak to what it takes to build a firm capable of becoming an acquirer, from converting advisors from 1099s to W-2s, to creating equity opportunities, to bringing in outside capital while remaining very deliberate about being private equity-invested rather than private equity-owned. And Kevin brings the seller’s perspective, how you evaluate the economics, the trade-offs, and ultimately the people you’re trusting with the business you spent more than 30 years building. Because whether you’re building, buying, or considering a transaction of any kind, the numbers are only part of the equation. As you hear from both Andy and Kevin, trust may be the most important currency of all. So let’s get to it.

Andy and Kevin, thank you so much for both joining us today.

Andy Schwartz:

Great to see you again, Lewis. Thank you for having us.

Louis Diamond:

I’ve been excited about this interview for a bunch of reasons. One, our Build, Grow, Transact series has become a real staple of our show and we got lots to talk about there. But also, the friendship, the relationship that you two have had for over 30 years really stood out to me. So before we get into the nuts and bolts, talk about your relationship. How’d you guys meet, and how did your career stay so intertwined together when you’re in different geographies and at different firms, and have each been very successful in your own rights?

Andy Schwartz:

Sure. Kevin, do you want to start with that?

Kevin Spahn:

Sure. I started in this career in 1994 and met Andy sometime after that. He was a more advanced financial planner. I was an attorney, and then I transitioned into this business. So when I first joined Northwestern Mutual, which is my first broker dealer, I didn’t really have a background in investments. At the time, a lot of Northwestern Mutual reps were learning the investment business because they maybe originally started with Northwestern Mutual focusing more on insurance planning.

My background was more estate planning. At the time, if you think early ’90s, if you did estate planning, insurance often went hand in hand with that. The estate exemption in early 1990s was about $600,000. So if you pass more than $600,000 to your children, there was a 55% tax. One way around it was to put insurance in an irrevocable trust, help cover the tax that way. So it really was a popular common strategy back then, and it’s really what got me into the business.

But I quickly realized that I didn’t want my future to be insurance and estate planning. And there was a conflict if you acted as someone’s attorney and sold insurance. So I had to pick one way or the other. I decided long-term it would be better for me to move into the wealth management space. But with that little background in that, I had a lot of work to do. So took a lot of tests, became a certified financial planner.

But the person that helped me the most along the way was Andy. We became friends, we sat on committees together. That’s really how we met, I would say. So we worked side by side interacting with our home office and representing the field, bringing issues to the home office that we thought were beneficial to the field. As we did that together, I got to know Andy. And then separately, I learned from him how he built his business and how they would review clients’ portfolios and come up with solutions. So I really credit Andy with helping me more than anyone else to transition from attorney, financial planner doing more estate planning insurance to wealth management.

Louis Diamond:

Very cool. Hey, I would say, maybe I’m a little biased, that, Kevin, you picked the right path in hanging up the law shingle and coming into wealth management.

Kevin Spahn:

I tell a lot of people I’m a reformed attorney.

Andy Schwartz:

Great.

Louis Diamond:

Exactly. My dad would say the exact same thing. Very common at dinner tables in the Diamond households.

Andy Schwartz:

I was always grateful that I wasn’t smart enough to be an attorney.

Louis Diamond:

There we go.

Andy Schwartz:

That’s where my gratitude lies. Yeah.

Louis Diamond:

There we go.

Andy Schwartz:

Some would say he’s too smart.

Louis Diamond:

There we go. Andy, question for you. I mean, anyone who is at or was at Northwestern Mutual, I mean, you’re like Elvis to them. It’s absolutely crazy the amount of fanfare and brand recognition that you and your brother Scott have. But for those who maybe missed your first podcast appearance with us a number of years ago, or aren’t or weren’t within the Northwestern Mutual system, or haven’t been familiar with Bleakley and now OnePoint BFG, just give us the cliff notes, the origin story, how you got into the business, and how’d you get from here to there?

Andy Schwartz:

Yeah. So the origin is probably pretty common, probably by accident. Going into my senior year in college, I was working in a restaurant, had a falling out with my boss. I happened to be dating a woman who was living with a general agent with Fidelity Union Life. No one will have ever heard of Fidelity Union Life, but their secret sauce was they sold life insurance to college seniors on a note. So if you can get a $10 money order, because where I went to school, nobody had a checking account, then you could basically get a note signed and they would buy insurance. And then when they graduate, hopefully they’d pay for it. I started selling life insurance my senior year in college. And then my twin brother Scott, who is my partner, and has been for over 40 years, he took an interview with what was the nucleus of our present firm actually.

I just went up to Northern New Jersey in May of 1984 because I was an expert. I had been selling life insurance to college kids for six months, so I knew everything you had to know. We met with these guys, and we both ended up joining them. So that was a Northwestern Mutual district agency, and that was 1984. We got licensed right away. I got my CFP in ’86. We always knew that it was going to be about planning. So I think we had the right idea. We were a little ahead of the curve because there weren’t a lot of CFPs in ’86. We got securities license immediately. So before Northwestern had securities license, we got securities license with US Life actually.

And then it was really a volume business, a client-building business. We always tried to act as a firm and share resources. We were small, but like a lot of people, we started out selling A shares and B shares and C shares, doing financial planning, selling insurance, and then we made a lot of really good hires along the way. And then after 30 years at Northwestern Mutual, which was a great experience for me, and I have nothing but respect for the institution and certainly the advisors that are there, Kevin certainly was one of them, and I know he feels the same way, but we just wanted to have a little more flexibility. We went independent about 11, almost 12 years ago. We wanted to be able to be multi-custodial. We wanted to have a little bit more optionality for our clients and for ourselves.

We left Northwestern at three billion or so in assets, and that was in 2015. It’s in March of 2024, I get introduced to this guy with a crazy accent named Joe Duran. Funny, probably the only person in the industry that had no idea who Joe Duran was me. I’d never heard of Joe Duran. I don’t pay attention. I worry about our firm. I don’t worry about what’s going on outside. So I get introduced to Joe by a mutual friend, and we had an interesting conversation, and it took us probably about four or five months to figure out what we wanted to do. And then in August of ’24, myself and my three partners, we rolled in. And then in ’85, the rest of the firm rolled in. And we can talk a little bit more about that.

Today we’re 18-plus billion, growing quite a bit. We’ve been very lucky that we’ve made some very good decisions along the way. We’ve made some bad ones too. But most of the decisions had to do with the people that we hired, the people that we brought on to help us, because I think it’s really important. I always say that the biggest mistake advisors make is they buy their own bullshit, and I try not to, and I realize that I’m smart enough, but I’m certainly not the smartest guy. I’m rarely the smartest guy in the room. So what we try to do is hire lots and lots of really smart people. And we’ve done that. They’ve been loyal to us, we’ve been loyal to them. Yeah, so we’re blessed to have a really great team and lots of good partners. Yeah.

Louis Diamond:

Yeah, we’ll definitely get into more of the nuts and bolts of the decision to take on capital, partner with Joe Duran’s Rise, but that’s an amazing background. Andy, I have to give you credit because your style, and I think I’m sure there’s business benefits, but it comes from a good place, I’m sure. But the coaching and consulting and just assistance that I’ve heard you provide to so many past and current Northwestern Mutual advisors through sports camps is absolutely incredible. It’s very near and dear to my heart because we always try to lead with education and helping people. So I just wanted to call that out, that your reputation for just providing amazing guidance and coaching to advisors is unparalleled.

Andy Schwartz:

And it’s been the best part of our journey. We’ve been able to help so many people. We get way too much credit by the way. So everybody gives us way too much credit. But the way I look at it is, I’ve been able to leverage my life because I’ve been able to build a great life for myself and my family, but we’ve been able to leverage that, and that’s where the real gift is. So yeah, it’s been a joyful journey for us.

Louis Diamond:

Amazing. Kevin, question for you. You walked through your little bit unorthodox background to get into Northwestern. Can you talk about where your personal practice is today? And then I want to ask you about the decision to leave Northwestern and sell and team up with Andy and team.

Kevin Spahn:

Well, I have to go back to the beginning. What was attractive to me about this business is I went from a career which was confrontational adversarial. I was a trial attorney for six years, and every day I would fight with people over things I didn’t necessarily have a personal interest in and I didn’t really believe in always. But the adversarial confrontational nature wasn’t really my personality, and I would take it too personally. So sometimes I’d go home in a bad mood because I was fighting with somebody taking a deposition.

At night, after so many years as a trial attorney, I started going to people’s houses and doing wills and trusts. And that’s where the dynamic of working with a client or a potential client, feeling that you helped them and walking out of the meeting where they would appreciate what you did for them, and you build a relationship and actually all of a sudden have a friend, that dynamic was attractive to me. That’s really what got me to transition into the business.

So I think it was really helpful to me at the beginning of this career. As Andy said, we all grew our businesses one client at a time. There’s a lot of doors closed, phones hung up on. There’s many people that don’t want to talk to you. There’s many people that don’t call you back. There’s many people that you think you’re getting somewhere with and you don’t. And that’s difficult for people because people often, young reps take that as personal rejection.

I had the benefit of comparing what I was dealing with as a young financial planner to what I had dealt with as an attorney in litigation. I think it just was perspective that I knew I didn’t want to do that anymore. So the negatives to this business didn’t seem that bad to me. I loved the independence. I loved all the relationships that I was building. And that part of it is to this day my favorite part of the business.

When you ask about the present, what basically happens is you start out taking anybody and everybody as a potential client or as someone that you would be willing to work with. And then over time you work with more successful people. So where I’m at today is working with pretty successful people, but they’re all the same, meaning we like working with nice people. If people are nice, we work with them. I feel we can help anybody. Over the years, one client at a time.

The thing that I probably, if I could go back, would change is I think Andy and I are both good at meeting people and building trust and providing value, so that’s why they work with us. So I think that’s just something we’ve both been able to do. He’s much better than I am at building an organization. So I built an organization basically hiring people, that whenever we got too busy, I hired another person. Drawback in terms of that is, anybody that I interview I think is great, and I think they’d be great to join the organization. I like them all. In spite of that, I’ve also brought in many good people that I love.

At this point, my firm has 18 people. We’re a little subset of Andy’s larger firm. I think one of the most attractive things to me about joining Andy’s firm is what Andy mentioned before: the people. As opposed to me having to build this all out myself, going independent, Andy already did that. And he has the infrastructure that would allow me to just merge right into that and not have to go through the pain of figuring all that out, which I don’t even think I’m capable of, to be honest with you.

Louis Diamond:

You’re probably selling yourself short because the way I understood it, you had one of the top practices within the entire Northwestern Mutual systems, and it’s a firm filled with very successful advisors.

For you, Kevin, what was the driving force to leaving NM after all these years? What was bothering you or frustrating you that indicated to you that it was time to do something different?

Kevin Spahn:

To be honest with you, I was pretty happy at Northwestern Mutual. I love the company and the people. I still have many good friends there that I truly miss. The big thing for me, I don’t know if it was any one thing, to be honest with you, is Andy said there’s optionality, especially on the investment side. I think one of the things that happened to me is, when I first started, I was 31 years old, and most of the potential clients that I would meet and work with, they weren’t what I would call today great investment clients. They didn’t have a lot of money. They had great futures. They might’ve been earning significant income or on the way to earning significant income. So what did they need at that point in their life? They needed planning. They needed protection. They didn’t really need investment management because most of their investments were going into their 401(k).

But a lot of those clients that we would take on, and I think that’s the big advantage of Northwestern Mutual, you take on clients that a lot of the investor firms don’t want because they don’t have large investment portfolios. But at some point down the road, all of a sudden you wake up and they do have large investment portfolios. So you bring them in as clients that might buy life insurance from you or disability insurance or something like that. And then you help them, and you give them advice, and you build a relationship with them. Down the road, they make more and more money. They leave jobs, they roll 401(k)s, they have the ability to invest money, stock options, things like that. Next thing you’re doing more comprehensive planning that incorporates investments.

As that progresses even further, you work with larger and larger clients, much more significant net worth, more complexity, bigger tax issues. Some of the strategies and opportunities that we now have at this independent RIA are very attractive for these high-net-worth clients. Along the same lines, less of what I do at this point in my career is insurance, mostly because a lot of the people that I meet are older, they already bought insurance, they’re looking more for investment advice as opposed to insurance. So one of the things that most attracted me to Northwest Mutual was their strong insurance products, which helped me for many years. As time went on, I was doing less of that.

Louis Diamond:

Makes complete sense. So it was a changing of what clients wanted and just the circumstances of your clients where you said, “What got me here when I was 31 was insurance planning, and that’s what my clients needed. But as my practice has evolved, I’ve aged, my clients are older, have more money, the focus shifted from insurance to investments.” And then the distinction was, am I at the best place to run investments in addition to insurance planning, et cetera? It’s a very interesting dynamic. Just the shift in basically your legacy clients was what drove you to consider change.

Kevin Spahn:

That was a big factor. I think the second big factor was I had my own firm with 18 people. My succession plan was that at some point I would shift ownership of the firm to people that worked with me. So as they owned more of the firm, they would have revenue that was currently at the time being paid to me. In my mind, as it shifted to them, they would buy me out using revenue from the clients that we already had. And I realized that there were some issues with that. In our business, as you get older, in your client’s age, they start taking money out of their portfolios. So everyone understands that in our business, the younger average age client you have makes your book more valuable.

I was the biggest driver of new business at my firm, and I started to see that there were some problems with my succession plan. They included, if something happened to me during this succession, that would be a real problem for the people that were buying my business from me if I went that way. If something happened to some of my key people, that would’ve been a problem as well. So it was really attractive to me to… I wasn’t looking to sell my business, I was looking to merge it. So I merged it with Andy’s business.

I believe that Andy and what he’s put together and the actual idea of having partners. So I never really had partners, but now I do. Having partners that we’re all on the same page, we all have similar backgrounds, we all bring something different to the table, and we can learn and benefit from working with each other. But also, owning a little piece of a much larger firm was, number one, it put me in a better position in terms of the potential risk of something happening to me or one of my key people. But secondly, I just think it’s more likely to grow at a greater pace than my firm would’ve as I aged from my 60s to my 70s.

Louis Diamond:

Very interesting. It’s a great realization. I think it’s one that probably every firm owner grapples with at some point, is the romanticism or the ease, some would say, of an internal succession plan. Rewarding those who have helped you build the firm is something I think everyone is interested in. But once that’s put into practice, whether it’s because of capital or sky-high valuations or right people on the bus or risk, et cetera, nowadays oftentimes leads to a firm owner looking at a transaction, whether it’s a merger, a sale, a private equity, capital infusion as a means to solve for succession. So it’s a very interesting way you framed it.

Andy, I want to turn it over to you for a little bit. So you mentioned when you launched Bleakley Financial, which was the old name of your firm, out of Northwestern, you’re about three billion. I think I read that you’re about 10 billion or so when Joe Duran and Rise invested you in 2024. You just said you’re at 18 billion now in the middle of 2026. That is absolutely incredible and amazing.

Andy Schwartz:

We’ll be well over 20 by the end of the year without any additional organic growth.

Louis Diamond:

That’s absolutely incredible.

Andy Schwartz:

We’ve got a lot going on right now.

Louis Diamond:

What’s actually driven that? What’s been the playbook?

Andy Schwartz:

The three areas that are most important for us, and we had our town hall this morning, and we always talk about the things we focus on as a group, the first and most important is the client experience. I always say to people, if you are their advisor, then that means someone else isn’t. These people, they all deserve to be really well taken care of. They deserve the best service, they deserve the best advice. So that’s something we take really personally. So client experience first.

Then we also understand that we don’t just work for clients, we work for our advisors. So I have two jobs. I have, I don’t know, 500 clients I service with my team, and I work for Kevin and 36 other partners and all of our employees. Because again, I recognize that the decision Kevin made… We’re in the middle of a transition out with another advisor, and we pretty much talk to her every day, and I know how hard this is. A transition is so difficult. When you come from a good place, because any of the Northwestern advisor who joins, they’re coming from a good place, it’s not like they have to go anywhere, it’s difficult. So we have the massive responsibility that three or four or five or 10 years from now, that there better be hugs around that this was the best decision ever made or otherwise. That’s the kind of thing that keeps me up at night.

So we’ve got to take care of our client experience, we’ve got to take care of our advisor experience. And then obviously, we’ve got to grow the firm so the firm grows organically. So part of this whole idea of serving our advisors is we have to help our advisors grow. I talk to a lot of people on the acquisition side, and if I’m talking to an advisor, it doesn’t matter how big they are, we kind of think of it as a OnePoint way. There’s flexibility in the OnePoint way. But if I can’t help them grow, I don’t want them, because I say it all the time, I’m not the mafia. I’m not here to get a taste.

Louis, if you weren’t interested in joining us, if I thought that we could help you grow by doing that, then I want you bad. If I don’t think I can help you grow because we’re so different, or because you’re not going to adapt what we do, or there’s no leverage in it, or you’re already better than we are, I don’t want it. So for us, organic growth, number one, and I think you know the industries well enough, that’s got to be the key. We shoot for 10% organic growth. We’re at a little over 5% so far halfway through the year. So assuming we have the similar second half of the year, we’ll hit our 10. Last year we’re at 7.5%.

The second is the inorganic growth. If you truly build a platform, if you truly build a firm that advisors know that they’ll be supported, that they’ll be loved, and you’ll help them grow their businesses, it does make it easier for us. We’re not the highest bidder typically. We can’t. We respect our client’s capital, we respect their equity, so therefore we’re not going to go out there. We’re not an aggregator, we’re a firm. But I think that if we can get that message across, and I think we have, then advisors join us. So that’s been a big part of the growth. And then the market’s helped. Obviously, over the last two years, the market’s been helpful. So that’s how we’ve gone from 10 to 18 and on our way to 22 by year-end.

Louis Diamond:

This is absolutely incredible. Any advisor or firm owner would say organic growth is important, but just saying it’s important doesn’t mean it’s going to happen. So what are the ways in which you help your advisors or your own practice grow organically? What is it that OnePoint is doing for your advisors?

Andy Schwartz:

Starting with bringing on growth-oriented advisors. I mean, look, Kevin Spahn and I come from the same place. We learned how to sell. The great thing about coming out of whether they’re broker dealers or out of the different insurance BDs is, these are people that know how to sell. These are people that don’t think that selling is a bad word. A lot of times you go to the wirehouses and they’re not necessarily sales guys. They’re really smart. They think that they’re investment mavens and investment geniuses. I’m not interested in investment geniuses. I’m interested in people that want to take care of their clients, provide everything they can, clients first, do the proper planning, be good advisors, but they’re growth-oriented.

So as long as we’re talking with the right advisors. Again, if I’m talking to advisor and they might have a big practice, if they’re not growers, we’re not interested. There’s a sense of responsibility for all the partners because we are a true partnership. It’s not an aggregation. This is a firm. I’m responsible for Kevin. Kevin’s responsible to me. All of our partners are responsible to each other, because if we’re going to do a 10% organic growth target, and if some partner is negative 3%, we don’t put them through the spanking machine, but everybody is very aware of where everybody is and nobody wants to let their partners down.

I think either you’re a growth-oriented advisor or you’re a zoo-fed bear. There’s another expression that I got from another Rise Growth Partner or Rise Growth firm. We all kind of communicate and talk to each other. And I was talking about zoo-fed bears, and he said, we call them house cats that think they fight. So they’re house cats, but they have no claws. But I think if you’re careful about who you bring on as partners, and if they are workers, growers, they understand that their job in life is to serve the people. We talk about referrals, we do lots of training to help on referrals. We work on organic growth strategies from the firm, but a lot of it comes from the advisors themselves.

Louis Diamond:

Makes sense. So it sounds like, to boil it down, it’s being really selective and having a really clear sense of who’s the right fit for your firm. Not that there’s not amazing advisors out there, but just because you’re an amazing advisor, doesn’t mean you’re the right fit to join OnePoint.

Andy Schwartz:

I think the one big distinction and difference is other than the fact that we are minority-owned with private equity. So we own our business. I mean, I’m the CEO of the firm. I also have the biggest book in the firm. At least for right now, I mean, Kevin was transitioning, so I’m sure next year he’ll be the leading advisor. But I lead the firm, because as far as I’m concerned, you have to lead by example. We are completely aligned. I know exactly what Kevin does every day because I do the same thing. I’m not some attorney or accountant or private equity boss that’s saying, “Oh, I’ve got an idea for growth. We’ll just raise our fees by 5%.” Brilliant. Yeah, we are completely aligned, all of us. I think that makes us a little bit unique, and it really helps us, I think, in our growth trajectory.

Louis Diamond:

I would agree. The challenge that a lot of advisors-turned-firm-owners or turned-enterprise-builders have is the tug of war between the client work, which either is their ultimate passion and driving force, or it’s something they’re really good at minimum, versus being the owner, the operator, et cetera. I resonate very much, Andy, with the way you handle it. I do the same thing running a company, but also working with advisors. To me, I need to do both in order to do my job well. But that tug of war is tough. So I’m curious, your firm is very large now, you’re a steward of external capital, and you have a $3 billion book yourself. How do you do it? How do you balance the two?

Andy Schwartz:

Well, fortunately, my kids are grown, so I’m not coaching sports anymore. So I do have a little more time than most. Look, we have a great team. So the idea that I run the firm… I mean, I lead the firm, I don’t run the firm. We have great partners. We have great… Our manager team is fantastic. So I mean, they really run the firm. But this is where my passion is for now. So I don’t mind. Days are typically pretty long. I don’t play golf during the week. Mara and I don’t travel probably as much as we should. Vacations are always a little bit mixed. There’s always room for calls and meetings and whatever.

But to me, I mean, I’m grateful to be in this situation. I’m enjoying it. This is such a privilege to be the person that people recognize as the leader of this bunch, of this group. I mean, it is the honor of my life. So I don’t think of it so much as work. It’s my advocation. It does get busy. There are some times where I have to remind myself, “Just enjoy the ride.” I get a little overwhelmed, but I get lots of help and that makes it possible.

Louis Diamond:

Yep. If you’re not doing the job of the folks that you’re encouraging and leading to do, how do you have fodder to train them, to teach them, to empathize with that?

Andy Schwartz:

Exactly, you don’t have the credibility. I can ask them to do almost anything because they know I do it myself, and I think that helps.

Louis Diamond:

Yep. So moving more into the decision to bring on private equity capital, what I thought was probably the most interesting component of your announcement that you took on PE investment was that you completely restructured or reoriented your firm prior to Joe Duran coming in 2024. Correct me if I’m wrong, but Bleakley Financial Group was almost all 1099 contractors. So everyone owned their own books of business, paid Bleakley a fee or an override for certain services. But now, today, over 85% of your advisors and your AUM are W-2 employees, meaning you converted them from 1099 to acquiring them or merging with them. To me, that’s the dream. It’s had to have been very, very, very hard and challenging because there’s so many aggregator firms or platforms that support independent advisors, but the value that they’ve created is fairly minimal relative to one cohesive firm. So can you just talk about that decision, a very big and brave decision to go down the path of acquiring or merging with the practices rather than letting them continue to operate independently?

Andy Schwartz:

Well, look, we had to… It’s funny because we had been having conversations for years with consultants, and they kept telling us what we had to do. Again, we’re not that smart, so we just kept thinking, “No, we don’t have to do that.” But we were told 10 years earlier that the only way that this thing has any value to the world is you’ve got to have EBITDA for the firm. We talked to all the smart people, we ignored all of them. But what happened was we needed capital and we needed equity in order to bring people on, because people aren’t just joining us just because we can help them grow a bigger business.

So the reason we went in the direction we went initially was we just needed capital. We wanted to grow the firm, and the only way we were going to get to is… What’s the old saying? What got us here is not going to get us there. So we needed capital. But we also realized that I had to have something I could sell in the marketplace. And people want equity. So they want cash, but they also want equity, because we’re talking to entrepreneurs. Kevin owned his own firm. He has $2 billion of assets. He wasn’t interested in being someone’s employee, but he was interested in being able to get leverage and be a partner and share equity in a larger firm that had the chance to grow even more. So what the gift that Joe Duran, the Rise folks gave us was that gift of structure and understanding. So that was really helpful, and that’s been a big part of our success.

Louis Diamond:

Yeah, it’s an amazing journey. Again, I think you could probably write a book or a case study on how that happened. I’m sure there were some downfalls, some people that weren’t all that excited about it, but the results speak for itself.

Andy Schwartz:

I think people ask all the time because I do get phone calls. People are trying to do this, and they’re struggling. It took us 90 days to basically do it. People say, “I’ve been at this for two years.” And the biggest issue is trust. Either they trust you or they don’t. At the end of the day, I always went to the advisor here, we were a firm for 30-plus years prior, and these guys knew that we always did what we said we were going to do, and we always did. If your people trust you, then you can do it. If your people don’t trust you, it isn’t going to work.

Louis Diamond:

In other words, your firm added immense value to the advisors as well. Aside from trust, if you weren’t providing a service or services that they found a value that they couldn’t access on their own, it would’ve been 85/15 going the other way for sure.

Andy Schwartz:

Yeah, 100%. I know it’s not easy, but it wasn’t that hard for us.

Louis Diamond:

Good. It’s well-earned. So I believe you were Rise Growth Partners’ first investment.

Andy Schwartz:

We were.

Louis Diamond:

That’s cool. It’s exciting. You get to be someone’s first, but did it make you uncomfortable that you were the first investment or did you see that as a positive?

Andy Schwartz:

I actually saw it as a positive. Well, one, because I recognized immediately that Joe Duran and his team were way smarter than we were certainly, and certainly with what we were trying to do. And I figured that it’s almost like the first child. They were so excited to have somebody, and there was so much time and energy, so they just really doted on us. They were really able to help us. Now they’ve got four or five groups that they work with, and obviously we’ve been launched. So the younger babies are getting more time and attention, although we get everything that we need from them. But yeah, that never concerned me. I always thought that would be our advantage. It actually turned out that way.

Louis Diamond:

Interesting. In thinking through a sale or a minority sale, did you entertain other types of capital, whether it was a family office or a multitude of other private equity sponsors or selling the firm outright?

Andy Schwartz:

Yeah, we probably had four or five very, very serious conversations. Actually, some got pretty close to the end where we basically just made the decision not to do it. One was a much larger firm, good people. But the problem always was… I was always going to get rich out of the deal because it was going to be 100% sale, but there was really no lift or leverage from the advisors. So the principals, they were willing to pay me a big multiple and my partners a big multiple, and pay these guys basically an average multiple. So we had always told our guys, “Let’s stay together, and someday, this thing, whatever it’s going to turn into be, will benefit everyone.”

So with the Duran situation and the deal with Rise did, it gave everybody a chance to benefit from what we were doing. But what was good about all of those false starts was, it taught me a lot because I had… I know you’re involved in this, so you know better than I do, but we’d start conversations, somebody would reach out to me, I would be very specific about what I needed. They would say, “Yep, we can do that.” And then you get to the finish line, and it’s almost like, I started out, I wanted a tomahawk steak and a baked potato, and I ended up getting a two-day-old hamburger with some cold French fries. It’s like, I know I’m not that smart and I know you’re the PE guys, but for God’s sakes, we’re not stupid.

So it was funny because in January of ’24, I told my partners, “I don’t want to have any more of these conversations. It was a waste of time and energy. I’m sick of talking to these people. Let’s just put our heads down, and then let’s grow the firm a little bit more, and then we’ll see what the world looks like.” And then I get introduced to Duran.

Louis Diamond:

Perfect. Makes sense. Yeah, so you were well-educated on the market, the types of buyers, and I always say it’s almost more important to understand what you don’t want more than what you do want. The only way oftentimes to understand what you don’t want is to experience it and touch and feel it and really get into the weeds on it. I like too, Andy, I saw in an article, you said that “we’re private equity invested, we’re not private equity owned,” which is a very cool dynamic. I could imagine why that was important to you to retain majority control.

Kevin, I want to bring you back into the conversation. Thank you for being patient here. But I mean, I would imagine you had some real choices. I mean, you could have stayed at Northwestern and been very successful, gone through with your internal succession plan. You could have gone to an independent BD, monetized, figured out succession later. You could have sold the business to a strategic acquirer. You were big enough to take on an investor in some capacity on your own. So options wasn’t your problem. Maybe just walk us through. Did you consider any other pathways? And what were the pros and cons in your mind that led you to doing a transaction with Andy?

Kevin Spahn:

I’m a little different, I think, than most people in this industry. Even as you grow your business at a certain percentage, none of that stuff has ever really meant anything to me. All I know is I like what I do. So when I came into the business, because I like it, I enjoy it, I spend time doing it, I’ve tried to get better at it. But it comes naturally because it’s something that I don’t look at Monday mornings as, “Oh, no, it’s Monday morning.” I’m excited to go to work.

My entire career, once I left law, my business has just grown over the years naturally. But you said something before, Louis, and I think this applies to me. I love to work with the clients. I don’t like what I have to do in terms of running the firm. I never have. It’s never been my cup of tea, but you have to do it if you run a firm. So number one, the thought of all the due diligence that I would have to do to research all the firms out there, I wasn’t really all that interested in doing that.

At the end of the day, it comes down to this word trust. I trust Andy. I trust the other partners here too, because I’ve known not just Andy, but I’ve known Scott and many of the other partners for years. So I knew what I was getting myself into. At the end of the day, I knew what they built. I was very comfortable with it, and I was either going to stay at Northwestern Mutual or I was going to come here, but I wasn’t going to go anywhere else.

I will say, since I’ve gone, it’s been exactly like I thought. I thought I trusted Andy. And if something happened along the way with the transition, everything that he said has been true, thing that he promised is real. As you deal with more complexities with a bigger book and more and more employees, I knew that I was almost at the breaking point in terms of my own organization and to merge into this organization that, as I said before, he’s already built out. I don’t have to do it. And to benefit from these great people that he has as part of his organization, that’s all been a real blessing for me and my team. So I didn’t shop the marketplace really, but I knew what I was getting into, and it’s worked out clear as I thought it would.

Louis Diamond:

That’s amazing. I think that’s what most people would covet. But it is a decision in and of itself to not shop the marketplace. I mean, from representing buyers or prospective buyers, I know the pricing leverage or the negotiation leverage and the valuation lift that comes from having an open market, having multiple bids, et cetera. It sounds like that wasn’t the… Obviously you wanted to get fair value for your firm, but for you, it was more, it’s trust, “I’m either going to just stay at Northwestern, which is the devil I know or it’s what I’ve known where I’ve been successful, or I’m going to go to the individual that I trust and forget about all the other noise.”

Kevin Spahn:

Well, Andy says things, but I know they’re true because I’ve seen him at work. I’ve seen how he’s acted. I’ve seen how he interacts with people. But here’s an example. He cares about the people that are at his firm. He says that, but I know it’s true because I see it. I’m the same. I really care about the people in my firm. So as I think about, well, what about the future of two groups, my clients, but also the people that work in my firm? They’re going to be around long after I am. Well, I don’t want myself to retire someday, get a big check, because there’s all sorts of options to get a check. If I get a check and then my client’s scatter to the wind, and my employees don’t really have a future and they just have to go and find their own way, that wasn’t attractive at all to me.

So one of the things that I really appreciate about this opportunity is that there is a plan for both my clients and my employees or the younger team members at formerly Spahn Financial, where I feel very good about the fact that they have a solid, secure future in an industry that they’ve all grown to love without them having to go out and make their own way.

Louis Diamond:

Makes sense to me. We noted a couple of times in this interview, you talked about equity, partnership, both of you have. So Kevin, for you, what did it mean differently for you to become a partner and get equity in a larger firm rather than, we’ll say, the less risky move of just taking everything in cash? Why was that an important distinction for you?

Kevin Spahn:

For many years, when I left law and came into this business, I didn’t have any money at the time. I was just starting to make money as a lawyer. It takes a while. I started low. I got trial experience working for the government, so they didn’t pay much. That was three years. Then I was at a firm, and I was just starting to make more money. Then I made this big shift into a career that was all commissions. Well, even with what I thought was good early success, it took years till I really had any money in the bank or till I could actually tell my wife what we had in the bank because I really didn’t want her to know before promoting with her.

But I never was really worried about the future because I could see what it looked like. I also knew that I loved what I did every day, and I knew what it would lead to. It’s always been a part of my own career path that I got to the point somewhere along the way where I knew I had enough money. Somewhere along the way, I realized I could retire if I wanted to. Here’s the good news. I don’t want to. I like what I do. So it really wasn’t about the biggest check or anything like that. But when I go back to this analysis, well, how did I bring in business before? If you do a good job and the clients appreciate the work you do, they refer you to their friends. So that would happen. That’s how we grew our business.

But as I think about, “Well, I now have two grandchildren. I’d like to spend time with them. I have four children. They’re all going to get married and have kids,” I see over the next whatever, 10 or 15 years, I will want more flexibility. Andy and I both work pretty long hours right now. Won’t have the time for that. So what’ll happen? Well, at some point, I think the new business generation will slow down a little bit. And as I said before, as our clients age, some of the money starts coming out, that all affects the value of your book.

I feel pretty comfortable that the combination of what we’re doing and all my partners and then this firm that Andy’s built, I think that the growth will be pretty strong over the next 5, 10 years. So part of my thought process was I’m trusting in that and I’m buying into that. At the end of the day, I’m comfortable that the combination of what this is going to ultimately do for my clients and then my team, and then the value of my ownership compared to what I would’ve done on my own, the combination of it all is a really good solution for where I was a year ago.

Louis Diamond:

That sounds like it. I mean, I feel like the equity ownership dynamic, especially equity in a firm other than yourself, it’s either something that advisors get really charged up about because they see what you saw, Kevin. “I’m diversifying. It’s not just my growth, it’s everyone’s growth, that this asset, this equity has the ability to grow and scale quicker, more efficiently than just me.” At the same time, it’s probably the hardest decision for folks to step over the threshold and say, “I’ve been responsible for my growth, the value of my firm. If they’re independent already, I decide distributions, who to hire, et cetera. It’s for better or worse, it’s me and I’ve trusted myself.” So just getting comfortable with equity in someone else and taking your hands off the wheel a little bit is not something that everyone gets comfortable with. But it sounds like, for you, it was the absolute right decision for all the reasons you laid out.

Kevin Spahn:

You just laid it out perfectly. Years ago, I was going to bring in a junior partner. I was working with this guy, I was training him, teaching him, and he was planning on joining my firm as a junior partner. And then he started asking me what I paid everybody and why I paid these people that much money. I realized right then and there, the last thing I want to do is bring on someone who’s going to own 10% of my firm, and then they’re going to start complaining about what I pay everybody else. I didn’t want to have to make that decision with anybody.

It is a special person that I would ever be comfortable becoming a partner with. There are obviously many partners in this firm, but it comes down to the fact that my relationship with Andy as the managing partner and he has a lot of the influence in the firm. It really is trust. And I’ll say, my wife has known Andy a long time, and she trusts him as well. So for years, she would ask me, “What about Andy?” We would talk here and there about his firm, and she’s always been very comfortable with Andy and this potential move.

Louis Diamond:

There we go. Yeah, the actual decision dynamic was, your wife was comfortable.

Kevin Spahn:

Exactly. She was my secret weapon the whole time.

Louis Diamond:

There we go. Andy, I can guess the answer just from doing this conversation, but when you bought Kevin, I don’t know if it’s still true, but at the time, at least, he was your largest deal, and it was the first time you’re entering the Chicagoland area. What was it about Kevin and his practice that made you get to a yes?

Andy Schwartz:

Listen, I’ve talked to Kevin. I mean, Kevin and I stayed in touch. So for the 11 years, one of the few advisors that I maintained a real relationship with was Kevin. I never really thought he would join me, but I couldn’t help myself because Kevin was the best advisor in the system and the best person in the system. Truth is, I think Kevin did what he did as much as anything. If it was a good financial decision, he wanted to be able to give more money away someday. That’s how Kevin operates. So I’ve always been just a huge fan.

I would tease him. When I would joke with him, I would always ask him, “So when are we going to come partners?” And we’ve had our own inside joke, which we’re working on right now, right, Kev, which we’ll work on later this afternoon. So we’ve always had our deal. And then I got to tell you, it was probably, it’s still sometimes I wake up, and I can’t believe how fortunate that he actually did it. So yeah, forgetting about size, I mean, yeah, huge practice, our biggest acquisition, Chicago’s a great market, but I mean, it’s a one in a million. It was hard for him because the Northwestern Mutual didn’t want to lose him. So it was a very difficult decision because I think everybody felt the same way. So no, we’re blessed to have him. His team, he’s got a great team, made our firm better, and this is the best part of the journey for me.

Louis Diamond:

Amazing. Two more questions for you guys. I’m going to let you get on with your busy days. This would be for either or both of you. So for a Northwestern Mutual advisor, or let’s say any advisor within an insurance BD or who has some sort of proverbial golden handcuffs, whether it’s insurance renewals or pension or a very large unvested deferred compensation balance, really you can pick anything, many of these folks think they’re stuck. Might be unhappy. They might see promise elsewhere, but they can’t reconcile leaving something behind. Another example would be mutual fund trails through proprietary products or a bunch of alts where the trails aren’t going to carry over. What is it you’d want those individuals to understand about what’s actually possible or the mindset of leaving something behind to go run towards something else?

Andy Schwartz:

Well, I mean, look, the issue is… Look, there’s a number that can be too big to make sense to never leave. So people could be truly stuck. Renewals run out. And as you do less premium as you get older, the renewals get smaller. So renewals to me are a non-issue. I always like to talk to advisors of how much bigger. Our thing is we think we can grow your practice twice as fast and half the time. So if that’s true, and if you believe that’s true, then there’s math on that side, and you just compare the math to what you’re losing.

Everybody that we’ve brought on, everybody makes more money, and they’ve more than made up for what they give up. That doesn’t mean though that someone doesn’t have such a golden handcuff or some program that is so substantial. By the way, we do the math. I wouldn’t suggest they do it. If somebody were going to be upside down millions of dollars five years from now by joining me, I don’t want them to join me because they shouldn’t. They should do what’s best for them and their families. But we find that if we really look at the math, we really look at the growth, we look at the growth and the equity, we look at the leverage.

The difference is they do not work at firms. They work at institutions, and they’re good institutions, all of them. They’re good people, they’re good institutions, but they’re not firms. They have to build their own firm with an institution. It’s very costly. Their margins are much, much worse. We have great margins. Our partners have great margins of their P&Ls because they’re able to leverage an actual firm. So that’s a big difference. Whenever I talk to these people, I mean, you might build a firm within the institution, but you are not part of a firm. We are a firm. Everybody runs a P&L, they run a book inside a firm because we are a firm. I think that’s a big difference. Everybody’s going to make the decision for themselves.

Louis Diamond:

Interesting. Andy, I lied because you just sparked another question before my last one. Where do you plot OnePoint on the spectrum, let’s say, of conformity? So on the one hand, you have just someone’s operating completely independently, call shots, no outside capital. All the way to the very, very right would be, all investment portfolios are the same. Everyone’s the same brand. Advisors are basically relationship managers. Where would OnePoint be on the spectrum, and why is that decision important to you?

Andy Schwartz:

Yeah, I would say we’re probably somewhere in the middle. Everybody’s the same brand. That’s a deal breaker for us. Either you’re going to be a OnePoint partner or you’re not, or a OnePoint tenant or you’re not. Because I’m an advisor, I recognize that everybody comes to a firm or they come to a situation with legacy assets. They come with legacy assets that have taxes. They come with legacy relationships. So we’re not unrealistic, but we also recognize that centralized service is the key both for the value of the firm and the future and for the value and the way they operate within their businesses, grow their businesses.

So I would say that it’s a little bit of a struggle. It’s always anything that we do, there has to be a why. You don’t just say, “Okay, everybody is now in this program, and this is what we do.” You better have a why. If you’re going to force people into something, it better be really good because it’s got to be able to be better for them than for them not to be in that. So we have the CSA desk. We don’t force them, but 80% of our advisors are on the CSA desk. Same with the think tank. My guys, they all want to shoot for 100%. I said, “Great, we’ll shoot for 100%.” It will never be mandatory unless it is so good that it’s more cost-effective and it’s better than they can do on their own. When my team can prove that’s true, then we’ll become more restrictive. But until then, we serve these advisors for the idea that we would shove things down their throats. It’s not going to happen.

By the way, growth-oriented advisors are entrepreneurial. I don’t want zoo-fed bears. I want growth-oriented, entrepreneurial advisors. But at the same time, they can’t be the Wild West either. It’s because it detracts from value, and it makes it impossible to run a business. It makes it impossible to really leverage the opportunity. So I would say we’re probably somewhere in the middle.

Louis Diamond:

I would agree. It’s like a gentler form of one team, one dream, while still leaving some entrepreneurial freedoms in the hands of your high growth non-zoo-fed-bear advisors.

Andy Schwartz:

Yeah. Be realistic about what’s possible, what you’re asking them to do. I mean, these guys have to be able to do what’s best for their clients and selling all their assets and paying taxes, because this is the way we run a portfolio, is completely unacceptable. So all the constituents have to be considered.

Louis Diamond:

Perfect. Last question for each of you, parting thoughts. If you were speaking to yourself, so Kevin, back before you merged with Andy back 12-ish years ago, before you left Northwestern to launch Bleakley Financial, now called OnePoint, what is it that you would want to tell yourself? Or put another way, what would you tell the yous that are still captive to some sort of institution?

Andy Schwartz:

Kevin, why don’t you go first?

Kevin Spahn:

So what would I tell myself? I guess it goes back to what I said before. It’s all about, do you love what you do or not? I’ve always loved what I do. And I tell every potential new client that three things have to be present for you to work with me. Number one, you have to trust me. If you don’t trust me, it’s not going to work. You’re not going to stick with the plan. But if you do trust the advisor, that’s not necessarily enough. People trusted Bernie Madoff, but look where it got them. So you have to trust them. You have to see that they provide value. And if they don’t provide value, I don’t know why you would pay them.

And then the third one, which I almost call a get-out-of-jail-free card, is you have to be on the same page with them philosophically. You have to trust them, you have to provide value, and you need to be on the same page philosophically. So as I think back to myself 12 years ago, all I would realize is that I know things now that I didn’t know them. Part of the reason is that Andy talked about my team. I brought on some people in the last 12 years that I was basically following Andy’s lead. They know more than I do. We have several CFAs in our firm. I have a guy, his name’s Tim Funke. He was a portfolio manager at Northern Trust for 12 years before I hired him. When he left Northern Trust, he was working with families of 250 million or more liquid net worth. He’s great, and he’s been with me for 10 years. He’s a partner in our firm too. It has really helped me provide more value for my clients.

If I go back 12 years, I would just say associate yourselves with the best people you can, whether you bring them into your firm or this example of me joining with Andy’s firm. It accelerates your trajectory in ways that you can’t do on your own.

Louis Diamond:

Fantastic. Andy, same question for you.

Andy Schwartz:

Yeah. I would say, I like to go back 42 years and say, thank you, Andy, for the late nights chasing down $500 a year premiums, taking, I don’t know, Kev, is it fair to say five, six, seven years to break even net worth? I mean, to first dig out of the hole and then to actually… Because I don’t think I was telling Jodi that I had any money in the bank for at least six or seven years.

And then I would say, if I look back 12 years, I’m grateful that we had the courage to do it because sometimes… I would say my brother Scott was a big part of it because he really had more conviction. I was benefiting more from being in the Northwestern system with all the joint work. But I’m just grateful that we had the courage because it’s hard to do and that we did it, because I mean, it has worked out so well for us. I mean, not just financially, but I love the work we do. I love what we can provide for our clients. I love the flexibility. I like to say to people that I haven’t had a fight professionally in 12 years, and I used to have fights all the time. They were friendly fights. I mean, they were good people, and I know they did the best they could, but we were constantly fighting about what we couldn’t do. We were constantly… And I don’t do that anymore. That hasn’t been part of my life for so long, so I’ve become like a spoiled brat. I don’t have to fight with anybody.

Louis Diamond:

That’s amazing.

Andy Schwartz:

People always ask like, “Do you regret not doing it sooner?” And I would say probably not because it was a great run for us and great firm, a great institution, I met great people. And everything worked out really well. So would we have been bigger sooner? Maybe, but I have no regrets about that. That’s not really an issue for me.

Louis Diamond:

Absolutely amazing. This has been so much fun, guys. I love the dynamic and the personal relationship and all the trust that you’ve built. Andy, I can’t believe what you’ve accomplished. I mean, you were very successful and Northwestern famous when you’re on our show a couple of years ago. But just the level of growth, the conviction and what you’re doing, the way you’ve converted 1099s to W-2s and partners and just where you’re headed from here is really a treat. Honestly, I almost look at it as a case study for how to build an enterprise. And, Kevin, I really appreciate your candor for sharing behind the scenes of your decision to make the big decision to not just leave Northwestern, but also merge your firm and kind of take your hands off the wheel a little bit.

Andy Schwartz:

Well, my pleasure. It’s great to see you again, Louis, and happy to talk anytime.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? Is a book written with you in mind? It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

Build, Grow & Transact: Making the Leap from Northwestern Mutual to a $20B Enterprise

A conversation between Louis Diamond, Andy Schwartz, CEO of OnePoint BFG Wealth Partners and Kevin Spahn, Founder of Spahn Financial (now OnePoint BFG).

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Build, Grow & Transact: Making the Leap from Northwestern Mutual to a $20B Enterprise. It’s a conversation with Andy Schwartz, CEO of OnePoint BFG Wealth Partners, and Kevin Spahn, founder of Spahn Financial, now OnePoint BFG. I’m Louis Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. Each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions, and more, inspired us to create our annual Advisor Transition Report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

There’s a big difference between building a successful practice and building an enterprise. I think Andy Schwartz and Kevin Spahn offer a unique perspective on that distinction from two very different sides. Both spent decades in the Northwestern Mutual system. Andy ultimately left to build what became OnePoint BFG Wealth Partners, taking the firm from roughly three billion to nearly 20 billion and transforming just about every aspect of the business along the way. Kevin built one of Northwestern Mutual’s top practices before reaching a different inflection point, deciding what he wanted the next phase of his career and business to look like. Rather than go independent on his own or simply monetize what he had built, he chose to become part of Andy’s growing enterprise.

That makes their story particularly relevant for our Build, Grow, and Transact series. Andy can speak to what it takes to build a firm capable of becoming an acquirer, from converting advisors from 1099s to W-2s, to creating equity opportunities, to bringing in outside capital while remaining very deliberate about being private equity-invested rather than private equity-owned. And Kevin brings the seller’s perspective, how you evaluate the economics, the trade-offs, and ultimately the people you’re trusting with the business you spent more than 30 years building. Because whether you’re building, buying, or considering a transaction of any kind, the numbers are only part of the equation. As you hear from both Andy and Kevin, trust may be the most important currency of all. So let’s get to it.

Andy and Kevin, thank you so much for both joining us today.

Andy Schwartz:

Great to see you again, Lewis. Thank you for having us.

Louis Diamond:

I’ve been excited about this interview for a bunch of reasons. One, our Build, Grow, Transact series has become a real staple of our show and we got lots to talk about there. But also, the friendship, the relationship that you two have had for over 30 years really stood out to me. So before we get into the nuts and bolts, talk about your relationship. How’d you guys meet, and how did your career stay so intertwined together when you’re in different geographies and at different firms, and have each been very successful in your own rights?

Andy Schwartz:

Sure. Kevin, do you want to start with that?

Kevin Spahn:

Sure. I started in this career in 1994 and met Andy sometime after that. He was a more advanced financial planner. I was an attorney, and then I transitioned into this business. So when I first joined Northwestern Mutual, which is my first broker dealer, I didn’t really have a background in investments. At the time, a lot of Northwestern Mutual reps were learning the investment business because they maybe originally started with Northwestern Mutual focusing more on insurance planning.

My background was more estate planning. At the time, if you think early ’90s, if you did estate planning, insurance often went hand in hand with that. The estate exemption in early 1990s was about $600,000. So if you pass more than $600,000 to your children, there was a 55% tax. One way around it was to put insurance in an irrevocable trust, help cover the tax that way. So it really was a popular common strategy back then, and it’s really what got me into the business.

But I quickly realized that I didn’t want my future to be insurance and estate planning. And there was a conflict if you acted as someone’s attorney and sold insurance. So I had to pick one way or the other. I decided long-term it would be better for me to move into the wealth management space. But with that little background in that, I had a lot of work to do. So took a lot of tests, became a certified financial planner.

But the person that helped me the most along the way was Andy. We became friends, we sat on committees together. That’s really how we met, I would say. So we worked side by side interacting with our home office and representing the field, bringing issues to the home office that we thought were beneficial to the field. As we did that together, I got to know Andy. And then separately, I learned from him how he built his business and how they would review clients’ portfolios and come up with solutions. So I really credit Andy with helping me more than anyone else to transition from attorney, financial planner doing more estate planning insurance to wealth management.

Louis Diamond:

Very cool. Hey, I would say, maybe I’m a little biased, that, Kevin, you picked the right path in hanging up the law shingle and coming into wealth management.

Kevin Spahn:

I tell a lot of people I’m a reformed attorney.

Andy Schwartz:

Great.

Louis Diamond:

Exactly. My dad would say the exact same thing. Very common at dinner tables in the Diamond households.

Andy Schwartz:

I was always grateful that I wasn’t smart enough to be an attorney.

Louis Diamond:

There we go.

Andy Schwartz:

That’s where my gratitude lies. Yeah.

Louis Diamond:

There we go.

Andy Schwartz:

Some would say he’s too smart.

Louis Diamond:

There we go. Andy, question for you. I mean, anyone who is at or was at Northwestern Mutual, I mean, you’re like Elvis to them. It’s absolutely crazy the amount of fanfare and brand recognition that you and your brother Scott have. But for those who maybe missed your first podcast appearance with us a number of years ago, or aren’t or weren’t within the Northwestern Mutual system, or haven’t been familiar with Bleakley and now OnePoint BFG, just give us the cliff notes, the origin story, how you got into the business, and how’d you get from here to there?

Andy Schwartz:

Yeah. So the origin is probably pretty common, probably by accident. Going into my senior year in college, I was working in a restaurant, had a falling out with my boss. I happened to be dating a woman who was living with a general agent with Fidelity Union Life. No one will have ever heard of Fidelity Union Life, but their secret sauce was they sold life insurance to college seniors on a note. So if you can get a $10 money order, because where I went to school, nobody had a checking account, then you could basically get a note signed and they would buy insurance. And then when they graduate, hopefully they’d pay for it. I started selling life insurance my senior year in college. And then my twin brother Scott, who is my partner, and has been for over 40 years, he took an interview with what was the nucleus of our present firm actually.

I just went up to Northern New Jersey in May of 1984 because I was an expert. I had been selling life insurance to college kids for six months, so I knew everything you had to know. We met with these guys, and we both ended up joining them. So that was a Northwestern Mutual district agency, and that was 1984. We got licensed right away. I got my CFP in ’86. We always knew that it was going to be about planning. So I think we had the right idea. We were a little ahead of the curve because there weren’t a lot of CFPs in ’86. We got securities license immediately. So before Northwestern had securities license, we got securities license with US Life actually.

And then it was really a volume business, a client-building business. We always tried to act as a firm and share resources. We were small, but like a lot of people, we started out selling A shares and B shares and C shares, doing financial planning, selling insurance, and then we made a lot of really good hires along the way. And then after 30 years at Northwestern Mutual, which was a great experience for me, and I have nothing but respect for the institution and certainly the advisors that are there, Kevin certainly was one of them, and I know he feels the same way, but we just wanted to have a little more flexibility. We went independent about 11, almost 12 years ago. We wanted to be able to be multi-custodial. We wanted to have a little bit more optionality for our clients and for ourselves.

We left Northwestern at three billion or so in assets, and that was in 2015. It’s in March of 2024, I get introduced to this guy with a crazy accent named Joe Duran. Funny, probably the only person in the industry that had no idea who Joe Duran was me. I’d never heard of Joe Duran. I don’t pay attention. I worry about our firm. I don’t worry about what’s going on outside. So I get introduced to Joe by a mutual friend, and we had an interesting conversation, and it took us probably about four or five months to figure out what we wanted to do. And then in August of ’24, myself and my three partners, we rolled in. And then in ’85, the rest of the firm rolled in. And we can talk a little bit more about that.

Today we’re 18-plus billion, growing quite a bit. We’ve been very lucky that we’ve made some very good decisions along the way. We’ve made some bad ones too. But most of the decisions had to do with the people that we hired, the people that we brought on to help us, because I think it’s really important. I always say that the biggest mistake advisors make is they buy their own bullshit, and I try not to, and I realize that I’m smart enough, but I’m certainly not the smartest guy. I’m rarely the smartest guy in the room. So what we try to do is hire lots and lots of really smart people. And we’ve done that. They’ve been loyal to us, we’ve been loyal to them. Yeah, so we’re blessed to have a really great team and lots of good partners. Yeah.

Louis Diamond:

Yeah, we’ll definitely get into more of the nuts and bolts of the decision to take on capital, partner with Joe Duran’s Rise, but that’s an amazing background. Andy, I have to give you credit because your style, and I think I’m sure there’s business benefits, but it comes from a good place, I’m sure. But the coaching and consulting and just assistance that I’ve heard you provide to so many past and current Northwestern Mutual advisors through sports camps is absolutely incredible. It’s very near and dear to my heart because we always try to lead with education and helping people. So I just wanted to call that out, that your reputation for just providing amazing guidance and coaching to advisors is unparalleled.

Andy Schwartz:

And it’s been the best part of our journey. We’ve been able to help so many people. We get way too much credit by the way. So everybody gives us way too much credit. But the way I look at it is, I’ve been able to leverage my life because I’ve been able to build a great life for myself and my family, but we’ve been able to leverage that, and that’s where the real gift is. So yeah, it’s been a joyful journey for us.

Louis Diamond:

Amazing. Kevin, question for you. You walked through your little bit unorthodox background to get into Northwestern. Can you talk about where your personal practice is today? And then I want to ask you about the decision to leave Northwestern and sell and team up with Andy and team.

Kevin Spahn:

Well, I have to go back to the beginning. What was attractive to me about this business is I went from a career which was confrontational adversarial. I was a trial attorney for six years, and every day I would fight with people over things I didn’t necessarily have a personal interest in and I didn’t really believe in always. But the adversarial confrontational nature wasn’t really my personality, and I would take it too personally. So sometimes I’d go home in a bad mood because I was fighting with somebody taking a deposition.

At night, after so many years as a trial attorney, I started going to people’s houses and doing wills and trusts. And that’s where the dynamic of working with a client or a potential client, feeling that you helped them and walking out of the meeting where they would appreciate what you did for them, and you build a relationship and actually all of a sudden have a friend, that dynamic was attractive to me. That’s really what got me to transition into the business.

So I think it was really helpful to me at the beginning of this career. As Andy said, we all grew our businesses one client at a time. There’s a lot of doors closed, phones hung up on. There’s many people that don’t want to talk to you. There’s many people that don’t call you back. There’s many people that you think you’re getting somewhere with and you don’t. And that’s difficult for people because people often, young reps take that as personal rejection.

I had the benefit of comparing what I was dealing with as a young financial planner to what I had dealt with as an attorney in litigation. I think it just was perspective that I knew I didn’t want to do that anymore. So the negatives to this business didn’t seem that bad to me. I loved the independence. I loved all the relationships that I was building. And that part of it is to this day my favorite part of the business.

When you ask about the present, what basically happens is you start out taking anybody and everybody as a potential client or as someone that you would be willing to work with. And then over time you work with more successful people. So where I’m at today is working with pretty successful people, but they’re all the same, meaning we like working with nice people. If people are nice, we work with them. I feel we can help anybody. Over the years, one client at a time.

The thing that I probably, if I could go back, would change is I think Andy and I are both good at meeting people and building trust and providing value, so that’s why they work with us. So I think that’s just something we’ve both been able to do. He’s much better than I am at building an organization. So I built an organization basically hiring people, that whenever we got too busy, I hired another person. Drawback in terms of that is, anybody that I interview I think is great, and I think they’d be great to join the organization. I like them all. In spite of that, I’ve also brought in many good people that I love.

At this point, my firm has 18 people. We’re a little subset of Andy’s larger firm. I think one of the most attractive things to me about joining Andy’s firm is what Andy mentioned before: the people. As opposed to me having to build this all out myself, going independent, Andy already did that. And he has the infrastructure that would allow me to just merge right into that and not have to go through the pain of figuring all that out, which I don’t even think I’m capable of, to be honest with you.

Louis Diamond:

You’re probably selling yourself short because the way I understood it, you had one of the top practices within the entire Northwestern Mutual systems, and it’s a firm filled with very successful advisors.

For you, Kevin, what was the driving force to leaving NM after all these years? What was bothering you or frustrating you that indicated to you that it was time to do something different?

Kevin Spahn:

To be honest with you, I was pretty happy at Northwestern Mutual. I love the company and the people. I still have many good friends there that I truly miss. The big thing for me, I don’t know if it was any one thing, to be honest with you, is Andy said there’s optionality, especially on the investment side. I think one of the things that happened to me is, when I first started, I was 31 years old, and most of the potential clients that I would meet and work with, they weren’t what I would call today great investment clients. They didn’t have a lot of money. They had great futures. They might’ve been earning significant income or on the way to earning significant income. So what did they need at that point in their life? They needed planning. They needed protection. They didn’t really need investment management because most of their investments were going into their 401(k).

But a lot of those clients that we would take on, and I think that’s the big advantage of Northwestern Mutual, you take on clients that a lot of the investor firms don’t want because they don’t have large investment portfolios. But at some point down the road, all of a sudden you wake up and they do have large investment portfolios. So you bring them in as clients that might buy life insurance from you or disability insurance or something like that. And then you help them, and you give them advice, and you build a relationship with them. Down the road, they make more and more money. They leave jobs, they roll 401(k)s, they have the ability to invest money, stock options, things like that. Next thing you’re doing more comprehensive planning that incorporates investments.

As that progresses even further, you work with larger and larger clients, much more significant net worth, more complexity, bigger tax issues. Some of the strategies and opportunities that we now have at this independent RIA are very attractive for these high-net-worth clients. Along the same lines, less of what I do at this point in my career is insurance, mostly because a lot of the people that I meet are older, they already bought insurance, they’re looking more for investment advice as opposed to insurance. So one of the things that most attracted me to Northwest Mutual was their strong insurance products, which helped me for many years. As time went on, I was doing less of that.

Louis Diamond:

Makes complete sense. So it was a changing of what clients wanted and just the circumstances of your clients where you said, “What got me here when I was 31 was insurance planning, and that’s what my clients needed. But as my practice has evolved, I’ve aged, my clients are older, have more money, the focus shifted from insurance to investments.” And then the distinction was, am I at the best place to run investments in addition to insurance planning, et cetera? It’s a very interesting dynamic. Just the shift in basically your legacy clients was what drove you to consider change.

Kevin Spahn:

That was a big factor. I think the second big factor was I had my own firm with 18 people. My succession plan was that at some point I would shift ownership of the firm to people that worked with me. So as they owned more of the firm, they would have revenue that was currently at the time being paid to me. In my mind, as it shifted to them, they would buy me out using revenue from the clients that we already had. And I realized that there were some issues with that. In our business, as you get older, in your client’s age, they start taking money out of their portfolios. So everyone understands that in our business, the younger average age client you have makes your book more valuable.

I was the biggest driver of new business at my firm, and I started to see that there were some problems with my succession plan. They included, if something happened to me during this succession, that would be a real problem for the people that were buying my business from me if I went that way. If something happened to some of my key people, that would’ve been a problem as well. So it was really attractive to me to… I wasn’t looking to sell my business, I was looking to merge it. So I merged it with Andy’s business.

I believe that Andy and what he’s put together and the actual idea of having partners. So I never really had partners, but now I do. Having partners that we’re all on the same page, we all have similar backgrounds, we all bring something different to the table, and we can learn and benefit from working with each other. But also, owning a little piece of a much larger firm was, number one, it put me in a better position in terms of the potential risk of something happening to me or one of my key people. But secondly, I just think it’s more likely to grow at a greater pace than my firm would’ve as I aged from my 60s to my 70s.

Louis Diamond:

Very interesting. It’s a great realization. I think it’s one that probably every firm owner grapples with at some point, is the romanticism or the ease, some would say, of an internal succession plan. Rewarding those who have helped you build the firm is something I think everyone is interested in. But once that’s put into practice, whether it’s because of capital or sky-high valuations or right people on the bus or risk, et cetera, nowadays oftentimes leads to a firm owner looking at a transaction, whether it’s a merger, a sale, a private equity, capital infusion as a means to solve for succession. So it’s a very interesting way you framed it.

Andy, I want to turn it over to you for a little bit. So you mentioned when you launched Bleakley Financial, which was the old name of your firm, out of Northwestern, you’re about three billion. I think I read that you’re about 10 billion or so when Joe Duran and Rise invested you in 2024. You just said you’re at 18 billion now in the middle of 2026. That is absolutely incredible and amazing.

Andy Schwartz:

We’ll be well over 20 by the end of the year without any additional organic growth.

Louis Diamond:

That’s absolutely incredible.

Andy Schwartz:

We’ve got a lot going on right now.

Louis Diamond:

What’s actually driven that? What’s been the playbook?

Andy Schwartz:

The three areas that are most important for us, and we had our town hall this morning, and we always talk about the things we focus on as a group, the first and most important is the client experience. I always say to people, if you are their advisor, then that means someone else isn’t. These people, they all deserve to be really well taken care of. They deserve the best service, they deserve the best advice. So that’s something we take really personally. So client experience first.

Then we also understand that we don’t just work for clients, we work for our advisors. So I have two jobs. I have, I don’t know, 500 clients I service with my team, and I work for Kevin and 36 other partners and all of our employees. Because again, I recognize that the decision Kevin made… We’re in the middle of a transition out with another advisor, and we pretty much talk to her every day, and I know how hard this is. A transition is so difficult. When you come from a good place, because any of the Northwestern advisor who joins, they’re coming from a good place, it’s not like they have to go anywhere, it’s difficult. So we have the massive responsibility that three or four or five or 10 years from now, that there better be hugs around that this was the best decision ever made or otherwise. That’s the kind of thing that keeps me up at night.

So we’ve got to take care of our client experience, we’ve got to take care of our advisor experience. And then obviously, we’ve got to grow the firm so the firm grows organically. So part of this whole idea of serving our advisors is we have to help our advisors grow. I talk to a lot of people on the acquisition side, and if I’m talking to an advisor, it doesn’t matter how big they are, we kind of think of it as a OnePoint way. There’s flexibility in the OnePoint way. But if I can’t help them grow, I don’t want them, because I say it all the time, I’m not the mafia. I’m not here to get a taste.

Louis, if you weren’t interested in joining us, if I thought that we could help you grow by doing that, then I want you bad. If I don’t think I can help you grow because we’re so different, or because you’re not going to adapt what we do, or there’s no leverage in it, or you’re already better than we are, I don’t want it. So for us, organic growth, number one, and I think you know the industries well enough, that’s got to be the key. We shoot for 10% organic growth. We’re at a little over 5% so far halfway through the year. So assuming we have the similar second half of the year, we’ll hit our 10. Last year we’re at 7.5%.

The second is the inorganic growth. If you truly build a platform, if you truly build a firm that advisors know that they’ll be supported, that they’ll be loved, and you’ll help them grow their businesses, it does make it easier for us. We’re not the highest bidder typically. We can’t. We respect our client’s capital, we respect their equity, so therefore we’re not going to go out there. We’re not an aggregator, we’re a firm. But I think that if we can get that message across, and I think we have, then advisors join us. So that’s been a big part of the growth. And then the market’s helped. Obviously, over the last two years, the market’s been helpful. So that’s how we’ve gone from 10 to 18 and on our way to 22 by year-end.

Louis Diamond:

This is absolutely incredible. Any advisor or firm owner would say organic growth is important, but just saying it’s important doesn’t mean it’s going to happen. So what are the ways in which you help your advisors or your own practice grow organically? What is it that OnePoint is doing for your advisors?

Andy Schwartz:

Starting with bringing on growth-oriented advisors. I mean, look, Kevin Spahn and I come from the same place. We learned how to sell. The great thing about coming out of whether they’re broker dealers or out of the different insurance BDs is, these are people that know how to sell. These are people that don’t think that selling is a bad word. A lot of times you go to the wirehouses and they’re not necessarily sales guys. They’re really smart. They think that they’re investment mavens and investment geniuses. I’m not interested in investment geniuses. I’m interested in people that want to take care of their clients, provide everything they can, clients first, do the proper planning, be good advisors, but they’re growth-oriented.

So as long as we’re talking with the right advisors. Again, if I’m talking to advisor and they might have a big practice, if they’re not growers, we’re not interested. There’s a sense of responsibility for all the partners because we are a true partnership. It’s not an aggregation. This is a firm. I’m responsible for Kevin. Kevin’s responsible to me. All of our partners are responsible to each other, because if we’re going to do a 10% organic growth target, and if some partner is negative 3%, we don’t put them through the spanking machine, but everybody is very aware of where everybody is and nobody wants to let their partners down.

I think either you’re a growth-oriented advisor or you’re a zoo-fed bear. There’s another expression that I got from another Rise Growth Partner or Rise Growth firm. We all kind of communicate and talk to each other. And I was talking about zoo-fed bears, and he said, we call them house cats that think they fight. So they’re house cats, but they have no claws. But I think if you’re careful about who you bring on as partners, and if they are workers, growers, they understand that their job in life is to serve the people. We talk about referrals, we do lots of training to help on referrals. We work on organic growth strategies from the firm, but a lot of it comes from the advisors themselves.

Louis Diamond:

Makes sense. So it sounds like, to boil it down, it’s being really selective and having a really clear sense of who’s the right fit for your firm. Not that there’s not amazing advisors out there, but just because you’re an amazing advisor, doesn’t mean you’re the right fit to join OnePoint.

Andy Schwartz:

I think the one big distinction and difference is other than the fact that we are minority-owned with private equity. So we own our business. I mean, I’m the CEO of the firm. I also have the biggest book in the firm. At least for right now, I mean, Kevin was transitioning, so I’m sure next year he’ll be the leading advisor. But I lead the firm, because as far as I’m concerned, you have to lead by example. We are completely aligned. I know exactly what Kevin does every day because I do the same thing. I’m not some attorney or accountant or private equity boss that’s saying, “Oh, I’ve got an idea for growth. We’ll just raise our fees by 5%.” Brilliant. Yeah, we are completely aligned, all of us. I think that makes us a little bit unique, and it really helps us, I think, in our growth trajectory.

Louis Diamond:

I would agree. The challenge that a lot of advisors-turned-firm-owners or turned-enterprise-builders have is the tug of war between the client work, which either is their ultimate passion and driving force, or it’s something they’re really good at minimum, versus being the owner, the operator, et cetera. I resonate very much, Andy, with the way you handle it. I do the same thing running a company, but also working with advisors. To me, I need to do both in order to do my job well. But that tug of war is tough. So I’m curious, your firm is very large now, you’re a steward of external capital, and you have a $3 billion book yourself. How do you do it? How do you balance the two?

Andy Schwartz:

Well, fortunately, my kids are grown, so I’m not coaching sports anymore. So I do have a little more time than most. Look, we have a great team. So the idea that I run the firm… I mean, I lead the firm, I don’t run the firm. We have great partners. We have great… Our manager team is fantastic. So I mean, they really run the firm. But this is where my passion is for now. So I don’t mind. Days are typically pretty long. I don’t play golf during the week. Mara and I don’t travel probably as much as we should. Vacations are always a little bit mixed. There’s always room for calls and meetings and whatever.

But to me, I mean, I’m grateful to be in this situation. I’m enjoying it. This is such a privilege to be the person that people recognize as the leader of this bunch, of this group. I mean, it is the honor of my life. So I don’t think of it so much as work. It’s my advocation. It does get busy. There are some times where I have to remind myself, “Just enjoy the ride.” I get a little overwhelmed, but I get lots of help and that makes it possible.

Louis Diamond:

Yep. If you’re not doing the job of the folks that you’re encouraging and leading to do, how do you have fodder to train them, to teach them, to empathize with that?

Andy Schwartz:

Exactly, you don’t have the credibility. I can ask them to do almost anything because they know I do it myself, and I think that helps.

Louis Diamond:

Yep. So moving more into the decision to bring on private equity capital, what I thought was probably the most interesting component of your announcement that you took on PE investment was that you completely restructured or reoriented your firm prior to Joe Duran coming in 2024. Correct me if I’m wrong, but Bleakley Financial Group was almost all 1099 contractors. So everyone owned their own books of business, paid Bleakley a fee or an override for certain services. But now, today, over 85% of your advisors and your AUM are W-2 employees, meaning you converted them from 1099 to acquiring them or merging with them. To me, that’s the dream. It’s had to have been very, very, very hard and challenging because there’s so many aggregator firms or platforms that support independent advisors, but the value that they’ve created is fairly minimal relative to one cohesive firm. So can you just talk about that decision, a very big and brave decision to go down the path of acquiring or merging with the practices rather than letting them continue to operate independently?

Andy Schwartz:

Well, look, we had to… It’s funny because we had been having conversations for years with consultants, and they kept telling us what we had to do. Again, we’re not that smart, so we just kept thinking, “No, we don’t have to do that.” But we were told 10 years earlier that the only way that this thing has any value to the world is you’ve got to have EBITDA for the firm. We talked to all the smart people, we ignored all of them. But what happened was we needed capital and we needed equity in order to bring people on, because people aren’t just joining us just because we can help them grow a bigger business.

So the reason we went in the direction we went initially was we just needed capital. We wanted to grow the firm, and the only way we were going to get to is… What’s the old saying? What got us here is not going to get us there. So we needed capital. But we also realized that I had to have something I could sell in the marketplace. And people want equity. So they want cash, but they also want equity, because we’re talking to entrepreneurs. Kevin owned his own firm. He has $2 billion of assets. He wasn’t interested in being someone’s employee, but he was interested in being able to get leverage and be a partner and share equity in a larger firm that had the chance to grow even more. So what the gift that Joe Duran, the Rise folks gave us was that gift of structure and understanding. So that was really helpful, and that’s been a big part of our success.

Louis Diamond:

Yeah, it’s an amazing journey. Again, I think you could probably write a book or a case study on how that happened. I’m sure there were some downfalls, some people that weren’t all that excited about it, but the results speak for itself.

Andy Schwartz:

I think people ask all the time because I do get phone calls. People are trying to do this, and they’re struggling. It took us 90 days to basically do it. People say, “I’ve been at this for two years.” And the biggest issue is trust. Either they trust you or they don’t. At the end of the day, I always went to the advisor here, we were a firm for 30-plus years prior, and these guys knew that we always did what we said we were going to do, and we always did. If your people trust you, then you can do it. If your people don’t trust you, it isn’t going to work.

Louis Diamond:

In other words, your firm added immense value to the advisors as well. Aside from trust, if you weren’t providing a service or services that they found a value that they couldn’t access on their own, it would’ve been 85/15 going the other way for sure.

Andy Schwartz:

Yeah, 100%. I know it’s not easy, but it wasn’t that hard for us.

Louis Diamond:

Good. It’s well-earned. So I believe you were Rise Growth Partners’ first investment.

Andy Schwartz:

We were.

Louis Diamond:

That’s cool. It’s exciting. You get to be someone’s first, but did it make you uncomfortable that you were the first investment or did you see that as a positive?

Andy Schwartz:

I actually saw it as a positive. Well, one, because I recognized immediately that Joe Duran and his team were way smarter than we were certainly, and certainly with what we were trying to do. And I figured that it’s almost like the first child. They were so excited to have somebody, and there was so much time and energy, so they just really doted on us. They were really able to help us. Now they’ve got four or five groups that they work with, and obviously we’ve been launched. So the younger babies are getting more time and attention, although we get everything that we need from them. But yeah, that never concerned me. I always thought that would be our advantage. It actually turned out that way.

Louis Diamond:

Interesting. In thinking through a sale or a minority sale, did you entertain other types of capital, whether it was a family office or a multitude of other private equity sponsors or selling the firm outright?

Andy Schwartz:

Yeah, we probably had four or five very, very serious conversations. Actually, some got pretty close to the end where we basically just made the decision not to do it. One was a much larger firm, good people. But the problem always was… I was always going to get rich out of the deal because it was going to be 100% sale, but there was really no lift or leverage from the advisors. So the principals, they were willing to pay me a big multiple and my partners a big multiple, and pay these guys basically an average multiple. So we had always told our guys, “Let’s stay together, and someday, this thing, whatever it’s going to turn into be, will benefit everyone.”

So with the Duran situation and the deal with Rise did, it gave everybody a chance to benefit from what we were doing. But what was good about all of those false starts was, it taught me a lot because I had… I know you’re involved in this, so you know better than I do, but we’d start conversations, somebody would reach out to me, I would be very specific about what I needed. They would say, “Yep, we can do that.” And then you get to the finish line, and it’s almost like, I started out, I wanted a tomahawk steak and a baked potato, and I ended up getting a two-day-old hamburger with some cold French fries. It’s like, I know I’m not that smart and I know you’re the PE guys, but for God’s sakes, we’re not stupid.

So it was funny because in January of ’24, I told my partners, “I don’t want to have any more of these conversations. It was a waste of time and energy. I’m sick of talking to these people. Let’s just put our heads down, and then let’s grow the firm a little bit more, and then we’ll see what the world looks like.” And then I get introduced to Duran.

Louis Diamond:

Perfect. Makes sense. Yeah, so you were well-educated on the market, the types of buyers, and I always say it’s almost more important to understand what you don’t want more than what you do want. The only way oftentimes to understand what you don’t want is to experience it and touch and feel it and really get into the weeds on it. I like too, Andy, I saw in an article, you said that “we’re private equity invested, we’re not private equity owned,” which is a very cool dynamic. I could imagine why that was important to you to retain majority control.

Kevin, I want to bring you back into the conversation. Thank you for being patient here. But I mean, I would imagine you had some real choices. I mean, you could have stayed at Northwestern and been very successful, gone through with your internal succession plan. You could have gone to an independent BD, monetized, figured out succession later. You could have sold the business to a strategic acquirer. You were big enough to take on an investor in some capacity on your own. So options wasn’t your problem. Maybe just walk us through. Did you consider any other pathways? And what were the pros and cons in your mind that led you to doing a transaction with Andy?

Kevin Spahn:

I’m a little different, I think, than most people in this industry. Even as you grow your business at a certain percentage, none of that stuff has ever really meant anything to me. All I know is I like what I do. So when I came into the business, because I like it, I enjoy it, I spend time doing it, I’ve tried to get better at it. But it comes naturally because it’s something that I don’t look at Monday mornings as, “Oh, no, it’s Monday morning.” I’m excited to go to work.

My entire career, once I left law, my business has just grown over the years naturally. But you said something before, Louis, and I think this applies to me. I love to work with the clients. I don’t like what I have to do in terms of running the firm. I never have. It’s never been my cup of tea, but you have to do it if you run a firm. So number one, the thought of all the due diligence that I would have to do to research all the firms out there, I wasn’t really all that interested in doing that.

At the end of the day, it comes down to this word trust. I trust Andy. I trust the other partners here too, because I’ve known not just Andy, but I’ve known Scott and many of the other partners for years. So I knew what I was getting myself into. At the end of the day, I knew what they built. I was very comfortable with it, and I was either going to stay at Northwestern Mutual or I was going to come here, but I wasn’t going to go anywhere else.

I will say, since I’ve gone, it’s been exactly like I thought. I thought I trusted Andy. And if something happened along the way with the transition, everything that he said has been true, thing that he promised is real. As you deal with more complexities with a bigger book and more and more employees, I knew that I was almost at the breaking point in terms of my own organization and to merge into this organization that, as I said before, he’s already built out. I don’t have to do it. And to benefit from these great people that he has as part of his organization, that’s all been a real blessing for me and my team. So I didn’t shop the marketplace really, but I knew what I was getting into, and it’s worked out clear as I thought it would.

Louis Diamond:

That’s amazing. I think that’s what most people would covet. But it is a decision in and of itself to not shop the marketplace. I mean, from representing buyers or prospective buyers, I know the pricing leverage or the negotiation leverage and the valuation lift that comes from having an open market, having multiple bids, et cetera. It sounds like that wasn’t the… Obviously you wanted to get fair value for your firm, but for you, it was more, it’s trust, “I’m either going to just stay at Northwestern, which is the devil I know or it’s what I’ve known where I’ve been successful, or I’m going to go to the individual that I trust and forget about all the other noise.”

Kevin Spahn:

Well, Andy says things, but I know they’re true because I’ve seen him at work. I’ve seen how he’s acted. I’ve seen how he interacts with people. But here’s an example. He cares about the people that are at his firm. He says that, but I know it’s true because I see it. I’m the same. I really care about the people in my firm. So as I think about, well, what about the future of two groups, my clients, but also the people that work in my firm? They’re going to be around long after I am. Well, I don’t want myself to retire someday, get a big check, because there’s all sorts of options to get a check. If I get a check and then my client’s scatter to the wind, and my employees don’t really have a future and they just have to go and find their own way, that wasn’t attractive at all to me.

So one of the things that I really appreciate about this opportunity is that there is a plan for both my clients and my employees or the younger team members at formerly Spahn Financial, where I feel very good about the fact that they have a solid, secure future in an industry that they’ve all grown to love without them having to go out and make their own way.

Louis Diamond:

Makes sense to me. We noted a couple of times in this interview, you talked about equity, partnership, both of you have. So Kevin, for you, what did it mean differently for you to become a partner and get equity in a larger firm rather than, we’ll say, the less risky move of just taking everything in cash? Why was that an important distinction for you?

Kevin Spahn:

For many years, when I left law and came into this business, I didn’t have any money at the time. I was just starting to make money as a lawyer. It takes a while. I started low. I got trial experience working for the government, so they didn’t pay much. That was three years. Then I was at a firm, and I was just starting to make more money. Then I made this big shift into a career that was all commissions. Well, even with what I thought was good early success, it took years till I really had any money in the bank or till I could actually tell my wife what we had in the bank because I really didn’t want her to know before promoting with her.

But I never was really worried about the future because I could see what it looked like. I also knew that I loved what I did every day, and I knew what it would lead to. It’s always been a part of my own career path that I got to the point somewhere along the way where I knew I had enough money. Somewhere along the way, I realized I could retire if I wanted to. Here’s the good news. I don’t want to. I like what I do. So it really wasn’t about the biggest check or anything like that. But when I go back to this analysis, well, how did I bring in business before? If you do a good job and the clients appreciate the work you do, they refer you to their friends. So that would happen. That’s how we grew our business.

But as I think about, “Well, I now have two grandchildren. I’d like to spend time with them. I have four children. They’re all going to get married and have kids,” I see over the next whatever, 10 or 15 years, I will want more flexibility. Andy and I both work pretty long hours right now. Won’t have the time for that. So what’ll happen? Well, at some point, I think the new business generation will slow down a little bit. And as I said before, as our clients age, some of the money starts coming out, that all affects the value of your book.

I feel pretty comfortable that the combination of what we’re doing and all my partners and then this firm that Andy’s built, I think that the growth will be pretty strong over the next 5, 10 years. So part of my thought process was I’m trusting in that and I’m buying into that. At the end of the day, I’m comfortable that the combination of what this is going to ultimately do for my clients and then my team, and then the value of my ownership compared to what I would’ve done on my own, the combination of it all is a really good solution for where I was a year ago.

Louis Diamond:

That sounds like it. I mean, I feel like the equity ownership dynamic, especially equity in a firm other than yourself, it’s either something that advisors get really charged up about because they see what you saw, Kevin. “I’m diversifying. It’s not just my growth, it’s everyone’s growth, that this asset, this equity has the ability to grow and scale quicker, more efficiently than just me.” At the same time, it’s probably the hardest decision for folks to step over the threshold and say, “I’ve been responsible for my growth, the value of my firm. If they’re independent already, I decide distributions, who to hire, et cetera. It’s for better or worse, it’s me and I’ve trusted myself.” So just getting comfortable with equity in someone else and taking your hands off the wheel a little bit is not something that everyone gets comfortable with. But it sounds like, for you, it was the absolute right decision for all the reasons you laid out.

Kevin Spahn:

You just laid it out perfectly. Years ago, I was going to bring in a junior partner. I was working with this guy, I was training him, teaching him, and he was planning on joining my firm as a junior partner. And then he started asking me what I paid everybody and why I paid these people that much money. I realized right then and there, the last thing I want to do is bring on someone who’s going to own 10% of my firm, and then they’re going to start complaining about what I pay everybody else. I didn’t want to have to make that decision with anybody.

It is a special person that I would ever be comfortable becoming a partner with. There are obviously many partners in this firm, but it comes down to the fact that my relationship with Andy as the managing partner and he has a lot of the influence in the firm. It really is trust. And I’ll say, my wife has known Andy a long time, and she trusts him as well. So for years, she would ask me, “What about Andy?” We would talk here and there about his firm, and she’s always been very comfortable with Andy and this potential move.

Louis Diamond:

There we go. Yeah, the actual decision dynamic was, your wife was comfortable.

Kevin Spahn:

Exactly. She was my secret weapon the whole time.

Louis Diamond:

There we go. Andy, I can guess the answer just from doing this conversation, but when you bought Kevin, I don’t know if it’s still true, but at the time, at least, he was your largest deal, and it was the first time you’re entering the Chicagoland area. What was it about Kevin and his practice that made you get to a yes?

Andy Schwartz:

Listen, I’ve talked to Kevin. I mean, Kevin and I stayed in touch. So for the 11 years, one of the few advisors that I maintained a real relationship with was Kevin. I never really thought he would join me, but I couldn’t help myself because Kevin was the best advisor in the system and the best person in the system. Truth is, I think Kevin did what he did as much as anything. If it was a good financial decision, he wanted to be able to give more money away someday. That’s how Kevin operates. So I’ve always been just a huge fan.

I would tease him. When I would joke with him, I would always ask him, “So when are we going to come partners?” And we’ve had our own inside joke, which we’re working on right now, right, Kev, which we’ll work on later this afternoon. So we’ve always had our deal. And then I got to tell you, it was probably, it’s still sometimes I wake up, and I can’t believe how fortunate that he actually did it. So yeah, forgetting about size, I mean, yeah, huge practice, our biggest acquisition, Chicago’s a great market, but I mean, it’s a one in a million. It was hard for him because the Northwestern Mutual didn’t want to lose him. So it was a very difficult decision because I think everybody felt the same way. So no, we’re blessed to have him. His team, he’s got a great team, made our firm better, and this is the best part of the journey for me.

Louis Diamond:

Amazing. Two more questions for you guys. I’m going to let you get on with your busy days. This would be for either or both of you. So for a Northwestern Mutual advisor, or let’s say any advisor within an insurance BD or who has some sort of proverbial golden handcuffs, whether it’s insurance renewals or pension or a very large unvested deferred compensation balance, really you can pick anything, many of these folks think they’re stuck. Might be unhappy. They might see promise elsewhere, but they can’t reconcile leaving something behind. Another example would be mutual fund trails through proprietary products or a bunch of alts where the trails aren’t going to carry over. What is it you’d want those individuals to understand about what’s actually possible or the mindset of leaving something behind to go run towards something else?

Andy Schwartz:

Well, I mean, look, the issue is… Look, there’s a number that can be too big to make sense to never leave. So people could be truly stuck. Renewals run out. And as you do less premium as you get older, the renewals get smaller. So renewals to me are a non-issue. I always like to talk to advisors of how much bigger. Our thing is we think we can grow your practice twice as fast and half the time. So if that’s true, and if you believe that’s true, then there’s math on that side, and you just compare the math to what you’re losing.

Everybody that we’ve brought on, everybody makes more money, and they’ve more than made up for what they give up. That doesn’t mean though that someone doesn’t have such a golden handcuff or some program that is so substantial. By the way, we do the math. I wouldn’t suggest they do it. If somebody were going to be upside down millions of dollars five years from now by joining me, I don’t want them to join me because they shouldn’t. They should do what’s best for them and their families. But we find that if we really look at the math, we really look at the growth, we look at the growth and the equity, we look at the leverage.

The difference is they do not work at firms. They work at institutions, and they’re good institutions, all of them. They’re good people, they’re good institutions, but they’re not firms. They have to build their own firm with an institution. It’s very costly. Their margins are much, much worse. We have great margins. Our partners have great margins of their P&Ls because they’re able to leverage an actual firm. So that’s a big difference. Whenever I talk to these people, I mean, you might build a firm within the institution, but you are not part of a firm. We are a firm. Everybody runs a P&L, they run a book inside a firm because we are a firm. I think that’s a big difference. Everybody’s going to make the decision for themselves.

Louis Diamond:

Interesting. Andy, I lied because you just sparked another question before my last one. Where do you plot OnePoint on the spectrum, let’s say, of conformity? So on the one hand, you have just someone’s operating completely independently, call shots, no outside capital. All the way to the very, very right would be, all investment portfolios are the same. Everyone’s the same brand. Advisors are basically relationship managers. Where would OnePoint be on the spectrum, and why is that decision important to you?

Andy Schwartz:

Yeah, I would say we’re probably somewhere in the middle. Everybody’s the same brand. That’s a deal breaker for us. Either you’re going to be a OnePoint partner or you’re not, or a OnePoint tenant or you’re not. Because I’m an advisor, I recognize that everybody comes to a firm or they come to a situation with legacy assets. They come with legacy assets that have taxes. They come with legacy relationships. So we’re not unrealistic, but we also recognize that centralized service is the key both for the value of the firm and the future and for the value and the way they operate within their businesses, grow their businesses.

So I would say that it’s a little bit of a struggle. It’s always anything that we do, there has to be a why. You don’t just say, “Okay, everybody is now in this program, and this is what we do.” You better have a why. If you’re going to force people into something, it better be really good because it’s got to be able to be better for them than for them not to be in that. So we have the CSA desk. We don’t force them, but 80% of our advisors are on the CSA desk. Same with the think tank. My guys, they all want to shoot for 100%. I said, “Great, we’ll shoot for 100%.” It will never be mandatory unless it is so good that it’s more cost-effective and it’s better than they can do on their own. When my team can prove that’s true, then we’ll become more restrictive. But until then, we serve these advisors for the idea that we would shove things down their throats. It’s not going to happen.

By the way, growth-oriented advisors are entrepreneurial. I don’t want zoo-fed bears. I want growth-oriented, entrepreneurial advisors. But at the same time, they can’t be the Wild West either. It’s because it detracts from value, and it makes it impossible to run a business. It makes it impossible to really leverage the opportunity. So I would say we’re probably somewhere in the middle.

Louis Diamond:

I would agree. It’s like a gentler form of one team, one dream, while still leaving some entrepreneurial freedoms in the hands of your high growth non-zoo-fed-bear advisors.

Andy Schwartz:

Yeah. Be realistic about what’s possible, what you’re asking them to do. I mean, these guys have to be able to do what’s best for their clients and selling all their assets and paying taxes, because this is the way we run a portfolio, is completely unacceptable. So all the constituents have to be considered.

Louis Diamond:

Perfect. Last question for each of you, parting thoughts. If you were speaking to yourself, so Kevin, back before you merged with Andy back 12-ish years ago, before you left Northwestern to launch Bleakley Financial, now called OnePoint, what is it that you would want to tell yourself? Or put another way, what would you tell the yous that are still captive to some sort of institution?

Andy Schwartz:

Kevin, why don’t you go first?

Kevin Spahn:

So what would I tell myself? I guess it goes back to what I said before. It’s all about, do you love what you do or not? I’ve always loved what I do. And I tell every potential new client that three things have to be present for you to work with me. Number one, you have to trust me. If you don’t trust me, it’s not going to work. You’re not going to stick with the plan. But if you do trust the advisor, that’s not necessarily enough. People trusted Bernie Madoff, but look where it got them. So you have to trust them. You have to see that they provide value. And if they don’t provide value, I don’t know why you would pay them.

And then the third one, which I almost call a get-out-of-jail-free card, is you have to be on the same page with them philosophically. You have to trust them, you have to provide value, and you need to be on the same page philosophically. So as I think back to myself 12 years ago, all I would realize is that I know things now that I didn’t know them. Part of the reason is that Andy talked about my team. I brought on some people in the last 12 years that I was basically following Andy’s lead. They know more than I do. We have several CFAs in our firm. I have a guy, his name’s Tim Funke. He was a portfolio manager at Northern Trust for 12 years before I hired him. When he left Northern Trust, he was working with families of 250 million or more liquid net worth. He’s great, and he’s been with me for 10 years. He’s a partner in our firm too. It has really helped me provide more value for my clients.

If I go back 12 years, I would just say associate yourselves with the best people you can, whether you bring them into your firm or this example of me joining with Andy’s firm. It accelerates your trajectory in ways that you can’t do on your own.

Louis Diamond:

Fantastic. Andy, same question for you.

Andy Schwartz:

Yeah. I would say, I like to go back 42 years and say, thank you, Andy, for the late nights chasing down $500 a year premiums, taking, I don’t know, Kev, is it fair to say five, six, seven years to break even net worth? I mean, to first dig out of the hole and then to actually… Because I don’t think I was telling Jodi that I had any money in the bank for at least six or seven years.

And then I would say, if I look back 12 years, I’m grateful that we had the courage to do it because sometimes… I would say my brother Scott was a big part of it because he really had more conviction. I was benefiting more from being in the Northwestern system with all the joint work. But I’m just grateful that we had the courage because it’s hard to do and that we did it, because I mean, it has worked out so well for us. I mean, not just financially, but I love the work we do. I love what we can provide for our clients. I love the flexibility. I like to say to people that I haven’t had a fight professionally in 12 years, and I used to have fights all the time. They were friendly fights. I mean, they were good people, and I know they did the best they could, but we were constantly fighting about what we couldn’t do. We were constantly… And I don’t do that anymore. That hasn’t been part of my life for so long, so I’ve become like a spoiled brat. I don’t have to fight with anybody.

Louis Diamond:

That’s amazing.

Andy Schwartz:

People always ask like, “Do you regret not doing it sooner?” And I would say probably not because it was a great run for us and great firm, a great institution, I met great people. And everything worked out really well. So would we have been bigger sooner? Maybe, but I have no regrets about that. That’s not really an issue for me.

Louis Diamond:

Absolutely amazing. This has been so much fun, guys. I love the dynamic and the personal relationship and all the trust that you’ve built. Andy, I can’t believe what you’ve accomplished. I mean, you were very successful and Northwestern famous when you’re on our show a couple of years ago. But just the level of growth, the conviction and what you’re doing, the way you’ve converted 1099s to W-2s and partners and just where you’re headed from here is really a treat. Honestly, I almost look at it as a case study for how to build an enterprise. And, Kevin, I really appreciate your candor for sharing behind the scenes of your decision to make the big decision to not just leave Northwestern, but also merge your firm and kind of take your hands off the wheel a little bit.

Andy Schwartz:

Well, my pleasure. It’s great to see you again, Louis, and happy to talk anytime.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? Is a book written with you in mind? It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 With Louis Diamond

Vanguard’s acquisition of Altruist could reshape RIA custody, bringing together Altruist’s technology with the scale, capital, and reputation of one of the industry’s best-known brands.

In Summary

Vanguard’s acquisition of Altruist brings one of the financial industry’s most established brands together with one of RIA custody’s fastest-growing challengers.

In this Rapid Reaction Industry Update, Louis Diamond looks beyond the reported $4B+ purchase price to consider what the combination could mean for advisors—what he sees as the good news, the potentially negative outcomes, and everything in between. Altruist gains the capital, scale, and brand recognition that could help it compete more aggressively for larger RIAs and breakaway teams. Vanguard gains a technology-forward custody platform and greater access to the independent advisor channel.

The larger implication may be increased competition across RIA custody. With Schwab and Fidelity controlling much of the market, a Vanguard-backed Altruist could create new pressure around technology, pricing, service, referrals, and innovation—while raising new questions about how Vanguard balances its growing advice business with its role as custodian.

The Storyline

RIA custody has long been dominated by Schwab and Fidelity, particularly since Schwab’s acquisition of TD Ameritrade. Altruist emerged as one of the few credible challengers, building its position around modern technology, lower costs, and an advisor-focused platform.

 

But technology was only part of the equation. For larger breakaway teams in particular, Altruist faced another hurdle: brand recognition. Advisors could be impressed by the platform while still wondering how clients accustomed to names like Merrill, UBS, Morgan Stanley, Schwab, or Fidelity would respond to an unfamiliar custodian.

 

Vanguard changes that equation.

 

Louis examines why the acquisition makes strategic sense for both companies, from Vanguard’s push to expand access to financial advice to Altruist’s opportunity to operate with the backing of a well-capitalized, long-term owner.

 

For advisors, however, the bigger story is what happens next. A stronger competitor in custody could affect everything from technology and pricing to referral opportunities and the choices available to breakaway advisors.

 

There are also important questions still unanswered. Vanguard operates its own advice businesses. Altruist’s speed and fintech culture may be tested inside a much larger organization. And while Vanguard says Altruist will remain independent, the longer-term operating model remains to be seen.

 

The deal may not change advisors’ options immediately. But it has the potential to change the competitive dynamics surrounding those options considerably.

 

Topics Covered

• Vanguard’s acquisition of Altruist
• RIA custody competition
• Schwab and Fidelity
• Altruist’s technology and Hazel AI
• Vanguard’s financial advice strategy
• Custodian brand recognition for breakaway advisors
• Advisor referral networks
• Custody and technology pricing
• Direct advice and custodian conflicts
• The future of RIA platforms and Supportive Independence

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

Why is the Vanguard-Altruist acquisition significant for RIA custody? (03:53)
Louis explains why custody has remained highly concentrated around Schwab and Fidelity and how combining Vanguard’s scale and reputation with Altruist’s technology could create a much stronger third competitor.

 

What problem does Vanguard potentially solve for Altruist? (05:01)
Altruist has built a strong reputation among advisors for its technology, but larger breakaway teams have sometimes questioned whether clients would recognize or trust the brand. Vanguard could significantly reduce that concern.

 

Why does buying Altruist make sense for Vanguard? (07:00)
Vanguard has more than 50 million investors and has publicly discussed the need to expand access to financial advice. Louis considers how Altruist could give Vanguard both additional capacity and a stronger connection to independent advisors.

 

What does Altruist gain from Vanguard beyond capital? (09:51)
Louis discusses the significance of having a long-term, investor-owned parent rather than remaining dependent on successive rounds of venture capital, while gaining additional resources to develop custody, technology, and Hazel AI.

 

How could this acquisition change the choices available to breakaway advisors? (12:33)
The combination of Altruist’s technology with Vanguard’s brand could make the platform more viable for larger teams that previously hesitated because of client recognition and trust concerns.

 

Could Vanguard become a meaningful source of client referrals to RIAs? (13:42)
With millions of existing investors and more demand for advice than Vanguard can necessarily serve internally, Louis considers whether a future referral program connecting Vanguard clients with Altruist RIAs could become an important competitive advantage.

 

What are the potential risks of the Vanguard-Altruist combination? (16:54)
The acquisition also raises questions around Vanguard’s competing advice business, Altruist’s long-term independence, differences in corporate culture, innovation speed, and talent retention.

 

What could happen next across the custody market? (20:00)
Louis offers several predictions, including responses from Schwab and Fidelity, wider adoption of Hazel AI, a potential Vanguard-Altruist referral channel, and greater use of Altruist by breakaway advisors.

 

Key Takeaways

• Vanguard’s acquisition of Altruist could introduce a more formidable competitor into an RIA custody market heavily concentrated around Schwab and Fidelity.
• Vanguard addresses one of Altruist’s biggest challenges with larger breakaway teams: providing a widely recognized financial brand that advisors can more easily explain to clients.
• Altruist gives Vanguard a technology-forward entry point into RIA custody as Vanguard continues expanding its strategy around access to financial advice.
• Advisors could benefit from greater competition through pressure on custody and technology pricing, service, product development, and innovation.
• A future referral channel could become an important part of the combination, particularly given Vanguard’s enormous investor base and Altruist’s growing network of RIAs.
• The acquisition also introduces potential conflicts and execution risks, including Vanguard’s own advice businesses, the integration of two very different corporate cultures, and questions about whether Altruist can maintain its speed and independence over time.
• For breakaway advisors, the custody shortlist may have changed: Altruist can now pair its technology and fintech capabilities with the capital and reputation of Vanguard.

https://youtu.be/UlgCBjLXrnw

Quotable Moments

“Custody is really a trust business.”
— Louis Diamond (05:55)

“Every time a well-capitalized player shows up, especially in custody, advisors win.”
— Louis Diamond (12:33)

“Really, it’s tech-forward independence now without a brand trade-off.”
— Louis Diamond (13:42)

“There are always innovators showing up from outside the establishment, and every time one succeeds, advisors end up with more options and more leverage and more negotiating power than they had the year before.”
— Louis Diamond (22:44)

FAQs

Why is Vanguard acquiring Altruist?

Louis sees several strategic reasons for the acquisition. Altruist gives Vanguard an established technology and custody platform serving more than 6,000 advisors, while potentially expanding Vanguard’s ability to reach investors through independent financial advisors. It may also provide another distribution channel for Vanguard investment products and future offerings.

What does Vanguard’s acquisition mean for Altruist?

Altruist gains the backing of one of the world’s largest and best-known investment firms while retaining, at least initially, its brand, leadership, and operating structure. Vanguard’s capital could allow Altruist to continue investing in custody capabilities, technology, and products such as Hazel AI without relying on additional venture funding rounds.

How could the acquisition affect RIA custody competition?

Schwab and Fidelity currently dominate RIA custody. Louis believes a Vanguard-backed Altruist could become a stronger challenger by combining Altruist’s technology and pricing model with Vanguard’s scale, capital, and reputation. That could increase competitive pressure around pricing, service, technology, and innovation.

Why could the deal matter to breakaway advisors?

Altruist’s technology has attracted advisor interest, but some larger breakaway teams have questioned whether clients would be comfortable holding substantial wealth with a less familiar custodian. Vanguard’s ownership could substantially reduce that brand-recognition hurdle and make Altruist a more viable option for larger teams.

Could Vanguard refer clients to advisors using Altruist?

No referral program has been announced. However, Louis believes it is an important possibility to watch. Vanguard has more than 50 million investors, while Altruist provides access to thousands of independent advisors. Connecting investors seeking human advice with RIAs on the Altruist platform could create a meaningful new referral channel.

Are there risks for advisors using a Vanguard-owned custodian?

Potentially. Vanguard operates its own financial advice businesses, creating some of the same competitive concerns advisors have raised about other custodians with retail advice operations. Other questions include whether Altruist will remain operationally independent over time and whether its culture and pace of innovation can be maintained under Vanguard ownership.

What happens next for Altruist, Schwab, and Fidelity?

Louis expects the competitive response to be worth watching. He believes Schwab and Fidelity could respond through technology, AI, pricing, or other changes to their advisor offerings. He also expects Altruist to compete more aggressively for breakaway teams and sees the potential for Hazel AI to expand well beyond advisors who custody assets with Altruist.

Does the Vanguard-Altruist deal change anything for advisors immediately?

Not necessarily. The transaction still needs to close, and its longer-term impact will take time to emerge. But for advisors evaluating custodians, independence, or the value they receive from existing partners, the acquisition adds another factor to consider as the competitive landscape evolves.

Louis sees several strategic reasons for the acquisition. Altruist gives Vanguard an established technology and custody platform serving more than 6,000 advisors, while potentially expanding Vanguard’s ability to reach investors through independent financial advisors. It may also provide another distribution channel for Vanguard investment products and future offerings.

Altruist gains the backing of one of the world’s largest and best-known investment firms while retaining, at least initially, its brand, leadership, and operating structure. Vanguard’s capital could allow Altruist to continue investing in custody capabilities, technology, and products such as Hazel AI without relying on additional venture funding rounds.

Schwab and Fidelity currently dominate RIA custody. Louis believes a Vanguard-backed Altruist could become a stronger challenger by combining Altruist’s technology and pricing model with Vanguard’s scale, capital, and reputation. That could increase competitive pressure around pricing, service, technology, and innovation.

Altruist’s technology has attracted advisor interest, but some larger breakaway teams have questioned whether clients would be comfortable holding substantial wealth with a less familiar custodian. Vanguard’s ownership could substantially reduce that brand-recognition hurdle and make Altruist a more viable option for larger teams.

No referral program has been announced. However, Louis believes it is an important possibility to watch. Vanguard has more than 50 million investors, while Altruist provides access to thousands of independent advisors. Connecting investors seeking human advice with RIAs on the Altruist platform could create a meaningful new referral channel.

Potentially. Vanguard operates its own financial advice businesses, creating some of the same competitive concerns advisors have raised about other custodians with retail advice operations. Other questions include whether Altruist will remain operationally independent over time and whether its culture and pace of innovation can be maintained under Vanguard ownership.

Louis expects the competitive response to be worth watching. He believes Schwab and Fidelity could respond through technology, AI, pricing, or other changes to their advisor offerings. He also expects Altruist to compete more aggressively for breakaway teams and sees the potential for Hazel AI to expand well beyond advisors who custody assets with Altruist.

Not necessarily. The transaction still needs to close, and its longer-term impact will take time to emerge. But for advisors evaluating custodians, independence, or the value they receive from existing partners, the acquisition adds another factor to consider as the competitive landscape evolves.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

Related Resources 

Rise and Reinvent: Joe Duran on Building and Rebuilding World-Class Firms

From Insurance Sales to $8B RIA: A Northwestern Mutual Breakaway Story

Diamond Consultants 4th Annual Advisor Transition Report

View the transcript of this episode…

Vanguard Acquires Altruist: What It Means for RIAs, Custody & Breakaway Advisors

With Louis Diamond

Louis Diamond (00:06):

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is a special rapid reaction industry update, Vanguard acquires Altruist, what it means for advisors in the industry. I’m Louis Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond (00:28):

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

(01:21):

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond (02:05):

Funny how the biggest news in the business almost never comes from the firms everyone is watching. On Wednesday, August 26th, 2026, Vanguard announced its acquiring Altruist. If you asked me a year ago to name the company most likely to buy an RIA custodian, Vanguard would not have been near the top of my list. Vanguard was in the RIA custody business once. They left in 2003 and handed roughly $120 billion of advisor assets to TD Ameritrade on the way out. 23 years later, they’re buying their way back in, reported $4 billion or more. So let’s talk about what happened, why it matters, and where I think it goes from here.

(02:48):

What happened? On August 26th, 2026, a definitive agreement was announced out of Valley Forge, Pennsylvania. A deal is closing later this year where Vanguard is acquiring Altruist, the relative upstart RIA custodian. The price, an undisclosed number, but a reported $4 billion, some outlets reporting $4.6 billion or more. Either way, more than double their last private market valuation at the end of April 2025. Another element is Altruist is staying as a standalone. They’ll keep their brand, CEO, management team, and operate the same model just as a wholly owned subsidiary of Vanguard. Altruist in one breath, for those unaware, was a custodian and fintech company founded in 2018 by Jason Wenk. They became a self-clearing custodian, third largest as far as number of advisors served, north of 6,000 advisors, and had a reputation for serving smaller or upstart advisors, but recently started getting into more of the larger market breakaway space.

(03:53):

One estimate I’ve seen peg’s Altruist market share of RIA custody at around 6%, but you compare that to about three quarters of the market for Schwab and Fidelity combined. So a relatively small player, but a rapidly emerging player and threat in US RIA custody. This is not the first time Vanguard has been involved with Altruist. They reportedly were an early investor in Altruist back in 2020 and former Vanguard CEO, Bill McNabb, has been on the board of Altruist, so a lot of history between the firms. Let’s get into now why I think this is interesting for the industry as a whole. In my view, custody has never really been all that competitive, especially since TD Ameritrade sold to Schwab. You really had an oligopoly between Schwab and Fidelity. Sure, there’s a number of compelling, say more boutique custodians, whether Pershing Advisor Solutions, Goldman Sachs, which was another newer entrant to custody, LPL, Raymond James, First Clearing, and a number of others are also in the space, but it is a market that is dramatically dominated by the two largest players.

(05:01):

So I think this matters because you add an amazing venerable brand and reputation of Vanguard with this scrappy upstart custodian, and all of a sudden you can see a world where custody is one of the more competitive spaces in the industry. Altruist, in my view too, was one of the first credible challengers to the incumbent custodians in 20-ish years. Goldman has since picked up some decent market share and certainly they’re attractive for the segment of advisors. But Altruist with their tech-forward approach, low fees, and even just the way they went to market as an antagonist to Schwab and Fidelity, they’re a big deal and I think this just magnifies what they’re able to do. The gap though for Altruist was brand and reputation. Sure, they had amazing tech. No one ever has doubted that. Hazel AI, which they recently launched has been very well received.

(05:55):

Advisors I’ve worked with who have demoed the platform are incredibly impressed. The big Achilles heel though for Altruist has been my clients don’t know who Altruist is. Why would my clients put their millions of dollars of wealth with a self-clearing custodian that doesn’t have the same scale or reputation as the incumbent custodians? Well, that really goes away here. And at the end of the day, custody is really a trust business, but you’d have to think that a client would trust their assets held with Vanguard or with Altruist through Vanguard in a very similar way that they would trust assets held by Bank of New York Mellon or Charles Schwab or Fidelity Investments or Goldman Sachs. So to me, Vanguard acquiring Altruist solves that problem in one sentence, very simple. Why I think this makes sense for Vanguard? Salim Ramji, the CEO of Vanguard, has been saying since he arrived from BlackRock two years ago that only one in five Americans work with a fee-based financial advisor and that quality advice shouldn’t be a luxury good and this shortage is only going to get worse as advisors retire.

(07:00):

This is really him putting his money where his mouth is and really trying to make financial advice, human directed financial advice more accessible to everyday Americans and the upper echelons of wealth in this country. Vanguard as a company has over 50 million reported investors and over 12 trillion in assets. A lot of these people want Vanguard advice, but Vanguard hasn’t had the manpower or the capacity to deliver it itself. Buying Altruist over time can certainly solve that capacity gap and make it so that a human-based financial advisor or any of Vanguard’s internal platforms now have a greater ability to provide advice to Americans looking for financial advisors in the United States. I think this also means more distribution capability for Vanguard funds. Not that Vanguard has ever had a problem with distribution. They have a relatively small wholesaling force compared to other firms, but given their cost and reputation and performance, they’re really on pretty much every platform.

(08:04):

Most advisors have some clients that are invested into Vanguard mutual funds or ETFs, but this I think just gives them a greater ability to distribute Vanguard products, probably in a similar way to Goldman’s approach. When Goldman entered US RIA custody, in large part, they were doing it for distribution of different things. For Goldman, it was private markets and lending and other types of products. Vanguard is more ETFs and mutual funds, but Vanguard has also been pushing more into the private market space, so I can definitely see a world in which they can ratchet up the distribution of their products in a fairly cost-efficient way. I think to me, the most interesting thing about this marriage is the mission overlap is quite real. When Vanguard started, and to this day, their goal was to provide quality investment products at a fraction of the cost of the incumbents so that investing can be accessible to everyday Americans.

(08:59):

That’s exactly the verbiage that Jason Wenk and Altruist has used from the beginning, where they want to become a all-in-one hub or tech-enabled custodian so that an advisor, regardless of their size and a client regardless of their AUM, have the ability to get quality advice. I recently listened to a podcast called Acquired. We’ll link it in the show notes, but it’s a three-hour in-depth look into the building of Vanguard. And if you combine that with the podcast episode that I recorded with Jason Wenk, the CEO of Altruist, if you play them side by side, the parallels are eerily similar. So we’ll link both into the show notes, but I really think both of these firms were cut from the same cloth and really from the beginning, both have gone against the grain and tried to rattle incumbent players in the industry. So at least on paper, seems like a very good match.

(09:51):

Why does this deal make sense for Altruist? For one, for Jason Wenk and his leadership team, this has to be the outcome you drew up, maybe even better. Founding a new custodian in 2018, selling it in 2026, eight years later for over $4 billion, that’s a pretty incredible return on time for this team. They deserve it all and built something special and really entered into a space where no one wanted to venture just given the market share of the major incumbents, but good for them and has to feel good to pull off this type of sale. I think the big thing too is the buyer is the story. Vanguard as a company, it’s investor owned. They’re not private equity owned. They’re not VC backed like Altruist was. So Altruist can get off of the fundraising treadmill. They don’t have to worry about fund life or a five-year hold period or an eventual sale to a strategic.

(10:42):

Now they can really just focus on the business at hand, having one of the most well-capitalized companies in the world as their capital backer and owner. And every advisor on a PE-backed platform knows the question hanging over every relationship, who owns this next? That’s a question they won’t have to answer anymore at all, and they can really just focus now going forward. I think this also gives Altruist a fortress balance sheet and a ton of capital to keep pushing and developing their Hazel AI platform, which was launched in September 2025. Hazel’s an AI tax planning tool, kind of AI superpower that really has taken the industry by storm and has started to be sold as a standalone product to RIAs. And from what I’ve seen, they’ve sold it to over 1600 new RIAs just in the first month alone for $60 a seat per month, and that’s available to folks if they custody at Altruist or not.

(11:36):

So this, I think, just gives them an ability to distribute their fintech solutions and certainly develop their custody platform in a way that maybe was challenging or not as possible before. They can also take a longer term view instead of having to worry about they raised a series F, whatever comes after F and an eventual sale, investors wanting to get a return on capital, they can now focus on building over the long term, which has been Vanguard’s strategy all along. I think too, this will give Altruist the ability to invest in new capabilities that they didn’t have before, whether it’s lending or whether it’s more on the product side. It takes a lot to be a custodian. It seems like a relatively straightforward business just holding assets, but there’s a lot of products, solutions, really requirements that everyday investors and RIA clients have, and I think this will just ratchet up Altruist’s ability to close some of the capability gaps that they’ve had since they launched and they’re very transparent about those.

(12:33):

What I’m most excited about this, just coming from my vantage point in the industry, is why should an advisor care? To me, there’s five things that advisors should really take notice of with this acquisition. First one’s competition. Every time a well-capitalized player shows up, especially in custody, advisors win. Schwab and Fidelity have fought Vanguard in the asset management space for decades, and more recently in financial advice. Now you’re adding custody against a firm that doesn’t need to be profitable the next quarter, and all of a sudden we very much have an arms race and some competition is good for pricing, for service, for innovation, and I think this is going to be only positives for clients across the country, having another competitive option and keeping the incumbents really on their toes. Another reason, the breakaway shortlist has changed. Objection I always heard about Altruist was, “The tech is great, the AI seems cool, but how do I explain the name Altruist to a 68-year-old client who’s leaving Merrill or UBS or Morgan Stanley?”

(13:42):

While someone may still get some objections because Vanguard may not have the same brand cache as Goldman Sachs or UBS Private Wealth or Merrill Private Wealth, that objection got a lot weaker today. Really, it’s tech-forward independence now without a brand trade-off. It’s a genuinely different offer in the market than it was before. Third, I think this is one that hasn’t been talked about much, but should be watched closely, potential for referrals. Schwab confirmed last week that it was taking the SAN or the Schwab Advisor Network client referral minimum from two million to five million. For anyone not aware, referrals from the retail branches of Schwab and Fidelity are one of the major organic growth funnels for many of the top RIAs in this country and have driven valuations to billions and billions of dollars for firms that are in this program.

(14:36):

I really do see this as being a potential new massive referral opportunity of Vanguard existing clients and customers to Altruist custody to RIAs at a time when Schwab is trying to keep more of those referrals from themselves, which is a very savvy strategy, but at the same time, probably creates a bit of an opening for Altruist and Vanguard to become a really good referral hub for clients, which is a major draw for signing up new RIAs as clients, for breakaway advisors, et cetera.

(15:07):

So more details need to come there. We don’t even know if they’re starting a referral channel, but I have to imagine that’s high in the punch list and will be a very compelling offering in the marketplace. Yeah, think about it. Vanguard is 50 million investors and a CEO who said multiple times that they don’t have enough advisors or humans to deliver this advice. So perfect. You now have a massive array of RIAs and more and more coming to the table who offer that advice and being able to still serve them, still keep the assets in-house, but do it in a way where Vanguard doesn’t have to scale up their advisor force. They now have advisors to refer to. Fourth is pricing. I think the Vanguard effect is going to be real here. When Vanguard started, and even to this day, they’ve been the one who’ve pushed down the expense ratio on mutual funds and ETFs.

(15:56):

It’s been a massive benefit to investors across this country. It’s been Altruist’s playbook all along too, more focused on the advisor, so offering amazing tech and a custody platform for virtually no cost to an advisor. So I would say whatever you’re paying for technology, for custody, and really anything else that Altruist and Vanguard might touch, I would expect it to go down potentially and just have more pressures on the incumbent firms to really sharpen their pencil or to get more creative on pricing and innovation. I think that the fifth thing to keep in mind is Schwab has long used its scale and positioning in the market to best competitors, whether it was going to $0 on tickets for equities and ETFs, et cetera, a number of years ago or a number of other strategies they’ve taken. Now you have a firm that has similar scale as Schwab, a reputation for playing the long game and being comfortable making less money in the process.

(16:54):

So again, massive benefit to the advisors to have another major player driving down costs and increasing innovation in the space. But this is not all positives. As with anything, there’s the good and the bad, and also some open questions. The biggest, I think, downside or potential thing to watch here, and certainly if you are a BDO at a custodian, this is the line you’re using, “Vanguard has its own advice business, personal advisor, digital advisor, and a CEO who stated that his goal is that an advisor is in every investor’s pocket.” So now you have the custodian that’s holding your client’s assets also running one of the largest advice operations in the country. We’ve heard this concern in the past about Schwab or Fidelity where you have RA custody and then these firms have massive retail distribution networks. So certainly Vanguard, I think, will be in the same lane.

(17:46):

And if you look at a Pershing or an LPL or Raymond James, it’s a little bit different because they don’t have their own channels in the same way that Schwab or Fidelity do. So certainly if you’re BNY Mellon in particular, which is a straight B2B custodian, this is a clear point of differentiation for Vanguard, Altruist and certainly versus the other custodians. Next one is Vanguard has said that Altruist will remain a standalone business. The brand will stay intact, the management team, et cetera. But in fairness, every acquirer says versions of the same thing. The real test is let’s wait two years, three years and see how converging roles or similar roles across the firm start to converge into one, and over time will they more Altruist brand and human capital into one structure.

(18:36):

Right now we don’t know, but I’m always a bit skeptical with acquisitions that you have the honeymoon period, takes time for the deals to close, and then what happens a couple of years down the line? Either as there’s new executives in charge, there’s turnover, or just there’s certain synergies that can be had, and the best way to do it is by combining operations and the like.

(18:56):

The next risk, I think it might sound a little bit mundane, but it’s culture and speed. Vanguard based in Valley Forge, Pennsylvania, Altruist in LA, very different cultures. Altruist as a fintech company has been superfast to market, building, breaking things, innovating. And Vanguard, I think they’ve been extremely innovative on pricing, on product development, but I’ve never heard amazing reviews about Vanguard’s technology. So does this convergence of cultures create an issue? Does it create more bureaucracy for Altruist trying to build stuff? Is there a cultural mismatch when it comes to speed of market and innovation? And I think the last thing to keep in mind or to watch is the talent drainage at Altruist post-closing. Yes, I was a FinTech company and custodian offering equity, lots of upside for people that have taken this journey with them. Vanguard notoriously is the opposite. They don’t offer equity to anyone and they offer their employees high base salaries and you have a culture of longevity within the firm.

(20:00):

So after the lockup period is done for, or the earn out period is done for any Altruist equity owners and many of their employees, does that cause some talent drainage where folks want to go onto the next big thing, think what will happen to all the amazing SpaceX employees a year from now when their IPO lockups are done? Does that lead them to another opportunity? All these are questions I don’t know, but trying to play devil’s advocate. I think the biggest potential negative is just the Vanguard advice business as a competitor, a conflict to RIA custody. Let me give you a couple of predictions before we wrap here. I think Schwab and Fidelity will respond fast, whether it’s on the AI front or because the pressure is really on. I don’t know, maybe the $5 million referral minimum that Schwab just announced, maybe that sunsets after a period of time. I have no idea.

(20:53):

I’m also excited to see, we’ll call it the tech face off between Altruist and Robinhood. Robinhood acquired TradePMR, which is on the Wells Fargo First Clearing platform and is in the process of launching an RIA custodian themselves. So now you have, I think, two pretty incredible tech-forward custodians really trying to gain market share, so that will be fun to watch. Could there be a threat in the RIA platform space? So RIA platforms meaning RIAs, we call them supportive versions of independence, where advisors can plug into, they get technology, compliance, operations, et cetera, and still own their business. Given the end-to-end tech stack that Altruist boasts, and they’ve also been in development of their own corporate RIA, does that become that much more of a competitive feature that could possibly become a solution in and of itself that takes a dent out of these RIA platforms playbook?

(21:45):

I don’t know, but I think it’s possible. Altruist Hazel AI, does that push even well beyond custody? There’s a ton of AI and fintechs popping up around the industry. Hazel has certainly taken a lot of headlines and attention. With Vanguard behind it now, does that push the price lower? Does it help their distribution? Maybe you picture this, if you have a Vanguard-owned product sitting in the daily workflow of a competitor’s advisors, so let’s say you’re a Morgan Stanley, you’re a Schwab advisor, et cetera, do you now have a Vanguard-owned product in Hazel as part of your workflow or your fintech stack? Could be interesting. I will call a referral channel for Vanguard or Altruist, we’ll say within the next year or two. I think it would be crazy if that didn’t happen and that will be a massive disruptor. And finally, my prediction is more breakaways landing in Altruist. They’ve started to crack that door, but now with the powerful brand and reputation behind them, the sky’s probably the limit.

(22:44):

So in closing, a guy, Jason Wenk, started a company in 2018 in Los Angeles because he thought independent advisors deserve better software at a lower price. Eight years later, one of the most respected financial institutions in the world paid $4 billion for it, and the reason is he was right in that bet. There are always innovators showing up from outside the establishment, and every time one succeeds, advisors end up with more options and more leverage and more negotiating power than they had the year before. It’s a consistent theme across the industry. So nothing changes tomorrow, deals take time, deals have a way of falling apart, but if you’re evaluating custodians, thinking about independence for the first time, wondering whether your current partner is going to keep earning your business, today is a good day to reopen that question. And if you’re an advisor, I think cheer this on and be excited.

(23:42):

And as a industry participant, I am very excited to see how this deal takes hold and how this pushes the rest of the industry to innovate and continue to be better. So that’s it for today. Thank you for hearing my ramblings, and I’ll see you next time.

Mindy Diamond (24:02):

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients, but are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay Or Should I Go? Is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Vanguard Acquires Altruist: What It Means for RIAs, Custody & Breakaway Advisors

With Louis Diamond

Louis Diamond (00:06):

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is a special rapid reaction industry update, Vanguard acquires Altruist, what it means for advisors in the industry. I’m Louis Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond (00:28):

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

(01:21):

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond (02:05):

Funny how the biggest news in the business almost never comes from the firms everyone is watching. On Wednesday, August 26th, 2026, Vanguard announced its acquiring Altruist. If you asked me a year ago to name the company most likely to buy an RIA custodian, Vanguard would not have been near the top of my list. Vanguard was in the RIA custody business once. They left in 2003 and handed roughly $120 billion of advisor assets to TD Ameritrade on the way out. 23 years later, they’re buying their way back in, reported $4 billion or more. So let’s talk about what happened, why it matters, and where I think it goes from here.

(02:48):

What happened? On August 26th, 2026, a definitive agreement was announced out of Valley Forge, Pennsylvania. A deal is closing later this year where Vanguard is acquiring Altruist, the relative upstart RIA custodian. The price, an undisclosed number, but a reported $4 billion, some outlets reporting $4.6 billion or more. Either way, more than double their last private market valuation at the end of April 2025. Another element is Altruist is staying as a standalone. They’ll keep their brand, CEO, management team, and operate the same model just as a wholly owned subsidiary of Vanguard. Altruist in one breath, for those unaware, was a custodian and fintech company founded in 2018 by Jason Wenk. They became a self-clearing custodian, third largest as far as number of advisors served, north of 6,000 advisors, and had a reputation for serving smaller or upstart advisors, but recently started getting into more of the larger market breakaway space.

(03:53):

One estimate I’ve seen peg’s Altruist market share of RIA custody at around 6%, but you compare that to about three quarters of the market for Schwab and Fidelity combined. So a relatively small player, but a rapidly emerging player and threat in US RIA custody. This is not the first time Vanguard has been involved with Altruist. They reportedly were an early investor in Altruist back in 2020 and former Vanguard CEO, Bill McNabb, has been on the board of Altruist, so a lot of history between the firms. Let’s get into now why I think this is interesting for the industry as a whole. In my view, custody has never really been all that competitive, especially since TD Ameritrade sold to Schwab. You really had an oligopoly between Schwab and Fidelity. Sure, there’s a number of compelling, say more boutique custodians, whether Pershing Advisor Solutions, Goldman Sachs, which was another newer entrant to custody, LPL, Raymond James, First Clearing, and a number of others are also in the space, but it is a market that is dramatically dominated by the two largest players.

(05:01):

So I think this matters because you add an amazing venerable brand and reputation of Vanguard with this scrappy upstart custodian, and all of a sudden you can see a world where custody is one of the more competitive spaces in the industry. Altruist, in my view too, was one of the first credible challengers to the incumbent custodians in 20-ish years. Goldman has since picked up some decent market share and certainly they’re attractive for the segment of advisors. But Altruist with their tech-forward approach, low fees, and even just the way they went to market as an antagonist to Schwab and Fidelity, they’re a big deal and I think this just magnifies what they’re able to do. The gap though for Altruist was brand and reputation. Sure, they had amazing tech. No one ever has doubted that. Hazel AI, which they recently launched has been very well received.

(05:55):

Advisors I’ve worked with who have demoed the platform are incredibly impressed. The big Achilles heel though for Altruist has been my clients don’t know who Altruist is. Why would my clients put their millions of dollars of wealth with a self-clearing custodian that doesn’t have the same scale or reputation as the incumbent custodians? Well, that really goes away here. And at the end of the day, custody is really a trust business, but you’d have to think that a client would trust their assets held with Vanguard or with Altruist through Vanguard in a very similar way that they would trust assets held by Bank of New York Mellon or Charles Schwab or Fidelity Investments or Goldman Sachs. So to me, Vanguard acquiring Altruist solves that problem in one sentence, very simple. Why I think this makes sense for Vanguard? Salim Ramji, the CEO of Vanguard, has been saying since he arrived from BlackRock two years ago that only one in five Americans work with a fee-based financial advisor and that quality advice shouldn’t be a luxury good and this shortage is only going to get worse as advisors retire.

(07:00):

This is really him putting his money where his mouth is and really trying to make financial advice, human directed financial advice more accessible to everyday Americans and the upper echelons of wealth in this country. Vanguard as a company has over 50 million reported investors and over 12 trillion in assets. A lot of these people want Vanguard advice, but Vanguard hasn’t had the manpower or the capacity to deliver it itself. Buying Altruist over time can certainly solve that capacity gap and make it so that a human-based financial advisor or any of Vanguard’s internal platforms now have a greater ability to provide advice to Americans looking for financial advisors in the United States. I think this also means more distribution capability for Vanguard funds. Not that Vanguard has ever had a problem with distribution. They have a relatively small wholesaling force compared to other firms, but given their cost and reputation and performance, they’re really on pretty much every platform.

(08:04):

Most advisors have some clients that are invested into Vanguard mutual funds or ETFs, but this I think just gives them a greater ability to distribute Vanguard products, probably in a similar way to Goldman’s approach. When Goldman entered US RIA custody, in large part, they were doing it for distribution of different things. For Goldman, it was private markets and lending and other types of products. Vanguard is more ETFs and mutual funds, but Vanguard has also been pushing more into the private market space, so I can definitely see a world in which they can ratchet up the distribution of their products in a fairly cost-efficient way. I think to me, the most interesting thing about this marriage is the mission overlap is quite real. When Vanguard started, and to this day, their goal was to provide quality investment products at a fraction of the cost of the incumbents so that investing can be accessible to everyday Americans.

(08:59):

That’s exactly the verbiage that Jason Wenk and Altruist has used from the beginning, where they want to become a all-in-one hub or tech-enabled custodian so that an advisor, regardless of their size and a client regardless of their AUM, have the ability to get quality advice. I recently listened to a podcast called Acquired. We’ll link it in the show notes, but it’s a three-hour in-depth look into the building of Vanguard. And if you combine that with the podcast episode that I recorded with Jason Wenk, the CEO of Altruist, if you play them side by side, the parallels are eerily similar. So we’ll link both into the show notes, but I really think both of these firms were cut from the same cloth and really from the beginning, both have gone against the grain and tried to rattle incumbent players in the industry. So at least on paper, seems like a very good match.

(09:51):

Why does this deal make sense for Altruist? For one, for Jason Wenk and his leadership team, this has to be the outcome you drew up, maybe even better. Founding a new custodian in 2018, selling it in 2026, eight years later for over $4 billion, that’s a pretty incredible return on time for this team. They deserve it all and built something special and really entered into a space where no one wanted to venture just given the market share of the major incumbents, but good for them and has to feel good to pull off this type of sale. I think the big thing too is the buyer is the story. Vanguard as a company, it’s investor owned. They’re not private equity owned. They’re not VC backed like Altruist was. So Altruist can get off of the fundraising treadmill. They don’t have to worry about fund life or a five-year hold period or an eventual sale to a strategic.

(10:42):

Now they can really just focus on the business at hand, having one of the most well-capitalized companies in the world as their capital backer and owner. And every advisor on a PE-backed platform knows the question hanging over every relationship, who owns this next? That’s a question they won’t have to answer anymore at all, and they can really just focus now going forward. I think this also gives Altruist a fortress balance sheet and a ton of capital to keep pushing and developing their Hazel AI platform, which was launched in September 2025. Hazel’s an AI tax planning tool, kind of AI superpower that really has taken the industry by storm and has started to be sold as a standalone product to RIAs. And from what I’ve seen, they’ve sold it to over 1600 new RIAs just in the first month alone for $60 a seat per month, and that’s available to folks if they custody at Altruist or not.

(11:36):

So this, I think, just gives them an ability to distribute their fintech solutions and certainly develop their custody platform in a way that maybe was challenging or not as possible before. They can also take a longer term view instead of having to worry about they raised a series F, whatever comes after F and an eventual sale, investors wanting to get a return on capital, they can now focus on building over the long term, which has been Vanguard’s strategy all along. I think too, this will give Altruist the ability to invest in new capabilities that they didn’t have before, whether it’s lending or whether it’s more on the product side. It takes a lot to be a custodian. It seems like a relatively straightforward business just holding assets, but there’s a lot of products, solutions, really requirements that everyday investors and RIA clients have, and I think this will just ratchet up Altruist’s ability to close some of the capability gaps that they’ve had since they launched and they’re very transparent about those.

(12:33):

What I’m most excited about this, just coming from my vantage point in the industry, is why should an advisor care? To me, there’s five things that advisors should really take notice of with this acquisition. First one’s competition. Every time a well-capitalized player shows up, especially in custody, advisors win. Schwab and Fidelity have fought Vanguard in the asset management space for decades, and more recently in financial advice. Now you’re adding custody against a firm that doesn’t need to be profitable the next quarter, and all of a sudden we very much have an arms race and some competition is good for pricing, for service, for innovation, and I think this is going to be only positives for clients across the country, having another competitive option and keeping the incumbents really on their toes. Another reason, the breakaway shortlist has changed. Objection I always heard about Altruist was, “The tech is great, the AI seems cool, but how do I explain the name Altruist to a 68-year-old client who’s leaving Merrill or UBS or Morgan Stanley?”

(13:42):

While someone may still get some objections because Vanguard may not have the same brand cache as Goldman Sachs or UBS Private Wealth or Merrill Private Wealth, that objection got a lot weaker today. Really, it’s tech-forward independence now without a brand trade-off. It’s a genuinely different offer in the market than it was before. Third, I think this is one that hasn’t been talked about much, but should be watched closely, potential for referrals. Schwab confirmed last week that it was taking the SAN or the Schwab Advisor Network client referral minimum from two million to five million. For anyone not aware, referrals from the retail branches of Schwab and Fidelity are one of the major organic growth funnels for many of the top RIAs in this country and have driven valuations to billions and billions of dollars for firms that are in this program.

(14:36):

I really do see this as being a potential new massive referral opportunity of Vanguard existing clients and customers to Altruist custody to RIAs at a time when Schwab is trying to keep more of those referrals from themselves, which is a very savvy strategy, but at the same time, probably creates a bit of an opening for Altruist and Vanguard to become a really good referral hub for clients, which is a major draw for signing up new RIAs as clients, for breakaway advisors, et cetera.

(15:07):

So more details need to come there. We don’t even know if they’re starting a referral channel, but I have to imagine that’s high in the punch list and will be a very compelling offering in the marketplace. Yeah, think about it. Vanguard is 50 million investors and a CEO who said multiple times that they don’t have enough advisors or humans to deliver this advice. So perfect. You now have a massive array of RIAs and more and more coming to the table who offer that advice and being able to still serve them, still keep the assets in-house, but do it in a way where Vanguard doesn’t have to scale up their advisor force. They now have advisors to refer to. Fourth is pricing. I think the Vanguard effect is going to be real here. When Vanguard started, and even to this day, they’ve been the one who’ve pushed down the expense ratio on mutual funds and ETFs.

(15:56):

It’s been a massive benefit to investors across this country. It’s been Altruist’s playbook all along too, more focused on the advisor, so offering amazing tech and a custody platform for virtually no cost to an advisor. So I would say whatever you’re paying for technology, for custody, and really anything else that Altruist and Vanguard might touch, I would expect it to go down potentially and just have more pressures on the incumbent firms to really sharpen their pencil or to get more creative on pricing and innovation. I think that the fifth thing to keep in mind is Schwab has long used its scale and positioning in the market to best competitors, whether it was going to $0 on tickets for equities and ETFs, et cetera, a number of years ago or a number of other strategies they’ve taken. Now you have a firm that has similar scale as Schwab, a reputation for playing the long game and being comfortable making less money in the process.

(16:54):

So again, massive benefit to the advisors to have another major player driving down costs and increasing innovation in the space. But this is not all positives. As with anything, there’s the good and the bad, and also some open questions. The biggest, I think, downside or potential thing to watch here, and certainly if you are a BDO at a custodian, this is the line you’re using, “Vanguard has its own advice business, personal advisor, digital advisor, and a CEO who stated that his goal is that an advisor is in every investor’s pocket.” So now you have the custodian that’s holding your client’s assets also running one of the largest advice operations in the country. We’ve heard this concern in the past about Schwab or Fidelity where you have RA custody and then these firms have massive retail distribution networks. So certainly Vanguard, I think, will be in the same lane.

(17:46):

And if you look at a Pershing or an LPL or Raymond James, it’s a little bit different because they don’t have their own channels in the same way that Schwab or Fidelity do. So certainly if you’re BNY Mellon in particular, which is a straight B2B custodian, this is a clear point of differentiation for Vanguard, Altruist and certainly versus the other custodians. Next one is Vanguard has said that Altruist will remain a standalone business. The brand will stay intact, the management team, et cetera. But in fairness, every acquirer says versions of the same thing. The real test is let’s wait two years, three years and see how converging roles or similar roles across the firm start to converge into one, and over time will they more Altruist brand and human capital into one structure.

(18:36):

Right now we don’t know, but I’m always a bit skeptical with acquisitions that you have the honeymoon period, takes time for the deals to close, and then what happens a couple of years down the line? Either as there’s new executives in charge, there’s turnover, or just there’s certain synergies that can be had, and the best way to do it is by combining operations and the like.

(18:56):

The next risk, I think it might sound a little bit mundane, but it’s culture and speed. Vanguard based in Valley Forge, Pennsylvania, Altruist in LA, very different cultures. Altruist as a fintech company has been superfast to market, building, breaking things, innovating. And Vanguard, I think they’ve been extremely innovative on pricing, on product development, but I’ve never heard amazing reviews about Vanguard’s technology. So does this convergence of cultures create an issue? Does it create more bureaucracy for Altruist trying to build stuff? Is there a cultural mismatch when it comes to speed of market and innovation? And I think the last thing to keep in mind or to watch is the talent drainage at Altruist post-closing. Yes, I was a FinTech company and custodian offering equity, lots of upside for people that have taken this journey with them. Vanguard notoriously is the opposite. They don’t offer equity to anyone and they offer their employees high base salaries and you have a culture of longevity within the firm.

(20:00):

So after the lockup period is done for, or the earn out period is done for any Altruist equity owners and many of their employees, does that cause some talent drainage where folks want to go onto the next big thing, think what will happen to all the amazing SpaceX employees a year from now when their IPO lockups are done? Does that lead them to another opportunity? All these are questions I don’t know, but trying to play devil’s advocate. I think the biggest potential negative is just the Vanguard advice business as a competitor, a conflict to RIA custody. Let me give you a couple of predictions before we wrap here. I think Schwab and Fidelity will respond fast, whether it’s on the AI front or because the pressure is really on. I don’t know, maybe the $5 million referral minimum that Schwab just announced, maybe that sunsets after a period of time. I have no idea.

(20:53):

I’m also excited to see, we’ll call it the tech face off between Altruist and Robinhood. Robinhood acquired TradePMR, which is on the Wells Fargo First Clearing platform and is in the process of launching an RIA custodian themselves. So now you have, I think, two pretty incredible tech-forward custodians really trying to gain market share, so that will be fun to watch. Could there be a threat in the RIA platform space? So RIA platforms meaning RIAs, we call them supportive versions of independence, where advisors can plug into, they get technology, compliance, operations, et cetera, and still own their business. Given the end-to-end tech stack that Altruist boasts, and they’ve also been in development of their own corporate RIA, does that become that much more of a competitive feature that could possibly become a solution in and of itself that takes a dent out of these RIA platforms playbook?

(21:45):

I don’t know, but I think it’s possible. Altruist Hazel AI, does that push even well beyond custody? There’s a ton of AI and fintechs popping up around the industry. Hazel has certainly taken a lot of headlines and attention. With Vanguard behind it now, does that push the price lower? Does it help their distribution? Maybe you picture this, if you have a Vanguard-owned product sitting in the daily workflow of a competitor’s advisors, so let’s say you’re a Morgan Stanley, you’re a Schwab advisor, et cetera, do you now have a Vanguard-owned product in Hazel as part of your workflow or your fintech stack? Could be interesting. I will call a referral channel for Vanguard or Altruist, we’ll say within the next year or two. I think it would be crazy if that didn’t happen and that will be a massive disruptor. And finally, my prediction is more breakaways landing in Altruist. They’ve started to crack that door, but now with the powerful brand and reputation behind them, the sky’s probably the limit.

(22:44):

So in closing, a guy, Jason Wenk, started a company in 2018 in Los Angeles because he thought independent advisors deserve better software at a lower price. Eight years later, one of the most respected financial institutions in the world paid $4 billion for it, and the reason is he was right in that bet. There are always innovators showing up from outside the establishment, and every time one succeeds, advisors end up with more options and more leverage and more negotiating power than they had the year before. It’s a consistent theme across the industry. So nothing changes tomorrow, deals take time, deals have a way of falling apart, but if you’re evaluating custodians, thinking about independence for the first time, wondering whether your current partner is going to keep earning your business, today is a good day to reopen that question. And if you’re an advisor, I think cheer this on and be excited.

(23:42):

And as a industry participant, I am very excited to see how this deal takes hold and how this pushes the rest of the industry to innovate and continue to be better. So that’s it for today. Thank you for hearing my ramblings, and I’ll see you next time.

Mindy Diamond (24:02):

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients, but are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay Or Should I Go? Is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Shannon Spotswood – CEO, RFG Advisory

Choosing a platform isn’t just about technology or economics. It’s about finding a partner that helps you build the business you actually want to own. Shannon Spotswood explains why growth without compromise starts with choosing the right partner.

In Summary

What should advisors really look for in a platform partner?

Jason Diamond sits down with Shannon Spotswood, CEO of RFG Advisory, to discuss why the best platforms do more than provide technology and operational support—they help advisors build stronger businesses. Shannon shares lessons from helping grow RFG into one of the industry’s leading supportive independence firms, covering everything from private equity partnerships and advisor experience to enterprise value, branding, and overcoming the fear that keeps many advisors from pursuing the business they truly want.

The Storyline

Most advisors evaluating independence compare technology, payouts, and service offerings.

Shannon Spotswood believes they’re asking the wrong first question.

After spending two decades in institutional investing and later helping to rebuild RFG Advisory from the ground up, Shannon has developed a philosophy centered on partnership. She argues that the best platforms function less like vendors and more like long-term business partners, helping advisors spend more time with clients, build enterprise value, and create businesses aligned with their vision rather than forcing compromises.

Jason and Shannon discuss what meaningful support actually looks like, why the right private equity partner can accelerate growth rather than restrict it, and why advisors should demand evidence – not marketing promises – when evaluating a platform.

The conversation also explores one of the industry’s biggest obstacles to change: fear. Shannon explains why outdated assumptions about transitioning firms continue to prevent advisors from building businesses they enjoy, even though data suggests the experience is often far less disruptive than many believe.

Ultimately, the discussion reframes independence itself—not as the destination, but as the beginning of choosing the right long-term partners.

Topics Covered

• Evaluating advisor platforms as long-term business partners
• Building an independent business without compromise
• Enterprise value and organic growth
• Private equity as a strategic growth partner
• Advisor experience and client experience
• Branding and authenticity in wealth management
• Overcoming fear and transition myths
• Technology, outsourcing, and operational leverage
• Leadership, succession, and organizational growth
• The future of supportive independence

 

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

Why should advisors think of a platform as a business partner? (10:00)

Shannon explains why technology and service alone aren’t enough—and why the right partner should help advisors build the business they ultimately want to own.

What does “growth without compromise” actually mean? (10:00–17:30)

RFG’s philosophy centers on helping advisors focus on their highest-value work while surrounding them with integrated support designed to drive enterprise value.

Can private equity make a firm better? (25:00)

Rather than debating whether private equity is good or bad, Shannon explains why success depends on choosing a partner whose values and long-term vision align with yours.

How should advisors evaluate competing platforms? (43:00)

Her advice is simple: don’t rely on marketing. Speak with advisors already using the platform and ask firms to demonstrate – not simply promise – how they solve problems.

Why does fear keep so many advisors from making a change? (48:30)

Shannon discusses the “PTSD” many advisors carry from outdated transition stories and why today’s reality often looks very different.

What does the future of advisor platforms look like? (34:00–42:00)

The conversation explores advisor demand for greater personalization, stronger brands, AI-enabled efficiency, and partners that help advisors grow without sacrificing independence.

Key Takeaways

• The best advisor platforms function as long-term strategic partners—not simply service providers.
• Enterprise value grows when advisors spend more time serving clients and less time managing operations.
• Private equity can be highly beneficial when partners share a common vision and respect management autonomy.
• Advisors should evaluate firms based on demonstrated execution rather than marketing claims.
• Fear remains one of the biggest barriers to advisor movement despite significant improvements in transition support.
• Authentic branding and deeper client relationships will become increasingly important as AI reshapes wealth management.

https://youtu.be/jaSt3-mO0so

Quotable Moments

“The right partners make you better. The wrong ones can quietly hold you back.”

“Don’t tell me. Show me.”

“Everything you want is on the other side of fear.”

“Your team deserves to be happy. You deserve to be happy.”

 

FAQs

What should advisors look for when evaluating an advisor platform?

Shannon believes advisors should look beyond technology and economics and evaluate whether a platform acts like a true long-term business partner that helps them grow and build enterprise value.

How does RFG define “growth without compromise”?

By providing integrated support – from technology and compliance to marketing and coaching – that allows advisors to spend more time with clients while maintaining control of their businesses.

Is private equity always good or bad for advisor firms?

No. Shannon argues that success depends less on private equity itself and more on choosing partners who share the firm’s long-term vision and values.

Why do advisors hesitate to make a move?

Fear and outdated perceptions about transitions still influence decision-making, even though today’s transition experience is often much smoother than advisors expect.

How should advisors compare competing platforms?

Talk directly with affiliated advisors, ask for measurable evidence of results, and focus on how a platform responds to advisor feedback rather than marketing claims.

How is AI changing advisor businesses?

AI should enhance – not replace – the advisor relationship by creating operational efficiencies that allow advisors to spend more time delivering personalized advice.

Shannon believes advisors should look beyond technology and economics and evaluate whether a platform acts like a true long-term business partner that helps them grow and build enterprise value.

By providing integrated support – from technology and compliance to marketing and coaching – that allows advisors to spend more time with clients while maintaining control of their businesses.

No. Shannon argues that success depends less on private equity itself and more on choosing partners who share the firm’s long-term vision and values.

Fear and outdated perceptions about transitions still influence decision-making, even though today’s transition experience is often much smoother than advisors expect.

Talk directly with affiliated advisors, ask for measurable evidence of results, and focus on how a platform responds to advisor feedback rather than marketing claims.

AI should enhance – not replace – the advisor relationship by creating operational efficiencies that allow advisors to spend more time delivering personalized advice.

Related Resources

How to Evaluate a Firm Beyond the Obvious: A Framework for Advisors

Why You Should Stay at Your Current Firm

 

Shannon Spotswood
CEO

Shannon Spotswood is a 25+ year industry veteran with a tremendous amount of experience across both retail and institutional finance and an outstanding reputation built on her passionate leadership and ongoing success in investment banking, hedge fund portfolio management, business development and retail wealth management. Joining RFG in 2015, Shannon recognized the opportunity to channel her entrepreneurial experience and passion for service into leading a mission to create an Advisor-focused RIA of the Future delivering a supported independence platform that empowers Financial Advisors to build the businesses they want to have, without compromise.

Shannon’s career has been characterized by her determination to build something bigger than herself. Having fallen in love with finance at only age 14, she was focused on making an impact in a male-dominated industry. After graduating from college, Shannon spent 20 years in San Francisco working in institutional finance. She began her career in investment banking and eventually achieved her dream job as a Portfolio Manager of a long- short equity fund at Symphony Asset Management. The company was acquired by Nuveen in 2001.

After a decade at that firm and now a mother of 3 young children, Shannon turned her entrepreneurial passion in a new direction with a drastic pivot to start a luxury children’s clothing brand, Busy Bees. Taking her years of experience in qualitative analysis of retail companies, Shannon and her business partner built the brand from the ground up, ushering its’ growth from a garage to “Gwyneth Paltrow’s Goop” over the course of a few years.

Shannon and her family made the decision to move from the Bay Area to Birmingham, Alabama to be closer to family. And shortly after, the call to return to her first love, finance, grew to great to ignore.

In 2015, Shannon joined RFG Advisory as President, leading RFG as the firm has grown from $1.8B to over $5B. In July of 2024, Shannon was named CEO of RFG Advisory and currently serves in that role.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

Growth Without Compromise: Building Around the Advisor Experience

A conversation with Jason Diamond and Shannon Spotswood, CEO of RFG Advisory.

Jason Diamond:

Welcome to the latest episode of our podcast series for Financial Advisors. Today’s episode is Growth Without Compromise: Building Around the Advisor Experience. It’s a conversation with Shannon Spotswood, the CEO of RFG Advisory. I’m Jason Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Jason Diamond:

The right partners make you better. The wrong ones can quietly hold you back. Most conversations about independence focus on platforms as providers of technology, service, or infrastructure. Shannon Spotswood sees them differently. She believes advisors should evaluate a platform the same way they’d evaluate any long-term business partner, by asking whether it will help them build the kind of firm they ultimately want to own. That’s exactly what we explore in this episode. Shannon is the CEO of RFG Advisory, a firm that has grown from a startup into one of the industry’s leading supportive independence platforms. Along the way, she’s developed a unique perspective on what advisors should be looking for beyond economics and technology, and why the right partner can accelerate growth, strengthen culture, and help create a business that’s built to last. It’s a conversation that goes well beyond advisor platforms. We explore why Shannon believes so strongly in growth without compromise, what private equity can look like when the partnership is aligned, why firms shouldn’t try to be everything to everyone, and how advisors can separate marketing promises from meaningful support.

We also spend time on a topic that comes up in nearly every transition conversation my team has with advisors, fear. Shannon shares her perspective on why outdated assumptions about making a move continue to hold advisors back and why asking better questions and demanding evidence instead of promises can fundamentally change the way advisors evaluate every opportunity in front of them. Whether you’re considering independence, evaluating your current platform, or simply thinking about what comes next for your business, I think you’ll find Shannon’s perspective both practical and though-provoking, especially the sage advice in her words, “Don’t tell me, show me.” There’s a lot to take away from this conversation, so let’s get to it. Shannon, thanks so much for joining me. Thrilled to have you here.

Shannon Spotswood:

It’s excellent to be here. I’m really looking forward to it.

Jason Diamond:

Me too. Let’s dive right in. I want to start with your background. You spent 20 years in San Fran as an investment banker, then as a portfolio manager at Symphony Asset Management before even touching the world of wealth management. So what made you walk away from, we’ll call it the institutional world and enter the world of wealth management?

Shannon Spotswood:

It’s a little bit of a circuitous story, but I’m going to take us on the short route. I fell in love with Wall Street as a teenager, so I knew I wanted to work on Wall Street. My dream job was actually the time that I spent at Symphony Asset Management. I was a hedge fund manager for them for six years running a long/short equity fund. I then had three children in three and a half years. The firm was acquired by Nuveen Investments, and we grew very large, and I was on this really interesting trajectory within the institutional investment management world. And somewhat of the unexpected happened to me in 2010, we’d come through the financial crisis. I looked around the room, I had these three young children, and having loved finance since a very early age, I couldn’t crawl on an airplane anymore.

I fell out of love with what was honestly my first love. And I made a pretty radical pivot. I left Symphony, the tallest building at the time in San Francisco, and I partnered with a woman, and we built a luxury children’s clothing company for the next three years. So about as radical of a move as you can make, a $30 billion firm, big team, a tremendous growth ahead of us to upside down boxes of infant cashmere in a garage that flooded when it rained. So I had my startup in a garage moment. And while I was running the children’s clothing company, my husband and I took a big leap of faith and decided to move from San Francisco to Birmingham, Alabama to get closer to family, to raise our kids in the South, and just manifest the life that we wanted.

In the third year of running the kids’ clothing business, we checked every box of our initial business plan, and I turned to my business partner and I was like, “Now what? Should we raise capital? Should we open stores? Should we diversify manufacturing?” And we realized this beautiful little luxury brand that we had created was exactly what it needed to be. And so we restructured the company and I punched out of that. And I spent, really for the first time in my life, about five months in deep contemplation. What was the first hedge fund that I was a part of in San Francisco, my tour of duty through investment banking as an analyst associate and helping them start an M&A group. This incredible decade that I’d spent at Symphony, and then this wild out of left field moment of building a luxury children’s clothing brand. And it had such an epiphany, Jason. And it was this, that I was on the ground floor of all of those businesses. And my aha moment was, oh my gosh, I’m a builder.

What I love more than anything is sitting at the intersection of talent and opportunity and what I think is truly one of life’s greatest gifts, and certainly I think the most fun way to live your professional life, which is building something. So I put my resume together and I titled… It wasn’t even really a job search. It was more, I was new to Birmingham. I wondered if there was anything I could be of service in being a part of building something. So I put that resume together and I titled it Seeking the Intangible. And I was looking for that opportunity of talent and building something bigger than myself. And it was through some networking with my across the street neighbor who went on to become a board member of RFG who thought all I did was sell his wife incredibly expensive clothing who networked me to Bobby White, who’s the founder of RFG.

And in the first 10 minutes of my conversation with Bobby, and I’ll tell you, both of us went into that meeting thinking it was going to be a filler meeting. He was doing a favor for a friend, and I had seen a little bit of the wealth management industry after Nuveen had acquired Symphony and was like, “That’s not really my bag. My jam is more on the institutional side of things.” And 10 minutes into our very first meeting, we both canceled the rest of our day, and we spent the next two and a half hours in his office having a conversation that really started with what if. What if we took RFG, which had been founded in 2003, and at the time was an OSJ with LPL, what if we took that business and we tore it all the way down to the ground? And we rebuilt it from the ground floor up to be a platform that is designed, that is intentionally engineered, to serve independent advisors? What would it look like to be a client experience company first, a technology company second, and a corporate RIA third?

And I’ll tell you, walking out of that meeting, I was like, “This is it. This is it. This is the intangible. This is an opportunity to really build something very special.” And that’s how I found myself sitting in this talking to you today.

Jason Diamond:

Wow. So there’s a lot to unpack there. Thank you for sharing. And you shared it with a degree of vulnerability that I personally, I have a two-year-old and a three-week-old as of this recording. So it resonates with me. I think it resonates with a lot of advisors, people in our, and honestly, probably most industries, the constant pull in multiple different directions. And I love what you called it, seeking the intangible. And it sounds like you didn’t go in with any preconceived notion about… Many of our guests, by the way, that is the case. They walk in saying, “I knew since I was two years old I wanted to be in wealth management. I wanted to help be a steward of client…” And I love that your circuitous route took you a different direction.

I want to talk more about the firm, and we’ll dive in on some of these elements of your background also. But before we do, you mentioned a little bit of, at a high level, what RFG is. Give me a little more context, types of advisors you serve, types of clients you serve. And if you don’t mind, provide some stats around size as well.

Shannon Spotswood:

Absolutely. So we are on a mission to help independent advisors build their business without compromise by driving organic growth to create enterprise value. And I share that because in our mission statement is the passion that links us all together, which is helping independent advisors build what they want to envision for their clients, what they believe is the best representation of their vision and their values. So we are a platform, a full turnkey platform for independent advisors. We talk about our services as a flywheel. There’s a very intentional interdependency from technology to marketing to compliance to talent to investment management to coaching, operations, transition services, and capital solutions. All of it is knit together very thoughtfully in order to be able to deliver to the advisors on our promise to help them operationalize and professionalize their business, to serve their clients and to generate that organic growth, which is what translates into enterprise value.

What is so cool about the RFG advisor community, and I think is really the thread that binds between our teams and our advisors team is this servant heart growth mindset that you find it in every nook and cranny of RFG and certainly within all of our advisor partners. So the advisor profile for us, we do tend to skew a little bit younger. Average age is 45 years old. Organic growth across all of our advisors is north of 10%. So we’re very focused and leaned in on growth. We do have advisors that are lifestyle. We talk about them as lifestyle scaling and enterprise, and they run all along that growth at growth spectrum, depending on what do they want to build in their lives, what is going to help them really realize their dreams? And we’ll talk about this a little bit and just the growth of the firm and what we’ve been building, but we are at $9 billion.

So it’s been a big run in 2026, as I say, 10 years of pre-game warmup to be able to really talk about that level of growth. So just knocking on the door of $10 billion and truly, Jason, I can tell you, I feel like we’re just getting started. I feel like we are just at the beginning of the J-curve as advisors are really realizing that their most valuable asset is their time and the amount of enterprise value that they can create being independent. There’s a lot of different flavors of that. We’ve got some incredibly well-capitalized and very strong competitors, but the collective awareness around this bull market for advice that we’re sitting at the very beginning of is shining such a bright light on what does it mean to be independent? What does it mean to be really supported by a partner who’s all in to help them win? And that’s where we find ourselves. And by design, that’s where we find ourselves.

Jason Diamond:

Yeah, and it’s an exciting time. I completely agree. The space, the vertical you’re in, probably as much or more than any other pocket of the industry. You took the words out of my mouth, the J-curve. I completely agree with the story you’re telling. There’s one component of your background that I do want to ask about, which is many RIAs, platforms, and the like, the leadership team is intentionally ex-advisors in their own right. So I’m curious, do you think of it as a benefit or maybe to what degree is it not a benefit that you have never been an advisor and served clients? I do love the idea that you’re a business builder and you’re helping advisors to build a business. That’s not lost on me, but I’m curious specifically about never having been an advisor.

Shannon Spotswood:

I think it is so critical that we were advisor-founded. What we like to say is we’re advisor-founded and professionally-led. Bobby founded the firm in 2003. We partnered in 2015. Our third partner, Rick Wedell, who’s our chief investment officer, managing partner, joined in 2016. So the three of us really co-founded the version of RFG that is-

Jason Diamond:

The right version.

Shannon Spotswood:

… expressed in the market today. But you’re a hundred percent right to double click on this. And I think it is such an important area for reflection for advisors in terms of where are their greatest skills? Where does their passion lie? And what are they interested in building? That very first day that I met Bobby, his telling of the story is he looked at my resume the morning that we were meant to meet, and he is like, “Well, why would I hire her? She could do my job.” And he often talked about that where you get to this point as an advisor where the business is scaling and growing. And we certainly are seeing this in a lot of the larger teams that we’re talking to and the relationships that we’re beginning to build within the pipeline of these advisors who were attracted to the industry because they wanted to serve clients and find themselves as accidental CEOs, COOs, their chief cook and bottle washer to advisor to all of these C-suite titles.

And it’s not amplifying their natural skillset and it’s not aligned with what is actually their passion for the business. So I give a tremendous amount of credit to Bobby for recognizing more than 10 years ago really what it would take and how he could align team around him and build partnerships around him to be able to maximize the impact that we can have for advisors. So that north star of keeping advisors front and center is truly our, it is woven into our DNA and it is our north star. So we are a client experience company by design. We talk about it all the time, whether it’s how we’re building our team, how we’re thinking about investing in technology, how we’re soliciting feedback for advisors. I always say one of our greatest strengths as an organization is we’re active listeners and then we actually execute on it.

Our best ideas come from our advisors, but you’ve got to have that posture as a firm that everything you do is orienting around how do we help advisors operationalize, professionalize, drive organic growth, and create enterprise value? And you can’t do it sometimes. You’re either all in, chips all in, only winning when your advisors win, and only having that lens of will this benefit the advisor and their team or not. It’s not something that you can just dip your toe in and out of. And I think RFG, having that foundation from which to always build is absolutely critical.

Jason Diamond:

Can I try and paraphrase or synthesize, and you tell me if I get this right? The pitch is something to the effect of, “We are really good at what we do. Let us take all the BS off of your plate so that you can go out and be an advisor. Service your client and prospect.” Do you find that story is resonating more over time? I mean, you’ve been with the firm now long enough to see this kind of cycle of movement towards independence. How has that story evolved over time? Do you find it easier to tell?

Shannon Spotswood:

Oh my gosh, without question. And I would even put a shorter term window on it. I would say in the last 12 to 15 months-

Jason Diamond:

Oh wow.

Shannon Spotswood:

… there has been a collective awakening by advisors, and I think there’s a lot of contributing factors to that. One is obviously as we are all aware, the majority of the industry is now private equity backed. There has been a real focus on the aggregator model, transitioning advisors into a W-2 model. And as that has played out and that financial engineering has translated into some incredible valuations and returns, there has also been simultaneously advisors picking their head up and like, wait a minute, I wanted to get independent so I could serve my clients in a way that I felt best represented my vision and my values. And I’m finding myself increasingly in a captive environment. All the while the technology is getting better, the valuations are getting larger, the ability to control both your branding and what that means for your family legacy is increasing.

So over the course of the last 15 to 18 months, that story has just, while it’s been there for a long time, the independent movement was obviously sparked more than, gosh, now 16, 20 years ago in earnest. Now it’s just the passion and the knowledge that advisors are showing up to conversations in recognizing I want more. I want to spend my time where I want to spend it. I want to serve more families. I want to be well-positioned for generational wealth transition. I want to own the enterprise value. I want to build my team and I want the best tech. And that to me is exactly why we’re at the beginning of this J-curve.

Jason Diamond:

Yeah, I think you nailed it. And I agree with you that this notion of independence is not a destination in and of… It’s too broad of a term I think to use. And there are plenty of advisors who either started at one version of independence and need something different now, or to your point, thought they were going independent only to realize perhaps there’s elements of the business that aren’t as independent as they realized. And that’s where I think a firm like RFG to me, it’s not an accident that your firm fills this niche. This was advisor demand driven. Advisors said explicitly and implicitly, “We want to be independent. We want to own our equity. We want to have control over the things we like, but we want a support partner that helps us with all the back office, the middle office, investment management, the flywheel,” as you call it.

Shannon Spotswood:

That’s right.

Jason Diamond:

One other element of your journey to this point that I want to ask about, the succession journey or the journey to CEO, and I’m only asking because it’s somewhat recent, I think it was 2024, so we’re about two years in CEO. For the eight years prior to that, you were president.

Shannon Spotswood:

Yes.

Jason Diamond:

And this dynamic is near and dear for a lot of advisors. This idea you’re the heir apparent, but the date hasn’t happened until it happened. Was that a smooth transition date or did you find yourself, and I hope you can be honest about it, and if not, I understand, but I think this is something that a lot of advisors in their own businesses struggle with. So as somebody who’s gone through a major succession journey in the last two years, I’m curious what your thoughts are.

Shannon Spotswood:

The timing coincided with us bringing on a growth capital partner. So we closed on that partnership with Long Ridge in the fall of 2023, and we really set our sights on how do we bring this capital into the business and invest in our team, invest in our technology, invest in this desire to help independent advisors build their business. And Long Ridge really shares that long-term strategic belief that independence and the corporate RIA model is the ultimate winning model. So we have a lot of room to run there. So entering into that growth partnership with Long Ridge really provided a natural opportunity for that succession conversation to take place and to be able to take the company to the next leg. So we’ve tripled the size of the company over the course of the last two and a half years.

Jason Diamond:

Good for you.

Shannon Spotswood:

And as I said, I feel like we’re just getting started. I always joke we’ve had the longest pre-game warmup in history. In a lot of ways that’s by design. For me, the way that I can sleep at night is knowing that we are waking up as a team in this unified front to walk the walk for our advisors. It is incredibly important to us to honor the promise that we’ve made, whether it’s on tech or talent or transition services or marketing growth. So being able to lean in and deliver that, it takes a long time to build that institutional know-how and to be uncompromising in consistently making hard decisions, whether it’s around talent or the investments that you’re making or how you’re running and growing and building the firm. And so Bobby reached and Long Ridge and all of us reached this point where it was just a very natural way.

And I think it was such a gift that I had such a long warmup, if you will, in the bullpen, running the day-to-day of the business as president, being so close to sweating the details of how we built the foundation, how we run the firm. And then obviously Ed Swenson joined us as president in last fall in October of 2025, having joined our board when we partnered with Long Ridge. So he joined our board in September of ’23, and he and I set up a call every other week. So we just became this incredibly trusted confidant of mine as we made a lot of strategic investments and key strategic decisions in that first 15 to 18 months of our partnership with Long Ridge. So to be able to build and attract the caliber of talent that we have to RFG, I mean, I’m totally biased and talking my own book, but I think we have the best leadership team.

Doug Nelson joined us from Long Ridge as our CFO in November of last year, just bringing that rigor, particularly around capital strategies into our C-suite. So it was the right time to make that transition. And what I would say for founder advisor-led firms, it’s all about what are your growth ambitions? It’s what are your growth ambitions? Without question, when I joined and Bobby and Rick and I set upon this journey to tear the entire company down and build this robust tech stack and be at the forefront as an innovator in that space, that was experience that I had from my 20 years in San Francisco. And Rick had this incredible institutional pedigree having spent 12 years at Bain Capital plus two years at Stanford Business School, complimenting this authenticity that Bobby brought as an advisor, bringing that together. So recognizing as a founder advisor, if you have growth ambitions to 10X your business, it’s going to require that you bring high caliber talent to the table and allow for that room both from an equity participation perspective, but also just from what does the business need as it continues to scale up?

Jason Diamond:

That’s exactly right. And part of this gets back to private equity sometimes gets a bad rep in our space, but the reality is capital from private equity enables a lot of what you’re talking about. And I give you a lot of credit. I mean, you make the half joke about the longest pregame warmup ever, but I think of it as you learned on your own dime and you built all the kinks and ironed out all the kinks prior to having this critical mass of advisors on your platform. And we’ve seen certainly plenty of firms go that route too. So I give you credit for that. I think because we’re on the topic, let’s talk about it, private equity. Positive experience, negative experience, neutral, neither good nor bad. Just give me your… I don’t want to make the episode about the perils-

Shannon Spotswood:

Right.

Jason Diamond:

… and benefits of private equity capital, but just curious what your experience has been.

Shannon Spotswood:

I think this is one of those life lessons. Choose your partners wisely and great things can happen, whether it’s in your marriage or your friendships-

Jason Diamond:

Spouse. Yep.

Shannon Spotswood:

… or your business partners. And Long Ridge found us very serendipitously. I mean, we were probably two years from even contemplating bringing in a growth capital partner. They were introduced to us by a former board member and they were in our offices in January of 2023. And the most important things for us were twofold. Number one, they shared our vision and belief that the corporate RIA independent is the winning model for the industry and for advisors and clients. And number two, who they are as people is very much who we are as people. They’re builders.

Jason Diamond:

Culturally.

Shannon Spotswood:

They have this servant heart growth mindset that they share with us. So I feel incredibly blessed to say they’re amazing partners. And what’s interesting, and I’ll share this very openly, they’re the majority owners of RFG. We were very early in that time of bringing them on. They have always honored the promise that they made to us, which is we run the business. They are a strategic partner. They’re a great thought partner. They are the capital provider, but there has been multiple examples where we have made business decisions where there’s been some heat in the kitchen, in the boardroom, and we’ve felt very strongly about it. So I just couldn’t say enough great things about them. And one thing that I will just share, and I say this because they’ve shared this with me, I have had this incredible personal journey of growth bringing such a deep bench in Long Ridge into the firm.

And that has been certainly challenging at times. Do hard things, get comfortable being uncomfortable. It’s the ultimate definition. But I really think that is something that never gets talked about is what it means in upskilling the caliber of your talent, yourself, how you have to grow and evolve as an individual has been really, I won’t say it’s been easy, but I look back on what I’ve learned over these two years and just feel prepared as a leadership team, how we operate as a team, what is expected of us to be able to deliver and execute for our advisors in this next leg of growth.

Jason Diamond:

I think your marriage analogy is the perfect one, and I’m going to use it. And honestly, in a lot of ways. First of all, marriage is hard, good or bad. It’s hard. Second of all, it’s the ultimate… The institution of marriage is not good or bad. Private equity capital is not good or bad, but your answer is the right one. Pick your partner very wisely. My favorite part of your answer, because it’s the most original, was around a good capital backer, a good partner, whatever you want to call it, pushes you to be better. And I think that you’re surrounding yourself with, by definition, some of the smartest people in the industry, and that can’t be a bad thing. And the proof is in the pudding. The growth trajectory you’ve seen, it’s certainly no accident. I think part of it is tied to your incredible stewardship. You don’t have to answer that. You don’t have to be humble, but I’ll attribute it to you. That brings me to my next question.

Shannon Spotswood:

I do have to say really quickly.

Jason Diamond:

Please do.

Shannon Spotswood:

I will be celebrating my 27th wedding anniversary in October. So yeah, pick your partners.

Jason Diamond:

Congrats. And I feel equally blessed, I assume as you do. I have a great partner, I’ll say. I don’t know if she’s listening right now, but she’s a great spouse. What I was going to say though, good segue, I think there’s been more in recent years, but not a ton certainly of female C-suite wealth management executives. How do you feel about your role? Do you feel an increased burden? Is it an honor to you? Is it something that you don’t think much about at all? I’m curious what your thoughts are.

Shannon Spotswood:

I feel immense gratitude. I mean, just in general, leading RFG and locking arms with our team and our advisors is, I mean, a gift of a lifetime. I was incredibly fortunate to not just have mentors during my 20 years in San Francisco, but to have true sponsors. Whether it was the first hedge fund I worked at, I took that job because it was a female portfolio manager and at the time one of the only in the country. And she really opened up her heart to me and poured into me. And then 10 years at Symphony, the founding partners of Symphony, they dropped me into the deep end of the pool and gave me a lot of rope to make a lot of mistakes and continued to invest. So I have this foundation from which to build and to lead and to be ready for this role.

I couldn’t do any of this without my partners. Rick and I have been partners for more than 10 years. It really does take a village in the same way that it takes a village to raise your family. It takes a village to find the courage and the strength to lead in a way that really honors the gravity of the mission. But I’ll tell you this. One, I knew I wanted to work on Wall Street from a very young age, so I chose this. I knew what I was getting into, that it was a male-dominated industry. I have made particularly, this is one of the unique facets of the wealth management business, we have phenomenal both male and female talent, and I have made the strongest female relationships on this side of the business as compared to the institutional side of the business. So I think there is a richness to our side of the industry that doesn’t get enough air cover.

There are just phenomenal leaders, and I think increasingly so, we’re seeing more women stay in the game and raise into positions within the C-suite and leading these firms. I will tell you one thing in 2019, and I really give a lot of credit to Bobby for this in coaching me, is I was raised by wolves on Wall Street without question. I sat on a trade desk, I was completely comfortable with compartmentalizing emotion, and I made it a mission to develop intentionally my emotional intelligence. And that truly unlocked everything for me, and I think plays such a huge part of who I want to be and who I challenge myself to be as a leader.

And so it’s funny when I get the question asked of me about being a female CEO, because I think that’s what people feel must be like came very intuitively to me, but I had to learn it. I had 20 plus years of being able to run with boys and I needed to develop that skill. And it is a skill that I challenge myself on a daily to continue to lean into. And I think it is increasingly important both for men and women who aspire to leadership to hone the strategic and execution alongside that emotional intelligence.

Jason Diamond:

Great answer. And I think you know I admire a lot about you, but it’s certainly one of the things I admire most about you is over the last couple years in particular you’ve been a real beacon of positivity, of empowerment in that regard. You’re active on socials, you’re active at industry events, you’re always willing to talk to people. And honestly, that to me is the answer. A lot of people complain about this as a problem, and I want to just take a second to applaud you because I think you and your firm actually do something to at least try and actively solve some of this. And also you mentioned it earlier, but same thing with some of the next gen dynamics. You skew much younger than the average firm on the industry. And I think that too is to your credit around, okay, we’ve identified that we have a major succession problem in our industry. What are we doing to solve that?

Shannon Spotswood:

Absolutely.

Jason Diamond:

Let’s talk about growth a little bit. I agree with your thesis. This space you occupy, no better time to be in it. We’re at the perfect spot on the J-curve. Unfortunately, we are not the only two people to think that. There are also, I think, some other firms. This space has become crowded. What do you think about that? Just the fact that there’s more competition than ever. I mean, my view of it is there are enough quality advisors to go around, but curious what you think.

Shannon Spotswood:

Anytime I find myself wading into the waters of fear and scarcity around this topic, I’m reminded that 67% of the assets still remain within the wirehouse and IBD space. We got lots of room to run. I believe in a mindset of abundance. The data will tell us that the demand for advice is increasing by 30% over the next decade while the number of advisors is decreasing by 1%. So we’ve got, find me another industry where you see a graph that looks like that. On top of that, next gen, which I think this is so fascinating, next gen actually wants more advice when compared to the baby boomers. So baby boomers created our industry, and here we are sitting on $87 trillion worth of generational wealth that’s going to begin to transition. That doesn’t even include all of the wealth that will be monetized through real estate and family-owned businesses.

It is a tsunami. And what is, I think, really interesting is that next gen recognizes the value of their time. I’m sure if I had a conversation, Jason, with you and my husband about how intentional you want to be in terms of showing up for your children and the equal nature of parenting, that alone is changing the way the next gen thinks about both their professions as well as their family life, which means you by default have to hire professionals to do the things that you don’t want to spend the time doing.

Jason Diamond:

Really good point.

Shannon Spotswood:

So we have this incredible convergence that’s happening right now, and it’s coming at a time that technology is finally going to allow us to serve more families more intentionally along that wealth spectrum. So it is like, bring it on. There is more than enough to go around. We are in an era of abundance. And what I worry the most about, and this, it’s like climb up on the soapbox and let’s roll, about independence because I see and have so many conversations with advisors where they have been willing to accept such a compromised service experience that they would never allow to be delivered to their clients. So advisors are delivering this 24-hour concierge, high-touch, deeply thoughtful experience, estate planning, tax planning, financial planning, multi-generational conversations. They’re in it. They’re in the trench. And then they turn around and their service partner is so subpar.

They’re compromising their growth. They’re burying them in compliance and ops and clicks and swivel chair and tech that doesn’t work. So we’re at the very beginning of this bull run for advice. And I think advisors who recognize, I want to serve more families, I want more control over my time, I want to be able to build enterprise value on my personal balance sheet, have room to do it. So I welcome the competition. I think the best way to talk about it is iron sharpens iron. I learn so much from our peers and like, ah, they did this or they did that. How do we think more disruptively, more innovatively? How do we do it differently? So I think there’s a lot of room for all of us. You’re going to be busy, my friend. You’re already sitting there advising the lion’s share of the big deals, and I think you guys are just getting started as well.

Jason Diamond:

Yeah, it certainly feels like a bull market for advice and also I think a bull market for some of the… You allude to an interesting paradox, which is some of the biggest and most sophisticated advisors in the industry have really high-touch impressive service models, but they don’t seem to demand the same in return. I have some thoughts as to why. I think one could just be Kool-Aid drinking, like you don’t know any better and you’ve been there for so long. There’s just so much friction associated with moving a business and fear associated that it’s unless things get really dire or unless I find something that’s better enough or meaningfully better enough, I can gut it out. But the third one that comes to mind is these firms we’re talking about have unequivocally, they do a lot of good, a lot of bad, but unequivocally one of the things they do really well is brand.

Shannon Spotswood:

Yeah.

Jason Diamond:

How do you reconcile that question with a firm that obviously doesn’t have a brand that the average American consumer would know?

Shannon Spotswood:

We take a posture on this that is rooted in an Accenture study that was conducted several years ago, but I think still remains so true today, is that advisors think that the value proposition that their clients are looking for, either it’s that big monobrand that’s advertising at the Super Bowl or the alpha they’re ever able to generate or the portfolio investments. But the clients tell us that what they’re looking for in an advisor is, do you get me? Do you share my values? And do I want to spend time with you outside the office? And that is basically distilled down the way we talk about it is people connect with people. So now more than ever, particularly if you take a big step back and you think about the influencer economy and how brands, big brands, Nike or big consumer brands have really leaned into niche branding.

How do I get my brand into the hands of someone who’s very passionate about it? So advisors who develop their own brand, who have a presence on social, who have a presence in AEO and SEO, who are leaning in and expressing not only their client experience, but their vision and their values through their brand, I actually think as this generational wealth unfolds, that authenticity carries so much more weight than is my name on a football stadium. So it is those three factors. It’s just I’m comfortable. I don’t want ripple. It is friction and fear for sure. And then it’s like that branding is up for grabs because we certainly see one of the most fun parts of advisors joining RFG, this is a big part of what we do is helping them design and develop or reimagine their brand name, their logo, all the rest of it.

Once that creative energy is unlocked and you get to tell your story, your my why, that connective tissue is so powerful with the clients and with the growth that comes from that because I mean, I truly believe people connect with people. They’re looking for that. And I think more so now than ever with AI.

Jason Diamond:

You just took the words out of my mouth. Do you think AI perpetuates that?

Shannon Spotswood:

I think people are craving that. And this is why advisors who are powered by AI without question are going to win. Advisors are not going to be disrupted by AI unless they haven’t made the move to get themselves in a position to be able to leverage the technology, the brand, the talent, the maximizing of their time. But especially with something as important and as personal as money, as you walk through life, I mean, you are at the very beginning. I’m sending, I’ll have all three kids in college. But as you make these critical decisions in your life, whether it’s getting married or starting a business or changing jobs or buying your first house, buying your vacation house, all of these things, you can go right or you can go wrong. And having a trusted partner who really understands you, I actually think that we’re going to see the fees paid for advisors increasing as there is a greater premium placed on, I want deeply personal relationships that are tailor-made for me.

Jason Diamond:

But I assume the flip side of that is you have to do more. You as a firm and you as an advisor have to do more, and you can’t just raise fees with the same service model. So I think what is the corollary of that? What are some of the ancillary growth areas that you do beyond the financial planning and asset management that says, “We’re worth that money you’re going to pay us”?

Shannon Spotswood:

It is, and I love the work that wealth.com is doing here. I mean, the estate planning and tax planning, making that more accessible along that continuum of wealth spectrum, the blurring of the lines between ultra high net worth and high net worth, and then mass affluent is so exciting. Better, more robust planning is good for our industry overall. Obviously there’s a huge amount of demand on the tax side of things, particularly the 1040. It’s easy to find a CPA to do the cool complex stuff. It’s increasingly more challenging for advisors. That’s an area that I know a lot of firms have leaned into. We’re certainly doing a lot of work. But so much of this, Jason, is showing up at the right time for clients with the resources. It’s a really interesting conversation about, yes, you have to do more for your clients, but you don’t have to do more for all your clients at exactly the same time.

Jason Diamond:

That’s well said. The flip side of that is as an advisor, because ultimately the advisors are the ones making this decision. There are a lot of firms, and not even just firms that you would be competitors with, because the reality is you and I understand the industry landscape and where various firms fit in. For many advisors, it’s a long list of various firm names that they’ve heard. So what are some things that you think advisors should be asking a firm like you or a business development person at your firm to suss this out? How does an advisor go about understanding if a platform is empty or is really going to be able to deliver in all these areas?

Shannon Spotswood:

Remember back in the day when the Wall Street Journal used to run have a monkey throw a dart and see if you can beat the pros on stock picking? I love to do that with regards to our advisors. We always tell our prospects, “Throw a dart at any advisor that’s affiliated with RFG and call them. Certainly we can provide a list of advisors who we think you’re going to most align with in terms of what your growth ambitions are or the way you want to run your business or who you are, life stage, all the rest of it.” But I do think that getting that unfiltered experience, the good, the bad, the ugly. We always are like, “Are we perfect? Absolutely not. Do we though immediately want the feedback so that we can iterate to excellence to get better? Absolutely. Get that firsthand testimony.” So that’s number one.

Number two is don’t tell me, show me. There are so many, and it always pulls at my heart because as much as I love to win business and transition advisors, and I think that we’re working certainly at RFG on some really interesting technology that is anchored around removing that friction and fear by speeding up the time that you can make that transition in. And the tech is finally there to allow for this. So I think we’re going to be able to take variable number two and at least make that box a little bit smaller. But if I’m sitting as an advisor, I would want to see the evidence. Show me how you’ve solved the problems that advisors have brought to you. How have you refined your tech stack? How have you invested in your team? How have you made the decisions where the ROI can be measurable and tangible?

And I think too often I’m surprised that advisors get, it’s almost as if they get overwhelmed by the amount of information that they’re taking in trying to compare all these different firms. If I’m ever asked, I’m like, please work with a third-party recruiter. You need someone not only to act as an interpreter, but you need someone to help really keep your top three priorities at the front of your decision-making matrix, because it really is apples to oranges to orangutans and you get decision fatigue. And then advisors end up making this decision that is anchored in like, well, this is the highest payout, and I’m willing to take all of these sacrifices and paper cuts for this highest payout. And that is just such a travesty.

So it’s like, know what you want. What are your top three problems that you’re trying to solve? Talk to advisors that you get to pick just so you can do some secret shopping, and then demand evidence of how the firm, the platform has responded to feedback and gotten better as a result because that will tell you, are they really going to walk the walk or are they just going to talk the talk?

Jason Diamond:

I’m super grateful that you gave specifics there because it’s an easy question to dodge and talk around. So I completely agree. Your first answer, actually all three of those points you just made, but certainly doing name-blind calls, and I say name-blind because advisors worry about confidentiality. I think that’s one of the best and most underrated tools to learn about a firm is advisors now have so many colleagues. There’s been this diaspora of advisors where advisors know advisors everywhere. And that’s a benefit if you wanted to go and just network and have conversations with other advisors on your own. But if you’re worried about confidentiality, there’s certainly the mechanisms, and we do this all the time for advisors to set up name-blind calls. You dial into a conference line, it’s John Smith, and you pick an advisor’s brain and say, “Hey, you moved your book from LPL to RFG, and tell me what that experience was like and what were the positives? Give me all the negatives.”

To your point, you want advisors to ask those questions in advance. It’s better to ask those questions than to end up in the wrong marriage with the advisor.

Shannon Spotswood:

Absolutely. And the other thing is what an easy answer to BS around is tell me who’s a good fit for your firm. And it’s like, “Everyone’s welcome here.”

Jason Diamond:

Everybody. Yeah.

Shannon Spotswood:

It’s just not true. RFG is not a good fit for an advisor who is not open to using technology, who is not interested in outsourcing investment management, who doesn’t want to have a conversation about how are you spending your time and do you want to create enterprise value? Do you want to grow? So it really is important to have that vulnerability and that honesty and the answer to that question.

Jason Diamond:

I love it. We have time for one more. I can’t believe it’s been almost an hour.

Shannon Spotswood:

I know, it flies by.

Jason Diamond:

We speak with plenty of advisors who aren’t considering a move, but I’m interested. I think you have a really nice lens into the industry. What is one thing you wish advisors knew? You have a megaphone to just talk to advisors who maybe are considering change, but maybe aren’t. What’s the questions they should be thinking about? What keeps you up at night? Just what would be your public service announcement?

Shannon Spotswood:

I’m going to focus on the friction and fear because that’s the number one barrier to making a move is PTSD, either first person PTSD or the collective negative experience that the industry has had. It took me 90 days to transition. I got sued by my former firm. I lost all these clients. I didn’t have income. The wise tales of fear are very widely trafficked and widespread. And what I would say to an advisor is everything you want is on the other side of fear.

And I look at all of this data that suggests exactly the opposite, which is you have the relationship with the client. You have the trust with the client. You are the one who they call on Sunday night when they need a shoulder to cry on or sage advice for making a decision. Just believe it with the core of your being because what we see is 99% of assets transition, whether it’s a restrictive transition or you’re taking full data, that the majority of assets are transitioning within 30 days, that this is still a free country, and you can make a move while honoring your contract around non-solicitation, non-competes, and non-associations.

So it is like this fear of holding advisors back is preventing them from realizing and monetizing this enterprise value, but equally as importantly, loving their business. Have fun. This should be fun. We spend the majority of our life at work. And so being able to surround yourself with people who win when you win, with a team who’s aligned and isn’t just drudgery with all their operations compliance headaches that they’re dealing with. Your team deserves to be happy. You deserve to be happy. And that fear factor is holding so many advisors back.

So that’s my advice is that it just doesn’t have to play out that way. And I think not just at RFG, collectively where we are as an independent industry with technology, with the way that AI is changing and our ability to harness data and business intelligence, getting to that point of next best action, how am I spending my time, how am I realizing, what is the blueprint for realizing my growth goals is more tangible now than ever. That’s immediately where I go.

Jason Diamond:

I’ve never been an advisor. I’ve never had a book of business, so I don’t want to minimize the fear, but I will say this. If we speak to advisors, let’s say a year post-transition, by far the number one thing we hear from them is, “I wish I did this sooner.”

Shannon Spotswood:

Wish I did it sooner.

Jason Diamond:

And that to me is the most telling data point there is to your point about fear and getting over it.

Shannon Spotswood:

So I do this exercise all the time with our team as we’re onboarding advisors is I want you to go home and look at your spouse and tell them, “I’m going to leave my job. I have no certainty that everything is going to work out. We might not receive any kind of compensation. Are you cool with that?” Walk that emotional journey. And while there’s plenty obviously that we can do with Capital Solutions to ease the financial fear associated with it, I still think at the baseline, it’s a great exercise to keep everyone very humble. You are asking an advisor to take their life’s work. And someone was sharing this analogy with me the other day and I was like, “Oh my gosh, that’s so good,” which is imagine moving houses. It’s such a hassle packing up moving one house. Now imagine moving 400 households or 1,200 households. It’s a lot, but I always hear the same thing, “I wish I’d done it sooner.”

Jason Diamond:

Thank you for sharing. You had some really sage wisdom that you shared with our audience. I can’t wait to see the next chapter, the continuation of the J-curve. This has been a fantastic episode, Shannon. Thank you.

Shannon Spotswood:

I love being with you, Jason. Thank you so much. We appreciate it.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Growth Without Compromise: Building Around the Advisor Experience

A conversation with Jason Diamond and Shannon Spotswood, CEO of RFG Advisory.

Jason Diamond:

Welcome to the latest episode of our podcast series for Financial Advisors. Today’s episode is Growth Without Compromise: Building Around the Advisor Experience. It’s a conversation with Shannon Spotswood, the CEO of RFG Advisory. I’m Jason Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Jason Diamond:

The right partners make you better. The wrong ones can quietly hold you back. Most conversations about independence focus on platforms as providers of technology, service, or infrastructure. Shannon Spotswood sees them differently. She believes advisors should evaluate a platform the same way they’d evaluate any long-term business partner, by asking whether it will help them build the kind of firm they ultimately want to own. That’s exactly what we explore in this episode. Shannon is the CEO of RFG Advisory, a firm that has grown from a startup into one of the industry’s leading supportive independence platforms. Along the way, she’s developed a unique perspective on what advisors should be looking for beyond economics and technology, and why the right partner can accelerate growth, strengthen culture, and help create a business that’s built to last. It’s a conversation that goes well beyond advisor platforms. We explore why Shannon believes so strongly in growth without compromise, what private equity can look like when the partnership is aligned, why firms shouldn’t try to be everything to everyone, and how advisors can separate marketing promises from meaningful support.

We also spend time on a topic that comes up in nearly every transition conversation my team has with advisors, fear. Shannon shares her perspective on why outdated assumptions about making a move continue to hold advisors back and why asking better questions and demanding evidence instead of promises can fundamentally change the way advisors evaluate every opportunity in front of them. Whether you’re considering independence, evaluating your current platform, or simply thinking about what comes next for your business, I think you’ll find Shannon’s perspective both practical and though-provoking, especially the sage advice in her words, “Don’t tell me, show me.” There’s a lot to take away from this conversation, so let’s get to it. Shannon, thanks so much for joining me. Thrilled to have you here.

Shannon Spotswood:

It’s excellent to be here. I’m really looking forward to it.

Jason Diamond:

Me too. Let’s dive right in. I want to start with your background. You spent 20 years in San Fran as an investment banker, then as a portfolio manager at Symphony Asset Management before even touching the world of wealth management. So what made you walk away from, we’ll call it the institutional world and enter the world of wealth management?

Shannon Spotswood:

It’s a little bit of a circuitous story, but I’m going to take us on the short route. I fell in love with Wall Street as a teenager, so I knew I wanted to work on Wall Street. My dream job was actually the time that I spent at Symphony Asset Management. I was a hedge fund manager for them for six years running a long/short equity fund. I then had three children in three and a half years. The firm was acquired by Nuveen Investments, and we grew very large, and I was on this really interesting trajectory within the institutional investment management world. And somewhat of the unexpected happened to me in 2010, we’d come through the financial crisis. I looked around the room, I had these three young children, and having loved finance since a very early age, I couldn’t crawl on an airplane anymore.

I fell out of love with what was honestly my first love. And I made a pretty radical pivot. I left Symphony, the tallest building at the time in San Francisco, and I partnered with a woman, and we built a luxury children’s clothing company for the next three years. So about as radical of a move as you can make, a $30 billion firm, big team, a tremendous growth ahead of us to upside down boxes of infant cashmere in a garage that flooded when it rained. So I had my startup in a garage moment. And while I was running the children’s clothing company, my husband and I took a big leap of faith and decided to move from San Francisco to Birmingham, Alabama to get closer to family, to raise our kids in the South, and just manifest the life that we wanted.

In the third year of running the kids’ clothing business, we checked every box of our initial business plan, and I turned to my business partner and I was like, “Now what? Should we raise capital? Should we open stores? Should we diversify manufacturing?” And we realized this beautiful little luxury brand that we had created was exactly what it needed to be. And so we restructured the company and I punched out of that. And I spent, really for the first time in my life, about five months in deep contemplation. What was the first hedge fund that I was a part of in San Francisco, my tour of duty through investment banking as an analyst associate and helping them start an M&A group. This incredible decade that I’d spent at Symphony, and then this wild out of left field moment of building a luxury children’s clothing brand. And it had such an epiphany, Jason. And it was this, that I was on the ground floor of all of those businesses. And my aha moment was, oh my gosh, I’m a builder.

What I love more than anything is sitting at the intersection of talent and opportunity and what I think is truly one of life’s greatest gifts, and certainly I think the most fun way to live your professional life, which is building something. So I put my resume together and I titled… It wasn’t even really a job search. It was more, I was new to Birmingham. I wondered if there was anything I could be of service in being a part of building something. So I put that resume together and I titled it Seeking the Intangible. And I was looking for that opportunity of talent and building something bigger than myself. And it was through some networking with my across the street neighbor who went on to become a board member of RFG who thought all I did was sell his wife incredibly expensive clothing who networked me to Bobby White, who’s the founder of RFG.

And in the first 10 minutes of my conversation with Bobby, and I’ll tell you, both of us went into that meeting thinking it was going to be a filler meeting. He was doing a favor for a friend, and I had seen a little bit of the wealth management industry after Nuveen had acquired Symphony and was like, “That’s not really my bag. My jam is more on the institutional side of things.” And 10 minutes into our very first meeting, we both canceled the rest of our day, and we spent the next two and a half hours in his office having a conversation that really started with what if. What if we took RFG, which had been founded in 2003, and at the time was an OSJ with LPL, what if we took that business and we tore it all the way down to the ground? And we rebuilt it from the ground floor up to be a platform that is designed, that is intentionally engineered, to serve independent advisors? What would it look like to be a client experience company first, a technology company second, and a corporate RIA third?

And I’ll tell you, walking out of that meeting, I was like, “This is it. This is it. This is the intangible. This is an opportunity to really build something very special.” And that’s how I found myself sitting in this talking to you today.

Jason Diamond:

Wow. So there’s a lot to unpack there. Thank you for sharing. And you shared it with a degree of vulnerability that I personally, I have a two-year-old and a three-week-old as of this recording. So it resonates with me. I think it resonates with a lot of advisors, people in our, and honestly, probably most industries, the constant pull in multiple different directions. And I love what you called it, seeking the intangible. And it sounds like you didn’t go in with any preconceived notion about… Many of our guests, by the way, that is the case. They walk in saying, “I knew since I was two years old I wanted to be in wealth management. I wanted to help be a steward of client…” And I love that your circuitous route took you a different direction.

I want to talk more about the firm, and we’ll dive in on some of these elements of your background also. But before we do, you mentioned a little bit of, at a high level, what RFG is. Give me a little more context, types of advisors you serve, types of clients you serve. And if you don’t mind, provide some stats around size as well.

Shannon Spotswood:

Absolutely. So we are on a mission to help independent advisors build their business without compromise by driving organic growth to create enterprise value. And I share that because in our mission statement is the passion that links us all together, which is helping independent advisors build what they want to envision for their clients, what they believe is the best representation of their vision and their values. So we are a platform, a full turnkey platform for independent advisors. We talk about our services as a flywheel. There’s a very intentional interdependency from technology to marketing to compliance to talent to investment management to coaching, operations, transition services, and capital solutions. All of it is knit together very thoughtfully in order to be able to deliver to the advisors on our promise to help them operationalize and professionalize their business, to serve their clients and to generate that organic growth, which is what translates into enterprise value.

What is so cool about the RFG advisor community, and I think is really the thread that binds between our teams and our advisors team is this servant heart growth mindset that you find it in every nook and cranny of RFG and certainly within all of our advisor partners. So the advisor profile for us, we do tend to skew a little bit younger. Average age is 45 years old. Organic growth across all of our advisors is north of 10%. So we’re very focused and leaned in on growth. We do have advisors that are lifestyle. We talk about them as lifestyle scaling and enterprise, and they run all along that growth at growth spectrum, depending on what do they want to build in their lives, what is going to help them really realize their dreams? And we’ll talk about this a little bit and just the growth of the firm and what we’ve been building, but we are at $9 billion.

So it’s been a big run in 2026, as I say, 10 years of pre-game warmup to be able to really talk about that level of growth. So just knocking on the door of $10 billion and truly, Jason, I can tell you, I feel like we’re just getting started. I feel like we are just at the beginning of the J-curve as advisors are really realizing that their most valuable asset is their time and the amount of enterprise value that they can create being independent. There’s a lot of different flavors of that. We’ve got some incredibly well-capitalized and very strong competitors, but the collective awareness around this bull market for advice that we’re sitting at the very beginning of is shining such a bright light on what does it mean to be independent? What does it mean to be really supported by a partner who’s all in to help them win? And that’s where we find ourselves. And by design, that’s where we find ourselves.

Jason Diamond:

Yeah, and it’s an exciting time. I completely agree. The space, the vertical you’re in, probably as much or more than any other pocket of the industry. You took the words out of my mouth, the J-curve. I completely agree with the story you’re telling. There’s one component of your background that I do want to ask about, which is many RIAs, platforms, and the like, the leadership team is intentionally ex-advisors in their own right. So I’m curious, do you think of it as a benefit or maybe to what degree is it not a benefit that you have never been an advisor and served clients? I do love the idea that you’re a business builder and you’re helping advisors to build a business. That’s not lost on me, but I’m curious specifically about never having been an advisor.

Shannon Spotswood:

I think it is so critical that we were advisor-founded. What we like to say is we’re advisor-founded and professionally-led. Bobby founded the firm in 2003. We partnered in 2015. Our third partner, Rick Wedell, who’s our chief investment officer, managing partner, joined in 2016. So the three of us really co-founded the version of RFG that is-

Jason Diamond:

The right version.

Shannon Spotswood:

… expressed in the market today. But you’re a hundred percent right to double click on this. And I think it is such an important area for reflection for advisors in terms of where are their greatest skills? Where does their passion lie? And what are they interested in building? That very first day that I met Bobby, his telling of the story is he looked at my resume the morning that we were meant to meet, and he is like, “Well, why would I hire her? She could do my job.” And he often talked about that where you get to this point as an advisor where the business is scaling and growing. And we certainly are seeing this in a lot of the larger teams that we’re talking to and the relationships that we’re beginning to build within the pipeline of these advisors who were attracted to the industry because they wanted to serve clients and find themselves as accidental CEOs, COOs, their chief cook and bottle washer to advisor to all of these C-suite titles.

And it’s not amplifying their natural skillset and it’s not aligned with what is actually their passion for the business. So I give a tremendous amount of credit to Bobby for recognizing more than 10 years ago really what it would take and how he could align team around him and build partnerships around him to be able to maximize the impact that we can have for advisors. So that north star of keeping advisors front and center is truly our, it is woven into our DNA and it is our north star. So we are a client experience company by design. We talk about it all the time, whether it’s how we’re building our team, how we’re thinking about investing in technology, how we’re soliciting feedback for advisors. I always say one of our greatest strengths as an organization is we’re active listeners and then we actually execute on it.

Our best ideas come from our advisors, but you’ve got to have that posture as a firm that everything you do is orienting around how do we help advisors operationalize, professionalize, drive organic growth, and create enterprise value? And you can’t do it sometimes. You’re either all in, chips all in, only winning when your advisors win, and only having that lens of will this benefit the advisor and their team or not. It’s not something that you can just dip your toe in and out of. And I think RFG, having that foundation from which to always build is absolutely critical.

Jason Diamond:

Can I try and paraphrase or synthesize, and you tell me if I get this right? The pitch is something to the effect of, “We are really good at what we do. Let us take all the BS off of your plate so that you can go out and be an advisor. Service your client and prospect.” Do you find that story is resonating more over time? I mean, you’ve been with the firm now long enough to see this kind of cycle of movement towards independence. How has that story evolved over time? Do you find it easier to tell?

Shannon Spotswood:

Oh my gosh, without question. And I would even put a shorter term window on it. I would say in the last 12 to 15 months-

Jason Diamond:

Oh wow.

Shannon Spotswood:

… there has been a collective awakening by advisors, and I think there’s a lot of contributing factors to that. One is obviously as we are all aware, the majority of the industry is now private equity backed. There has been a real focus on the aggregator model, transitioning advisors into a W-2 model. And as that has played out and that financial engineering has translated into some incredible valuations and returns, there has also been simultaneously advisors picking their head up and like, wait a minute, I wanted to get independent so I could serve my clients in a way that I felt best represented my vision and my values. And I’m finding myself increasingly in a captive environment. All the while the technology is getting better, the valuations are getting larger, the ability to control both your branding and what that means for your family legacy is increasing.

So over the course of the last 15 to 18 months, that story has just, while it’s been there for a long time, the independent movement was obviously sparked more than, gosh, now 16, 20 years ago in earnest. Now it’s just the passion and the knowledge that advisors are showing up to conversations in recognizing I want more. I want to spend my time where I want to spend it. I want to serve more families. I want to be well-positioned for generational wealth transition. I want to own the enterprise value. I want to build my team and I want the best tech. And that to me is exactly why we’re at the beginning of this J-curve.

Jason Diamond:

Yeah, I think you nailed it. And I agree with you that this notion of independence is not a destination in and of… It’s too broad of a term I think to use. And there are plenty of advisors who either started at one version of independence and need something different now, or to your point, thought they were going independent only to realize perhaps there’s elements of the business that aren’t as independent as they realized. And that’s where I think a firm like RFG to me, it’s not an accident that your firm fills this niche. This was advisor demand driven. Advisors said explicitly and implicitly, “We want to be independent. We want to own our equity. We want to have control over the things we like, but we want a support partner that helps us with all the back office, the middle office, investment management, the flywheel,” as you call it.

Shannon Spotswood:

That’s right.

Jason Diamond:

One other element of your journey to this point that I want to ask about, the succession journey or the journey to CEO, and I’m only asking because it’s somewhat recent, I think it was 2024, so we’re about two years in CEO. For the eight years prior to that, you were president.

Shannon Spotswood:

Yes.

Jason Diamond:

And this dynamic is near and dear for a lot of advisors. This idea you’re the heir apparent, but the date hasn’t happened until it happened. Was that a smooth transition date or did you find yourself, and I hope you can be honest about it, and if not, I understand, but I think this is something that a lot of advisors in their own businesses struggle with. So as somebody who’s gone through a major succession journey in the last two years, I’m curious what your thoughts are.

Shannon Spotswood:

The timing coincided with us bringing on a growth capital partner. So we closed on that partnership with Long Ridge in the fall of 2023, and we really set our sights on how do we bring this capital into the business and invest in our team, invest in our technology, invest in this desire to help independent advisors build their business. And Long Ridge really shares that long-term strategic belief that independence and the corporate RIA model is the ultimate winning model. So we have a lot of room to run there. So entering into that growth partnership with Long Ridge really provided a natural opportunity for that succession conversation to take place and to be able to take the company to the next leg. So we’ve tripled the size of the company over the course of the last two and a half years.

Jason Diamond:

Good for you.

Shannon Spotswood:

And as I said, I feel like we’re just getting started. I always joke we’ve had the longest pre-game warmup in history. In a lot of ways that’s by design. For me, the way that I can sleep at night is knowing that we are waking up as a team in this unified front to walk the walk for our advisors. It is incredibly important to us to honor the promise that we’ve made, whether it’s on tech or talent or transition services or marketing growth. So being able to lean in and deliver that, it takes a long time to build that institutional know-how and to be uncompromising in consistently making hard decisions, whether it’s around talent or the investments that you’re making or how you’re running and growing and building the firm. And so Bobby reached and Long Ridge and all of us reached this point where it was just a very natural way.

And I think it was such a gift that I had such a long warmup, if you will, in the bullpen, running the day-to-day of the business as president, being so close to sweating the details of how we built the foundation, how we run the firm. And then obviously Ed Swenson joined us as president in last fall in October of 2025, having joined our board when we partnered with Long Ridge. So he joined our board in September of ’23, and he and I set up a call every other week. So we just became this incredibly trusted confidant of mine as we made a lot of strategic investments and key strategic decisions in that first 15 to 18 months of our partnership with Long Ridge. So to be able to build and attract the caliber of talent that we have to RFG, I mean, I’m totally biased and talking my own book, but I think we have the best leadership team.

Doug Nelson joined us from Long Ridge as our CFO in November of last year, just bringing that rigor, particularly around capital strategies into our C-suite. So it was the right time to make that transition. And what I would say for founder advisor-led firms, it’s all about what are your growth ambitions? It’s what are your growth ambitions? Without question, when I joined and Bobby and Rick and I set upon this journey to tear the entire company down and build this robust tech stack and be at the forefront as an innovator in that space, that was experience that I had from my 20 years in San Francisco. And Rick had this incredible institutional pedigree having spent 12 years at Bain Capital plus two years at Stanford Business School, complimenting this authenticity that Bobby brought as an advisor, bringing that together. So recognizing as a founder advisor, if you have growth ambitions to 10X your business, it’s going to require that you bring high caliber talent to the table and allow for that room both from an equity participation perspective, but also just from what does the business need as it continues to scale up?

Jason Diamond:

That’s exactly right. And part of this gets back to private equity sometimes gets a bad rep in our space, but the reality is capital from private equity enables a lot of what you’re talking about. And I give you a lot of credit. I mean, you make the half joke about the longest pregame warmup ever, but I think of it as you learned on your own dime and you built all the kinks and ironed out all the kinks prior to having this critical mass of advisors on your platform. And we’ve seen certainly plenty of firms go that route too. So I give you credit for that. I think because we’re on the topic, let’s talk about it, private equity. Positive experience, negative experience, neutral, neither good nor bad. Just give me your… I don’t want to make the episode about the perils-

Shannon Spotswood:

Right.

Jason Diamond:

… and benefits of private equity capital, but just curious what your experience has been.

Shannon Spotswood:

I think this is one of those life lessons. Choose your partners wisely and great things can happen, whether it’s in your marriage or your friendships-

Jason Diamond:

Spouse. Yep.

Shannon Spotswood:

… or your business partners. And Long Ridge found us very serendipitously. I mean, we were probably two years from even contemplating bringing in a growth capital partner. They were introduced to us by a former board member and they were in our offices in January of 2023. And the most important things for us were twofold. Number one, they shared our vision and belief that the corporate RIA independent is the winning model for the industry and for advisors and clients. And number two, who they are as people is very much who we are as people. They’re builders.

Jason Diamond:

Culturally.

Shannon Spotswood:

They have this servant heart growth mindset that they share with us. So I feel incredibly blessed to say they’re amazing partners. And what’s interesting, and I’ll share this very openly, they’re the majority owners of RFG. We were very early in that time of bringing them on. They have always honored the promise that they made to us, which is we run the business. They are a strategic partner. They’re a great thought partner. They are the capital provider, but there has been multiple examples where we have made business decisions where there’s been some heat in the kitchen, in the boardroom, and we’ve felt very strongly about it. So I just couldn’t say enough great things about them. And one thing that I will just share, and I say this because they’ve shared this with me, I have had this incredible personal journey of growth bringing such a deep bench in Long Ridge into the firm.

And that has been certainly challenging at times. Do hard things, get comfortable being uncomfortable. It’s the ultimate definition. But I really think that is something that never gets talked about is what it means in upskilling the caliber of your talent, yourself, how you have to grow and evolve as an individual has been really, I won’t say it’s been easy, but I look back on what I’ve learned over these two years and just feel prepared as a leadership team, how we operate as a team, what is expected of us to be able to deliver and execute for our advisors in this next leg of growth.

Jason Diamond:

I think your marriage analogy is the perfect one, and I’m going to use it. And honestly, in a lot of ways. First of all, marriage is hard, good or bad. It’s hard. Second of all, it’s the ultimate… The institution of marriage is not good or bad. Private equity capital is not good or bad, but your answer is the right one. Pick your partner very wisely. My favorite part of your answer, because it’s the most original, was around a good capital backer, a good partner, whatever you want to call it, pushes you to be better. And I think that you’re surrounding yourself with, by definition, some of the smartest people in the industry, and that can’t be a bad thing. And the proof is in the pudding. The growth trajectory you’ve seen, it’s certainly no accident. I think part of it is tied to your incredible stewardship. You don’t have to answer that. You don’t have to be humble, but I’ll attribute it to you. That brings me to my next question.

Shannon Spotswood:

I do have to say really quickly.

Jason Diamond:

Please do.

Shannon Spotswood:

I will be celebrating my 27th wedding anniversary in October. So yeah, pick your partners.

Jason Diamond:

Congrats. And I feel equally blessed, I assume as you do. I have a great partner, I’ll say. I don’t know if she’s listening right now, but she’s a great spouse. What I was going to say though, good segue, I think there’s been more in recent years, but not a ton certainly of female C-suite wealth management executives. How do you feel about your role? Do you feel an increased burden? Is it an honor to you? Is it something that you don’t think much about at all? I’m curious what your thoughts are.

Shannon Spotswood:

I feel immense gratitude. I mean, just in general, leading RFG and locking arms with our team and our advisors is, I mean, a gift of a lifetime. I was incredibly fortunate to not just have mentors during my 20 years in San Francisco, but to have true sponsors. Whether it was the first hedge fund I worked at, I took that job because it was a female portfolio manager and at the time one of the only in the country. And she really opened up her heart to me and poured into me. And then 10 years at Symphony, the founding partners of Symphony, they dropped me into the deep end of the pool and gave me a lot of rope to make a lot of mistakes and continued to invest. So I have this foundation from which to build and to lead and to be ready for this role.

I couldn’t do any of this without my partners. Rick and I have been partners for more than 10 years. It really does take a village in the same way that it takes a village to raise your family. It takes a village to find the courage and the strength to lead in a way that really honors the gravity of the mission. But I’ll tell you this. One, I knew I wanted to work on Wall Street from a very young age, so I chose this. I knew what I was getting into, that it was a male-dominated industry. I have made particularly, this is one of the unique facets of the wealth management business, we have phenomenal both male and female talent, and I have made the strongest female relationships on this side of the business as compared to the institutional side of the business. So I think there is a richness to our side of the industry that doesn’t get enough air cover.

There are just phenomenal leaders, and I think increasingly so, we’re seeing more women stay in the game and raise into positions within the C-suite and leading these firms. I will tell you one thing in 2019, and I really give a lot of credit to Bobby for this in coaching me, is I was raised by wolves on Wall Street without question. I sat on a trade desk, I was completely comfortable with compartmentalizing emotion, and I made it a mission to develop intentionally my emotional intelligence. And that truly unlocked everything for me, and I think plays such a huge part of who I want to be and who I challenge myself to be as a leader.

And so it’s funny when I get the question asked of me about being a female CEO, because I think that’s what people feel must be like came very intuitively to me, but I had to learn it. I had 20 plus years of being able to run with boys and I needed to develop that skill. And it is a skill that I challenge myself on a daily to continue to lean into. And I think it is increasingly important both for men and women who aspire to leadership to hone the strategic and execution alongside that emotional intelligence.

Jason Diamond:

Great answer. And I think you know I admire a lot about you, but it’s certainly one of the things I admire most about you is over the last couple years in particular you’ve been a real beacon of positivity, of empowerment in that regard. You’re active on socials, you’re active at industry events, you’re always willing to talk to people. And honestly, that to me is the answer. A lot of people complain about this as a problem, and I want to just take a second to applaud you because I think you and your firm actually do something to at least try and actively solve some of this. And also you mentioned it earlier, but same thing with some of the next gen dynamics. You skew much younger than the average firm on the industry. And I think that too is to your credit around, okay, we’ve identified that we have a major succession problem in our industry. What are we doing to solve that?

Shannon Spotswood:

Absolutely.

Jason Diamond:

Let’s talk about growth a little bit. I agree with your thesis. This space you occupy, no better time to be in it. We’re at the perfect spot on the J-curve. Unfortunately, we are not the only two people to think that. There are also, I think, some other firms. This space has become crowded. What do you think about that? Just the fact that there’s more competition than ever. I mean, my view of it is there are enough quality advisors to go around, but curious what you think.

Shannon Spotswood:

Anytime I find myself wading into the waters of fear and scarcity around this topic, I’m reminded that 67% of the assets still remain within the wirehouse and IBD space. We got lots of room to run. I believe in a mindset of abundance. The data will tell us that the demand for advice is increasing by 30% over the next decade while the number of advisors is decreasing by 1%. So we’ve got, find me another industry where you see a graph that looks like that. On top of that, next gen, which I think this is so fascinating, next gen actually wants more advice when compared to the baby boomers. So baby boomers created our industry, and here we are sitting on $87 trillion worth of generational wealth that’s going to begin to transition. That doesn’t even include all of the wealth that will be monetized through real estate and family-owned businesses.

It is a tsunami. And what is, I think, really interesting is that next gen recognizes the value of their time. I’m sure if I had a conversation, Jason, with you and my husband about how intentional you want to be in terms of showing up for your children and the equal nature of parenting, that alone is changing the way the next gen thinks about both their professions as well as their family life, which means you by default have to hire professionals to do the things that you don’t want to spend the time doing.

Jason Diamond:

Really good point.

Shannon Spotswood:

So we have this incredible convergence that’s happening right now, and it’s coming at a time that technology is finally going to allow us to serve more families more intentionally along that wealth spectrum. So it is like, bring it on. There is more than enough to go around. We are in an era of abundance. And what I worry the most about, and this, it’s like climb up on the soapbox and let’s roll, about independence because I see and have so many conversations with advisors where they have been willing to accept such a compromised service experience that they would never allow to be delivered to their clients. So advisors are delivering this 24-hour concierge, high-touch, deeply thoughtful experience, estate planning, tax planning, financial planning, multi-generational conversations. They’re in it. They’re in the trench. And then they turn around and their service partner is so subpar.

They’re compromising their growth. They’re burying them in compliance and ops and clicks and swivel chair and tech that doesn’t work. So we’re at the very beginning of this bull run for advice. And I think advisors who recognize, I want to serve more families, I want more control over my time, I want to be able to build enterprise value on my personal balance sheet, have room to do it. So I welcome the competition. I think the best way to talk about it is iron sharpens iron. I learn so much from our peers and like, ah, they did this or they did that. How do we think more disruptively, more innovatively? How do we do it differently? So I think there’s a lot of room for all of us. You’re going to be busy, my friend. You’re already sitting there advising the lion’s share of the big deals, and I think you guys are just getting started as well.

Jason Diamond:

Yeah, it certainly feels like a bull market for advice and also I think a bull market for some of the… You allude to an interesting paradox, which is some of the biggest and most sophisticated advisors in the industry have really high-touch impressive service models, but they don’t seem to demand the same in return. I have some thoughts as to why. I think one could just be Kool-Aid drinking, like you don’t know any better and you’ve been there for so long. There’s just so much friction associated with moving a business and fear associated that it’s unless things get really dire or unless I find something that’s better enough or meaningfully better enough, I can gut it out. But the third one that comes to mind is these firms we’re talking about have unequivocally, they do a lot of good, a lot of bad, but unequivocally one of the things they do really well is brand.

Shannon Spotswood:

Yeah.

Jason Diamond:

How do you reconcile that question with a firm that obviously doesn’t have a brand that the average American consumer would know?

Shannon Spotswood:

We take a posture on this that is rooted in an Accenture study that was conducted several years ago, but I think still remains so true today, is that advisors think that the value proposition that their clients are looking for, either it’s that big monobrand that’s advertising at the Super Bowl or the alpha they’re ever able to generate or the portfolio investments. But the clients tell us that what they’re looking for in an advisor is, do you get me? Do you share my values? And do I want to spend time with you outside the office? And that is basically distilled down the way we talk about it is people connect with people. So now more than ever, particularly if you take a big step back and you think about the influencer economy and how brands, big brands, Nike or big consumer brands have really leaned into niche branding.

How do I get my brand into the hands of someone who’s very passionate about it? So advisors who develop their own brand, who have a presence on social, who have a presence in AEO and SEO, who are leaning in and expressing not only their client experience, but their vision and their values through their brand, I actually think as this generational wealth unfolds, that authenticity carries so much more weight than is my name on a football stadium. So it is those three factors. It’s just I’m comfortable. I don’t want ripple. It is friction and fear for sure. And then it’s like that branding is up for grabs because we certainly see one of the most fun parts of advisors joining RFG, this is a big part of what we do is helping them design and develop or reimagine their brand name, their logo, all the rest of it.

Once that creative energy is unlocked and you get to tell your story, your my why, that connective tissue is so powerful with the clients and with the growth that comes from that because I mean, I truly believe people connect with people. They’re looking for that. And I think more so now than ever with AI.

Jason Diamond:

You just took the words out of my mouth. Do you think AI perpetuates that?

Shannon Spotswood:

I think people are craving that. And this is why advisors who are powered by AI without question are going to win. Advisors are not going to be disrupted by AI unless they haven’t made the move to get themselves in a position to be able to leverage the technology, the brand, the talent, the maximizing of their time. But especially with something as important and as personal as money, as you walk through life, I mean, you are at the very beginning. I’m sending, I’ll have all three kids in college. But as you make these critical decisions in your life, whether it’s getting married or starting a business or changing jobs or buying your first house, buying your vacation house, all of these things, you can go right or you can go wrong. And having a trusted partner who really understands you, I actually think that we’re going to see the fees paid for advisors increasing as there is a greater premium placed on, I want deeply personal relationships that are tailor-made for me.

Jason Diamond:

But I assume the flip side of that is you have to do more. You as a firm and you as an advisor have to do more, and you can’t just raise fees with the same service model. So I think what is the corollary of that? What are some of the ancillary growth areas that you do beyond the financial planning and asset management that says, “We’re worth that money you’re going to pay us”?

Shannon Spotswood:

It is, and I love the work that wealth.com is doing here. I mean, the estate planning and tax planning, making that more accessible along that continuum of wealth spectrum, the blurring of the lines between ultra high net worth and high net worth, and then mass affluent is so exciting. Better, more robust planning is good for our industry overall. Obviously there’s a huge amount of demand on the tax side of things, particularly the 1040. It’s easy to find a CPA to do the cool complex stuff. It’s increasingly more challenging for advisors. That’s an area that I know a lot of firms have leaned into. We’re certainly doing a lot of work. But so much of this, Jason, is showing up at the right time for clients with the resources. It’s a really interesting conversation about, yes, you have to do more for your clients, but you don’t have to do more for all your clients at exactly the same time.

Jason Diamond:

That’s well said. The flip side of that is as an advisor, because ultimately the advisors are the ones making this decision. There are a lot of firms, and not even just firms that you would be competitors with, because the reality is you and I understand the industry landscape and where various firms fit in. For many advisors, it’s a long list of various firm names that they’ve heard. So what are some things that you think advisors should be asking a firm like you or a business development person at your firm to suss this out? How does an advisor go about understanding if a platform is empty or is really going to be able to deliver in all these areas?

Shannon Spotswood:

Remember back in the day when the Wall Street Journal used to run have a monkey throw a dart and see if you can beat the pros on stock picking? I love to do that with regards to our advisors. We always tell our prospects, “Throw a dart at any advisor that’s affiliated with RFG and call them. Certainly we can provide a list of advisors who we think you’re going to most align with in terms of what your growth ambitions are or the way you want to run your business or who you are, life stage, all the rest of it.” But I do think that getting that unfiltered experience, the good, the bad, the ugly. We always are like, “Are we perfect? Absolutely not. Do we though immediately want the feedback so that we can iterate to excellence to get better? Absolutely. Get that firsthand testimony.” So that’s number one.

Number two is don’t tell me, show me. There are so many, and it always pulls at my heart because as much as I love to win business and transition advisors, and I think that we’re working certainly at RFG on some really interesting technology that is anchored around removing that friction and fear by speeding up the time that you can make that transition in. And the tech is finally there to allow for this. So I think we’re going to be able to take variable number two and at least make that box a little bit smaller. But if I’m sitting as an advisor, I would want to see the evidence. Show me how you’ve solved the problems that advisors have brought to you. How have you refined your tech stack? How have you invested in your team? How have you made the decisions where the ROI can be measurable and tangible?

And I think too often I’m surprised that advisors get, it’s almost as if they get overwhelmed by the amount of information that they’re taking in trying to compare all these different firms. If I’m ever asked, I’m like, please work with a third-party recruiter. You need someone not only to act as an interpreter, but you need someone to help really keep your top three priorities at the front of your decision-making matrix, because it really is apples to oranges to orangutans and you get decision fatigue. And then advisors end up making this decision that is anchored in like, well, this is the highest payout, and I’m willing to take all of these sacrifices and paper cuts for this highest payout. And that is just such a travesty.

So it’s like, know what you want. What are your top three problems that you’re trying to solve? Talk to advisors that you get to pick just so you can do some secret shopping, and then demand evidence of how the firm, the platform has responded to feedback and gotten better as a result because that will tell you, are they really going to walk the walk or are they just going to talk the talk?

Jason Diamond:

I’m super grateful that you gave specifics there because it’s an easy question to dodge and talk around. So I completely agree. Your first answer, actually all three of those points you just made, but certainly doing name-blind calls, and I say name-blind because advisors worry about confidentiality. I think that’s one of the best and most underrated tools to learn about a firm is advisors now have so many colleagues. There’s been this diaspora of advisors where advisors know advisors everywhere. And that’s a benefit if you wanted to go and just network and have conversations with other advisors on your own. But if you’re worried about confidentiality, there’s certainly the mechanisms, and we do this all the time for advisors to set up name-blind calls. You dial into a conference line, it’s John Smith, and you pick an advisor’s brain and say, “Hey, you moved your book from LPL to RFG, and tell me what that experience was like and what were the positives? Give me all the negatives.”

To your point, you want advisors to ask those questions in advance. It’s better to ask those questions than to end up in the wrong marriage with the advisor.

Shannon Spotswood:

Absolutely. And the other thing is what an easy answer to BS around is tell me who’s a good fit for your firm. And it’s like, “Everyone’s welcome here.”

Jason Diamond:

Everybody. Yeah.

Shannon Spotswood:

It’s just not true. RFG is not a good fit for an advisor who is not open to using technology, who is not interested in outsourcing investment management, who doesn’t want to have a conversation about how are you spending your time and do you want to create enterprise value? Do you want to grow? So it really is important to have that vulnerability and that honesty and the answer to that question.

Jason Diamond:

I love it. We have time for one more. I can’t believe it’s been almost an hour.

Shannon Spotswood:

I know, it flies by.

Jason Diamond:

We speak with plenty of advisors who aren’t considering a move, but I’m interested. I think you have a really nice lens into the industry. What is one thing you wish advisors knew? You have a megaphone to just talk to advisors who maybe are considering change, but maybe aren’t. What’s the questions they should be thinking about? What keeps you up at night? Just what would be your public service announcement?

Shannon Spotswood:

I’m going to focus on the friction and fear because that’s the number one barrier to making a move is PTSD, either first person PTSD or the collective negative experience that the industry has had. It took me 90 days to transition. I got sued by my former firm. I lost all these clients. I didn’t have income. The wise tales of fear are very widely trafficked and widespread. And what I would say to an advisor is everything you want is on the other side of fear.

And I look at all of this data that suggests exactly the opposite, which is you have the relationship with the client. You have the trust with the client. You are the one who they call on Sunday night when they need a shoulder to cry on or sage advice for making a decision. Just believe it with the core of your being because what we see is 99% of assets transition, whether it’s a restrictive transition or you’re taking full data, that the majority of assets are transitioning within 30 days, that this is still a free country, and you can make a move while honoring your contract around non-solicitation, non-competes, and non-associations.

So it is like this fear of holding advisors back is preventing them from realizing and monetizing this enterprise value, but equally as importantly, loving their business. Have fun. This should be fun. We spend the majority of our life at work. And so being able to surround yourself with people who win when you win, with a team who’s aligned and isn’t just drudgery with all their operations compliance headaches that they’re dealing with. Your team deserves to be happy. You deserve to be happy. And that fear factor is holding so many advisors back.

So that’s my advice is that it just doesn’t have to play out that way. And I think not just at RFG, collectively where we are as an independent industry with technology, with the way that AI is changing and our ability to harness data and business intelligence, getting to that point of next best action, how am I spending my time, how am I realizing, what is the blueprint for realizing my growth goals is more tangible now than ever. That’s immediately where I go.

Jason Diamond:

I’ve never been an advisor. I’ve never had a book of business, so I don’t want to minimize the fear, but I will say this. If we speak to advisors, let’s say a year post-transition, by far the number one thing we hear from them is, “I wish I did this sooner.”

Shannon Spotswood:

Wish I did it sooner.

Jason Diamond:

And that to me is the most telling data point there is to your point about fear and getting over it.

Shannon Spotswood:

So I do this exercise all the time with our team as we’re onboarding advisors is I want you to go home and look at your spouse and tell them, “I’m going to leave my job. I have no certainty that everything is going to work out. We might not receive any kind of compensation. Are you cool with that?” Walk that emotional journey. And while there’s plenty obviously that we can do with Capital Solutions to ease the financial fear associated with it, I still think at the baseline, it’s a great exercise to keep everyone very humble. You are asking an advisor to take their life’s work. And someone was sharing this analogy with me the other day and I was like, “Oh my gosh, that’s so good,” which is imagine moving houses. It’s such a hassle packing up moving one house. Now imagine moving 400 households or 1,200 households. It’s a lot, but I always hear the same thing, “I wish I’d done it sooner.”

Jason Diamond:

Thank you for sharing. You had some really sage wisdom that you shared with our audience. I can’t wait to see the next chapter, the continuation of the J-curve. This has been a fantastic episode, Shannon. Thank you.

Shannon Spotswood:

I love being with you, Jason. Thank you so much. We appreciate it.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Patrick Larkin, Partner & Practice Leader, Cerity Partners

Three years after launching his independent RIA, Patrick Larkin merged with Cerity Partners—but not because that was the original plan. He explains how ownership changed the way he viewed enterprise value, optionality, and the future of his business.

In Summary

Going independent is often viewed as the destination. Patrick Larkin discovered it was just the beginning.

Louis sits down with Patrick, Partner and Practice Leader at Cerity Partners and former founder of Oak Hill Wealth Advisors, to discuss an unconventional journey: leaving Wells Fargo to build an independent RIA, then choosing to merge that business just three years later.

Rather than following a predetermined exit strategy, Patrick shares how ownership fundamentally changed the way he thought about enterprise value. A conversation with a prospective acquirer revealed that buyers weren’t interested in purchasing a book of business—they were looking for a business. That realization reshaped how he invested, hired, delegated, and ultimately positioned his firm for the future.

The conversation from our Build Grow & Transact series also offers a candid look at life after a merger, from evaluating cultural fit and partnership to balancing autonomy with the resources of a larger organization. More broadly, it illustrates how ownership creates optionality—and why the most valuable decision an advisor makes may not be the one they originally envisioned.

The Storyline

After spending nearly 15 years building a successful practice at AG Edwards, Wachovia, and Wells Fargo, Patrick Larkin launched Oak Hill Wealth Advisors in 2022 with a simple objective: build a business on his own terms.

Like many advisors, he expected independence to be the final destination for a long time. But then there was the realization that ownership changes more than economics; it changes perspective.

And it became the beginning of an entirely different way of thinking.

As acquisition inquiries arrived sooner than expected, Patrick realized something that fundamentally changed his strategy. Sophisticated buyers weren’t evaluating his client relationships as a book of business; they were evaluating Oak Hill as an enterprise. That insight shifted his priorities from maximizing short-term profitability to building a business that could thrive beyond its founder.

Just three years after launching, Patrick chose to merge with Cerity Partners—not because he was looking for an exit, but because he believed it strengthened the future for his clients, his team, and his family.

Louis and Patrick explore what led to that decision, how ownership increased the value of his business almost immediately, why he compares independence to an IPO, and what advisors should consider if they hope to create options for the future—even if they don’t yet know what that future looks like.

Topics Covered

• Building enterprise value versus maximizing annual income
• Creating optionality through ownership
• Leaving Wells Fargo to launch an independent RIA
• Why buyers value businesses more than books of business
• Evaluating strategic partners and acquisition opportunities
• The economics of independence and business valuation
• Life after merging with Cerity Partners
• Balancing autonomy with enterprise-scale resources
• Leadership, succession, and building beyond the founder
• Long-term ownership and partnership models

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

Why did Patrick decide to leave Wells Fargo? (11:07)

Patrick explains why growing frustrations around control, firm priorities, and the ability to build his business eventually outweighed the comfort of staying put.

How did going independent immediately change the value of his business? (21:42)

Patrick introduces one of the episode’s biggest ideas: why launching Oak Hill felt like taking a company public and how ownership increased the firm’s value almost overnight.

Why did Patrick sell only three years after becoming independent? (20:03)

An unexpected conversation with a prospective acquirer completely changed how he viewed enterprise value and accelerated his long-term thinking.

What separates a business from a book of business? (21:42)

Patrick discusses why recruiting advisors, delegating client relationships, and investing beyond himself made Oak Hill more attractive to strategic buyers.

Why Cerity Partners? (26:48)

Rather than focusing on valuation, Cerity emphasized culture, partnership, and long-term alignment—qualities Patrick says ultimately mattered most.

What is life actually like after a merger? (37:57)

Patrick offers an unusually candid perspective on autonomy, leadership, and why he says he hasn’t second-guessed the decision once.

Key Takeaways

• Ownership creates opportunities that often aren’t visible until after independence.
• Enterprise value is built by creating a business that can thrive beyond its founder.
• The first acquisition conversation can be valuable even if no transaction occurs.
• Cultural alignment may ultimately matter more than valuation when selecting a long-term partner.
• Independence doesn’t eliminate future options—it expands them.
• Strategic transactions can strengthen outcomes for clients, employees, and owners simultaneously.
• The goal isn’t simply to own a business; it’s to create choices for what comes next.

https://youtu.be/f7FGLGjBbyo

Quotable Moments

“The day Oak Hill launched felt like the business had gone public.”

“Potential acquirers weren’t interested in buying a book. They were interested in buying a business.”

“Ownership isn’t simply about control. It’s about creating optionality.”

“The fear of leaving is almost always worse than the actual experience of leaving.”

FAQs

Why did Patrick Larkin merge with Cerity Partners only three years after launching his RIA?

Patrick explains that independence changed how he viewed enterprise value. After learning what sophisticated buyers were actually looking for, he intentionally built Oak Hill as a business rather than simply managing for annual profitability.

Why does Patrick compare independence to an IPO?

Because ownership immediately transformed the economic value of his practice. Rather than participating in an internal succession model, he owned an independent enterprise that carried substantially greater market value.

What changed after Patrick became independent?

Beyond gaining control, he began making decisions through the lens of enterprise value—investing in advisors, systems, and infrastructure that would make the business less dependent on him personally.

What made Cerity Partners stand out?

Patrick cites the firm’s culture, partnership model, meritocracy, long-term vision, and ability to combine local autonomy with enterprise-level capabilities.

Is this episode only relevant for advisors considering selling?

No. The broader lesson is that ownership creates flexibility. Whether an advisor ultimately remains independent or joins another organization, understanding how enterprise value is created can influence decisions from day one.

What is the biggest lesson Patrick hopes advisors take away?

That independence isn’t simply about leaving a firm. It’s about creating the ability to choose what comes next on your own terms.

Patrick explains that independence changed how he viewed enterprise value. After learning what sophisticated buyers were actually looking for, he intentionally built Oak Hill as a business rather than simply managing for annual profitability.

Because ownership immediately transformed the economic value of his practice. Rather than participating in an internal succession model, he owned an independent enterprise that carried substantially greater market value.

Beyond gaining control, he began making decisions through the lens of enterprise value—investing in advisors, systems, and infrastructure that would make the business less dependent on him personally.

Patrick cites the firm’s culture, partnership model, meritocracy, long-term vision, and ability to combine local autonomy with enterprise-level capabilities.

No. The broader lesson is that ownership creates flexibility. Whether an advisor ultimately remains independent or joins another organization, understanding how enterprise value is created can influence decisions from day one.

That independence isn’t simply about leaving a firm. It’s about creating the ability to choose what comes next on your own terms.

Related Resources

From Start-Up to $31B Behemoth RIA: The Catalysts Behind the Growth of Mega-Firm Cerity Partners

Ownership Matters: What Advisors Need to Know When Evaluating Firms

Top Tips for Setting Your Business Up for Success Years Before a Move

Patrick Larkin
Partner and Practice Leader

Patrick is a Partner and Practice Leader in the Lansdowne, VA office. He is a member of the Lansdowne Practice, where he works closely with families, foundations, and non-profits to help them define and achieve their financial goals with clarity and confidence.

With a deep specialization in retirement income distribution planning and complex risk and wealth management strategies, Patrick is known for helping clients simplify complicated financial decisions, reduce uncertainty, and build sustainable, long-term plans. His approach emphasizes fiduciary responsibility, transparency, and personalized guidance — ensuring clients always feel informed and empowered.

Prior to joining Cerity Partners, Patrick was the founding member of Oak Hill Wealth Advisors, where he built a highly respected independent advisory practice that earned the trust of families, professionals, and mission-driven organizations across the region. His leadership was instrumental in shaping a client-first culture that continues today.

Patrick’s work is rooted in a passion for long-term relationships — guiding clients not just through markets, but through life’s milestones such as retirement, business transitions, philanthropic planning, and wealth transfer across generations. He takes pride in being both a strategic advisor and a steady partner to the people he serves.

Patrick lives in Bluemont, VA, with his wife Angela, their two children, Paige and Sean, and their Golden Retrievers, Huckleberry and Genoa. Outside of the office, Patrick and his family enjoy an active lifestyle — whether it’s hiking and backpacking on the Appalachian Trail, biking the Great Allegheny Passage, or sailing on the Chesapeake Bay. These experiences reflect his belief in balance, resilience, and enjoying the journey — values he also brings to his work with clients.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

Build, Grow & Transact: From Breakaway to Transaction in 3 Years

A conversation with Louis Diamond and Patrick Larkin, Partner & Practice Leader at Cerity Partners.     

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Build, Grow & Transact: From Breakaway to Transaction in 3 Years. It’s a conversation with Patrick Larkin, Partner and Practice Leader at Cerity Partners. I’m Louis Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual Advisor Transition Report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

Ownership as a way of creating opportunities you can’t always predict. That’s exactly why we created our Build, Grow, and Transact series. Independence isn’t the end of the story. It’s often the beginning of thinking differently about enterprise value, optionality, and what comes next. Today’s guest is Patrick Larkin, Partner and Practice Leader at Cerity Partners, and formerly the founder of Oak Hill Wealth Advisors. Patrick spent nearly 15 years building a successful practice at A.G. Edwards, Wachovia, and eventually Wells Fargo before launching his own independent firm in 2022. Just three years later, he merged that firm into Cerity.

At first glance, that timeline might seem surprisingly short, but as you’ll hear, the merger wasn’t a change in direction. It was the result of seeing his business differently once he owned it. Yet, it’s this perspective that really brings that thought home. Patrick said the day Oak Hill launched felt like the business had gone public because overnight, what had been viewed as a book of business became an enterprise with substantially greater value, some four to five times the value of what it was worth at Wells. And that realization changed the way he invested, the way he hired, and ultimately the way he thought about the future.

Pat and I also talk about something advisors don’t often discuss candidly, what life actually looks like after a merger. How much control do you give up? What changes day to day? How do you know whether you’re joining a partner or simply selling a business? Whether your long-term plan is to remain independent forever or eventually join a larger organization, Patrick’s experience is a reminder that ownership isn’t simply about control. It’s about creating optionality and putting yourself in a position where the next decision is yours to make. So let’s get to it.

Patrick, thanks for coming on our show today.

Patrick Larkin:

Oh, my pleasure. Nice to meet you, Louis.

Louis Diamond:

You too. So let’s start off basically how we start every interview. Tell us about yourself, your background, and how you found your way into our industry in the first place.

Patrick Larkin:

Yeah, thank you for asking. I knew I always wanted to be a financial advisor. That part really wasn’t in question, but upon graduating college and being a 22-year-old, I knew that it was probably not practical to walk in and start advising people my parents’ age with their life savings. Probably wasn’t going to be a recipe for success. So I took a quick tour through the pharmaceutical industry first, which ended up being unexpectedly valuable. My employers there pushed me to think like an entrepreneur and within our territories. And honestly, that mindset never left me. It shaped how I built everything that came after. Eventually, an opportunity presented itself in Loudoun County, Virginia in Northern Virginia, and I became an FA trainee with A.G. Edwards, absolutely fantastic firm to start my career.

Now, what drew me to this career was pretty simple. I felt like it was one of the professions that we had an opportunity to do so much good for others while simultaneously also doing well for yourself, and those two things aren’t in conflict. I also really loved the idea that in this profession there was no hiding. You don’t get paid to show up. You get paid for what you actually do. And perhaps for me, what was most important, I loved the weight of responsibility. I loved earning people’s trust. I loved the idea of deserving, being deserving of their trust, and being a steward of what they’ve worked a lifetime to build. I never took that lightly, and I still don’t.

Louis Diamond:

That’s amazing. Yeah, I mean, the number of people I’ve heard, you talked so fondly about A.G. Edwards and there’s a bunch of other firms that have since been absorbed or emerged that are like the regional firms of old. So not surprised to hear you loved it. A.G. Edwards, obviously, became Wells Fargo Advisors or was acquired or merged with Wells Fargo. So I know you’re at Wells and A.G. Edwards until 2022. So give us a quick version. How’d you build your practice from the pharma world into being in FA?

Patrick Larkin:

Yeah, so as I started with A.G. Edwards, I came in at really just the perfect time. It was towards the end of the financial crisis. And I built the business the old-fashioned way with a lot of cold calling and eventually did some dinner seminars, which I can tell you is a very expensive way to learn how to speak in front of a room. But I made some progress, and I was also in a great office, small enough that some of the advisors there would hand off some of the smaller accounts that they weren’t interested in working with, and got an opportunity to get a lot of reps in working with real life clients and individuals. I knew early on I didn’t have enough talent to win on talent alone, so I made up for it and compensated for that with really hard work.

The real turning point came for me when A.G. Edwards was first acquired by Wachovia Securities, and that was about five years into my career. And at that point, my branch manager, who was eyeing retirement, asked me to step in as her partner, and that changed everything. We eventually moved over to a Wachovia Securities office, another really great local office in Loudoun County, Virginia. And from that office, I worked on and became a CIMA, a CFP, worked with the clients, built a business through referrals. And I found at that point in my career when I would go to a meeting with Wachovia, eventually Wells Fargo, as a young 30-year-old, I would look around the room often and realize that I was the youngest person in the room.

The funny thing was 10 years later, I would go into that same room and I’d look around and I still was the youngest guy in that room. And those demographics in our industry, and when I came into our industry, ultimately led that office that I worked in with Wells Fargo Advisors, I eventually was the recipient and party to five different succession plans-

Louis Diamond:

Wow.

Patrick Larkin:

… at Wells Fargo Advisors. I hoped that I had built a reputation as somebody that these other advisors would entrust with their clients. And over that time period, really, I would say professionally, one of my accomplishments I’m most proud of is all five of those retired advisors that I used to work with, who had an opportunity to see me work with clients, all became clients of mine, I still continue to work with. And it’s professionally just one of the greatest honors that I’ve ever had.

Louis Diamond:

I mean, that’s a large number of advisors you helped sunset, but I would agree it’s the ultimate proof of concept that they not only trusted you with their clients and their life’s work, but now also with their family’s wealth. So I like that, kind of the full life cycle there. So I’m curious, though, you stayed at Wells through a really turbulent time through the fake bank scandal. There’s a lot of attrition. I mean, obviously, they’re still a powerhouse to this day, but what kept you at Wells for as long as it did before you left in 2022?

Patrick Larkin:

You described it as a turbulent time. Pretty turbulent might be an understatement. Even before Wells, the transition to Wells, Wachovia Bank had been the first company that we transitioned to from A.G. Edwards. And we, of course, went through the financial crisis during that time period and handholding our clients and helping them get through that time period and dealing with concerns that we shouldn’t really have to be prepared with. “Is my money safe? It’s not what’s happening to the market, but is my money safe in your institution?” But once things stabilized, I found real purpose in partnering with some of the retiring advisors and opportunities that came up. It was a really wonderful climate and atmosphere in our local office. It was really a family-like atmosphere, and I still had a lot to learn. And all those advisors that I partnered with, I’ve joked I’ve never had an original idea in my entire life.

I stole all my good ideas from them. And some of them were really ahead of their time, and I learned, adopted, and built my own philosophies by working closely with them. Ultimately, by the time I left Wells Fargo, I was finishing up the fifth sunset program and had only made my way halfway through the sunset before the opportunity presented itself to create my own practice.

Louis Diamond:

So I’m curious, when did you first seriously start thinking about leaving and what really tipped the scales for you? What was the proverbial straw that broke the camel’s back?

Patrick Larkin:

Yeah, it really was a number of small items and ultimately one big one. But for a long time, I’d been content, but as I tried to grow the business beyond what I could do individually, I felt like I kept running into walls. There were it felt like limitations on how I could build out my team and structure the practice the way I envisioned it. Additionally, there were some new policies that also started to bother me. One of them was the platform advisory fee, which in my eyes was less about client transparency and more about replacing a declining revenue source on the firm’s balance sheet. And after dealing with clients and helping them through the bank scandal at the firm, I was concerned that this would come back and hurt me and the relationships that I had with my clients. Incidentally, I just recently onboarded a new client that transferred to us. And for them, looking at their statement, identifying this platform advisory fee-

Louis Diamond:

Oh boy.

Patrick Larkin:

… was the last straw for them before they moved about 15 million of assets to us. Also, I thought I would be I would be a better allocator of resources than Wells Fargo. Wells Fargo retained about half of the revenue that I earned for the business.

They seemed to think that the best allocation of that money was additional middle management. Whereas, I thought investment in technology, investment in additional personnel, and an investment in marketing were best places to continue to build out my vision. The final straw, and really a thing that crystallized everything for me was when I read a book in 2021 called The Infinite Game, a book written by Simon Sinek. Chapter eight, the title is Ethical Fading. And it uses the Wells Fargo bank scandal as a case study in what happens when a firm loses its moral compass. I read the chapter and thought, “There it is, I have to do something.” That was really the final push I needed.

I mentioned earlier I was very fortunate to start my career with a company called A.G. Edwards, a regional brokerage firm. And while I was at A.G. Edwards, there was a research report that came out on A.G. Edwards as a company. And I’m going to paraphrase a little bit on what was said in that report, but ultimately there was a line in there, and it was a criticism, but I took it as a huge positive as being an employee there. The line said, “While management does not necessarily say it, we believe the client is put ahead of the shareholder.” And that was something I was very proud of. And I just, upon reflecting on it, felt confident those were words that I never was going to see go to print about Wells Fargo.

Louis Diamond:

So you left Wells in 2022 and founded Oak Hill Wealth Partners in Lansdowne, Virginia. Walk us through that decision. Why go independent rather than going to another firm?

Patrick Larkin:

I really thought moving to another firm, the things that I had grown frustrated with at Wells Fargo Advisors, I would also find at another wirehouse firm. I was ready, and honestly, the simple answer is I thought I could do better. And I wanted control after having what I felt like was very little control. I had grown frustrated with others making important decisions, and I wanted an opportunity to grab the reins and make decisions on my own. I believe at that time, the future of wealth management was going to be built around fiduciary advice, and I didn’t want to watch that from the sidelines anymore. I was watching what was happening in the industry. And as we were trying to hire new advisors, reaching out to college graduates who were studying CFP programs, identified that they were more inclined to want to start employment with an RIA than a wirehouse.

What made the timing work really well was Wells Fargo had actually introduced a program to help advisors in the private client group spin off and establish their own RIAs. Now, whenever I tell this to another advisor, particularly ones that are wirehouses, they can’t understand it. And quite frankly, I don’t understand why they helped us do it, but we were about the 30th practice that they helped us through this process and they provided real support. They hired consultants, made vendor recommendations, even referrals to financing so I could pay off my last succession plan before I left. The only really upside for Wells Fargo was that the ask was that we continue to use First Clearing as the custodian. And one of the downsides for me was I was going to leave all of my deferred comp behind with Wells Fargo.

Now, all clients had to do to join me was sign a positive consent. And on May 9th, 2020, we turned on our computers in our new office and our clients were already there. That same day, we launched and started a relationship with Charles Schwab. And it was so exciting to be able to start shopping for what I thought was the best FinTech, really feeling like I was stuck with proprietary tools that Wells Fargo advisors had offered. I felt like I was a kid in a candy store. And if there was a cool tool that I identified that would help us serve our clients better, I was all in and I was buying it. I really feel that some of the technology that Oak Hill eventually bought into and some of the tools we’re using now are going to take years and years before they eventually trickle down to where the wirehouses are, if ever.

Louis Diamond:

Interesting. So it was really it was for the most part an internal move from one-

Patrick Larkin:

It was-

Louis Diamond:

… channel to the other.

Patrick Larkin:

… it was an internal move, but there was no requirement to stay at First Clearing. As a fiduciary, they couldn’t make those demands. And again, they helped us with the financing, which is really unusual that they helped us secure a loan so I could pay off the last retiring advisor. It’s really unusual that a bank will loan money where there is no business at the time, but because of previous experience that financial institution had working with Wells, they helped us facilitate the transaction. And the program is still in place at Wells Fargo, which is absolutely amazing to me after the experience that I’ve just had myself.

Louis Diamond:

Yeah, it’s interesting. I mean, does it cannibalize a more profitable revenue source? Sure. But if the alternative was all the assets go to Schwab or Fidelity, to me, honestly, it’s smart. I think they played the long game by not being adversarial on it.

Patrick Larkin:

I think they played a long game and they took the philosophy, and I think they use it as a recruiting tool that if you love them, set them free. And that’s exactly what they did.

Louis Diamond:

So for the rest of the episode, I want to talk about your eventual, and not that long period of time, transaction or decision to merge Oak Hill with Cerity Partners. This is our Build, Grow, Transact subseries. And I was really struck by your story because you were three years or so into running Oak Hill, and then your merger with Cerity Partners, an amazing RIA closed. That’s a fairly short runway. Usually when I see folks go independent for the first time, it’s 10, 15, 20 years, maybe never, that they decide to merge or sell. I’m curious to understand your thinking about the transaction. Were you looking to do something? Or was it just like right place, right time and the opportunity presented itself?

Patrick Larkin:

I had started Oak Hill with the intent of eventually down the road, much closer to retirement, looking for a partner. The opportunity and what I learned early on helped change that idea and philosophy, and I adapted and made modifications to take advantage of it.

Louis Diamond:

Interesting. So you weren’t necessarily planning on selling or merging the business, it just kind of circumstances happened the way they did?

Patrick Larkin:

Yeah. When we started Oak Hill Wealth Advisors, it was a really pretty short period of time before we started getting calls from larger national RIAs about potential acquisition, much sooner than I expected. Early on, I just brushed them off, but about a year in, I took one of those calls and it really just opened my eyes up. I realized for the first time this small firm, this little practice actually had some real value, way more than I’d given it credit for.

That first call, that first exploration didn’t go anywhere. It wasn’t a good fit. But what it gave me was a much clearer picture of what the serious acquirers were actually looking for. And that changed decisions I made at Oak Hill going forward. I really at that point stopped trying to optimize for near-term profit and really thought of my business as a business and started building towards enterprise value, sometimes at the cost of short-term income. And that turned out to be exactly the right call.

Louis Diamond:

That’s such an interesting perspective. Let’s double-click into that concept. So it sounds almost counterintuitive that if you kind of had this light bulb moment that like, “Okay, maybe I want to transact my business sooner than I initially thought.” I think most people would say, “Let’s become lean and mean. Let’s become as profitable as possible so my EBITDA’s higher.” But you took the different approach. What were the decisions you did to invest more in enterprise value rather than current cash flow?

Patrick Larkin:

A true business is one that doesn’t need me to be here every day to operate. And when we left Wells Fargo Advisors, it was myself and one other advisor that created Oak Hill Wealth Advisors. I was responsible for about 95% of the assets and revenue. And one of the more significant investments we made is in additional advisors. I recruited three new advisors, all CFPs, to join Oak Hill Wealth Advisors. Whereas, before I had been largely managing all the relationships myself. For someone that kind of grew up in the regional wirehouse space, it’s pretty counterintuitive to start moving relationships away from you onto other advisors. You’re trained and built to create a moat around your relationships, and realized that the potential acquirers are not interested, at least the ones I was interested in, weren’t interested in buying a book. They were interested in buying a business.

And that just meant every decision we made going forward was not profit-driven, but how can I increase the value of the business? So after that first call, I knew I probably would be looking to move forward with a transaction sooner as opposed to the end of retirement. That information that I got on that first call helped me realize that when Oak Hill Wealth Advisors opened its doors on May 9th, 2022, we effectively had an IPO. I had great familiarity with how the succession plans at Wells Fargo Advisors worked. And on that day that we opened our practice, the value of my business jumped to be four to five times the value of it in a succession plan at Wells Fargo Advisors.

Now, I knew going forward that I was going to be able to increase revenue. I was going to be able to increase EBITDA. I was going to potentially have some benefits from a market tailwind. I knew the multiples of EBITDA that the firms use may fluctuate, but the biggest change by far occurred leaving the wirehouse and having the value of my business grow four to fivefold in that same day. So what I really focused on was making sure that I was going to, when I was ready to start looking again after I had worked on improving the practice, really was going to look for a firm that was going to be a good cultural fit for both my clients, my team, and myself.

Louis Diamond:

That’s such a cool perspective. I’ve never heard anyone say that the day we launched your independent business was like an IPO. But honestly, it’s so true. You’re planting a flag in the ground that like, “Here is real value. This is value that we’ve created that we own rather than it being a book of business and a W-2 paycheck.” And it’s a fascinating perspective.

Patrick Larkin:

Yep. It really is amazing that the value changed that much on one day and the future value changes. Looking at the equity that I owned in Oak Hill Wealth Advisors, it made sense to consider is there a better way to take some risk off the table for myself and my family and diversify some of the equity that I had in Oak Hill Wealth Advisors with a larger enterprise?

Louis Diamond:

It makes complete sense. Obviously, everyone would sign up for 4 to 5X increase in value.

Patrick Larkin:

Sure.

Louis Diamond:

That’s not the reason most people go independent, but it’s important to know. And also, what I really liked about what you shared is I think a really valuable learning for anyone is those calls come in, whether it’s from annoying people like me or from an acquirer, from a firm, they’re not all noise. You took it as an opportunity to learn. Even though that first person who called wasn’t the right fit, it crystallized something in your mind and it let you make proactive decisions that ultimately paid off in spades when it came time to sign the dotted line for your transaction with Cerity. So I think it’s brilliant. And it’s very big picture, big-business-owner-type stuff that I think a lot of people will just filter out because it’s annoying and I’m young, I’m not looking to sell, but that was the journey.

Patrick Larkin:

Yeah, that first call changed my opinion about timing of when to move forward with a partnership. Originally, I thought this would be something at the end of retirement. The timing of doing so sooner seemed a lot more appealing after having that conversation and realizing what we had actually built.

Louis Diamond:

Amazing. So ultimately you decided to merge with Cerity Partners. We’ve had Kurt Miscinski from Cerity Partners on the show. They’re a real heavyweight within the RIA world. Most recently, they were valued at $8 billion in a recap, and it’s a very impressive firm. What specifically drew you to Cerity versus other potential buyers? Like you said, you got a lot of calls.

Patrick Larkin:

After that first call, I just got to work and focused on continuing to take care of our clients, building a team, adding new advisors, being a mentor to those advisors. But at the same time, we were being approached fairly regularly by that point. And I had a pretty good system for quickly deciding whether something was worth a second look, and most weren’t. But about a year ago, one of the national RIAs caught my attention and I started having conversations with them. And once I had progressed with them, I though, “You know what? If I’m giving this consideration, I really need to cast a wider net.” So I reached out to other RIAs that I had looked at and admired and been keeping an eye on. And ultimately, my longtime business coach, Barbara Kay, suggested I talk with Cerity Partners, a company that one of her other clients had just recently joined.

And from the very first call, I could tell something was different. And I talked to many different companies. Cerity Partners, and an individual I spoke with, Geoff Newman, they weren’t leading with valuation formulas or deal structure. They were asking questions about my clients, my team, and how I actually ran the practice. They had a very defined process for identifying partners who were genuinely compatible, not just advisors with books that were transferable. And that distinction mattered greatly to me. They also offered really, in my opinion, the right balance of support and still having some autonomy. And their aspiration to deliver consistent standard of care to clients, whether they be in California or Virginia, so that those individuals get the same quality of experience, resonated with how I was already running things within my practice. That combination of support and autonomy, I really liked the idea of continuing to have oversight over my local practice, over our practice, which included the budget, salaries, and bonuses.

It more than anybody else felt like a partnership and not a buyout. And I really appreciate it during that first call, Cerity was the only company that talked about a hundred-year plan. It was amazing to me to hear what their thoughts were. Most of the other firms I spoke with talked about valuations. And very quickly in the process, I found myself on a Zoom call with a Patagonia fleece vest-wearing private equity rep walking me through a valuation. And it was efficient, but it was not a cultural fit for me. And the infrastructure behind us and the combination of autonomy is really harder to find than most people think. As I progressed with Cerity, I remember early on in the process thinking to myself, “My God, I hope they want me, I hope they want me,” because I could tell I’m a very process-driven person They had a process with the way they brought me on board.

And ultimately, we had a due diligence trip set up to go to one of their larger offices where I met with one of their leaders, Claire O’Keefe, part of their practice development, and had an opportunity to meet with different leaders within the firm and really get my arms wrapped around the potential that they had. Just the quality of the people I encountered through the whole process just kept reinforcing the decision. And by the time we got to the finish line, it didn’t feel like a transaction. It felt like I was joining something that I was excited to be part of. So just a little bit more about what attracted me to Cerity, their culture is just phenomenal. Cerity Partners uses the word “meritocracy” and they actually mean it. Ownership and influence here track your contribution, not your tenure or how well you play the politics.

I just attended my first partner meeting in April, and without exaggeration, it was the most extraordinary professional meeting I’ve attended in my 25-year career. During the meeting, there was open debate about the direction of the firm, and every voice in the room carried weight. You could feel the culture. And that type of culture is built over years. You can’t fake it. Everyone in the room it felt like was rowing in the same direction. And by the time the meeting was over, I was so excited to get back to my team and tell them about what I had just witnessed, I wasn’t looking for the exit. I was looking for the brick wall to run through. I was so excited. And every once in a while I wonder having spent so much time in the wirehouse spaces, the bar just set really low for me when I talked to some of my other colleagues that have been independent for a long time.

But it was just an absolutely amazing experience. And I do want to just add, one of the last really important things to me about Cerity Partners is I’ve been very fortunate with my career and in this profession. And part of my goal over the rest of my career is to have a legacy. And my legacy currently exists with the families I’ve advised and the team that I’ve built and have served and led. But Cerity Partners is helping me achieve even a greater legacy in our industry with our shared long-term goals. During my first meeting, they talked about their hundred-year vision of being a worldwide employee-owned professional services firm. And currently, and this is very exciting, the employees are the largest shareholder of the firm.

No one else I talked to talked about their long-term goals like this, and it’s a vision I believe in. I want to contribute to help to see it accomplished. And one day when I do retire, I want to look back and see how I contribute it to a company that I believe is going to change the direction of professional wealth management.

Louis Diamond:

Wow.

Patrick Larkin:

My partnership with Cerity Partners is going to make that a reality. It’s just an amazing place. Yeah, very happy.

Louis Diamond:

Honestly, you can’t fake that type of enthusiasm. It sounds like-

Patrick Larkin:

It’s not-

Louis Diamond:

… you entered into a transaction, which is it’s like jumping into the deep end. How do you sort through what’s the sales process versus what’s real? How much of this is actually going to translate to my life? But hearing you not that long after the transaction, you still feel that and it’s very cool. In the press release I read, you cited estate planning, private markets access, and cross-border planning as key reasons for the merger. Can you talk about what it was about those? Maybe-

Patrick Larkin:

Yeah.

Louis Diamond:

… anything else that was missed?

Patrick Larkin:

Yeah.

Louis Diamond:

And were those not things that you felt like you could have delivered yourself as a standalone?

Patrick Larkin:

I thought that they were going to help me be able to be more effective in delivering those, but they weren’t the complete picture. The capabilities that we cited in the release were genuine gaps I wanted to fill and have available for clients and be able to prospect and go after new additional clients. But being fully honest, there were also deeper drivers. One was my team. Sometimes we get emotional about this. Being someone who’s trusted is really important to me, and that’s something I hold in high priority. There are people that followed me out of Wells Fargo to join me. One of my client associates had delayed her retirement so that she could join me and help us launch for the first three months. One of my other client associates has been with me close to 15 years. These are people that trusted me to do the right thing and to make sure that I wasn’t walking them off the plank.

Being able to join Cerity Partners and give them a future that didn’t hinge entirely on my personal longevity was a huge relief. And Cerity Partners is an ownership culture. I’m so happy to say today that every single individual on my team in our practice in Lansdowne is now either an equity owner in Cerity Partners or very shortly will be an equity-

Louis Diamond:

So cool.

Patrick Larkin:

… equity owner. So they have a stake as well in what they’re building. It matters. My youngest client associate noticed how much it costs to send to FedEx. And he goes, “Now that I’m an owner, maybe we should rethink about sending regular mail.” Another driver was my family. And I’ve always had the philosophy of trying to prioritize and clients first, team and colleagues, and then my family. And I’ve always made decisions that if I put those others before myself, eventually I’ll be taken care of.

And going through this transaction, it was so generous to my family and provided such security. There was a little bit of guilt that, “Am I doing this for all the right reasons?” But being able to secure my family’s future, converting equity in a three-year-old RIA into a stake of a $8 billion-plus valuation with institutional backing, that was a meaningful moment and I’d be less than honest if I glossed over that. I also really wanted to be part of something larger than myself. And the opportunity to help build a legacy in this business with Cerity Partners really gives me the platform to do that.

Louis Diamond:

Very cool. I can tell that you’re genuine, not just because of the way you sound, the way you’re speaking, but in the very beginning of the episode, you talked about the reason you got into this business was because you thought it gave you the dual purpose of being able to help people, but also being able to enrich yourself or your family. So this answer, it comes full circle. You’re able to accomplish all these goals, which made it the right decision. And I think, look, I say to advisors all the time, “You’re allowed to be greedy, you’re allowed to be selfish as long as the clients are still in the front of your mind as the most important thing.”

There’s nothing wrong with doing better for clients, building a legacy in your case, but also reaping the rewards of all your hard work and labor and also all the risks that you’ve taken over your career. I got to ask you, though, from being an employee of Wells, where you were running your team, for the most part, you can run the business within their guardrails the way you want, to then running an RIA, which is really like you’re fully in control of everything, to now being a partner, but you’re not the one who has the name on the door anymore.

Patrick Larkin:

Right, right.

Louis Diamond:

Well, how do you think about the giving up control and full ownership of your practice versus owning a very small amount of a much larger entity?

Patrick Larkin:

There was such continuity. Oak Hill Wealth Advisors and Cerity Partners were so philosophically aligned that I genuinely never felt like I was giving up anything that I wasn’t glad to let go. My wife joined the business shortly before I left Wells Fargo Advisors. And still to this day, on my drive home from work, I call her up and say, “You’re not going to believe this.” And it’s all a positive, good thing. So Cerity has struck the perfect balance of that autonomy and support combination that I was looking for. So I still have control and a say over the way our practice is managed. Very shortly after the merger, my supervisor came down and met me for the first time, and we went out together after the day had ended. And early in the conversation I said to him, “What can I do to make your life easier?” And he said, “Pat, what can I do to make your life easier?” And that set the tone that still exists to this day.

I almost cried when he said that because that was so different than what I had experienced up to that point. So the collaboration, the way we work together, it’s just absolutely amazing. And not once for a single moment have I second-guessed my decision. And it’s really weird because I’ve now been part of this organization for nearly nine months, and there just has not been one thing that’s occurred where I said, “That’s a disappointment.” It’s just been absolutely amazing every single day.

Louis Diamond:

Very cool. To me, there’s different arcs of when you want to ask people the question of, “Hey, any regrets?” And usually you don’t want to ask them too soon because they’re still going through the transition and integration and growing pains. And you don’t want to ask them too far in the future because you forget about what was life before. To be this short of a duration into this new partnership and to have these feelings, that’s absolutely pretty special. I got two more questions for you, Pat, if you don’t mind.

Patrick Larkin:

Sure.

Louis Diamond:

First one, economically, to me, one of the hardest things for really any advisor to really grapple with or to fully comprehend or make their own is, “I own 100% of the equity in my business. I get to decide when I want to sell in the future. My business is growing 10% per year. I wait to sell until 10 years from now, my business is going to be much bigger and I get to keep all the cash flow. I get to make all the decisions.” That compared to the path that you took, which was take cash off the table, which everyone understands, to, “Now, I own a much smaller piece of a much larger pie.” How would you talk to someone about the financial trade-off between a hundred percent ownership in their business, full control, full discretion over everything, versus becoming a minority equity partner in a larger entity?

Patrick Larkin:

You have to look at the valuation of my business, again, the day that we opened our doors as Oak Hill Wealth Advisors. There was such a massive jump in the value of the business. There was not going to be an opportunity for an appreciation at that level. So then, you have to compare what the growth rate is of Oak Hill Wealth Advisors versus a Cerity Partners. And I’m not embarrassed to say that Cerity Partners is and has been growing at a much faster rate of return. The value of the equity that I have retained in Cerity Partners, my ownership stake, I fully expect by the time I transact that business as I get closer to retirement, that’s going to be worth many times more than whatever opportunity I would have had at Wells Fargo with the valuation they would have provided me.

Nevermind, very important, the tax consequences of a structure like this is all the retiring advisors that I worked with were taxed at their highest marginal rate. I owned a business and we were taxed at long-term capital gains rates. A significant difference in savings in what as the owner we actually realize. So yeah, I feel very comfortable with the ownership that I have and the control and continued opportunity with the meritocracy culture to increase my share of ownership in the company.

Louis Diamond:

Okay, and let’s do one more question here. I’ll pick it back up. So Pat, I think it’s a really cool perspective. It’s almost do your homework, and if you find the right horse and the right jockey that can run faster than you can on your own, that the equity value will compound and grow and appreciate in a faster, more efficient way than what you’re doing on your own, which makes complete sense. It’s the ultimate trade-off. And again, it’s like jumping into the deep end. On the one hand, Oak Hill was all you, right? You control the growth, for better or worse, for the good days, the bad days, the good years, the bad years, versus now your growth is diversified amongst hundreds of partners across M&A, across different lead flow channels, et cetera. It makes complete sense. But honestly, if I were an advisor, I don’t know how I would think about it.

I think it’s all just fact-and-circumstance-based on where I am in my life and who the firm is and what I’m trying to accomplish. But it’s such a cool perspective because usually the playbook that we see, which is why we did this series, is go independent and there’s a long pause until there is a realization of all the value that’s been created. So seeing you do this in a much quicker timeframe, it seems like it was the absolutely right decision. To me, it just is another path, another way that an advisor or a firm is able to think about their future. Any final advice or parting words for someone who is sitting right where you were in 2021 or 2022 thinking about making the leap? And we’ll say a transition in general, or really anything you want to share to wrap our episode here.

Patrick Larkin:

Thank you for having me, and this is a great question. Happy to give a thoughtful answer to it. Before I’d left Wells Fargo Advisors through the program and started Oak Hill Wealth Advisors, I had an opportunity to go through a due diligence process and make sure that this was going to be a right move for me. There was no carrot out there that was obvious. I learned after that first conversation that I had built a practice that had some value to it. I was leaving behind the security of something I knew, leaving behind a significant amount in deferred compensation, and I wanted to make sure I was making the right decision. And through that due diligence process, talked to about five other firms that had recently left Wells Fargo to join this RIA program.

I asked them a lot of different questions about what their experience was. And at every point during those conversations, they all said the same thing at different points. And it sounded like this. They said, “I’m working harder than I ever have before, but I wish I had done this sooner.” So my advice to those people, do it. I know that sounds simple, but I mean it. The fear of leaving is almost always worse than the actual experience of leaving. And I understand the inertia of not leaving and the real apprehension of what was on the other side. But what I found was a version of this profession I genuinely didn’t know was possible.

One where I could do things the right way on my terms for the people I care most about serving. And not every path is going to look like mine. Some advisors should go fully independent and stay there, and that can be an incredible life. But when it comes time to look for a partner, quite frankly, if Cerity Partners is not on your shortlist, you’re making a significant mistake. And I say that not to sell anything, but because I’ve lived the comparison firsthand and there’s simply nothing else like it.

Louis Diamond:

So Pat, it’s been really fun, but I don’t think we’ve had anyone on the eight years or so we’ve been doing this show that’s gone through this type of arc or journey that you have. One of my big takeaways or sticking points that this episode brought for me is by going independent and taking control over your future, you created complete optionality for yourself to do exactly what you wanted to do with your business, even if that was different than what you initially planned. So in your case, it was selling within three years of going independent, but by taking action, being proactive, playing some offense, you made the opportunity happen on your terms and your timeline.

So this has been fun in so many different ways. I loved your comment about how when you went independent, it’s basically like the day of your IPO, the four-to-five-times increase in value versus an internal succession deal, and even just the way to think about getting equity in a larger entity versus running your own plays only. So thank you so much for doing this. This has been fun.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibility seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firm’s or could a better option exist? Should I Stay or Should I Go? Is a book written with you in mind? It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Build, Grow & Transact: From Breakaway to Transaction in 3 Years

A conversation with Louis Diamond and Patrick Larkin, Partner & Practice Leader at Cerity Partners.     

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Build, Grow & Transact: From Breakaway to Transaction in 3 Years. It’s a conversation with Patrick Larkin, Partner and Practice Leader at Cerity Partners. I’m Louis Diamond, and this is The Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual Advisor Transition Report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

Ownership as a way of creating opportunities you can’t always predict. That’s exactly why we created our Build, Grow, and Transact series. Independence isn’t the end of the story. It’s often the beginning of thinking differently about enterprise value, optionality, and what comes next. Today’s guest is Patrick Larkin, Partner and Practice Leader at Cerity Partners, and formerly the founder of Oak Hill Wealth Advisors. Patrick spent nearly 15 years building a successful practice at A.G. Edwards, Wachovia, and eventually Wells Fargo before launching his own independent firm in 2022. Just three years later, he merged that firm into Cerity.

At first glance, that timeline might seem surprisingly short, but as you’ll hear, the merger wasn’t a change in direction. It was the result of seeing his business differently once he owned it. Yet, it’s this perspective that really brings that thought home. Patrick said the day Oak Hill launched felt like the business had gone public because overnight, what had been viewed as a book of business became an enterprise with substantially greater value, some four to five times the value of what it was worth at Wells. And that realization changed the way he invested, the way he hired, and ultimately the way he thought about the future.

Pat and I also talk about something advisors don’t often discuss candidly, what life actually looks like after a merger. How much control do you give up? What changes day to day? How do you know whether you’re joining a partner or simply selling a business? Whether your long-term plan is to remain independent forever or eventually join a larger organization, Patrick’s experience is a reminder that ownership isn’t simply about control. It’s about creating optionality and putting yourself in a position where the next decision is yours to make. So let’s get to it.

Patrick, thanks for coming on our show today.

Patrick Larkin:

Oh, my pleasure. Nice to meet you, Louis.

Louis Diamond:

You too. So let’s start off basically how we start every interview. Tell us about yourself, your background, and how you found your way into our industry in the first place.

Patrick Larkin:

Yeah, thank you for asking. I knew I always wanted to be a financial advisor. That part really wasn’t in question, but upon graduating college and being a 22-year-old, I knew that it was probably not practical to walk in and start advising people my parents’ age with their life savings. Probably wasn’t going to be a recipe for success. So I took a quick tour through the pharmaceutical industry first, which ended up being unexpectedly valuable. My employers there pushed me to think like an entrepreneur and within our territories. And honestly, that mindset never left me. It shaped how I built everything that came after. Eventually, an opportunity presented itself in Loudoun County, Virginia in Northern Virginia, and I became an FA trainee with A.G. Edwards, absolutely fantastic firm to start my career.

Now, what drew me to this career was pretty simple. I felt like it was one of the professions that we had an opportunity to do so much good for others while simultaneously also doing well for yourself, and those two things aren’t in conflict. I also really loved the idea that in this profession there was no hiding. You don’t get paid to show up. You get paid for what you actually do. And perhaps for me, what was most important, I loved the weight of responsibility. I loved earning people’s trust. I loved the idea of deserving, being deserving of their trust, and being a steward of what they’ve worked a lifetime to build. I never took that lightly, and I still don’t.

Louis Diamond:

That’s amazing. Yeah, I mean, the number of people I’ve heard, you talked so fondly about A.G. Edwards and there’s a bunch of other firms that have since been absorbed or emerged that are like the regional firms of old. So not surprised to hear you loved it. A.G. Edwards, obviously, became Wells Fargo Advisors or was acquired or merged with Wells Fargo. So I know you’re at Wells and A.G. Edwards until 2022. So give us a quick version. How’d you build your practice from the pharma world into being in FA?

Patrick Larkin:

Yeah, so as I started with A.G. Edwards, I came in at really just the perfect time. It was towards the end of the financial crisis. And I built the business the old-fashioned way with a lot of cold calling and eventually did some dinner seminars, which I can tell you is a very expensive way to learn how to speak in front of a room. But I made some progress, and I was also in a great office, small enough that some of the advisors there would hand off some of the smaller accounts that they weren’t interested in working with, and got an opportunity to get a lot of reps in working with real life clients and individuals. I knew early on I didn’t have enough talent to win on talent alone, so I made up for it and compensated for that with really hard work.

The real turning point came for me when A.G. Edwards was first acquired by Wachovia Securities, and that was about five years into my career. And at that point, my branch manager, who was eyeing retirement, asked me to step in as her partner, and that changed everything. We eventually moved over to a Wachovia Securities office, another really great local office in Loudoun County, Virginia. And from that office, I worked on and became a CIMA, a CFP, worked with the clients, built a business through referrals. And I found at that point in my career when I would go to a meeting with Wachovia, eventually Wells Fargo, as a young 30-year-old, I would look around the room often and realize that I was the youngest person in the room.

The funny thing was 10 years later, I would go into that same room and I’d look around and I still was the youngest guy in that room. And those demographics in our industry, and when I came into our industry, ultimately led that office that I worked in with Wells Fargo Advisors, I eventually was the recipient and party to five different succession plans-

Louis Diamond:

Wow.

Patrick Larkin:

… at Wells Fargo Advisors. I hoped that I had built a reputation as somebody that these other advisors would entrust with their clients. And over that time period, really, I would say professionally, one of my accomplishments I’m most proud of is all five of those retired advisors that I used to work with, who had an opportunity to see me work with clients, all became clients of mine, I still continue to work with. And it’s professionally just one of the greatest honors that I’ve ever had.

Louis Diamond:

I mean, that’s a large number of advisors you helped sunset, but I would agree it’s the ultimate proof of concept that they not only trusted you with their clients and their life’s work, but now also with their family’s wealth. So I like that, kind of the full life cycle there. So I’m curious, though, you stayed at Wells through a really turbulent time through the fake bank scandal. There’s a lot of attrition. I mean, obviously, they’re still a powerhouse to this day, but what kept you at Wells for as long as it did before you left in 2022?

Patrick Larkin:

You described it as a turbulent time. Pretty turbulent might be an understatement. Even before Wells, the transition to Wells, Wachovia Bank had been the first company that we transitioned to from A.G. Edwards. And we, of course, went through the financial crisis during that time period and handholding our clients and helping them get through that time period and dealing with concerns that we shouldn’t really have to be prepared with. “Is my money safe? It’s not what’s happening to the market, but is my money safe in your institution?” But once things stabilized, I found real purpose in partnering with some of the retiring advisors and opportunities that came up. It was a really wonderful climate and atmosphere in our local office. It was really a family-like atmosphere, and I still had a lot to learn. And all those advisors that I partnered with, I’ve joked I’ve never had an original idea in my entire life.

I stole all my good ideas from them. And some of them were really ahead of their time, and I learned, adopted, and built my own philosophies by working closely with them. Ultimately, by the time I left Wells Fargo, I was finishing up the fifth sunset program and had only made my way halfway through the sunset before the opportunity presented itself to create my own practice.

Louis Diamond:

So I’m curious, when did you first seriously start thinking about leaving and what really tipped the scales for you? What was the proverbial straw that broke the camel’s back?

Patrick Larkin:

Yeah, it really was a number of small items and ultimately one big one. But for a long time, I’d been content, but as I tried to grow the business beyond what I could do individually, I felt like I kept running into walls. There were it felt like limitations on how I could build out my team and structure the practice the way I envisioned it. Additionally, there were some new policies that also started to bother me. One of them was the platform advisory fee, which in my eyes was less about client transparency and more about replacing a declining revenue source on the firm’s balance sheet. And after dealing with clients and helping them through the bank scandal at the firm, I was concerned that this would come back and hurt me and the relationships that I had with my clients. Incidentally, I just recently onboarded a new client that transferred to us. And for them, looking at their statement, identifying this platform advisory fee-

Louis Diamond:

Oh boy.

Patrick Larkin:

… was the last straw for them before they moved about 15 million of assets to us. Also, I thought I would be I would be a better allocator of resources than Wells Fargo. Wells Fargo retained about half of the revenue that I earned for the business.

They seemed to think that the best allocation of that money was additional middle management. Whereas, I thought investment in technology, investment in additional personnel, and an investment in marketing were best places to continue to build out my vision. The final straw, and really a thing that crystallized everything for me was when I read a book in 2021 called The Infinite Game, a book written by Simon Sinek. Chapter eight, the title is Ethical Fading. And it uses the Wells Fargo bank scandal as a case study in what happens when a firm loses its moral compass. I read the chapter and thought, “There it is, I have to do something.” That was really the final push I needed.

I mentioned earlier I was very fortunate to start my career with a company called A.G. Edwards, a regional brokerage firm. And while I was at A.G. Edwards, there was a research report that came out on A.G. Edwards as a company. And I’m going to paraphrase a little bit on what was said in that report, but ultimately there was a line in there, and it was a criticism, but I took it as a huge positive as being an employee there. The line said, “While management does not necessarily say it, we believe the client is put ahead of the shareholder.” And that was something I was very proud of. And I just, upon reflecting on it, felt confident those were words that I never was going to see go to print about Wells Fargo.

Louis Diamond:

So you left Wells in 2022 and founded Oak Hill Wealth Partners in Lansdowne, Virginia. Walk us through that decision. Why go independent rather than going to another firm?

Patrick Larkin:

I really thought moving to another firm, the things that I had grown frustrated with at Wells Fargo Advisors, I would also find at another wirehouse firm. I was ready, and honestly, the simple answer is I thought I could do better. And I wanted control after having what I felt like was very little control. I had grown frustrated with others making important decisions, and I wanted an opportunity to grab the reins and make decisions on my own. I believe at that time, the future of wealth management was going to be built around fiduciary advice, and I didn’t want to watch that from the sidelines anymore. I was watching what was happening in the industry. And as we were trying to hire new advisors, reaching out to college graduates who were studying CFP programs, identified that they were more inclined to want to start employment with an RIA than a wirehouse.

What made the timing work really well was Wells Fargo had actually introduced a program to help advisors in the private client group spin off and establish their own RIAs. Now, whenever I tell this to another advisor, particularly ones that are wirehouses, they can’t understand it. And quite frankly, I don’t understand why they helped us do it, but we were about the 30th practice that they helped us through this process and they provided real support. They hired consultants, made vendor recommendations, even referrals to financing so I could pay off my last succession plan before I left. The only really upside for Wells Fargo was that the ask was that we continue to use First Clearing as the custodian. And one of the downsides for me was I was going to leave all of my deferred comp behind with Wells Fargo.

Now, all clients had to do to join me was sign a positive consent. And on May 9th, 2020, we turned on our computers in our new office and our clients were already there. That same day, we launched and started a relationship with Charles Schwab. And it was so exciting to be able to start shopping for what I thought was the best FinTech, really feeling like I was stuck with proprietary tools that Wells Fargo advisors had offered. I felt like I was a kid in a candy store. And if there was a cool tool that I identified that would help us serve our clients better, I was all in and I was buying it. I really feel that some of the technology that Oak Hill eventually bought into and some of the tools we’re using now are going to take years and years before they eventually trickle down to where the wirehouses are, if ever.

Louis Diamond:

Interesting. So it was really it was for the most part an internal move from one-

Patrick Larkin:

It was-

Louis Diamond:

… channel to the other.

Patrick Larkin:

… it was an internal move, but there was no requirement to stay at First Clearing. As a fiduciary, they couldn’t make those demands. And again, they helped us with the financing, which is really unusual that they helped us secure a loan so I could pay off the last retiring advisor. It’s really unusual that a bank will loan money where there is no business at the time, but because of previous experience that financial institution had working with Wells, they helped us facilitate the transaction. And the program is still in place at Wells Fargo, which is absolutely amazing to me after the experience that I’ve just had myself.

Louis Diamond:

Yeah, it’s interesting. I mean, does it cannibalize a more profitable revenue source? Sure. But if the alternative was all the assets go to Schwab or Fidelity, to me, honestly, it’s smart. I think they played the long game by not being adversarial on it.

Patrick Larkin:

I think they played a long game and they took the philosophy, and I think they use it as a recruiting tool that if you love them, set them free. And that’s exactly what they did.

Louis Diamond:

So for the rest of the episode, I want to talk about your eventual, and not that long period of time, transaction or decision to merge Oak Hill with Cerity Partners. This is our Build, Grow, Transact subseries. And I was really struck by your story because you were three years or so into running Oak Hill, and then your merger with Cerity Partners, an amazing RIA closed. That’s a fairly short runway. Usually when I see folks go independent for the first time, it’s 10, 15, 20 years, maybe never, that they decide to merge or sell. I’m curious to understand your thinking about the transaction. Were you looking to do something? Or was it just like right place, right time and the opportunity presented itself?

Patrick Larkin:

I had started Oak Hill with the intent of eventually down the road, much closer to retirement, looking for a partner. The opportunity and what I learned early on helped change that idea and philosophy, and I adapted and made modifications to take advantage of it.

Louis Diamond:

Interesting. So you weren’t necessarily planning on selling or merging the business, it just kind of circumstances happened the way they did?

Patrick Larkin:

Yeah. When we started Oak Hill Wealth Advisors, it was a really pretty short period of time before we started getting calls from larger national RIAs about potential acquisition, much sooner than I expected. Early on, I just brushed them off, but about a year in, I took one of those calls and it really just opened my eyes up. I realized for the first time this small firm, this little practice actually had some real value, way more than I’d given it credit for.

That first call, that first exploration didn’t go anywhere. It wasn’t a good fit. But what it gave me was a much clearer picture of what the serious acquirers were actually looking for. And that changed decisions I made at Oak Hill going forward. I really at that point stopped trying to optimize for near-term profit and really thought of my business as a business and started building towards enterprise value, sometimes at the cost of short-term income. And that turned out to be exactly the right call.

Louis Diamond:

That’s such an interesting perspective. Let’s double-click into that concept. So it sounds almost counterintuitive that if you kind of had this light bulb moment that like, “Okay, maybe I want to transact my business sooner than I initially thought.” I think most people would say, “Let’s become lean and mean. Let’s become as profitable as possible so my EBITDA’s higher.” But you took the different approach. What were the decisions you did to invest more in enterprise value rather than current cash flow?

Patrick Larkin:

A true business is one that doesn’t need me to be here every day to operate. And when we left Wells Fargo Advisors, it was myself and one other advisor that created Oak Hill Wealth Advisors. I was responsible for about 95% of the assets and revenue. And one of the more significant investments we made is in additional advisors. I recruited three new advisors, all CFPs, to join Oak Hill Wealth Advisors. Whereas, before I had been largely managing all the relationships myself. For someone that kind of grew up in the regional wirehouse space, it’s pretty counterintuitive to start moving relationships away from you onto other advisors. You’re trained and built to create a moat around your relationships, and realized that the potential acquirers are not interested, at least the ones I was interested in, weren’t interested in buying a book. They were interested in buying a business.

And that just meant every decision we made going forward was not profit-driven, but how can I increase the value of the business? So after that first call, I knew I probably would be looking to move forward with a transaction sooner as opposed to the end of retirement. That information that I got on that first call helped me realize that when Oak Hill Wealth Advisors opened its doors on May 9th, 2022, we effectively had an IPO. I had great familiarity with how the succession plans at Wells Fargo Advisors worked. And on that day that we opened our practice, the value of my business jumped to be four to five times the value of it in a succession plan at Wells Fargo Advisors.

Now, I knew going forward that I was going to be able to increase revenue. I was going to be able to increase EBITDA. I was going to potentially have some benefits from a market tailwind. I knew the multiples of EBITDA that the firms use may fluctuate, but the biggest change by far occurred leaving the wirehouse and having the value of my business grow four to fivefold in that same day. So what I really focused on was making sure that I was going to, when I was ready to start looking again after I had worked on improving the practice, really was going to look for a firm that was going to be a good cultural fit for both my clients, my team, and myself.

Louis Diamond:

That’s such a cool perspective. I’ve never heard anyone say that the day we launched your independent business was like an IPO. But honestly, it’s so true. You’re planting a flag in the ground that like, “Here is real value. This is value that we’ve created that we own rather than it being a book of business and a W-2 paycheck.” And it’s a fascinating perspective.

Patrick Larkin:

Yep. It really is amazing that the value changed that much on one day and the future value changes. Looking at the equity that I owned in Oak Hill Wealth Advisors, it made sense to consider is there a better way to take some risk off the table for myself and my family and diversify some of the equity that I had in Oak Hill Wealth Advisors with a larger enterprise?

Louis Diamond:

It makes complete sense. Obviously, everyone would sign up for 4 to 5X increase in value.

Patrick Larkin:

Sure.

Louis Diamond:

That’s not the reason most people go independent, but it’s important to know. And also, what I really liked about what you shared is I think a really valuable learning for anyone is those calls come in, whether it’s from annoying people like me or from an acquirer, from a firm, they’re not all noise. You took it as an opportunity to learn. Even though that first person who called wasn’t the right fit, it crystallized something in your mind and it let you make proactive decisions that ultimately paid off in spades when it came time to sign the dotted line for your transaction with Cerity. So I think it’s brilliant. And it’s very big picture, big-business-owner-type stuff that I think a lot of people will just filter out because it’s annoying and I’m young, I’m not looking to sell, but that was the journey.

Patrick Larkin:

Yeah, that first call changed my opinion about timing of when to move forward with a partnership. Originally, I thought this would be something at the end of retirement. The timing of doing so sooner seemed a lot more appealing after having that conversation and realizing what we had actually built.

Louis Diamond:

Amazing. So ultimately you decided to merge with Cerity Partners. We’ve had Kurt Miscinski from Cerity Partners on the show. They’re a real heavyweight within the RIA world. Most recently, they were valued at $8 billion in a recap, and it’s a very impressive firm. What specifically drew you to Cerity versus other potential buyers? Like you said, you got a lot of calls.

Patrick Larkin:

After that first call, I just got to work and focused on continuing to take care of our clients, building a team, adding new advisors, being a mentor to those advisors. But at the same time, we were being approached fairly regularly by that point. And I had a pretty good system for quickly deciding whether something was worth a second look, and most weren’t. But about a year ago, one of the national RIAs caught my attention and I started having conversations with them. And once I had progressed with them, I though, “You know what? If I’m giving this consideration, I really need to cast a wider net.” So I reached out to other RIAs that I had looked at and admired and been keeping an eye on. And ultimately, my longtime business coach, Barbara Kay, suggested I talk with Cerity Partners, a company that one of her other clients had just recently joined.

And from the very first call, I could tell something was different. And I talked to many different companies. Cerity Partners, and an individual I spoke with, Geoff Newman, they weren’t leading with valuation formulas or deal structure. They were asking questions about my clients, my team, and how I actually ran the practice. They had a very defined process for identifying partners who were genuinely compatible, not just advisors with books that were transferable. And that distinction mattered greatly to me. They also offered really, in my opinion, the right balance of support and still having some autonomy. And their aspiration to deliver consistent standard of care to clients, whether they be in California or Virginia, so that those individuals get the same quality of experience, resonated with how I was already running things within my practice. That combination of support and autonomy, I really liked the idea of continuing to have oversight over my local practice, over our practice, which included the budget, salaries, and bonuses.

It more than anybody else felt like a partnership and not a buyout. And I really appreciate it during that first call, Cerity was the only company that talked about a hundred-year plan. It was amazing to me to hear what their thoughts were. Most of the other firms I spoke with talked about valuations. And very quickly in the process, I found myself on a Zoom call with a Patagonia fleece vest-wearing private equity rep walking me through a valuation. And it was efficient, but it was not a cultural fit for me. And the infrastructure behind us and the combination of autonomy is really harder to find than most people think. As I progressed with Cerity, I remember early on in the process thinking to myself, “My God, I hope they want me, I hope they want me,” because I could tell I’m a very process-driven person They had a process with the way they brought me on board.

And ultimately, we had a due diligence trip set up to go to one of their larger offices where I met with one of their leaders, Claire O’Keefe, part of their practice development, and had an opportunity to meet with different leaders within the firm and really get my arms wrapped around the potential that they had. Just the quality of the people I encountered through the whole process just kept reinforcing the decision. And by the time we got to the finish line, it didn’t feel like a transaction. It felt like I was joining something that I was excited to be part of. So just a little bit more about what attracted me to Cerity, their culture is just phenomenal. Cerity Partners uses the word “meritocracy” and they actually mean it. Ownership and influence here track your contribution, not your tenure or how well you play the politics.

I just attended my first partner meeting in April, and without exaggeration, it was the most extraordinary professional meeting I’ve attended in my 25-year career. During the meeting, there was open debate about the direction of the firm, and every voice in the room carried weight. You could feel the culture. And that type of culture is built over years. You can’t fake it. Everyone in the room it felt like was rowing in the same direction. And by the time the meeting was over, I was so excited to get back to my team and tell them about what I had just witnessed, I wasn’t looking for the exit. I was looking for the brick wall to run through. I was so excited. And every once in a while I wonder having spent so much time in the wirehouse spaces, the bar just set really low for me when I talked to some of my other colleagues that have been independent for a long time.

But it was just an absolutely amazing experience. And I do want to just add, one of the last really important things to me about Cerity Partners is I’ve been very fortunate with my career and in this profession. And part of my goal over the rest of my career is to have a legacy. And my legacy currently exists with the families I’ve advised and the team that I’ve built and have served and led. But Cerity Partners is helping me achieve even a greater legacy in our industry with our shared long-term goals. During my first meeting, they talked about their hundred-year vision of being a worldwide employee-owned professional services firm. And currently, and this is very exciting, the employees are the largest shareholder of the firm.

No one else I talked to talked about their long-term goals like this, and it’s a vision I believe in. I want to contribute to help to see it accomplished. And one day when I do retire, I want to look back and see how I contribute it to a company that I believe is going to change the direction of professional wealth management.

Louis Diamond:

Wow.

Patrick Larkin:

My partnership with Cerity Partners is going to make that a reality. It’s just an amazing place. Yeah, very happy.

Louis Diamond:

Honestly, you can’t fake that type of enthusiasm. It sounds like-

Patrick Larkin:

It’s not-

Louis Diamond:

… you entered into a transaction, which is it’s like jumping into the deep end. How do you sort through what’s the sales process versus what’s real? How much of this is actually going to translate to my life? But hearing you not that long after the transaction, you still feel that and it’s very cool. In the press release I read, you cited estate planning, private markets access, and cross-border planning as key reasons for the merger. Can you talk about what it was about those? Maybe-

Patrick Larkin:

Yeah.

Louis Diamond:

… anything else that was missed?

Patrick Larkin:

Yeah.

Louis Diamond:

And were those not things that you felt like you could have delivered yourself as a standalone?

Patrick Larkin:

I thought that they were going to help me be able to be more effective in delivering those, but they weren’t the complete picture. The capabilities that we cited in the release were genuine gaps I wanted to fill and have available for clients and be able to prospect and go after new additional clients. But being fully honest, there were also deeper drivers. One was my team. Sometimes we get emotional about this. Being someone who’s trusted is really important to me, and that’s something I hold in high priority. There are people that followed me out of Wells Fargo to join me. One of my client associates had delayed her retirement so that she could join me and help us launch for the first three months. One of my other client associates has been with me close to 15 years. These are people that trusted me to do the right thing and to make sure that I wasn’t walking them off the plank.

Being able to join Cerity Partners and give them a future that didn’t hinge entirely on my personal longevity was a huge relief. And Cerity Partners is an ownership culture. I’m so happy to say today that every single individual on my team in our practice in Lansdowne is now either an equity owner in Cerity Partners or very shortly will be an equity-

Louis Diamond:

So cool.

Patrick Larkin:

… equity owner. So they have a stake as well in what they’re building. It matters. My youngest client associate noticed how much it costs to send to FedEx. And he goes, “Now that I’m an owner, maybe we should rethink about sending regular mail.” Another driver was my family. And I’ve always had the philosophy of trying to prioritize and clients first, team and colleagues, and then my family. And I’ve always made decisions that if I put those others before myself, eventually I’ll be taken care of.

And going through this transaction, it was so generous to my family and provided such security. There was a little bit of guilt that, “Am I doing this for all the right reasons?” But being able to secure my family’s future, converting equity in a three-year-old RIA into a stake of a $8 billion-plus valuation with institutional backing, that was a meaningful moment and I’d be less than honest if I glossed over that. I also really wanted to be part of something larger than myself. And the opportunity to help build a legacy in this business with Cerity Partners really gives me the platform to do that.

Louis Diamond:

Very cool. I can tell that you’re genuine, not just because of the way you sound, the way you’re speaking, but in the very beginning of the episode, you talked about the reason you got into this business was because you thought it gave you the dual purpose of being able to help people, but also being able to enrich yourself or your family. So this answer, it comes full circle. You’re able to accomplish all these goals, which made it the right decision. And I think, look, I say to advisors all the time, “You’re allowed to be greedy, you’re allowed to be selfish as long as the clients are still in the front of your mind as the most important thing.”

There’s nothing wrong with doing better for clients, building a legacy in your case, but also reaping the rewards of all your hard work and labor and also all the risks that you’ve taken over your career. I got to ask you, though, from being an employee of Wells, where you were running your team, for the most part, you can run the business within their guardrails the way you want, to then running an RIA, which is really like you’re fully in control of everything, to now being a partner, but you’re not the one who has the name on the door anymore.

Patrick Larkin:

Right, right.

Louis Diamond:

Well, how do you think about the giving up control and full ownership of your practice versus owning a very small amount of a much larger entity?

Patrick Larkin:

There was such continuity. Oak Hill Wealth Advisors and Cerity Partners were so philosophically aligned that I genuinely never felt like I was giving up anything that I wasn’t glad to let go. My wife joined the business shortly before I left Wells Fargo Advisors. And still to this day, on my drive home from work, I call her up and say, “You’re not going to believe this.” And it’s all a positive, good thing. So Cerity has struck the perfect balance of that autonomy and support combination that I was looking for. So I still have control and a say over the way our practice is managed. Very shortly after the merger, my supervisor came down and met me for the first time, and we went out together after the day had ended. And early in the conversation I said to him, “What can I do to make your life easier?” And he said, “Pat, what can I do to make your life easier?” And that set the tone that still exists to this day.

I almost cried when he said that because that was so different than what I had experienced up to that point. So the collaboration, the way we work together, it’s just absolutely amazing. And not once for a single moment have I second-guessed my decision. And it’s really weird because I’ve now been part of this organization for nearly nine months, and there just has not been one thing that’s occurred where I said, “That’s a disappointment.” It’s just been absolutely amazing every single day.

Louis Diamond:

Very cool. To me, there’s different arcs of when you want to ask people the question of, “Hey, any regrets?” And usually you don’t want to ask them too soon because they’re still going through the transition and integration and growing pains. And you don’t want to ask them too far in the future because you forget about what was life before. To be this short of a duration into this new partnership and to have these feelings, that’s absolutely pretty special. I got two more questions for you, Pat, if you don’t mind.

Patrick Larkin:

Sure.

Louis Diamond:

First one, economically, to me, one of the hardest things for really any advisor to really grapple with or to fully comprehend or make their own is, “I own 100% of the equity in my business. I get to decide when I want to sell in the future. My business is growing 10% per year. I wait to sell until 10 years from now, my business is going to be much bigger and I get to keep all the cash flow. I get to make all the decisions.” That compared to the path that you took, which was take cash off the table, which everyone understands, to, “Now, I own a much smaller piece of a much larger pie.” How would you talk to someone about the financial trade-off between a hundred percent ownership in their business, full control, full discretion over everything, versus becoming a minority equity partner in a larger entity?

Patrick Larkin:

You have to look at the valuation of my business, again, the day that we opened our doors as Oak Hill Wealth Advisors. There was such a massive jump in the value of the business. There was not going to be an opportunity for an appreciation at that level. So then, you have to compare what the growth rate is of Oak Hill Wealth Advisors versus a Cerity Partners. And I’m not embarrassed to say that Cerity Partners is and has been growing at a much faster rate of return. The value of the equity that I have retained in Cerity Partners, my ownership stake, I fully expect by the time I transact that business as I get closer to retirement, that’s going to be worth many times more than whatever opportunity I would have had at Wells Fargo with the valuation they would have provided me.

Nevermind, very important, the tax consequences of a structure like this is all the retiring advisors that I worked with were taxed at their highest marginal rate. I owned a business and we were taxed at long-term capital gains rates. A significant difference in savings in what as the owner we actually realize. So yeah, I feel very comfortable with the ownership that I have and the control and continued opportunity with the meritocracy culture to increase my share of ownership in the company.

Louis Diamond:

Okay, and let’s do one more question here. I’ll pick it back up. So Pat, I think it’s a really cool perspective. It’s almost do your homework, and if you find the right horse and the right jockey that can run faster than you can on your own, that the equity value will compound and grow and appreciate in a faster, more efficient way than what you’re doing on your own, which makes complete sense. It’s the ultimate trade-off. And again, it’s like jumping into the deep end. On the one hand, Oak Hill was all you, right? You control the growth, for better or worse, for the good days, the bad days, the good years, the bad years, versus now your growth is diversified amongst hundreds of partners across M&A, across different lead flow channels, et cetera. It makes complete sense. But honestly, if I were an advisor, I don’t know how I would think about it.

I think it’s all just fact-and-circumstance-based on where I am in my life and who the firm is and what I’m trying to accomplish. But it’s such a cool perspective because usually the playbook that we see, which is why we did this series, is go independent and there’s a long pause until there is a realization of all the value that’s been created. So seeing you do this in a much quicker timeframe, it seems like it was the absolutely right decision. To me, it just is another path, another way that an advisor or a firm is able to think about their future. Any final advice or parting words for someone who is sitting right where you were in 2021 or 2022 thinking about making the leap? And we’ll say a transition in general, or really anything you want to share to wrap our episode here.

Patrick Larkin:

Thank you for having me, and this is a great question. Happy to give a thoughtful answer to it. Before I’d left Wells Fargo Advisors through the program and started Oak Hill Wealth Advisors, I had an opportunity to go through a due diligence process and make sure that this was going to be a right move for me. There was no carrot out there that was obvious. I learned after that first conversation that I had built a practice that had some value to it. I was leaving behind the security of something I knew, leaving behind a significant amount in deferred compensation, and I wanted to make sure I was making the right decision. And through that due diligence process, talked to about five other firms that had recently left Wells Fargo to join this RIA program.

I asked them a lot of different questions about what their experience was. And at every point during those conversations, they all said the same thing at different points. And it sounded like this. They said, “I’m working harder than I ever have before, but I wish I had done this sooner.” So my advice to those people, do it. I know that sounds simple, but I mean it. The fear of leaving is almost always worse than the actual experience of leaving. And I understand the inertia of not leaving and the real apprehension of what was on the other side. But what I found was a version of this profession I genuinely didn’t know was possible.

One where I could do things the right way on my terms for the people I care most about serving. And not every path is going to look like mine. Some advisors should go fully independent and stay there, and that can be an incredible life. But when it comes time to look for a partner, quite frankly, if Cerity Partners is not on your shortlist, you’re making a significant mistake. And I say that not to sell anything, but because I’ve lived the comparison firsthand and there’s simply nothing else like it.

Louis Diamond:

So Pat, it’s been really fun, but I don’t think we’ve had anyone on the eight years or so we’ve been doing this show that’s gone through this type of arc or journey that you have. One of my big takeaways or sticking points that this episode brought for me is by going independent and taking control over your future, you created complete optionality for yourself to do exactly what you wanted to do with your business, even if that was different than what you initially planned. So in your case, it was selling within three years of going independent, but by taking action, being proactive, playing some offense, you made the opportunity happen on your terms and your timeline.

So this has been fun in so many different ways. I loved your comment about how when you went independent, it’s basically like the day of your IPO, the four-to-five-times increase in value versus an internal succession deal, and even just the way to think about getting equity in a larger entity versus running your own plays only. So thank you so much for doing this. This has been fun.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibility seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firm’s or could a better option exist? Should I Stay or Should I Go? Is a book written with you in mind? It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

Ryan Belanger — Founder & CEO, Claro Advisors

Most firms are adding AI to existing workflows. Ryan Belanger chose a different path, acquiring a fintech company and rebuilding Claro Advisors around an AI-native platform. He explains why he believes the future belongs to firms that rethink how they operate, not just the tools they use.

In Summary

Most firms view AI as another technology investment. Ryan Belanger sees it as a business strategy.

Louis sits down with the Founder & CEO of Claro Advisors to discuss why his $1.5 billion RIA acquired a fintech company, built an AI-native operating platform, and believes the firms that gain the biggest advantage won’t simply adopt new technology—they’ll rethink how their businesses are built.

The conversation also explores the broader philosophy behind that decision. Ryan shares why he’s consistently chosen unconventional paths—from recruiting younger advisors and embracing a partnership model built around ownership to investing in proprietary technology instead of relying on third-party solutions. For advisors, the bigger question isn’t simply how AI will change their workflow. It’s how it may change what it takes to build a durable, differentiated advisory firm.

The Storyline

Every generation of wealth management has been shaped by a different competitive advantage.

For some, independence paved the way to build unique branding and a bespoke client experience. Inorganic growth and M&A gave many firms access to scale and growth.

Today, many believe the next advantage will come from artificial intelligence. But simply adopting AI may not be enough.

Ryan Belanger has spent his career challenging conventional thinking. He left Morgan Stanley in 2012, well before independence became mainstream. He built Claro Advisors by investing in younger advisors instead of competing for established producers. He embraced a partnership model centered on advisor ownership rather than restrictive employment structures. And when AI began reshaping the industry, he made another unconventional decision: instead of licensing another technology platform, Claro acquired a fintech company and built its own AI-native operating system.

Louis explores the reasoning behind each decision and the philosophy that connects them. Ryan explains why he believes proprietary technology will become a defining competitive advantage, how Claro’s AI platform, Claire, is changing advisor workflows, and why the biggest opportunity isn’t replacing advisors; it’s giving them more time to do the work clients value most.

The conversation also tackles practical questions facing every advisory firm: how to integrate AI responsibly, where human judgment continues to matter most, and why the firms best positioned for the future may be the ones willing to redesign their businesses instead of simply adding another layer of technology.

Topics Covered

• AI-native advisory firms
• Acquiring a fintech versus licensing technology
• Building proprietary advisor technology
• Advisor productivity and workflow automation
• Recruiting and developing younger advisors
• 1099 partnership model and advisor autonomy
• Enterprise building and long-term differentiation
• AI governance and advisor trust
• The future of wealth management technology

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

Why did Ryan launch independently long before it became common? (7:30)

Ryan explains why leaving Morgan Stanley in 2012 wasn’t simply about independence—it was about creating a better business model while betting on himself.

Why recruit emerging advisors instead of established producers? (15:00)

Ryan shares why investing in younger advisors has become one of Claro’s greatest competitive advantages and succession strategies.

Why would an RIA buy a technology company? (23:45)

Rather than licensing another platform, Ryan explains why Claro acquired NDVR to build proprietary technology that could fundamentally change advisor workflows.

How does Claire actually help advisors day-to-day? (33:00)

From meeting preparation and client follow-up to portfolio management and workflow automation, Ryan walks through how AI is saving advisors meaningful time.

Will AI replace advisors—or make them better? (36:30)

Ryan discusses where AI belongs, where human advice remains essential, and why he believes technology should enhance – not replace – the advisor relationship.

What does the advisory firm of the future look like? (38:20)

Ryan shares his long-term view of how AI, proprietary technology, and advisor expectations will reshape wealth management over the next decade.

Key Takeaways

• Ryan believes firms that build AI into the foundation of their businesses will create greater long-term differentiation than those simply adding new software.
• Claro’s acquisition of a fintech company reflects a strategy of owning core technology rather than relying exclusively on third-party vendors.
• AI is most valuable when it eliminates administrative work, allowing advisors to spend more time serving clients.
• Recruiting younger advisors and investing in long-term talent has become a defining part of Claro’s growth strategy.
• Advisor autonomy, equity participation, and technology can create stronger retention than restrictive employment models.
• Human relationships remain central to wealth management, even as AI becomes increasingly capable.
• The firms that adapt fastest may be those willing to rethink their operating model—not just their technology stack.

https://youtu.be/7XvSXi0PzXI

Quotable Moments

“I wanted to build something that was integrated instead of just layering another tool on top.”

“We’re trying to make really good advisors become super advisors.”

“Clients still want advice from a person—but they’re going to expect that person to know how to use AI.”

“The firms that win won’t necessarily be the ones using the most technology. They’ll be the ones building differently.”

FAQs

Why did Claro Advisors acquire a fintech company?

Ryan believed owning proprietary technology would create greater long-term differentiation than licensing another collection of third-party tools.

What is Claire by Claro?

Claire is Claro Advisors’ AI-powered chief of staff, designed to automate advisor workflows, prepare meetings, organize client information, and streamline operational tasks.

How is Claro using AI differently than many RIAs?

Rather than layering AI onto multiple disconnected applications, Claro built an integrated operating platform where AI has access to the advisor’s workflow, planning, portfolio, and client information.

Will AI replace financial advisors?

Ryan believes AI will automate much of the administrative work advisors perform today, but that clients—particularly those with more complex needs—will continue to value human advice and relationships.

How does Claro recruit advisors?

The firm emphasizes advisor ownership, partnership, equity participation, technology, and operational support instead of relying primarily on acquisition-based recruiting models.

What does Ryan believe will differentiate advisory firms in the future?

He believes proprietary technology, integrated AI, and the ability to improve advisor productivity will become increasingly important competitive advantages.

Ryan believed owning proprietary technology would create greater long-term differentiation than licensing another collection of third-party tools.

Claire is Claro Advisors’ AI-powered chief of staff, designed to automate advisor workflows, prepare meetings, organize client information, and streamline operational tasks.

Rather than layering AI onto multiple disconnected applications, Claro built an integrated operating platform where AI has access to the advisor’s workflow, planning, portfolio, and client information.

Ryan believes AI will automate much of the administrative work advisors perform today, but that clients—particularly those with more complex needs—will continue to value human advice and relationships.

The firm emphasizes advisor ownership, partnership, equity participation, technology, and operational support instead of relying primarily on acquisition-based recruiting models.

He believes proprietary technology, integrated AI, and the ability to improve advisor productivity will become increasingly important competitive advantages.

Related Resources

• Why AI Matters Now: Filling the Estate Planning Gap with Wealth.com
• Emotional Intelligence: The “Untouchable” Differentiator in an AI World
• Diamond Consultants Annual Advisor Transition Report

Ryan Belanger
Chief Executive Officer & Founder

Ryan founded Claro Advisors in 2012 after seven years at Morgan Stanley. He named the company after a Latin phrase “to make clear in the mind.” All Claro advisors strive to give their clients clarity and transparency, core tenants of the firm. Claro is continuously recognized within industry for its growth and thought leadership. In 2004, Ryan received a BA in Economics from The College of the Holy Cross and in 2009, he earned the Certified Financial Planner™ distinction.

He is most proud of his philanthropic activity. Along with his wife Rachel, they started a foundation that raises money for genetic research in the name of their late daughter, Bella. Their focus is on extreme rare disease.

Ryan resides in Boston’s Back Bay with his wife Rachel and their three children. He enjoys exercising, golfing, reading and spending time with his family. He has been featured in numerous magazines and industry publications and is regularly on television sharing his market thoughts.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

Why AI Matters Now: How a $1.5B RIA is Building the Firm of the Future

A conversation with Louis Diamond and Ryan Belanger, Founder & CEO of Claro Advisors.     

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Why AI Matters Now: How a $1.5B RIA is Building the Firm of the Future. It’s a conversation with Ryan Belanger, the Founder and CEO of Claro Advisors. I’m Louis Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven, and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual Advisor Transition Report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

Artificial intelligence has quickly become one of the biggest topics in wealth management in the world. Almost every firm is experimenting with new tools, looking for ways to automate tasks, improve efficiency, or help advisors serve clients more effectively. But what if AI isn’t just another technology to plug into your business? What if it becomes the foundation for how your business is built? That’s exactly why I wanted to have Ryan Belanger on the show. Ryan is the Founder and CEO of Claro Advisors, a billion and a half dollar RIA that’s taken a very different path than most firms in the industry. Rather than simply adding AI to an existing tech stack, Claro acquired a FinTech company and is building its own AI native operating system designed specifically for advisors.

What’s interesting is that this isn’t really a conversation about software, it’s about strategy. Ryan has consistently gone against the grain from leaving Morgan Stanley to launch an independent firm in 2012 before it became commonplace, to recruiting younger advisors when others chased established producers, to betting that proprietary technology will become one of the biggest competitive advantages an advisory firm can have.

If AI is going to reshape wealth management, and I think it will, the firms that benefit most may not be the ones using the most tools. They may be the ones rethinking how the entire business operates. Ryan shares what that looks like in practice, what he’s seeing from advisors today, and why he believes the next generation of advisory firms will look fundamentally different from the firms we’ve known over the last two decades. There’s a lot to cover, so let’s get to it.

Ryan, thanks for joining us today.

Ryan Belanger:

Yeah, nice to see you.

Louis Diamond:

You too, good to see you again. For those who aren’t familiar with you and your firm Claro, why don’t you walk us through your background and how you found your way into the industry to set the table.

Ryan Belanger:

Yeah, sounds good. So background was after college, I got a job at Morgan Stanley. I’d done an internship while in college and that gentleman, Morgan Dewey, said you should look at the Morgan Stanley. So I applied, got a job immediately, and just a couple weeks after graduating, I began as a financial advisor in a training program at Morgan Stanley and spent a good amount of time there and was able to develop skills necessary that really I had all along just growing up, a lot of entrepreneurial spirit I think is important in this business, how to relate to people, some competitiveness. I just happened to luck out and get into a profession that rewarded some of those skill sets.

Louis Diamond:

I’d say it was the right choice for you. So I think you started at Morgan Stanley in 2004. You were 21, 22 years old, just cutting your teeth, but the financial crisis happens a handful of years later. So what was it like being a relative newbie and seeing client accounts falling, the world crumbling every day? What did living through that crash teach you that’s shaped how you’ve built your business or serve clients now?

Ryan Belanger:

I did learn a tremendous amount at Morgan Stanley and I do still tell people if they’re looking to start at a big shop with big training programs and resources and really try to figure out what you like and then you can go off and get more specialized. But I do feel like it was a great place to get trained. They would post how many cold calls we were making every day. So on the board every morning you’d walk in and say, “Okay, where did you fall?”

And I’m a competitive person, and I just want to make sure I was first every single day. So it was those type of things that really propelled me to keep interested in this business but also see the benefits. It’s really hard to get clients and that’s what people underestimate the most is to build the level of trust with someone that they’ll allow you to manage their retirement nest egg is it takes time. And I was 22, I looked really young, I had no experience, but I was fortunate to have two great mentors at Morgan Stanley, a gentleman named Todd Wetzel. He was brilliant at developing relationships, really caring for people.

And then the gentleman that I had done an internship with went to Morgan Stanley as well, and he allowed me to work on some small accounts and really cut my teeth with some customers. And I was very fortunate to have done that, but you’d asked about the crash, and I think what I learned from that when people were literally weeping when their account values were down by 50%, 60% was that money is really emotional, and you have to understand how much it means to people, it’s not just the number on your screen. So having some empathy towards someone who’s really in a period of distress is now a critical skill that those of us have been around for this long understand.

And there’s a whole generation, Louis, of advisors that have never experienced a real bear market, and I do fear for them at some point because when you go through that, it really changes the perspective that you have. But for me, it happened, I was four or five years into the business at that point, so I’m thankful that it happened just for my own personal development and I’ll never forget it.

Louis Diamond:

Yeah. Things have a way of happening for a reason and then the best advisors, best humans, they learn from them, and they’re better off for it. You’re very much right. I like that perspective about how the empathy around the emotions of money was something that you still carry and wear as a badge of honor today. So you left Morgan Stanley in 2012. I think you were 30 years old I read.

One, that’s very young to consider leaving a firm like that nonetheless to go independent when in 2012, it wasn’t like everyone was going independent. There weren’t as many infrastructure providers or tech vendors or as much capital available as there is today. It definitely wasn’t a path that was as well-worn as it was. So two-part question, what pushed you to leave the firm presumably without a huge book of business? And second part, how’d you think about risk and reward at that age?

Ryan Belanger:

Yeah, what drove me was ultimately I felt like I was not seeing the value from the firm I was at, Morgan Stanley at the time. They were just taking an exorbitant amount of the revenue I felt. And I would see product managers strolling through and going to steak dinners, and I’m thinking, geez, I’m here every night on weekends. I’m busting my butt, and I should be creating more value to myself. And so that was one kind of thing. And I think there was a right level of naivete just to think that I could pull this off.

I did believe that I had a small number of clients. I was hopeful that they would come because I had to hit a minimum for the custodian platform to start the RIA, which I was able to do. But I felt that they would come with me and that I had developed enough trust with them that I could be their advisor for a long time. And so for me, it felt like the technology wasn’t great. I was just told the mother-in-law is an expression. She says to my kids sometimes, “You get what you get and you don’t get upset.” Have you heard that expression?

Louis Diamond:

I have. My daughter reads a book where that line is repeated frequently.

Ryan Belanger:

Yeah, okay. So that’s how I felt then. I was like, “This is what you have and deal with it.” And to me, it just felt like there had to be a better way, but I didn’t have any capital backing, so I bootstrapped it. I Craigslisted an office from an estate planning attorney. I cold called Fidelity at the time they were our only custodian. I called to get some compliance help and I just thought that there’d be other people that would want to join. I named the firm, it’s a Latin phrase, it’s Claro Advisors, and it means to make clear in the mind. And I felt like not only was I trying to do that for clients, but I was trying to push advisors to challenge the norms here.

There are other solutions out there. So I purposefully did put my name on it, I knew that there’d be other people that might feel the same way. I’ve always been a team sport guy. I like being around other people and collaborating. And I did have a good friend and credit to him. He said, “If you put this together, I’ll come with you.”

And so just a couple weeks after I did, we talked and I said, “It’s up and running.” He came and Dana was our first, he’s still with us.

And then a couple of months later, another guy I used to work with called and said, “Hey, I’m at this bank, and it looks like what you’ve done is interesting.”

And I said, “We like it if you’d like to give it a try.” And so he came, his name’s Mike. He’s still with us. And so teams started to get put together.

But I met someone in 2014, so I was two years in at that point and I was doing legitimately everything, not only as an advisor, but just all the stuff that you have to do to run the business. And it was becoming too much, especially the compliance. And I think nowadays starting an RIA, the threshold is so much higher. That’s why you see better than anyone else. You just see a lot more tuck-ins. But Jen Street was someone that I met and she really allowed me to catapult the business and scale it, so she took over all the operations and compliance and that really freed me up to be an advisor. And I really was just an advisor moonlighting as someone running. I would recruit a little bit or just be introductions, very soft. All that has changed based on what we’ve done in the last couple of years.

Louis Diamond:

Amazing. So thinking about risk spectrum, obviously now if you look back and say, “Hey, I had 30 million or whatever it was, I didn’t have anything to lose.” Right?

But when you’re in it and you had income, you had recurring revenue, you had a paycheck versus the dynamic of, “I’m going to incur a bunch of expenses. I’m not positive who’s going to come with me. I’m not going to have a paycheck for a period of time.”

Did the fact that your business was relatively small and you were just getting up and running, do you think it made it easier for you to reconcile that risk, or in some ways it was harder because your dispersion, if someone didn’t come, was that much higher?

Ryan Belanger:

I think it was easier for me, I knew I could always go to another firm. They would take me and whatever clients I had. I did it at a time when I had little personal risk, no kids, no mortgage. I didn’t have a wife at that point. So for me, it felt like the right time to take a risk. And I had been entrepreneurial in my life. I mean, I had a business in high school and my parents and grandparents were entrepreneurial. So that was in me, even if I didn’t really recognize it, was that I was okay with a good level of risk. And I do say this now to anyone that I’m hoping to partner with is that if you want to bet on yourself, I’ll go all in on you too.

But you’ve got to be able to take that jump. I won’t let you fail, but you’ve got to be the one. I think that inertia is what a lot of advisors are like, “Geez, I don’t know, I got to give something up.” And that’s why the data’s important and you have all the data. The clients overwhelmingly go with the advisor. These days it’s just much harder to try to establish a new relationship with a trusted advisor than it is to just DocuSign some forms and move your account somewhere.

So to me, it’s just trying to support people, and really push them to the edge and say, “No, this is possible. You should definitely explore this.” And I get it’s totally different, and you might be at a different life stage, but you know the numbers. I mean, tens of thousands of advisors are moving every year and not all of them have a small book like I did when I did it.

Louis Diamond:

Right, exactly. On one hand, making this entrepreneurial move as early in your career as you did, it was a benefit, right? Because you didn’t have as much to lose, like you said, the stage of life you’re in allowed you to absorb more risk. On the other end of the spectrum, if someone who has a massive business with immense value, they’re well situated financially, maybe their kids are through college, et cetera. And then most people are somewhere in the middle. So it’s interesting hearing that dynamic in real time. Let’s talk about Claro today. So you launched the business, like you said, you had to work hard to meet a minimum custodial threshold. So started from a very small base in 2012, but where is it today as far as assets, team size? Just give us some stats or perspective on what you’ve built in the last decade and a half or so.

Ryan Belanger:

Yeah, sure. So we enjoyed a tremendous amount of organic growth, Louis. We are not capital-backed. We don’t buy books of businesses, so I would recruit or partner with advisors that were coming from all the various places that you could think of that were finding us to be a very friendly place to work where you had a high level of autonomy, freedom, control, just great economics. We stayed out of people’s ways. We were just good people trying to help other good people, and it was just that friendly environment that allowed us to grow. And of course, we can’t discount market. I think markets had a tremendous growth for everybody in the business. And so the business as it stands right now, we’re about 1.5 billion in assets, 15 to 20 advisors. We got a 40-person team based primarily at a Boston headquarter, but we have advisors all over. And I think as we’ll get to, we’ve just gone through a really exciting new chapter for us where the next 15 years are going to look a lot different than the previous 15 years.

Louis Diamond:

Very cool. That’s amazing, and I’m in the recruiting businesses and doing recruiting yourself, it’s not easy to tell your story, get in front of the right people, the right like-minded people too, who are willing to take the leap to you, especially if you don’t have the capital backing and you can’t pay big deals or write big checks like others could, so that’s a massive testament to you and your vision. I know the average age of an advisor at Claro is around 40, yet the average advisor in the industry is 59, 60, 61, depending upon what data source you look at. What do you think you figured out about attracting, training, and really cultivating younger advisors that the rest of the industry either gets wrong or ignores? What’s been your hack in that regard?

Ryan Belanger:

I’ll just take a chance on people that others might not. And typically what that really means is someone with nothing, I’ll make them a deal and I’ll say, “Look, I believe in you. I think you’d be a great advisor. Let’s work on an arrangement where you feel like you can do this and I’ll support you.”

And so our specialty was growing advisors from 20 million or 30 million into hundreds of million of client assets. And some of it was just being willing to look where others wouldn’t possibly want to spend their time. But when I was 22, someone took a chance on me, and so I owe it to the next generation to do that as well because there’s some great talent out there that really just isn’t getting the attention they deserve because they don’t have big books of business yet.

But one of my core values is long-term thinking, and so that’s the way I frame my decisions is it doesn’t have to be a win today, but it can be a championship tomorrow or down three or five years from now. And so that’s how I’ve positioned it. I think that’s why we tend to get younger advisors.

And then what happens when you get a lot of younger advisors, you have some older advisors say, “Hey, look, that’s an attractive bench of talent. I needed a succession plan. You guys seem to have a bunch of guys and gals that know how to do really great work and serve clients.” But I think that’s probably one of the things that I just was willing to take some chances on people at an earlier stage.

Louis Diamond:

Yep. I love it. I mean, once again, you said in the beginning, you developed an empathy for the emotional side of money and what people were going through that you carry through to this day. So not losing touch with the fact that you started. I mean, everyone starts in this business at some time, but I feel like once you’re successful or you’re through the first few years, you forget what it was like to be a newbie. So keeping that perspective and appreciation for the mentors you had, et cetera, is great.

And honestly, from a business building standpoint, to me in this environment, unless you take on private equity capital, or you have capital from a BD or from a wirehouse behind you for recruiting, it’s really hard to win advisors with large books of business. So going in the blue part of the ocean instead of the red ocean, if anyone’s read that book, is very smart, looking under rocks that others don’t or really buying into or leaning into folks that you see something in that you know you can cultivate is a brilliant way. And it’s honestly more scalable, cheaper, you build a better business as well doing it the way that you do, but still, it’s hard. And my guess is the ROI is shorter. I’m sure you’ve made some hires that don’t pan out.

So you have to have the tolerance and the demeanor to really invest in people. So long-winded way to say I love what you’re doing. How much of your recruitment of advisors and the retention of that talent as they become successful would you tie to how you compensate them, or equity if that’s available versus the culture of the firm and the mentorship that you and your team provide?

Ryan Belanger:

Yeah, I mean I’ll speak to what we’re offering now just because that’s more relevant, and so we are positioning ourselves now as the best home for advisors in the country and we really believe that’s the case, but our problem is we’re just a secret. We’ve just come to the market after our deal and all the technology that I know we’ll talk about. So we’re now marketing this message to advisors that want to partner with us. Economics will help them grow. We have a really interesting growth program. We’ll give them equity and Claro. I firmly believe that we should tie each other, just get in the same boat, so to speak. So our success is their success, but allowing them to operate in a 1099 model, which I know is not a popular strategy.

I know everyone wants to buy books and own the assets and own the clients, but I feel there’s a tremendous amount of advisors that do not that probably should not be monetizing their businesses so quickly. And so I’m trying to foster a home for those like-minded advisors that want the autonomy to own their clients, maybe even still have a brand, but partner with a firm that’s got really credible technology, just unbelievable back office support and a firm of the future so that they can grow at 10X to what they could have on their own and then they could monetize. That’s what we’ve tried to put together here with our partnership model.

Louis Diamond:

Love it. Yeah, I mean it is definitely going against the grain a little bit, leaning into growing a 1099 model versus more of an acquisition model where everyone coming over as W-2s. So do you think about those trade-offs when it comes time to raising capital down the line or if you want to sell the business or even just an advisor wants to leave, that would stink if that happened. How do you think about those trade-offs? The ability to let advisors keep control and ownership. And honestly, in my view, probably win many people that you wouldn’t otherwise versus the stickiness, and the enterprise building abilities of owning the books of business.

Ryan Belanger:

Yeah, it’s a paradox because I understand why you want to own the client, but that’s a different business model. And frankly, I think it attracts different type of people. I had to really look myself in the mirror a couple years ago. We had enjoyed a tremendous amount of success, high growth and all organic, growing at 30% more per year on a CAGR basis. Nothing could stop us. But what happened was when private equity entered the space, everyone wanted to buy Claro. And to me, it didn’t feel like I did a lot of due diligence. I talked to a lot of firms. I didn’t see any differentiation in the market, Louis. To me from a technology perspective, everyone was doing the same thing. They’re using six to 12 different tools. We all know who they are. And now there’s a bunch of AI tools they’re layering on. And to me, it just didn’t feel like that was going to be any… There was no differentiation in the market.

But admittedly, I had a couple of friends who I’d brought in at very low levels of AUMB that wanted to leave. And they said, “Look, I want to go to a firm that has more resources.”

And so I had to just make a business decision and say, “Where do I want to take this?”

And so it was only after some real adversity because you get emotionally attached to these people that you’ve developed friendships with and they still are friends, no doubt, but they can leave and they’re not captive. So we have to plan for that at Claro now, and I think we’ve got two ways that we’ve done that where it really ties the advisors to us, but in a way where they want to be here because we have something that’s really different.

Louis Diamond:

I like it. I’m sure we’ll get into that. But before we do, we’ll get into what you’re doing on the technology side, which is very cool and unique. How do you balance being an advisor and being a CEO? And what percentage of your time is advisor versus CEO and has that fluctuated or changed over time?

Ryan Belanger:

Drastically changed in the last year, two years or so. So the first 10, 12 years, I was really an advisor first and foremost. That’s inverse at this point, I’m strictly running the business. I have a great team here that deals with our clients, and I’ll still attend the client meetings and such, but I’m really laser-focused on running the business, trying to develop new partnerships with advisors, running an engineering team, sales and marketing. So the change for me has definitely occurred, and I’ll miss not keeping up with planning as much. I’m a CFP, but I just recognized that for me, I had to make a clear change and commit all my time to running the business, and so that’s the decision that I’ve made.

Louis Diamond:

It is a hard balance. I mean, there’s some people that try to do both, run a business, be an advisor, be a rainmaker, and something breaks. You’re not able to give all yourself to one thing. Then there’s others that would much prefer to be an advisor over a business owner. Others who say, “I’m over being an advisor. I want to be a business owner.”

So I think the cool thing about doing what you’ve done is you get to choose, right? Some of it might be circumstances, but you really got to decide which elements of the business you personally want to invest your time in. And you really push your chips in the middle of the table. So let’s get into what you did in November of 2025. I read that you acquired a tech company of all things called NDVR. I’ve done this podcast for a while, speak to a ton of people. I can’t really think of anyone, any advisor or RIA that’s actually bought a tech company. So what made you puck the trend, buy a tech company and not just license all the FinTech that’s available today?

Ryan Belanger:

Yeah, that was the decision I had to make was do I really want to be different, or do I want to just say that I’m different? And so I was fortunate enough to get introduced to a gentleman named Michael Simon about 18 months ago, two years ago. And him and I immediately could see that we were both trying to solve the same problem, and we had perfectly mirrored image skills of one another so I had this deep wealth experience and he had a deep tech experience.

And sometimes it’s just about timing in life, about catching someone at the right time. And I think we each caught each other at a really good time where we could see that coming together, we could create something really magical. And this AI wave was cresting. And I could see when I was talking to all the national PE firms or RIA firms about what people wanted to do, no one had quite figured out how AI was going to come into the technology mix, and it appears as though it’s just going to be another add-on tool to everything else.

And for me, I wanted to try to build something that was integrated an all- in-one platform for an advisor so they didn’t have to use a ton of different tools. And I thought if you could do that, couldn’t you have AI that’s really much more rich and purposeful to help the clients? And so I felt like here’s an opportunity to elevate financial advice throughout the country, really give the clients all the value. And so what we’ve built allows advisors who are really good advisors to become super advisors because they’ve got this technology cape that no one else has that is allowing them to save a bunch of time and do all these really cool things for their clients. But it just felt like right time, right place. I’d been through a little bit of adversity and I felt like taking another swing just like I did 15 years ago going for it. I’ve really never been averse to risk, and so this felt like it was too good to pass up and so we went for it.

Louis Diamond:

Interesting. So that makes sense on the build or acquire versus rent dynamic, wanting to own the IP that makes you actually different. What does NDVR actually do?

Ryan Belanger:

Yeah, so everything’s all integrated. So we’ve kept the Claro Advisors name. We feel like clients really want to know that they’re still getting a person to deliver the advice. And so having the advisor’s name in our brand is important, but we have a Claro Intelligent Hub, and that’s where it’s an AI native operating system for the advisors. They spend their entire day in there, Louis. So they’re not toggling between 10 different Chrome tasks to perform all their business. And so what that allows them to do is not only it’s CRM, calendar, contacts, emails, messages, but we also have all the portfolio information. So trading history and we can do tax loss harvesting and factor-based investing.

So we’ve got institutional grade portfolio management, and that’s really what Endeavor had created through their R&D was the hyper-personalized portfolios where you have a customer’s financial plan directly tied to their account. So there’s never any de-linking between the two. It’s really sophisticated technology that we can provide to our clients. So that’s all integrated as well. And so we’ve since continued to build the build upon that layer of integrated proprietary technology.

Louis Diamond:

It’s very interesting. And we have to imagine part of you maybe now or in the future is, okay, we’ve built this amazing technology mousetrap for our advisors, but do we become a FinTech? Is there any thought of eventually licensing what Endeavor is doing for your business and your clients to other RIAs? How do you think about that dynamic of just building something unique and different for Claro that advisors can latch onto versus making what you and your partners have developed into something that someone else can take and license themselves?

Ryan Belanger:

Yeah, it’s a fair question. We get it a good amount. While there might be a possibility that we license this to some other businesses, our main goal right now is to keep it captive to RIAs that want to partner with Claro. And so we feel like this gives them a true level of differentiation in the market, and so that’s the approach that we’re taking right now. Being a FinTech company, there’s a lot of different skills. The setup and tear down of getting someone to use the platform and I think all that time and resources we want on sales and marketing to try to attract new advisors and continue to develop just jaw-dropping technology for the existing advisors.

Louis Diamond:

Very cool. Let’s talk a little bit about your partnership model. So it does sound unique in that you have people that are 1099, but you don’t usually also hear partner. So how does it work?

Ryan Belanger:

Yeah, so we’re offering advisors to come and use Claro as a back office so you can have your own brand if you want or you can just be a Claro advisor. We have both here and you’ll be a 1099 advisor so you’ll still own the business that you’ve owned. So if you were at a wirehouse or something, you would actually now be creating some enterprise value for yourself. But if you’re an existing REA, you’d be coming to us because you’re tired of doing tech vendor due diligence all the time or you’re tired of the compliance, the AI regulations. That’s just coming. So that’s going to be a huge challenge for REAs, so we’re seeing a lot of interest from REAs saying, “Look, you’re not asking me to give up really anything except the stuff that I hate to do anyway, so this sounds great.” So they partner with us.

In return, they get all access to our technology And we’ll provide all the back office support, office space, dedicated resources, planning, everything you could want to have to operate a business. We do have a growth program that’s really interesting. And then we’ve got this equity in Claro. As you’re a partner with Claro, you should get equity so we give stock options to our advisors who are here and every year thereafter. And naturally, that’s a way to stay connected with the advisor. So hopefully they never want to leave, and I do believe that once you experience our technology, you never want to go back to trying to do it the way you were doing it before.

Louis Diamond:

It’s like instead of building the most enclosed box that you keep people in with sticks and with locks and keys like a lot of firms do, it’s we’re going to keep advisors here, but not by force, but because they have the stock options, because you’re delivering value, because they have this amazing technology. To me, that’s the dynamic that so many firms across the industry get wrong is that they try to keep advisors where they are by restrictive covenants and by fear, and by retribution rather than if we just do good work for people, we add value, we make ourselves indispensable to the advisor. To me, it creates a healthier dynamic. I think firms would actually retain more even if it’s a gentler approach.

And I love what you’re doing there. I think it’s the exact right way to think about we have advisors that are 1099, so yeah, they could leave us, but we’re doing things that make it that they don’t want to leave us. And that’s your charge as the owner to create the infrastructure and the structure where people could go out on their own, but there isn’t an advantage to do so.

Ryan Belanger:

Yeah, I think the culture is a big thing for us. And if you have people here that don’t want to be here, that’s a problem. And I think that’s what you see in a lot of the wirehouses. Frankly, they scare people and they don’t. It’s like, oh my God, if I leave. And for us, it’s like personally, life is too short. I want to work with people that want to work with me. I’ve got other things going on in my life and these things are just work things. And so I want to enjoy being in the office every day with people that want to be here. And if you think you’ve found a different place, you should go explore that. It’s really a soft approach. I know it’s not the most popular approach, but that’s just the style that I have.

Louis Diamond:

Yeah. I mean, it sounds like the trend in your career and in launching Claro was we’re going to do things that aren’t popular, but that work for us, like hiring younger advisors that may not have a book or have a small book, buying a tech company instead of licensing it, being 1099 when you’re recruiting instead of owning books of business. There’s a series of decisions you’ve made as the business owner that they’ve worked out, they’ve paid off, but they’re definitely against the grain. And I very much respect that.

Ryan Belanger:

I really have never been afraid to be a little different, and so I think typically you find other people that might be interested, but it’s a big pool out there. There’s 300,000 advisors so there’s something for everyone, which is awesome.

Louis Diamond:

Totally agree.

Let’s get back to the AI platform that you’ve built, or that you’re building. Maybe give a real tangible example. If I’m a Claro advisor, how has my life changed now that I’m using this platform versus before? So the old model was I log in, like you said, to 10 different Chrome tabs. I’m meeting with clients, doing planning, et cetera. What is the day in the life? How does it look different from what an advisor’s actually doing today versus before this platform was rolled out?

Ryan Belanger:

Yeah. All right. I’ll just give you a couple examples. So a client will send you a request and say, “Louis, I need $25,000.” And so a typical advisor would either write a note down, go drop it off at the CSA’s desk, or maybe forward that email to the CSA and then that person would have to input it into their CRM, and they go perform the task. And then the advisor would want to know where things are in that process so that there’s a lot of back and forth. With our system, Claire, our intelligent chief of staff, AI chief of staff, you just forward that task to [email protected]. It recognizes the email address that the client is emailing from, it knows the account number. It talks to our portfolio engineer. It knows which account to raise the cash from because it knows the tax jurisdiction, and otherwise, and it performs the task.

And the last push of a button is that CSA just moving money from the custodian. So all along the way, the advisor can check on the task and see where it is in the process. It’s beautifully integrated in the intelligent hub, but you could see how that would save a tremendous amount of time and it’s a better customer experience. The mistakes get limited. So it really allows the advisor to get things done at a much higher level. So we’re raising productivity quite a bit.

First of all, she’ll establish your meetings, Claire will. So she’ll schedule them for you. She’ll prep them for you. So we have a button, say prep the meeting because we have all the notes, emails. If you’re texting portfolio data, because she has all that information in about 30 to 45 seconds, she’s going to present to the advisor a really nice meeting summary that, “Hey, here’s the things that we should talk about.”

She’s going to surface things that the advisor’s forgotten about because she doesn’t forget things. And so she’s prepped the meeting for you, so you’ve saved a couple hours there. She joins the meeting, she takes all of your notes, stores them in the system. She’ll give you a follow-up email. She knows your writing style, so she’ll know that you like to call this client this, and you send these emails typically at this time. And so she’ll deliver a nice follow-up email instantly for the advisor. They click that button, that’s done. So there’s just a lot of things that where she’s efficiency-wise where on 20, 30 hours a week that we’re saving advisors just on the productivity tools alone, so that’s where we’re seeing advisors seeing a ton of value in this.

Louis Diamond:

It’s very cool.

Ryan Belanger:

And then there’s a whole portfolio management capabilities, sweeping idle cash and tax loss harvesting and rebalancing that gets done while advisors are having a cup of coffee. They don’t have to think about these things. It just gets done for them.

Louis Diamond:

It’s so cool because it’s like I think I can conceptualize or think of building in Claude any one of those functionalities for the most part, but the way that the flow of things works and the journey of it is unique. I think every advisor would be interested in that type of promise of saving that much time. So how do you think now in the future, how do you think about the human advisor interaction, and what the human and the advisor will do versus what can be offloaded to AI?

Ryan Belanger:

Yeah, certainly a lot of the non-client-facing activity can be unloaded and that’s where advisors spend, according to recent studies, almost 60% of their time non-client-facing. So we’re trying to take all that off of their plates for them. We strongly believe clients still want the message to come from a person that has a level of experience and understands them. But at the same point, I think there’s a growing curiosity about, geez, what could it do for me? And so shouldn’t my advisor know how to use it?

And so I think you’re seeing a lot of advisors put their head in the sand and say, “I don’t know. I’m just going to hope people don’t really want to use this and adopt it.” They’re a little bit shortsighted there. Our bet is that clients are going to want an advisor that knows how to use tech, has really sophisticated tech, but it isn’t just another tool layered on top that now my data is in that tool. The reason our system is so beautiful and integrated is because it captures everything in a structured and secure way.

So all of the compliance is in there. We whitewash all the PII that’s sensitive information, so we’re not layering another tool on, because it’s integrated, we have an AI governance committee that really takes it seriously. How are we using this information? And so we’ve got an approach and we’ve put guardrails around what it can do and what it can’t do. Might there be a generation, Louis, that wants an AI advisor? I don’t know, that could happen. A twin, a digital twin where you say, “Look, I want to talk to Louis.” It’s 10 o’clock at night. He might be in a different time zone than me.

He’s got little kids, but I do have this question. And so we’re iterating ideas on how we can surface that for an advisor to be advisable 24/7 without actually having to be available 24/7.

Louis Diamond:

Seven. It’s amazing to think about. I mean, obviously you’re deeply in this. You have a front row seat into the power of AI, how it’s transforming your business, doing due diligence on acquiring this technology five years from now, 10 years from now, what does the industry look like as a result of AI? What’s your big bet?

Ryan Belanger:

A lot of the big firms are going to try to figure out how to layer in tech. It’s going to be very difficult to do that. It’s built on extremely old legacy technology. They’ll be slow. They’ll figure out how to do some things. What we’re already seeing from advisors is the wow factor. Wow, I didn’t know this was even possible, and so I think just given our size and where we are, we have an advantage that we can build things from the ground up very quickly. I mean, what used to take an engineer a couple of months or years can be done in a couple of days or weeks, so things have really sped up in terms of the development.

It’s much easier to build it than buy it. And so I think you’ll see a lot of firms trying to do what we’ve done, really build proprietary technology. And I think there’ll be a few winners that are able to do that, but being tech forward and aligned with someone who’s thinking about it, I think is what a lot of advisors are going to want to be. That’s the type of firm people would want to partner with, I think.

Louis Diamond:

What about the dynamic of, like you said, the digital twin thing is equal parts cool as it is terrifying, how do you see, we’ll say the threat of AI impacting the profession of being a financial advisor? Do you look at it as the entire pie is going to grow because everyone’s more efficient? Or do you look at it as it’s going to take out a lot of the advisor capacity we have because it’s no longer necessary? Where do you fall on that spectrum?

Ryan Belanger:

So robo-advisors came and went, you remember those. I mean, not that they went, but they never took off the way that it was projected. They’re still great businesses, but the human advisor won that battle. Clients do want an advisor, particularly at the higher end, and so I think at the lower end of the market, you’re going to see some AI solutions where people are perfectly comfortable just talking to someone in AI, and they’ll figure out if there’s a hallucinization or not. But I think there’s definitely going to be a market for it, and so I think it just depends on where the clients are and what level of complexity they have. On the higher end, I do feel like the advisors will continue to have a huge advantage there. But we’re building tools to give optionality to advisors. There might be some advisors who say, “Look, I’ll charge half the fee that I used to charge so you can get my digital twin. And that’s a win-win situation for everybody.”

Louis Diamond:

Yep, that’s fair. So do you look at your competitive ecosystem now? Not for recruiting advisors, let’s say for winning clients. Do you look at Farther and Savvy and different AI or FinTechs as your competition or do you still look at it as the wirehouses and other traditional RIAs?

Ryan Belanger:

I mean, Farther and Savvy have done a great job of going after this market. I think we’re not as well known yet as they are. We’ve certainly built out what we think is tremendous technology second to none. There’s a huge market of the IBD space that is just these guys and gals are stuck on these old platforms and things are okay, but they’re not super compelled to switch until maybe they see something like this, and so we have a massive pipeline of advisors and I’ve been recruiting for a long time. I’ve never had a pipeline like this.

So I know it feels different to me. People really are interested in this. It’s enough for them to want to see tech demos and come visit us and really understand, okay, this is a firm that is challenging what’s possible and that’s someone that maybe I want to be aligned with, and so I think that there’s a lot of places where we can get the talent. And so for us, it’s just trying to find the right people that we want to partner with for the long term.

Louis Diamond:

Very cool, I got two more questions for you. It’s pretty remarkable that to get from where you started to now, the recruiting you’ve done, buying a FinTech, integrating it, that you still don’t have private equity investor outside capital. So you think it’s on the roadmap, whether it’s a certain size or you’re looking for personal liquidity where the business will just need it because it’s expensive to operate a FinTech platform and to scale up and to keep growing the firm. Do you think there’s a world in which you take on external capital to fuel your growth?

Ryan Belanger:

Most certainly. I mean, things have developed for us very quickly here, and outside capital and venture particular is a space that we’re actively in discussions with firms that believe in our vision, understand the value that we can create, and there’s just no doubt that you have to have some wind at your back to get to the market, and so while we’re not a household name right now, I’m confident in two years we will be, and our plan is to grow to hundreds and thousands of advisors across the country.

Louis Diamond:

Wow, big vision, but I love it. Last question for you. If you were 30 years old again, which I think everyone would kill for that opportunity, leaving Morgan Stanley today instead of in 2012, what do you think you would do differently knowing what you know now?

Ryan Belanger:

At that point, interest rates were near zero, Louis. Valuations you remember were two to three times revenue. It felt expensive then. Obviously things have changed quite a bit. So I would’ve begged, borrowed, and stole all the money I could from friends and family and said, “I need to buy as many businesses as I could at two times, three times revenue and pay, I don’t know, 3% loan.”

Just in hindsight, that’s what everyone should have done. That’s not the path that we chose, but I think there’s a huge opportunity in front of us to elevate financial advice across the country, make really good advisors even better by putting that super cape on them. And so we’re very excited about the future, what we’ve got in store, and what we’re going to deliver to the market. And it seems like just yesterday that I walked out of Morgan Stanley with very little assets and tried to start this RIA, but I’m very thankful for all the people that have been supporting me throughout this journey.

Louis Diamond:

Amazing. And that’s a great spot to end, but let me ask the inverse of that question. Let’s say you leave in 2026, so leave today, you’re 30 years old, but you have the benefit of hindsight. You know what you know now. What would you do differently around the transition or building the firm other than of course be amazing if you can buy businesses for a fraction of what they cost today?

Ryan Belanger:

I would want to make sure that I’ve got an integrated solution. I don’t want to be picking a bunch of different vendor tools. I know that’s going to become way too time-consuming for me. So I would really try to figure out how you can get something that’s integrated that can scale, but I wouldn’t change anything about the people. I think you got to be able to connect with people that are like-minded and you still take the risk. What I can’t believe, Louis, is that people that sit at the wirehouses take a home team discount and they’re so fearful of leaving Morgan Stanley or Merrill Lynch or UBS, but why are they taking that?

The market says you should be paid double what you paid. And it’s not just like that’s 20, 30 years of data here that show that. And so I just would keep pushing people to bet on yourself. Your clients will come with you. Yes, that firm that you love will be the first ones to try to steal your clients. They’re going to call them, and that’s one way, loyalty. Another thing I don’t understand, but that’s the way the business is structured. I think there’s a huge opportunity to just educate advisors about what’s out there and I would take the risk.

Louis Diamond:

Love it.

Ryan, this has been very fun. What you’ve accomplished, like I said earlier, gone against the grain at every turn. Leaving on the younger side without a huge business, buying and integrating a technology company, recruiting younger advisors without books of business. Every single thing you’ve done has been a different playbook. So I’m pumped to watch how we make Claro a household name and how this approach is going to pay off in spade. So I appreciate hearing this different perspective, and I know our listeners did as well, so much appreciated today.

Ryan Belanger:

Well, thanks for having me on. I know it’s a long time coming. Thanks for your patience. I wanted to make sure we had something really exciting to talk about when we finally did this, and hopefully I can come back in a couple years and catch up. And congratulations on everything you guys have built. You guys are just a premier name out there, and it’s been fun to watch your success as well.

Louis Diamond:

Thank you, Ryan, I appreciate it.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

Why AI Matters Now: How a $1.5B RIA is Building the Firm of the Future

A conversation with Louis Diamond and Ryan Belanger, Founder & CEO of Claro Advisors.     

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is Why AI Matters Now: How a $1.5B RIA is Building the Firm of the Future. It’s a conversation with Ryan Belanger, the Founder and CEO of Claro Advisors. I’m Louis Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven, and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual Advisor Transition Report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

Artificial intelligence has quickly become one of the biggest topics in wealth management in the world. Almost every firm is experimenting with new tools, looking for ways to automate tasks, improve efficiency, or help advisors serve clients more effectively. But what if AI isn’t just another technology to plug into your business? What if it becomes the foundation for how your business is built? That’s exactly why I wanted to have Ryan Belanger on the show. Ryan is the Founder and CEO of Claro Advisors, a billion and a half dollar RIA that’s taken a very different path than most firms in the industry. Rather than simply adding AI to an existing tech stack, Claro acquired a FinTech company and is building its own AI native operating system designed specifically for advisors.

What’s interesting is that this isn’t really a conversation about software, it’s about strategy. Ryan has consistently gone against the grain from leaving Morgan Stanley to launch an independent firm in 2012 before it became commonplace, to recruiting younger advisors when others chased established producers, to betting that proprietary technology will become one of the biggest competitive advantages an advisory firm can have.

If AI is going to reshape wealth management, and I think it will, the firms that benefit most may not be the ones using the most tools. They may be the ones rethinking how the entire business operates. Ryan shares what that looks like in practice, what he’s seeing from advisors today, and why he believes the next generation of advisory firms will look fundamentally different from the firms we’ve known over the last two decades. There’s a lot to cover, so let’s get to it.

Ryan, thanks for joining us today.

Ryan Belanger:

Yeah, nice to see you.

Louis Diamond:

You too, good to see you again. For those who aren’t familiar with you and your firm Claro, why don’t you walk us through your background and how you found your way into the industry to set the table.

Ryan Belanger:

Yeah, sounds good. So background was after college, I got a job at Morgan Stanley. I’d done an internship while in college and that gentleman, Morgan Dewey, said you should look at the Morgan Stanley. So I applied, got a job immediately, and just a couple weeks after graduating, I began as a financial advisor in a training program at Morgan Stanley and spent a good amount of time there and was able to develop skills necessary that really I had all along just growing up, a lot of entrepreneurial spirit I think is important in this business, how to relate to people, some competitiveness. I just happened to luck out and get into a profession that rewarded some of those skill sets.

Louis Diamond:

I’d say it was the right choice for you. So I think you started at Morgan Stanley in 2004. You were 21, 22 years old, just cutting your teeth, but the financial crisis happens a handful of years later. So what was it like being a relative newbie and seeing client accounts falling, the world crumbling every day? What did living through that crash teach you that’s shaped how you’ve built your business or serve clients now?

Ryan Belanger:

I did learn a tremendous amount at Morgan Stanley and I do still tell people if they’re looking to start at a big shop with big training programs and resources and really try to figure out what you like and then you can go off and get more specialized. But I do feel like it was a great place to get trained. They would post how many cold calls we were making every day. So on the board every morning you’d walk in and say, “Okay, where did you fall?”

And I’m a competitive person, and I just want to make sure I was first every single day. So it was those type of things that really propelled me to keep interested in this business but also see the benefits. It’s really hard to get clients and that’s what people underestimate the most is to build the level of trust with someone that they’ll allow you to manage their retirement nest egg is it takes time. And I was 22, I looked really young, I had no experience, but I was fortunate to have two great mentors at Morgan Stanley, a gentleman named Todd Wetzel. He was brilliant at developing relationships, really caring for people.

And then the gentleman that I had done an internship with went to Morgan Stanley as well, and he allowed me to work on some small accounts and really cut my teeth with some customers. And I was very fortunate to have done that, but you’d asked about the crash, and I think what I learned from that when people were literally weeping when their account values were down by 50%, 60% was that money is really emotional, and you have to understand how much it means to people, it’s not just the number on your screen. So having some empathy towards someone who’s really in a period of distress is now a critical skill that those of us have been around for this long understand.

And there’s a whole generation, Louis, of advisors that have never experienced a real bear market, and I do fear for them at some point because when you go through that, it really changes the perspective that you have. But for me, it happened, I was four or five years into the business at that point, so I’m thankful that it happened just for my own personal development and I’ll never forget it.

Louis Diamond:

Yeah. Things have a way of happening for a reason and then the best advisors, best humans, they learn from them, and they’re better off for it. You’re very much right. I like that perspective about how the empathy around the emotions of money was something that you still carry and wear as a badge of honor today. So you left Morgan Stanley in 2012. I think you were 30 years old I read.

One, that’s very young to consider leaving a firm like that nonetheless to go independent when in 2012, it wasn’t like everyone was going independent. There weren’t as many infrastructure providers or tech vendors or as much capital available as there is today. It definitely wasn’t a path that was as well-worn as it was. So two-part question, what pushed you to leave the firm presumably without a huge book of business? And second part, how’d you think about risk and reward at that age?

Ryan Belanger:

Yeah, what drove me was ultimately I felt like I was not seeing the value from the firm I was at, Morgan Stanley at the time. They were just taking an exorbitant amount of the revenue I felt. And I would see product managers strolling through and going to steak dinners, and I’m thinking, geez, I’m here every night on weekends. I’m busting my butt, and I should be creating more value to myself. And so that was one kind of thing. And I think there was a right level of naivete just to think that I could pull this off.

I did believe that I had a small number of clients. I was hopeful that they would come because I had to hit a minimum for the custodian platform to start the RIA, which I was able to do. But I felt that they would come with me and that I had developed enough trust with them that I could be their advisor for a long time. And so for me, it felt like the technology wasn’t great. I was just told the mother-in-law is an expression. She says to my kids sometimes, “You get what you get and you don’t get upset.” Have you heard that expression?

Louis Diamond:

I have. My daughter reads a book where that line is repeated frequently.

Ryan Belanger:

Yeah, okay. So that’s how I felt then. I was like, “This is what you have and deal with it.” And to me, it just felt like there had to be a better way, but I didn’t have any capital backing, so I bootstrapped it. I Craigslisted an office from an estate planning attorney. I cold called Fidelity at the time they were our only custodian. I called to get some compliance help and I just thought that there’d be other people that would want to join. I named the firm, it’s a Latin phrase, it’s Claro Advisors, and it means to make clear in the mind. And I felt like not only was I trying to do that for clients, but I was trying to push advisors to challenge the norms here.

There are other solutions out there. So I purposefully did put my name on it, I knew that there’d be other people that might feel the same way. I’ve always been a team sport guy. I like being around other people and collaborating. And I did have a good friend and credit to him. He said, “If you put this together, I’ll come with you.”

And so just a couple weeks after I did, we talked and I said, “It’s up and running.” He came and Dana was our first, he’s still with us.

And then a couple of months later, another guy I used to work with called and said, “Hey, I’m at this bank, and it looks like what you’ve done is interesting.”

And I said, “We like it if you’d like to give it a try.” And so he came, his name’s Mike. He’s still with us. And so teams started to get put together.

But I met someone in 2014, so I was two years in at that point and I was doing legitimately everything, not only as an advisor, but just all the stuff that you have to do to run the business. And it was becoming too much, especially the compliance. And I think nowadays starting an RIA, the threshold is so much higher. That’s why you see better than anyone else. You just see a lot more tuck-ins. But Jen Street was someone that I met and she really allowed me to catapult the business and scale it, so she took over all the operations and compliance and that really freed me up to be an advisor. And I really was just an advisor moonlighting as someone running. I would recruit a little bit or just be introductions, very soft. All that has changed based on what we’ve done in the last couple of years.

Louis Diamond:

Amazing. So thinking about risk spectrum, obviously now if you look back and say, “Hey, I had 30 million or whatever it was, I didn’t have anything to lose.” Right?

But when you’re in it and you had income, you had recurring revenue, you had a paycheck versus the dynamic of, “I’m going to incur a bunch of expenses. I’m not positive who’s going to come with me. I’m not going to have a paycheck for a period of time.”

Did the fact that your business was relatively small and you were just getting up and running, do you think it made it easier for you to reconcile that risk, or in some ways it was harder because your dispersion, if someone didn’t come, was that much higher?

Ryan Belanger:

I think it was easier for me, I knew I could always go to another firm. They would take me and whatever clients I had. I did it at a time when I had little personal risk, no kids, no mortgage. I didn’t have a wife at that point. So for me, it felt like the right time to take a risk. And I had been entrepreneurial in my life. I mean, I had a business in high school and my parents and grandparents were entrepreneurial. So that was in me, even if I didn’t really recognize it, was that I was okay with a good level of risk. And I do say this now to anyone that I’m hoping to partner with is that if you want to bet on yourself, I’ll go all in on you too.

But you’ve got to be able to take that jump. I won’t let you fail, but you’ve got to be the one. I think that inertia is what a lot of advisors are like, “Geez, I don’t know, I got to give something up.” And that’s why the data’s important and you have all the data. The clients overwhelmingly go with the advisor. These days it’s just much harder to try to establish a new relationship with a trusted advisor than it is to just DocuSign some forms and move your account somewhere.

So to me, it’s just trying to support people, and really push them to the edge and say, “No, this is possible. You should definitely explore this.” And I get it’s totally different, and you might be at a different life stage, but you know the numbers. I mean, tens of thousands of advisors are moving every year and not all of them have a small book like I did when I did it.

Louis Diamond:

Right, exactly. On one hand, making this entrepreneurial move as early in your career as you did, it was a benefit, right? Because you didn’t have as much to lose, like you said, the stage of life you’re in allowed you to absorb more risk. On the other end of the spectrum, if someone who has a massive business with immense value, they’re well situated financially, maybe their kids are through college, et cetera. And then most people are somewhere in the middle. So it’s interesting hearing that dynamic in real time. Let’s talk about Claro today. So you launched the business, like you said, you had to work hard to meet a minimum custodial threshold. So started from a very small base in 2012, but where is it today as far as assets, team size? Just give us some stats or perspective on what you’ve built in the last decade and a half or so.

Ryan Belanger:

Yeah, sure. So we enjoyed a tremendous amount of organic growth, Louis. We are not capital-backed. We don’t buy books of businesses, so I would recruit or partner with advisors that were coming from all the various places that you could think of that were finding us to be a very friendly place to work where you had a high level of autonomy, freedom, control, just great economics. We stayed out of people’s ways. We were just good people trying to help other good people, and it was just that friendly environment that allowed us to grow. And of course, we can’t discount market. I think markets had a tremendous growth for everybody in the business. And so the business as it stands right now, we’re about 1.5 billion in assets, 15 to 20 advisors. We got a 40-person team based primarily at a Boston headquarter, but we have advisors all over. And I think as we’ll get to, we’ve just gone through a really exciting new chapter for us where the next 15 years are going to look a lot different than the previous 15 years.

Louis Diamond:

Very cool. That’s amazing, and I’m in the recruiting businesses and doing recruiting yourself, it’s not easy to tell your story, get in front of the right people, the right like-minded people too, who are willing to take the leap to you, especially if you don’t have the capital backing and you can’t pay big deals or write big checks like others could, so that’s a massive testament to you and your vision. I know the average age of an advisor at Claro is around 40, yet the average advisor in the industry is 59, 60, 61, depending upon what data source you look at. What do you think you figured out about attracting, training, and really cultivating younger advisors that the rest of the industry either gets wrong or ignores? What’s been your hack in that regard?

Ryan Belanger:

I’ll just take a chance on people that others might not. And typically what that really means is someone with nothing, I’ll make them a deal and I’ll say, “Look, I believe in you. I think you’d be a great advisor. Let’s work on an arrangement where you feel like you can do this and I’ll support you.”

And so our specialty was growing advisors from 20 million or 30 million into hundreds of million of client assets. And some of it was just being willing to look where others wouldn’t possibly want to spend their time. But when I was 22, someone took a chance on me, and so I owe it to the next generation to do that as well because there’s some great talent out there that really just isn’t getting the attention they deserve because they don’t have big books of business yet.

But one of my core values is long-term thinking, and so that’s the way I frame my decisions is it doesn’t have to be a win today, but it can be a championship tomorrow or down three or five years from now. And so that’s how I’ve positioned it. I think that’s why we tend to get younger advisors.

And then what happens when you get a lot of younger advisors, you have some older advisors say, “Hey, look, that’s an attractive bench of talent. I needed a succession plan. You guys seem to have a bunch of guys and gals that know how to do really great work and serve clients.” But I think that’s probably one of the things that I just was willing to take some chances on people at an earlier stage.

Louis Diamond:

Yep. I love it. I mean, once again, you said in the beginning, you developed an empathy for the emotional side of money and what people were going through that you carry through to this day. So not losing touch with the fact that you started. I mean, everyone starts in this business at some time, but I feel like once you’re successful or you’re through the first few years, you forget what it was like to be a newbie. So keeping that perspective and appreciation for the mentors you had, et cetera, is great.

And honestly, from a business building standpoint, to me in this environment, unless you take on private equity capital, or you have capital from a BD or from a wirehouse behind you for recruiting, it’s really hard to win advisors with large books of business. So going in the blue part of the ocean instead of the red ocean, if anyone’s read that book, is very smart, looking under rocks that others don’t or really buying into or leaning into folks that you see something in that you know you can cultivate is a brilliant way. And it’s honestly more scalable, cheaper, you build a better business as well doing it the way that you do, but still, it’s hard. And my guess is the ROI is shorter. I’m sure you’ve made some hires that don’t pan out.

So you have to have the tolerance and the demeanor to really invest in people. So long-winded way to say I love what you’re doing. How much of your recruitment of advisors and the retention of that talent as they become successful would you tie to how you compensate them, or equity if that’s available versus the culture of the firm and the mentorship that you and your team provide?

Ryan Belanger:

Yeah, I mean I’ll speak to what we’re offering now just because that’s more relevant, and so we are positioning ourselves now as the best home for advisors in the country and we really believe that’s the case, but our problem is we’re just a secret. We’ve just come to the market after our deal and all the technology that I know we’ll talk about. So we’re now marketing this message to advisors that want to partner with us. Economics will help them grow. We have a really interesting growth program. We’ll give them equity and Claro. I firmly believe that we should tie each other, just get in the same boat, so to speak. So our success is their success, but allowing them to operate in a 1099 model, which I know is not a popular strategy.

I know everyone wants to buy books and own the assets and own the clients, but I feel there’s a tremendous amount of advisors that do not that probably should not be monetizing their businesses so quickly. And so I’m trying to foster a home for those like-minded advisors that want the autonomy to own their clients, maybe even still have a brand, but partner with a firm that’s got really credible technology, just unbelievable back office support and a firm of the future so that they can grow at 10X to what they could have on their own and then they could monetize. That’s what we’ve tried to put together here with our partnership model.

Louis Diamond:

Love it. Yeah, I mean it is definitely going against the grain a little bit, leaning into growing a 1099 model versus more of an acquisition model where everyone coming over as W-2s. So do you think about those trade-offs when it comes time to raising capital down the line or if you want to sell the business or even just an advisor wants to leave, that would stink if that happened. How do you think about those trade-offs? The ability to let advisors keep control and ownership. And honestly, in my view, probably win many people that you wouldn’t otherwise versus the stickiness, and the enterprise building abilities of owning the books of business.

Ryan Belanger:

Yeah, it’s a paradox because I understand why you want to own the client, but that’s a different business model. And frankly, I think it attracts different type of people. I had to really look myself in the mirror a couple years ago. We had enjoyed a tremendous amount of success, high growth and all organic, growing at 30% more per year on a CAGR basis. Nothing could stop us. But what happened was when private equity entered the space, everyone wanted to buy Claro. And to me, it didn’t feel like I did a lot of due diligence. I talked to a lot of firms. I didn’t see any differentiation in the market, Louis. To me from a technology perspective, everyone was doing the same thing. They’re using six to 12 different tools. We all know who they are. And now there’s a bunch of AI tools they’re layering on. And to me, it just didn’t feel like that was going to be any… There was no differentiation in the market.

But admittedly, I had a couple of friends who I’d brought in at very low levels of AUMB that wanted to leave. And they said, “Look, I want to go to a firm that has more resources.”

And so I had to just make a business decision and say, “Where do I want to take this?”

And so it was only after some real adversity because you get emotionally attached to these people that you’ve developed friendships with and they still are friends, no doubt, but they can leave and they’re not captive. So we have to plan for that at Claro now, and I think we’ve got two ways that we’ve done that where it really ties the advisors to us, but in a way where they want to be here because we have something that’s really different.

Louis Diamond:

I like it. I’m sure we’ll get into that. But before we do, we’ll get into what you’re doing on the technology side, which is very cool and unique. How do you balance being an advisor and being a CEO? And what percentage of your time is advisor versus CEO and has that fluctuated or changed over time?

Ryan Belanger:

Drastically changed in the last year, two years or so. So the first 10, 12 years, I was really an advisor first and foremost. That’s inverse at this point, I’m strictly running the business. I have a great team here that deals with our clients, and I’ll still attend the client meetings and such, but I’m really laser-focused on running the business, trying to develop new partnerships with advisors, running an engineering team, sales and marketing. So the change for me has definitely occurred, and I’ll miss not keeping up with planning as much. I’m a CFP, but I just recognized that for me, I had to make a clear change and commit all my time to running the business, and so that’s the decision that I’ve made.

Louis Diamond:

It is a hard balance. I mean, there’s some people that try to do both, run a business, be an advisor, be a rainmaker, and something breaks. You’re not able to give all yourself to one thing. Then there’s others that would much prefer to be an advisor over a business owner. Others who say, “I’m over being an advisor. I want to be a business owner.”

So I think the cool thing about doing what you’ve done is you get to choose, right? Some of it might be circumstances, but you really got to decide which elements of the business you personally want to invest your time in. And you really push your chips in the middle of the table. So let’s get into what you did in November of 2025. I read that you acquired a tech company of all things called NDVR. I’ve done this podcast for a while, speak to a ton of people. I can’t really think of anyone, any advisor or RIA that’s actually bought a tech company. So what made you puck the trend, buy a tech company and not just license all the FinTech that’s available today?

Ryan Belanger:

Yeah, that was the decision I had to make was do I really want to be different, or do I want to just say that I’m different? And so I was fortunate enough to get introduced to a gentleman named Michael Simon about 18 months ago, two years ago. And him and I immediately could see that we were both trying to solve the same problem, and we had perfectly mirrored image skills of one another so I had this deep wealth experience and he had a deep tech experience.

And sometimes it’s just about timing in life, about catching someone at the right time. And I think we each caught each other at a really good time where we could see that coming together, we could create something really magical. And this AI wave was cresting. And I could see when I was talking to all the national PE firms or RIA firms about what people wanted to do, no one had quite figured out how AI was going to come into the technology mix, and it appears as though it’s just going to be another add-on tool to everything else.

And for me, I wanted to try to build something that was integrated an all- in-one platform for an advisor so they didn’t have to use a ton of different tools. And I thought if you could do that, couldn’t you have AI that’s really much more rich and purposeful to help the clients? And so I felt like here’s an opportunity to elevate financial advice throughout the country, really give the clients all the value. And so what we’ve built allows advisors who are really good advisors to become super advisors because they’ve got this technology cape that no one else has that is allowing them to save a bunch of time and do all these really cool things for their clients. But it just felt like right time, right place. I’d been through a little bit of adversity and I felt like taking another swing just like I did 15 years ago going for it. I’ve really never been averse to risk, and so this felt like it was too good to pass up and so we went for it.

Louis Diamond:

Interesting. So that makes sense on the build or acquire versus rent dynamic, wanting to own the IP that makes you actually different. What does NDVR actually do?

Ryan Belanger:

Yeah, so everything’s all integrated. So we’ve kept the Claro Advisors name. We feel like clients really want to know that they’re still getting a person to deliver the advice. And so having the advisor’s name in our brand is important, but we have a Claro Intelligent Hub, and that’s where it’s an AI native operating system for the advisors. They spend their entire day in there, Louis. So they’re not toggling between 10 different Chrome tasks to perform all their business. And so what that allows them to do is not only it’s CRM, calendar, contacts, emails, messages, but we also have all the portfolio information. So trading history and we can do tax loss harvesting and factor-based investing.

So we’ve got institutional grade portfolio management, and that’s really what Endeavor had created through their R&D was the hyper-personalized portfolios where you have a customer’s financial plan directly tied to their account. So there’s never any de-linking between the two. It’s really sophisticated technology that we can provide to our clients. So that’s all integrated as well. And so we’ve since continued to build the build upon that layer of integrated proprietary technology.

Louis Diamond:

It’s very interesting. And we have to imagine part of you maybe now or in the future is, okay, we’ve built this amazing technology mousetrap for our advisors, but do we become a FinTech? Is there any thought of eventually licensing what Endeavor is doing for your business and your clients to other RIAs? How do you think about that dynamic of just building something unique and different for Claro that advisors can latch onto versus making what you and your partners have developed into something that someone else can take and license themselves?

Ryan Belanger:

Yeah, it’s a fair question. We get it a good amount. While there might be a possibility that we license this to some other businesses, our main goal right now is to keep it captive to RIAs that want to partner with Claro. And so we feel like this gives them a true level of differentiation in the market, and so that’s the approach that we’re taking right now. Being a FinTech company, there’s a lot of different skills. The setup and tear down of getting someone to use the platform and I think all that time and resources we want on sales and marketing to try to attract new advisors and continue to develop just jaw-dropping technology for the existing advisors.

Louis Diamond:

Very cool. Let’s talk a little bit about your partnership model. So it does sound unique in that you have people that are 1099, but you don’t usually also hear partner. So how does it work?

Ryan Belanger:

Yeah, so we’re offering advisors to come and use Claro as a back office so you can have your own brand if you want or you can just be a Claro advisor. We have both here and you’ll be a 1099 advisor so you’ll still own the business that you’ve owned. So if you were at a wirehouse or something, you would actually now be creating some enterprise value for yourself. But if you’re an existing REA, you’d be coming to us because you’re tired of doing tech vendor due diligence all the time or you’re tired of the compliance, the AI regulations. That’s just coming. So that’s going to be a huge challenge for REAs, so we’re seeing a lot of interest from REAs saying, “Look, you’re not asking me to give up really anything except the stuff that I hate to do anyway, so this sounds great.” So they partner with us.

In return, they get all access to our technology And we’ll provide all the back office support, office space, dedicated resources, planning, everything you could want to have to operate a business. We do have a growth program that’s really interesting. And then we’ve got this equity in Claro. As you’re a partner with Claro, you should get equity so we give stock options to our advisors who are here and every year thereafter. And naturally, that’s a way to stay connected with the advisor. So hopefully they never want to leave, and I do believe that once you experience our technology, you never want to go back to trying to do it the way you were doing it before.

Louis Diamond:

It’s like instead of building the most enclosed box that you keep people in with sticks and with locks and keys like a lot of firms do, it’s we’re going to keep advisors here, but not by force, but because they have the stock options, because you’re delivering value, because they have this amazing technology. To me, that’s the dynamic that so many firms across the industry get wrong is that they try to keep advisors where they are by restrictive covenants and by fear, and by retribution rather than if we just do good work for people, we add value, we make ourselves indispensable to the advisor. To me, it creates a healthier dynamic. I think firms would actually retain more even if it’s a gentler approach.

And I love what you’re doing there. I think it’s the exact right way to think about we have advisors that are 1099, so yeah, they could leave us, but we’re doing things that make it that they don’t want to leave us. And that’s your charge as the owner to create the infrastructure and the structure where people could go out on their own, but there isn’t an advantage to do so.

Ryan Belanger:

Yeah, I think the culture is a big thing for us. And if you have people here that don’t want to be here, that’s a problem. And I think that’s what you see in a lot of the wirehouses. Frankly, they scare people and they don’t. It’s like, oh my God, if I leave. And for us, it’s like personally, life is too short. I want to work with people that want to work with me. I’ve got other things going on in my life and these things are just work things. And so I want to enjoy being in the office every day with people that want to be here. And if you think you’ve found a different place, you should go explore that. It’s really a soft approach. I know it’s not the most popular approach, but that’s just the style that I have.

Louis Diamond:

Yeah. I mean, it sounds like the trend in your career and in launching Claro was we’re going to do things that aren’t popular, but that work for us, like hiring younger advisors that may not have a book or have a small book, buying a tech company instead of licensing it, being 1099 when you’re recruiting instead of owning books of business. There’s a series of decisions you’ve made as the business owner that they’ve worked out, they’ve paid off, but they’re definitely against the grain. And I very much respect that.

Ryan Belanger:

I really have never been afraid to be a little different, and so I think typically you find other people that might be interested, but it’s a big pool out there. There’s 300,000 advisors so there’s something for everyone, which is awesome.

Louis Diamond:

Totally agree.

Let’s get back to the AI platform that you’ve built, or that you’re building. Maybe give a real tangible example. If I’m a Claro advisor, how has my life changed now that I’m using this platform versus before? So the old model was I log in, like you said, to 10 different Chrome tabs. I’m meeting with clients, doing planning, et cetera. What is the day in the life? How does it look different from what an advisor’s actually doing today versus before this platform was rolled out?

Ryan Belanger:

Yeah. All right. I’ll just give you a couple examples. So a client will send you a request and say, “Louis, I need $25,000.” And so a typical advisor would either write a note down, go drop it off at the CSA’s desk, or maybe forward that email to the CSA and then that person would have to input it into their CRM, and they go perform the task. And then the advisor would want to know where things are in that process so that there’s a lot of back and forth. With our system, Claire, our intelligent chief of staff, AI chief of staff, you just forward that task to [email protected]. It recognizes the email address that the client is emailing from, it knows the account number. It talks to our portfolio engineer. It knows which account to raise the cash from because it knows the tax jurisdiction, and otherwise, and it performs the task.

And the last push of a button is that CSA just moving money from the custodian. So all along the way, the advisor can check on the task and see where it is in the process. It’s beautifully integrated in the intelligent hub, but you could see how that would save a tremendous amount of time and it’s a better customer experience. The mistakes get limited. So it really allows the advisor to get things done at a much higher level. So we’re raising productivity quite a bit.

First of all, she’ll establish your meetings, Claire will. So she’ll schedule them for you. She’ll prep them for you. So we have a button, say prep the meeting because we have all the notes, emails. If you’re texting portfolio data, because she has all that information in about 30 to 45 seconds, she’s going to present to the advisor a really nice meeting summary that, “Hey, here’s the things that we should talk about.”

She’s going to surface things that the advisor’s forgotten about because she doesn’t forget things. And so she’s prepped the meeting for you, so you’ve saved a couple hours there. She joins the meeting, she takes all of your notes, stores them in the system. She’ll give you a follow-up email. She knows your writing style, so she’ll know that you like to call this client this, and you send these emails typically at this time. And so she’ll deliver a nice follow-up email instantly for the advisor. They click that button, that’s done. So there’s just a lot of things that where she’s efficiency-wise where on 20, 30 hours a week that we’re saving advisors just on the productivity tools alone, so that’s where we’re seeing advisors seeing a ton of value in this.

Louis Diamond:

It’s very cool.

Ryan Belanger:

And then there’s a whole portfolio management capabilities, sweeping idle cash and tax loss harvesting and rebalancing that gets done while advisors are having a cup of coffee. They don’t have to think about these things. It just gets done for them.

Louis Diamond:

It’s so cool because it’s like I think I can conceptualize or think of building in Claude any one of those functionalities for the most part, but the way that the flow of things works and the journey of it is unique. I think every advisor would be interested in that type of promise of saving that much time. So how do you think now in the future, how do you think about the human advisor interaction, and what the human and the advisor will do versus what can be offloaded to AI?

Ryan Belanger:

Yeah, certainly a lot of the non-client-facing activity can be unloaded and that’s where advisors spend, according to recent studies, almost 60% of their time non-client-facing. So we’re trying to take all that off of their plates for them. We strongly believe clients still want the message to come from a person that has a level of experience and understands them. But at the same point, I think there’s a growing curiosity about, geez, what could it do for me? And so shouldn’t my advisor know how to use it?

And so I think you’re seeing a lot of advisors put their head in the sand and say, “I don’t know. I’m just going to hope people don’t really want to use this and adopt it.” They’re a little bit shortsighted there. Our bet is that clients are going to want an advisor that knows how to use tech, has really sophisticated tech, but it isn’t just another tool layered on top that now my data is in that tool. The reason our system is so beautiful and integrated is because it captures everything in a structured and secure way.

So all of the compliance is in there. We whitewash all the PII that’s sensitive information, so we’re not layering another tool on, because it’s integrated, we have an AI governance committee that really takes it seriously. How are we using this information? And so we’ve got an approach and we’ve put guardrails around what it can do and what it can’t do. Might there be a generation, Louis, that wants an AI advisor? I don’t know, that could happen. A twin, a digital twin where you say, “Look, I want to talk to Louis.” It’s 10 o’clock at night. He might be in a different time zone than me.

He’s got little kids, but I do have this question. And so we’re iterating ideas on how we can surface that for an advisor to be advisable 24/7 without actually having to be available 24/7.

Louis Diamond:

Seven. It’s amazing to think about. I mean, obviously you’re deeply in this. You have a front row seat into the power of AI, how it’s transforming your business, doing due diligence on acquiring this technology five years from now, 10 years from now, what does the industry look like as a result of AI? What’s your big bet?

Ryan Belanger:

A lot of the big firms are going to try to figure out how to layer in tech. It’s going to be very difficult to do that. It’s built on extremely old legacy technology. They’ll be slow. They’ll figure out how to do some things. What we’re already seeing from advisors is the wow factor. Wow, I didn’t know this was even possible, and so I think just given our size and where we are, we have an advantage that we can build things from the ground up very quickly. I mean, what used to take an engineer a couple of months or years can be done in a couple of days or weeks, so things have really sped up in terms of the development.

It’s much easier to build it than buy it. And so I think you’ll see a lot of firms trying to do what we’ve done, really build proprietary technology. And I think there’ll be a few winners that are able to do that, but being tech forward and aligned with someone who’s thinking about it, I think is what a lot of advisors are going to want to be. That’s the type of firm people would want to partner with, I think.

Louis Diamond:

What about the dynamic of, like you said, the digital twin thing is equal parts cool as it is terrifying, how do you see, we’ll say the threat of AI impacting the profession of being a financial advisor? Do you look at it as the entire pie is going to grow because everyone’s more efficient? Or do you look at it as it’s going to take out a lot of the advisor capacity we have because it’s no longer necessary? Where do you fall on that spectrum?

Ryan Belanger:

So robo-advisors came and went, you remember those. I mean, not that they went, but they never took off the way that it was projected. They’re still great businesses, but the human advisor won that battle. Clients do want an advisor, particularly at the higher end, and so I think at the lower end of the market, you’re going to see some AI solutions where people are perfectly comfortable just talking to someone in AI, and they’ll figure out if there’s a hallucinization or not. But I think there’s definitely going to be a market for it, and so I think it just depends on where the clients are and what level of complexity they have. On the higher end, I do feel like the advisors will continue to have a huge advantage there. But we’re building tools to give optionality to advisors. There might be some advisors who say, “Look, I’ll charge half the fee that I used to charge so you can get my digital twin. And that’s a win-win situation for everybody.”

Louis Diamond:

Yep, that’s fair. So do you look at your competitive ecosystem now? Not for recruiting advisors, let’s say for winning clients. Do you look at Farther and Savvy and different AI or FinTechs as your competition or do you still look at it as the wirehouses and other traditional RIAs?

Ryan Belanger:

I mean, Farther and Savvy have done a great job of going after this market. I think we’re not as well known yet as they are. We’ve certainly built out what we think is tremendous technology second to none. There’s a huge market of the IBD space that is just these guys and gals are stuck on these old platforms and things are okay, but they’re not super compelled to switch until maybe they see something like this, and so we have a massive pipeline of advisors and I’ve been recruiting for a long time. I’ve never had a pipeline like this.

So I know it feels different to me. People really are interested in this. It’s enough for them to want to see tech demos and come visit us and really understand, okay, this is a firm that is challenging what’s possible and that’s someone that maybe I want to be aligned with, and so I think that there’s a lot of places where we can get the talent. And so for us, it’s just trying to find the right people that we want to partner with for the long term.

Louis Diamond:

Very cool, I got two more questions for you. It’s pretty remarkable that to get from where you started to now, the recruiting you’ve done, buying a FinTech, integrating it, that you still don’t have private equity investor outside capital. So you think it’s on the roadmap, whether it’s a certain size or you’re looking for personal liquidity where the business will just need it because it’s expensive to operate a FinTech platform and to scale up and to keep growing the firm. Do you think there’s a world in which you take on external capital to fuel your growth?

Ryan Belanger:

Most certainly. I mean, things have developed for us very quickly here, and outside capital and venture particular is a space that we’re actively in discussions with firms that believe in our vision, understand the value that we can create, and there’s just no doubt that you have to have some wind at your back to get to the market, and so while we’re not a household name right now, I’m confident in two years we will be, and our plan is to grow to hundreds and thousands of advisors across the country.

Louis Diamond:

Wow, big vision, but I love it. Last question for you. If you were 30 years old again, which I think everyone would kill for that opportunity, leaving Morgan Stanley today instead of in 2012, what do you think you would do differently knowing what you know now?

Ryan Belanger:

At that point, interest rates were near zero, Louis. Valuations you remember were two to three times revenue. It felt expensive then. Obviously things have changed quite a bit. So I would’ve begged, borrowed, and stole all the money I could from friends and family and said, “I need to buy as many businesses as I could at two times, three times revenue and pay, I don’t know, 3% loan.”

Just in hindsight, that’s what everyone should have done. That’s not the path that we chose, but I think there’s a huge opportunity in front of us to elevate financial advice across the country, make really good advisors even better by putting that super cape on them. And so we’re very excited about the future, what we’ve got in store, and what we’re going to deliver to the market. And it seems like just yesterday that I walked out of Morgan Stanley with very little assets and tried to start this RIA, but I’m very thankful for all the people that have been supporting me throughout this journey.

Louis Diamond:

Amazing. And that’s a great spot to end, but let me ask the inverse of that question. Let’s say you leave in 2026, so leave today, you’re 30 years old, but you have the benefit of hindsight. You know what you know now. What would you do differently around the transition or building the firm other than of course be amazing if you can buy businesses for a fraction of what they cost today?

Ryan Belanger:

I would want to make sure that I’ve got an integrated solution. I don’t want to be picking a bunch of different vendor tools. I know that’s going to become way too time-consuming for me. So I would really try to figure out how you can get something that’s integrated that can scale, but I wouldn’t change anything about the people. I think you got to be able to connect with people that are like-minded and you still take the risk. What I can’t believe, Louis, is that people that sit at the wirehouses take a home team discount and they’re so fearful of leaving Morgan Stanley or Merrill Lynch or UBS, but why are they taking that?

The market says you should be paid double what you paid. And it’s not just like that’s 20, 30 years of data here that show that. And so I just would keep pushing people to bet on yourself. Your clients will come with you. Yes, that firm that you love will be the first ones to try to steal your clients. They’re going to call them, and that’s one way, loyalty. Another thing I don’t understand, but that’s the way the business is structured. I think there’s a huge opportunity to just educate advisors about what’s out there and I would take the risk.

Louis Diamond:

Love it.

Ryan, this has been very fun. What you’ve accomplished, like I said earlier, gone against the grain at every turn. Leaving on the younger side without a huge business, buying and integrating a technology company, recruiting younger advisors without books of business. Every single thing you’ve done has been a different playbook. So I’m pumped to watch how we make Claro a household name and how this approach is going to pay off in spade. So I appreciate hearing this different perspective, and I know our listeners did as well, so much appreciated today.

Ryan Belanger:

Well, thanks for having me on. I know it’s a long time coming. Thanks for your patience. I wanted to make sure we had something really exciting to talk about when we finally did this, and hopefully I can come back in a couple years and catch up. And congratulations on everything you guys have built. You guys are just a premier name out there, and it’s been fun to watch your success as well.

Louis Diamond:

Thank you, Ryan, I appreciate it.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

With Josh Tomolak, Vice President of Independent Advisor Services, Diamond Consultants

Louis Diamond and Josh Tomolak unpack today’s IBD vs. RIA landscape, explaining what has changed, where each model excels, and how to determine which path best supports the business you want to build.

In Summary

The independent wealth management landscape has changed dramatically, making the decision between an independent broker dealer (IBD) and an RIA more nuanced than ever before.

Louis Diamond welcomes Diamond Consultants’ Vice President of Independent Advisor Services, Josh Tomolak, for a practical discussion of how the independent space has evolved, what truly differentiates the IBD and RIA models today, and how advisors can evaluate which path best aligns with the business they want to build.

The Storyline

Not long ago, the decision to become independent was relatively straightforward. Advisors either remained with a traditional firm or pursued independence through one of a limited number of models.

Today, the conversation is far more complex.

Independent broker dealers have significantly expanded their capabilities, offering stronger technology, larger transition packages, greater flexibility, and even pathways to RIA ownership. At the same time, the RIA ecosystem has matured into a sophisticated marketplace supported by multiple custodians, outsourced service providers, institutional capital, and enterprise platforms that rival many of the industry’s largest firms.

As these developments have unfolded, the traditional distinctions between an IBD and an RIA have become less obvious. Advisors evaluating their options are no longer simply asking whether they should become independent—they’re asking which model best supports the clients they serve, the business they envision, and the lifestyle they want to create.

In this Industry Update, Louis and Josh unpack the realities behind the IBD vs. RIA decision. They discuss where the two models overlap, where meaningful differences still exist, and why factors like service, technology, economics, operational responsibility, enterprise value, and long-term optionality often matter more than labels alone.

Whether you’re considering changing independent firms, launching your own RIA, or simply want a better understanding of how the independent landscape has evolved, this conversation provides an objective framework for evaluating today’s choices—and preparing for tomorrow’s opportunities.

Topics Covered

• Independent Broker Dealer (IBD) vs. RIA models
• The evolution of supportive independence
• Technology investments across the independent space
• Transition support and advisor mobility
• Capital solutions and recruiting economics
• Business formation and enterprise value
• Launching an independent RIA
• Multi-custodial platforms and open architecture
• Minority investments and succession planning
• Future trends shaping advisor independence

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

Why are already-independent advisors reconsidering their current model? (5:27)

Josh explains why service, technology, economics, and growing optionality are causing advisors to reevaluate their existing affiliations.

How have independent broker dealers and RIAs become more alike? (19:28)

Louis and Josh discuss the growing convergence between the two models and why the distinction is becoming less obvious than many advisors assume.

What really separates an IBD from an RIA? (25:04)

A practical discussion of autonomy, compliance, flexibility, custody, economics, and advisor experience.

What misconceptions keep advisors from launching an RIA? (36:29)

Josh outlines the “Four Pillars” of launching an RIA and explains where advisors tend to either overestimate or underestimate the operational realities.

Which advisors thrive most in each model? (33:12)

The conversation explores why there isn’t a universally “better” model—only one that’s better aligned with an advisor’s goals.

What trends are quietly reshaping independence? (42:13)

Minority investments, enterprise value, business formation, and changing revenue models may have an even greater impact than advisors realize today.

Key Takeaways

• Independence has evolved from a destination into an ongoing strategic decision.
• Independent broker dealers have significantly improved technology, transition support, economics, and flexibility.
• The RIA ecosystem has matured into a highly sophisticated marketplace with broad outsourcing and support options.
• Choosing between an IBD and an RIA should begin with long-term business objectives—not industry perceptions.
• Building a valuable business depends more on business structure and scalability than simply growing assets.
• Advisors considering independence should evaluate models with an open mind rather than relying on outdated assumptions.
• The next decade will likely bring continued convergence between independent business models.

https://youtu.be/jHDVso2TsmQ

Quotable Moments

“The question is no longer, ‘Do I want to go independent?’ The question is, ‘What kind of independence makes the most sense for my clients, business, and goals?’”

“Business formation is far more important than assets under management.”

“The way you build your business will ultimately determine how valuable that business becomes.”

“Everything in an RIA is going to cost you either your time or your money.”

FAQs

Is there still a meaningful difference between an IBD and an RIA?

Yes. While the two models increasingly overlap, they differ in areas such as flexibility, compliance structure, operational responsibility, economics, and control.

Why are more independent advisors changing firms today?

Improved technology, stronger transition support, evolving economics, and better service models are prompting many advisors to reassess whether their current platform still fits their business.

Is launching an RIA easier than it used to be?

Yes. Supportive independence, outsourced service providers, and improved custodial resources have significantly reduced many of the historical barriers.

Does every entrepreneurial advisor belong in the RIA model?

No. The best fit depends on an advisor’s appetite for ownership, customization, operational responsibility, and long-term vision.

What matters more: assets under management or how the business is built?

Josh argues that scalable business formation often has a greater impact on enterprise value than AUM alone.

What’s the biggest mistake advisors make when evaluating independence?

Starting with assumptions instead of objectives. The most effective due diligence begins by defining the business you’re trying to build, then identifying the model best suited to support it.

Yes. While the two models increasingly overlap, they differ in areas such as flexibility, compliance structure, operational responsibility, economics, and control.

Improved technology, stronger transition support, evolving economics, and better service models are prompting many advisors to reassess whether their current platform still fits their business.

Yes. Supportive independence, outsourced service providers, and improved custodial resources have significantly reduced many of the historical barriers.

No. The best fit depends on an advisor’s appetite for ownership, customization, operational responsibility, and long-term vision.

Josh argues that scalable business formation often has a greater impact on enterprise value than AUM alone.

Starting with assumptions instead of objectives. The most effective due diligence begins by defining the business you’re trying to build, then identifying the model best suited to support it.

Related Resources

• IBD vs. RIA Comparison Guide
• IBD vs. RIA Revisited: Two Independent Pathways for Advisors to Consider

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

IBD vs. RIA: A Special Industry Update on Independence

A conversation with Louis Diamond and Josh Tomolak, Vice President of Independent Advisor Services at Diamond Consultants.     

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is IBD vs. RIA: A Special Industry Update on Independence. It’s a conversation with Josh Tomolak, our Vice President of Independent Advisor Services. I’m Louis Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

For a long time, going independent would suggest the destination. Today, it’s often the beginning of a different conversation. As the independent space has matured, advisors have more choices than ever before. Broker-dealers have expanded their capabilities. The RIA ecosystem has become increasingly sophisticated. Capital is more readily available and support models now exist that would’ve been difficult to imagine a decade ago. The result is that many advisors who are already independent are taking a fresh look at whether their current affiliation still aligns with what they’re trying to build. My guest is Josh Tomolak, Vice President of Independent Advisor Services here at Diamond Consultants and our resident expert on independence. Josh spends his days helping advisors evaluate independence in all its forms from independent broker dealers, the fully independent RIAs and everything in between. And his knowledge is critical because the distinction between these models is often blurred.

Many broker dealers now offer pathways to greater autonomy while supported independence has made RIA ownership more accessible than ever before. So the question is no longer simply, “Do I want to go independent?” The question is, “What kind of independence makes the most sense for client, business, and goals?” Josh shares what he’s seeing across the landscape, the misconceptions that continue to shape advisor thinking and the factors that matter most when evaluating the next chapter of an independent business. There’s a lot to discuss, so let’s get to it.

Josh, thanks for joining me today.

Joshua Tomolak:

Thanks for having me, Louis. It’s a real privilege to have come. This is a full circle moment for me going from being a student of your podcast, to working alongside you, to being a guest. So I appreciate you having me.

Louis Diamond:

Amazing. I’m excited for this one too, because you have a fresh and in the weeds perspective that a lot of our guests simply don’t have. So why don’t you start off, you spend your time helping advisors evaluate independence every day. So working with advisors who are already independent, for the most part. And to me, it feels like the independent space has really evolved dramatically over the last decade. I mean, this podcast is really the epicenter of that to prove that out, but give us a little background on your past roles in the space and then we can get into what you’re seeing right now.

Joshua Tomolak:

Yeah, I’d be happy to. So I took a very non-traditional path into wealth management. I spent a decade as a deep sea Navy diver, and upon completing my service there, I ended up working for TD Ameritrade. And in my role there, I spent about six years doing nothing but helping financial advisors explore the RIA space, whether that was to join or partner with an RIA, sell to an RIA, or in most cases, launch their own RIA. And one of the things that I ultimately came to terms with is it’s just not the right model for everybody. While I’m a huge advocate for it, we would often lose business to the major broker-dealers of the world. And at the time, I really didn’t understand why. In the last six years at Diamond Consultants has been a very interesting purview into what a lot of the broker-dealers have done and are doing to make themselves more RIA-ish and be very compelling to the right advisor.

Louis Diamond:

Perfect framing. Your background is incredibly germane to the folks you work with. So let’s start off with the softball here. What are you seeing right now?

Joshua Tomolak:

It’s not so different than the rest of the industry, the wirehouses, the regional firms, things of that nature, that if you took 10 firms, they’re all likely to go different directions, even if they were identical practices. That could be… A third would go from an independent broker-dealer to another independent broker-dealer. Certainly the supported RIA space is growing every day and has created a lot of very fun and unique solutions for advisors, very customized and curated. And then I think there’s still a lot of really great sophisticated teams and individual contributors that are making the decision to go hyper entrepreneurial and launch their own individual RIA. So the movement’s really all over the board from my perspective.

Louis Diamond:

It does feel like it’s no longer independence is an alternative option or it’s on the fringes. It’s very front and center whether for breakaways, which is a big topic on our podcast, but in general, the infrastructure has become much, much more sophisticated today than ever before. Advisors have way more tools in their toolbox to serve clients, whether in the private markets or through technology. And it’s no longer that if an advisor’s independent, they’re in the minor leagues where they don’t have the same ability to serve clients like they did if they’re at a big bank or a private bank or a wirehouse. Do you agree?

Joshua Tomolak:

I absolutely agree. And I’m reminded of a question I got one time from a great team that I worked with in New York. They asked me, “Are there really more options than ever before? Because all we see is one firm selling to another.” And I think that’s a really great point. There’s far less broker dealers on the street than there were even five years ago. But for every Commonwealth, for example, that sells to an LPL, up pops three or four really cool private equity-backed, sophisticated RIA platform firms that are built to service their own unique advisor base.

Louis Diamond:

I think that’s right. Sitting on the sidelines, sitting on top of everything going on in the industry, I feel like capital is always an interesting topic forever. If an advisor wanted to move within the independent world or break away from a big firm to go independent, the only way to get capital was to go to an independent broker dealer. So we still see that, but I feel like today between all these minority acquisition opportunities, we’re seeing firms acquire practices at time of transition, which is somewhat new. There’s debt solutions, recruiting deals are way up for firms that are paying forgivable loans. RIAs now would, in some cases, will pay a forgivable note. What are you seeing there as far as the availability of capital and just deals in general?

Joshua Tomolak:

It’s a great question and I didn’t want to take the low-hanging fruit, but capital’s been a huge innovation, I guess, in the last five years I’d say. Just to give you rough quotes, please don’t hold me to it, but traditional transition broker-dealer deals were five years ago, 40 to 60% of Trailing Twelve revenue today are somewhere between 90 and 120%, sometimes north of that for the right team. That’s really meaningful money for the team that is thinking about foregoing a wirehouse deal, for example. I’d also say a lot of these firms are getting hyper-creative in how they solve for capital. The minority investment piece that you mentioned is very interesting. We’re seeing a lot of privatized forgivable notes in the RIA space where third-party or private lenders are basically lending the money and the RIA is making the payments on that forgivable note as long as the advisor is affiliated with them.

So there’s been a recognition among the RIA space to get away from the, “Oh, they just took a check” type of mantra, and to say, “Look, I understand there are capital needs. These people are taking a risk. We need to solve for that.” So we’ve seen a lot of that in the marketplace.

Louis Diamond:

Very interesting. I think another thing financially, and then we’ll keep the train moving, that I know I’ve seen, and maybe you can weigh in if you’ve seen the same, is the cost to an advisor or a business owner to join an independent BD or to join an RIA has come way down, probably in part because of Schwab going to zero on trading. That’s been a catalyst. But it feels like we used to say independent BDs were expensive relative to the RIA world. And in some cases, they certainly could be. And if you’re at scale, maybe you can pick up a point or two being in the RIA world versus a BD. But when you have some of these BDs that have a basis point admin fee or no admin fee at a certain size and the payouts I feel like are similar, maybe have gone up a little bit, but it’s more so like the administrator fees, the platform fees, the program fees.

Anyone who’s not in that world, it’s like, “What are you talking about?” But basically the way that these broker-dealers make money, it seems like there’s been a pretty big differential in the exchange of value where advisors now get more services, better technology, get more money to join them and get it at a lower cost. Do you agree?

Joshua Tomolak:

I absolutely agree. I think that maybe that’s one of the larger changes that we’ve seen, and it’s probably one of the benefits from a lot of the industry consolidation on that independent broker-dealer side. The economies of scale of these folks have allowed them to increase their tech spend, increase their service capacities all while offering it to the advisors at a cheaper price. And when I was at TD Ameritrade, one of the biggest pitches was the idea of a 100% payout and you control the fixed expenses, your technology compliance, et cetera. But what’s changed is that broker-dealers are pretty darn comparable on the expenses. All of those admin fees and things you mentioned will still exist, but they’re on a much smaller scale. And I think the question a lot of advisors are asking is, “Am I getting congruent value from my broker-dealer for what I pay for?” And while that answer might’ve been no a couple years ago, today the answer is more often yes.

Louis Diamond:

Yeah, I would agree. A lot of times we work with advisors who are starting an RIA or affiliating with an RIA or going to a BD and they see how big the deals are in the independent BD world and the payouts are really high and the fees are relatively low. And honestly, it is a hard decision or calculus to make, like, “How does it make sense for me to turn down this extremely lucrative deal when my ongoing economics are going to be somewhat similar in the BD world versus in the RIA space?” I think it’s just an interesting dynamic and we’ll get more into that distinction. One of the stars of the show right here is we’ve seen a ton of advisor movement across the industry. Our annual advisor transition report said that in 2025, over 11,000 experienced advisors changed firms, which is a large number.

A lot of those numbers are within the independent world. So advisors who are 1099 through a BD or through an RIA transitioning to another platform or organization or starting an RIA. So why do you think we’re seeing so many advisors reconsider their current firm or their platform or their broker-dealer today than in years past?

Joshua Tomolak:

It’s a jarring number. 11,000 is definitely a significant amount of advisor movements. To me, it comes down to a few things, but I will say that it’s almost always a conglomeration of pushes and pulls. Pushes being inherent frustrations with your status quo, pulls being the new sexy, shiny things that you see in the marketplace that could be really impactful for your business. To me, it typically comes down to one of three things, at least on the push front, that drives advisors to movement. Service being number one, technology being number two, and economics being number three. And if we were just going to unpack those, I think service being, “Can you call somebody that knows your business, that knows your name? Are you getting the correct answers? Are you being pushed through a phone tree? And even if you’re not doing it, is it taking up a meaningful amount of time of your staff’s free time?”

On the technology front, there’s very significant tech spends happening in the industry right now. I think Raymond James and LPL reported, for example, they spent 500 million in 2025 on a tech spend. So advisors are going to the places that are making their life easier. People are looking for a mechanism to really scale their business without having to add staff and a lot of expenses to the bottom line. And technology is just the fastest, most efficient way to do that most times. And then economics, certainly a lot of advisors and teams have built phenomenal businesses and they’ve made a great living without really stressing out about the economics. And they eventually get to a point in their business where what they were giving up as a million dollar producer is far different than what they’re giving up as a $4 million producer. And back to the congruent value, it perhaps stops to make as much sense.

Louis Diamond:

Well said. I always say when the cost-to-value ratio is out of whack, that’s when advisors sit up and take notice. And not to name names of firms, but there definitely are firms that are more expensive. And even if you look at how much a wirehouse or a Ed Jones advisor paid their firm, it’s like, “What got me here is not necessarily what’s going to get me there.” And while the name on the business card, the resources were incredibly impactful, and I’m so grateful for what my firm, my broker-dealer did for me when I was just starting or when I was smaller. Now the business is bigger, I rely upon different resources or I don’t need the firm as much. So I’d rather plow the cost savings either into income for myself or invest it in areas that are most germane to my business. And it’s usually when that kind of light bulb moment goes off, that’s one of the major pushes that cause advisors to evaluate other options.

So I agree with you, those are the major push factors, but then what are the pull factors? What are the major advancements or changes across the independent space that’s causing advisors to say, “Hey, okay, I might have some frustrations, but at the same time, I also need to find something that’s more than marginally better than the firm I’m at. Otherwise, why am I going to go through the hassle, take the risk, et cetera? So what are some of the pull factors that advisors are latching onto today?

Joshua Tomolak:

Sure. And I might say with one final push factor, there’s a straw that breaks the proverbial camel’s back when you’ve been told for however many years that this change or that change is coming down the pipeline and it never happens. And it translates well into the pull factors is do they do what they say they’re going to do? The talking points really for the pull factors are exactly the same. So the counterpoint to service is perhaps having a direct relationship with the chief compliance officer at a firm or having a dedicated service representative that knows their stuff inside and out and can get you the answer even if they don’t know it off the top of their head. Having the technology to rebalance a household in two clicks instead of two hours. In economics, I think it’s really a transparency of economics. We’ve both worked with some really significant firms that have looked at their P&Ls and said, “where the heck is the money going?”

And we’ve looked at the same P&Ls and said, “I have no idea,” because it’s so convoluted. People are happy to pay for good service, good technology, good products, but they just want to know where the money’s coming from. So I think it’s a yin and yang. The same things that they’re the push are often the pull.

Louis Diamond:

Definitely. I’ll give you a couple other from my perspective. I’ll say first specific to the independent BD world, and then we’ll dive into the RIA, I think it’s a little bit different. But I think some other will say innovations or changes that are causing advisors to really perk up and listen and really make the case to themselves that life will be better at this new organization than the status quo or staying put. We’ve seen major advancements in transition support, whether it’s being able to do a transition without a shred of paper, being able to… I mean, we’ve seen some independent advisors move their entire book within two weeks, which never would’ve happened before. So the firms that I’d say are playing offense, the larger firms that are winning, they have insane headcount around transitions and are always investing in technology, whether now on the AI front or in general.

And we’ve seen transitions, they’re never easy. So that’s not a comment to say it’s easy, but a lot of the friction, a lot of the manual work has been taken away, which is massive. You definitely mentioned the significant technology spend. I mean, just the innovations going on across the industry. There’s definitely some firms that are laggards on technology and others that are light years ahead, whether because their tech is more integrated or they’ve built out their platform to be more, we’ll say modular, to plug in different third-party softwares where an advisor can really customize and create their own tech stack. I think there’s been some changes on compliance. It used to be if you’re at an independent BD, you had to be the OSJ by yourself or you had to roll up under an OSJ. But now most BDs offer home office supervision, so a big friction or pain point is taken away.

And then I’ll give you a bridge to talk about what we’re seeing on the RIA side. But we’ve also seen, I would say, a real blurring of the lines between what you would traditionally think of as an independent broker dealer versus what was an RIA. So whether it’s an internal pathway where it’s like, “Start off on our independent BD platform, get the big deal, get the support, but then you can ditch that and just use this as a custodian or you can sell the business to us when you want to retire and convert to W2.” So in that vein, transitioning internally to an RIA, give me the same points like, “What are the major advancements or changes you’re seeing on the RIA side today?”

Joshua Tomolak:

I love that you said that because it’s been one of the most interesting changes to watch. Independent broker dealers becoming more like RIAs, and to your point, being more flexible, having more optionality, a more curated experience in some cases. And in many cases becoming closer to independent broker dealers with some of these massive shops that we’ve seen be created over the last five years that now have hundreds, if not thousands of advisors. To your question on the internal RIA slide as we sometimes call it, this really didn’t exist many places a few years ago. And I think it’s been created as both originally a retention tool in many places for the advisors that were with a major independent broker dealer and they ultimately wanted to have their own ADV and their own RIA. And the firm didn’t want to lose all the assets to an independent custodian so they gave them the green light to…

And it’s ultimately became a sales tool in many cases. Just to use a couple of examples across the industry, I mean, Raymond James has Raymond James Custody Services, which has attracted a lot of really sophisticated teams. I know Wells Fargo Finance done something similar and even the counterparts over at Cetera and Osaic are trying to do the same thing. So it’s a recognition in my view that we want to keep the best talent possible. And if these folks are ultimately going to go RIA anyway, it’s less about the money and more about the flexibility and control that it offers them. So what can we do to keep those folks on board? And rightfully so, a lot of senior management of these firms have said, “Let’s not lose these teams. It’s going to be a lower margin business for us, but at the rate that they’re growing, it’s going to pay off in the long run.”

Louis Diamond:

Well said.

RIAs are now more mainstream. And some of these RIAs, they’re either resembling independent BDs or I would even go so far to say the valuations that are even publicly available on some RIAs is definitely having people take notice. I mean, Cerity Partners recently raised capital at an over $8 billion reported valuation. Crescent was well over a billion. Firms like Mariner, Creative Planning, Mercer, Wealth Enhancement Group, and there’s many that I’m missing, are all worth a couple billion dollars or more and growing. Do you think that’s had an impact on the legitimacy or the staying power of the RIA model?

Joshua Tomolak:

Oh, absolutely. There’s no doubt about it. I mean, those groups that you mentioned and many more are winning some of the biggest teams on the street. I mean, if you pull up a run-of-the-mill advisor hub article, for example, you’ll see as many of those RIAs win significant businesses as you will their broker-dealer counterparts, partially in my opinion, due to the massive valuations these firms are fetching. And it’s much more of a partnership in the sense that joining a Crescent or a Wealth Enhancement Group, as you mentioned, you’re a part of a boutique group of maybe a couple of hundred very sophisticated high-producing advisors all playing under the same banner, all rowing in the same direction, and that creates substantial growth.

Louis Diamond:

Exactly right. I think two other things to me that’s driving the legitimacy or the growth of the RIA segment, there’s so many different outsourcing solutions that have popped up, whether it’s more of a… We’ll say a bundled or a package outsourcing solution through firms like Dynasty and Sanctuary. LPL has done a ton with having a shared services outsourcing model. So you have those. But you also have, I mean, probably 10 different firms I could think of that can be an outsourced chief compliance officer. You have tons of marketing agencies that specialize in helping RIAs. You have all these FinTechs popping up to support the RIA space. Really, it’s like anything and everything can be outsourced now. And even the big Wall Street banks like UBS, Merrill, et cetera, they’re attempting to sell and distribute product into the RIA space. Venture funds, private equity funds, anyone you talk to is trying to get a piece of the RIA space, which means there’s more product and platform availability than ever before.

And I think it’s massive because one, it’s a catalyst for teams who say, “I love everything about the RIA world. I just don’t want to do it on my own,” or, “I don’t know where to start.” But also it means that they can look their clients in the eye and say, “Hey, not only do I have the same stuff that I had for you at XYZ firm, I can actually do more for you.” And even if you look at what the custodians are doing on the lending side now, Schwab owning a bank is massive and being able to facilitate mortgages, securities-backed loans, things that didn’t really exist in the past. I think it’s a very exciting time for advisors either that are independent or are considering the independent space because you have all these choices and it’s really like, “Choose your own adventure. Give me your top five things you want.” I’m sure it exists and we can find it and make it happen. And I don’t think we’d have the same confidence in that statement 5, 7, 10 years ago.

Joshua Tomolak:

I couldn’t agree more. That’s such a huge development is the marketplace of third party vendors in any kind of capitalism environment. There’s problems that people encounter and there’s really smart people that are trying to make a lot of money that go to market to solve them. And we’ve seen a ton of that over the last few years.

Louis Diamond:

Exactly right. Yeah, it’s like also… If an advisor looks around and says, “Hey, this is what I want,” and it doesn’t exist, oftentimes that’s a light bulb moment to be like, “Okay, I’ll go build it. I’ll do it on my own.” Whether it was Stewart Partners when they launched a number of years ago or Hightower, Dynasty, et cetera. They were all started by people that said, “Hey, I see a big gap in the ecosystem. Let’s create a business and raise capital to go solve it and then deliver this service to other like-minded advisors or business owners.” Honestly, it’s a treat to be able to watch all this happen in real time. We probably should have laid the groundwork with this next question, but I think it’s an important one. What’s the difference between a independent broker-dealer and an RIA? Really basic foundational. It sounds like the lines are blurred. There’s probably a lot of similarities. Advisors are successful in both. It’s not like one’s better than the other. How would you explain the differences, if a client of ours asked, “What’s the difference between an independent broker-dealer and IBD versus an RIA”?

Joshua Tomolak:

Get into the core of it. Again, the lines are blurred, and I’ll stay very high level on the strategic differences, but I like to use this example. I drive a Toyota Tundra. Really like the truck, gets me from A to B. Now, if I were getting to a point where I wanted a new vehicle, if I were to go get another Toyota Tundra because I really like a lot of aspects of it, but I want the one with the bigger screen and the bigger tires and the power seats, and I have rolled down windows because I have a fear of drowning. But if I want a lot of the bells and whistles, but I want to keep the foundation, that’s what I align to a independent broker-dealer to independent broker-dealer. You like the foundation of everything all under one roof. You like a lot of the resources, but you have some meaningful frustrations and you want to see if another provider in the market can solve for those or you can upgrade.

If I instead, Louis, decided that I wanted a sports car or a Jeep Wrangler or something, I would be looking at a different category altogether. That’s how I articulate the platform space. They provide the same services and support in many cases that an independent broker-dealer does, think of marketing and a tech stack and regulatory oversight and a fellowship in a community, but they’re built on an RIA TC registered chassis. They’re typically far more customized so you can shop the street to get a lot more of the things that you like, though you are walking away from maybe some of the things that you’ve liked in the independent broker-dealer model. So I guess that’s the highest level I might explain it, just a little bit more minutia in any broker-dealer is going to be a FINRA registered, FINRA member broker-dealer. So they’re subject to the FINRA rules, which basically means it’s the compliance interpretation of those rules that they have to follow. So LPL’s rules may be slightly different than Cetera’s than Ameriprise’s because it’s based on their interpretations of the rules.

In the RIA space, everybody really operates on the fiduciary standard. So it’s just a different lens that from a compliance standpoint, business is looked at. And a lot of people would make the argument that it’s just easier to get things done when you’re looking at something from that lens. I might’ve gone too compliance nerd on you there, but I’d be curious what you think some of the major differences are.

Louis Diamond:

Yeah, I think that’s right. I mean, it sounds like if you’re in the RIA world in some capacity that you as the advisor or business owner are going to have a little bit more control and autonomy and flexibility. One, do you think that’s true? And what are the reasons why that is? Is it platform? Is it strictly just compliance is easier? What are the different ways that an RIA would have more or less flexibility than someone who’s with an independent BD?

Joshua Tomolak:

Yeah, I think it’s overwhelmingly true, but it certainly depends on your business. Within most RIA platforms, you’re going to be one of a couple dozen, maybe a couple hundred, where you’re going to have people within that firm that really know your business. So the experience in getting things done is much less about, “Can I do this,” or, “Can I not do this?” And it’s, “Louis, I understand you asked for this. We’re going to run into these issues, but let’s figure out how to get to yes.” So it’s far more curated by people that are not operating on black and white rules and can actually figure out how to get to yes for your business. The other thing I would say is that most significant RIA platforms have multiple custodial options. So many times you’ll see as few as two or as many as five. So if an advisor or a team is trying to bring on a new piece of business or do something creative, that might be something they can use a different custodial relationship to accomplish.

It might be something that Goldman Sachs does really well but is in its infancy at Fidelity, or it might be international business that’s approved on Pershing’s platform but not Schwab’s platform. So the RIA partner that you’re with can really look at those custodians agnostically and say, “What’s the best home for this business? What’s the best way to get this done for Louis?” There’s a couple examples of where I see the flexibility in practice.

Louis Diamond:

Yeah, I think one more too would be the concept of being able to shop the street. I’ve heard it described as becoming a buy-side advocate for your clients versus being a professional seller. So meaning, if I’m affiliated with an RIA or I’m operating my own RIA, there’s no selling away like there is at a wirehouse or at certain BDs. So if I have a client who’s trying to get a $10 million loan for a new building that they’re breaking ground on, if I’m at UBS, Merrill, Morgan Stanley, captive to a BD, I can go to my firm and say, “Hey, this $10 million loan, here it is. What are the terms? What are the rates? Will you take on this business?” And the firm will say, “Yes. No. Yes, here are the terms. Here’s the caveats, et cetera.” But it’s a very closed market process and an advisor has to live and die by what their firm says.

Versus in the RIA world, it’s, “Okay, I have relationships with nine different banks and I can go to these different banks and private credit funds and whoever and really create either an option process for my client or really just help them in a fully agnostic open way.” And we see the same thing when it comes to alternative investments. No one at a wirehouse, let’s say, is complaining that they don’t have enough alts that they can offer clients. Those firms have done an amazing job with really boiling the ocean and having tons and tons of options for private investments, hedge funds, et cetera. But if you’re in the RIA world, you can take it to the next level and say, “Hey, this $3 million startup company that my friend is starting, I’m going to help them raise capital,” or, “My client wants to get a syndicate of investors together to have a direct investment into a qualified opportunity zone fund that they’re starting. Let’s do it when we can advise on it.”

So it really expands what an advisor is able to do on behalf of clients. Like to me, that’s the most interesting or exciting part of the RIA model. You can get some of that within the BD world, but to me, when an advisor’s business becomes more sophisticated as far as what their end client’s needs are, it tends to translate better to the RIA world than the BD world. Not to say there aren’t ultra-high net worth focused advisors at BDs, but because of that additional flexibility, autonomy, customization, et cetera, that speaks more RIA. So again, absolutely not down at all on the independent BDs because I think there’s a massive home for them. Josh, let me turn it back to you. I’m rambling now. Give me the pitch for an independent BD. What are the things that are misperceptions that people have? What are the advantages that an independent broker dealer like an LPL or a RayJ or a Cetera have over RIAs or over other models in general?

Joshua Tomolak:

Absolutely. And I’d say I’ve learned more over the last six years from some of your ramblings than most people learn in an MBA course, so keep doing what you’re doing. But it’s funny being in this position now, having spent so much time sort of selling against the IBD model within TD Ameritrade, but what I’ve learned is it’s a good home for everybody. And a lot of times the advisors that they’re entrepreneurial enough where they like having their name on the door, but they’re not so entrepreneurial where they want to build everything out themselves, that’s where the independent broker dealers absolutely kill it. Their economics have gotten to a point where they’re really competitive. They offer transition capital that isn’t even going to be comparable in the RIA space unless you’re selling a minority share of your business. And you mentioned LPL, or we could really list all of the major ones, there’s not a department that they don’t have.

It could be as nuance as finding 403(b) payroll slots or it could be as mainstream as fixed income or setting up events. There are all kinds of really neat departments that these all under one roof independent broker dealers have invested in. And a lot of times they make an effort to make you very much aware of all of the support because most people don’t use it. So I would say for the advisors that are looking to get their improved Toyota Tundra, then you can get probably 70 or 80% of what you want within the independent broker-dealer world. And you can also keep 20 or 30% of the stuff, maybe more that you really liked at your previous firm. So I think that’s where it really shines. I sometimes call it an incremental change rather than a transformational change. But for many advisors, incremental is really good enough if you get to keep the familiarity of how you’ve been doing business for the last 20-some years, but you’re able to get net improvement on the things that were really bothering you.

Louis Diamond:

Well said. Something that I’ve seen that’s been… I guess this could be either pro or con depending upon the advisor, but with some broker dealers, letting an advisor co-brand with them or really having a real consumer-facing brand, whether it’s, “I’m a franchise owner with Ameriprise,” or, “I’m independent through Raymond James,” or, “Running my own practice through Wells Fargo FiNet,” or, “I’m independent with Northwestern Mutual.” There’s definitely some brand cache or brand familiarity with some of those firms that may or may not be the same if you’re in the RIA world. So I would agree there’s a lot to like about the independent BD world and there’s a fit for people that is absolutely better with independent BDs than on the RIA side. Even if some people would say RIA is better, we’re cleaner, I wouldn’t say that. To me, it’s all about what an advisor’s goals are and then matching that up with what these firms do.

And there’s never a perfect option. I jokingly say, “If there was a perfect firm, we wouldn’t be in business.” Every firm has their advantages or disadvantages. And depending upon where an advisor’s coming from, their style of business, their pain points, that’ll match up really well with on firm or one type of firm or one model than the other.

Let’s pivot a little bit to the RIA world. A lot of your comments have been more about advisors affiliating or joining RIAs, this whole supportive version of independence concept. But what about advisors who want to go and start their own RIA? Either they’re leaving a captive firm and taking the entrepreneurial route and starting their own firm, or they’re leaving an independent BD to go start their own RIA. What do you see as some of the biggest misconceptions that advisors have about that move?

Joshua Tomolak:

That’s probably my favorite topic because there are the most misconceptions I think in this space.

Louis Diamond:

I’d agree.

Joshua Tomolak:

And I would say there’s 9 out of 10 conversations that I have with advisors and teams, they start off with the launching an RIA in mind or at least RIA curious and they want to understand what’s out there. And probably less than half the time do these folks end up actually launching their own RIA, which is okay because the ones that do are massively successful and they know they’re dang sure that’s exactly what they want to do. I think it gets a little bit romanticized sometimes that they’ll say, “Oh, I’ll just give Schwab a call,” or, “I’ll just give the custodian a call,” as if they were shopping independent broker dealers. That’s fine. You can do that and they will help you, but there’s quite a bit more to think about. And it’s not, in my opinion, the same as evaluating independent broker dealers.

If it’s all right, I was taught the four pillars of the RIA model. I can go through that with you really quickly. So the way to think about the RIA space is in four pieces. And shout out to a friend, Eli Suarez, that taught me this years ago. The first pillar… Thinking of four pillars on a bar stool, if you will. The first one being administration. And this is your compliance, this is setting up your ADV, your LLC, all of your business formation documents. The second piece being technology, what do you actually want to use? Because the benefits of the broker-dealer world and the supported independent world is they’ve already built it for you. They’ve already paid for it and scraped their knees building it. In this case, you have to. And for some people, that’s really exciting to source financial planning software and portfolio management software and your CRM and tax software, et cetera. For some people, it just sounds like a huge headache.

The third pillar being custodians. I have them third because you want to make sure that the right custodian can integrate properly with the technology that you’ve sourced that you’re passionate about. And then ultimately transition. What does a transition really look like? What are my legal and regulatory requirements? How does this work? What are the timelines? Things of that nature. So I guess I would say in closing that if those four things are things that you really want to own, then you’re in a really good position to consider an RIA launch. What do you think, Louis?

Louis Diamond:

I think that’s a great framework to break it down. Not just be like, “Okay, I can tolerate that,” or, “My team can do it,” but I think you have to be pretty excited about rolling up your sleeves and customizing and doing it yourself because in our experience, there’s a nominal differential between the economics of running your own RIA versus affiliating with an RIA or going to an independent BD. All the extra work and responsibility, you’re not really going to make it up, at least on the front end, on a higher net payout. So it has to be more about what the model means to you and having a vision that you don’t think anyone else can accomplish other than yourself.

And looking at that crazy ever-expanding Michael Kitces’ FinTech map and there’s 500 different logos on it and being like, “Yes, that’s what I want. I want to go through this. I want to pick the seven pieces of my tech stack that work for me,” rather than getting, “Here’s the tech stack, take a demo, you like it, you don’t like it, take it or leave it.” To me, the two biggest misconceptions people have about the RIA world is one, “I’m going to have to be a full-time chief compliance officer,” and just that compliance is this boogeyman, this terrible, scary thing. In some ways it is. But the reality is most, especially startup RIAs will fully outsource compliance to a firm or they’ll hire a compliance consultant or firms that are big enough even will hire a CCO or repurpose someone on their team to be CCO. But compliance is much more streamlined and simpler than BD compliance. And ultimately, it’s compliance that’s being built for your business rather than compliance that’s being built for a publicly traded multinational company that supports 20,000 financial advisors.

So I think compliance is always a big misconception. It’s definitely what a lot of firms will pry upon when they’re saying like, “Oh, you’re going to own all the legal and regulatory requirements. You could, but it’s definitely not a requirement.” And then I think another one is folks sometimes underestimate and overestimate the operational burden and how much work it is to start an RIA. Sometimes people just… They’re perfect for the RIA world, that’s their goal, but they get stopped in their tracks. They don’t really know what to do. But what we’ve seen, we said it earlier with so many different outsourcing solutions and different service providers that have popped up, if you have the fire in your belly to go build something, it doesn’t mean you’re doing it by yourself. I mean, that’s what firms like ours do. The custodians are very helpful. On the flip side though, I have seen advisors chasing payouts say, “Hey, I’m just going to go start an RIA because I want to make another 1 to 3%,” or whatever it comes to and they drastically underestimate what it really takes to build a successful firm.

Joshua Tomolak:

Exactly right. I think that’s my favorite one, Louis, overestimating and estimating the operational burden there is you could have the same conversation with two teams and it can go the completely different direction.

Louis Diamond:

Josh, let’s wrap here. I got one more question for you that I think is an exciting one, but give me three key trends or storylines that most people don’t know about or aren’t talking about that you’re passionate about or that you’re sharing with advisors or counseling today.

Joshua Tomolak:

Sure. This is the free advice portion. And I’ll tell you what, Louis, if it’s all right with you, I’ll give you two and I would love to hear one from you as well. The first one I’ve seen in both the independent broker-dealer and RIA space is the minority investor concept. A lot of folks will talk about the idea of taking chips off a table and starting to partially monetize your business. I think that’s all important, but what I’ve found is that a lot of advisors really want their partner, whether it’s an RIA broker dealer to help them grow. And that could be with M&A opportunities, that could be with traditional recruitment of advisors, that could be building a business plan. But the minority investment part really helps accelerate that for a lot of businesses because all of a sudden, not only are you cashing out a small part of your business, but you’ve just created an ally with the parent entity, it is now much more likely to help you grow in that capacity because they’re insulated from it and they profit when you profit.

So I think it’s easy to be shortsighted and say, “Well, my equity’s going to keep growing. Why would I sell you a piece of this?” But I counsel folks often to really think about what that long-term strategic partnership is and making somebody a real equity partner rather than just a vendor that provides you with technology and regulatory coverage. The other one I’d say is that… And this one’s really important to me, that business formation is far more important than your assets under management. Said a different way, the way you build your business is going to make your business far more valuable than the number of dollars underneath your name. And what I mean by that is, just to use an example, a sophisticated, well-built, centralized, scalable and repeatable business, whether it’s an RIA with a broker-dealer that is going to fetch a far higher M&A multiple than a OSJ that’s five times the size that just has a bunch of 1099 independent advisors underneath the umbrella.

What we’ve seen in the M&A space is that if you’re going to shell out 50, 60, $80 million for somebody’s business, you want to know that you have this business for the long term. So I would certainly counsel people that have been around maybe far longer than me to take a look at how you’re building this and put together a business plan on what those next 10 years should look like and not necessarily fall into the trap where your only revenue source is the override that you receive from a firm and then you in turn pay to the advisors on your team.

Louis Diamond:

Well said. I really like that line. We’d probably do a whole episode on what are the tips and tricks for building a business with the end in mind? Like the Covey quote, “Begin with the end in mind.” Transitions are like… They’re a bear. I mean, there’s no way to sugarcoat it. Advisors, when they hear transition, if you ask them, “Don’t think about it, give me your reaction.” “Terrible, risky, a lot of work. I’ll never do it again. My friend did it and it was terrible. What if my clients don’t come?” It’s all these negative emotions. And in many cases, I don’t blame an advisor because it is a big act. But to me, if someone is weighing making a transition, whether a wholesale business model change going from being an employee to being independent, going from being an advisor at an independent BD to starting an RIA, or even going independent BD to independent BD, it’s an opportunity if you rise to the occasion to build with this next act with intentionality.

So whether it’s restructuring compensation for your team, converting people from 1099 to W2, putting in place new workflows, changing how investments, instead of it being each individual advisor doing investments to more of a centralized model, cleaning up workflows, really investing in data, investing in AI. It’s something that I think, again, we can have a whole episode on it, but I think it’s a great one. Build the business the right way. And obviously, businesses that are larger, theoretically, sell for more, but we’ve certainly seen businesses that are half the size of a larger one sell for a similar amount or more because they did all the right things and the larger one did the things that really turn off a buyer or detract from a valuation. Let me give you one more and tell me if you agree, but I think we’re in this moment when Altruist, the upstart, a new kid on the block custodian, they launched a basically tokenization of cash in a way to automatically agentically source or sort cash to the highest yielding money market.

And you’re like, “This is fricking wonky. Louis, why are you telling us this?” I think this is an important one just to keep a watchful eye on. I have no idea how this is going to shake out, but really the biggest way that independent BDs or even custodians like Schwab and Fidelity really make money, it’s not on their overrides from practices or the admin fee or the custody fee. It’s really on net interest margin. So how much the broker-dealer or the firm is making on client cash and brokerage accounts relative to what they’re paying out the client. It’s essentially like free margin to these firms. And this concept, I think, has massive potential for disruption for the business model. Again, I don’t know what it’s going to look like, whether it means platform fees that are instituted at all these firms, whether it means certain models would be more beneficial than others, whether it means nothing’s going to change, which is probably the right answer given this industry.

But it’s something to keep a watchful eye on just if your firm institutes a new platform fee or there’s a fundamental way in which your firm can no longer make money. How are they going to make it up? Are they now going to be uncompetitive? They’re not going to have as much scale or profits to invest in the platform. Is it going to cause even more consolidation in the industry? So to me, that’s the one pretty under the radar, pretty wonky storyline that I don’t think enough people are talking about, but has the biggest possibility for disruption across their space than anything I’ve seen in a while.

Joshua Tomolak:

Sure. That’s the whole iceberg. Not a lot of people are talking about it. It’s not poking out of the ocean, but it’s going to be continuously brought up. I think it’s a question that a lot of advisors are going to have to ask these firms. And at the end of the day, the firms aren’t the bad guys. They have to make money too to provide a quality product. So where the money comes from matters.

Louis Diamond:

Exactly. Josh, this has been awesome. I learned a lot talking with you and just having your objective consulting hat on what I think are really the differences between IBD and RIA and some of the key trends and storylines to watch has been instrumental. I’ll also give a plug that on our website and we’ll link to it in the show notes, we have a really helpful one-page reference guide going through the differences between independent BDs or IBDs and RIAs. So feel free to click on it. We’ll make sure it gets in your inbox. Josh, thanks again for joining us today.

Joshua Tomolak:

Yeah, thanks for having me, Louis. It was a pleasure.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

IBD vs. RIA: A Special Industry Update on Independence

A conversation with Louis Diamond and Josh Tomolak, Vice President of Independent Advisor Services at Diamond Consultants.     

Louis Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is IBD vs. RIA: A Special Industry Update on Independence. It’s a conversation with Josh Tomolak, our Vice President of Independent Advisor Services. I’m Louis Diamond, and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at (908) 879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent. Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Louis Diamond:

For a long time, going independent would suggest the destination. Today, it’s often the beginning of a different conversation. As the independent space has matured, advisors have more choices than ever before. Broker-dealers have expanded their capabilities. The RIA ecosystem has become increasingly sophisticated. Capital is more readily available and support models now exist that would’ve been difficult to imagine a decade ago. The result is that many advisors who are already independent are taking a fresh look at whether their current affiliation still aligns with what they’re trying to build. My guest is Josh Tomolak, Vice President of Independent Advisor Services here at Diamond Consultants and our resident expert on independence. Josh spends his days helping advisors evaluate independence in all its forms from independent broker dealers, the fully independent RIAs and everything in between. And his knowledge is critical because the distinction between these models is often blurred.

Many broker dealers now offer pathways to greater autonomy while supported independence has made RIA ownership more accessible than ever before. So the question is no longer simply, “Do I want to go independent?” The question is, “What kind of independence makes the most sense for client, business, and goals?” Josh shares what he’s seeing across the landscape, the misconceptions that continue to shape advisor thinking and the factors that matter most when evaluating the next chapter of an independent business. There’s a lot to discuss, so let’s get to it.

Josh, thanks for joining me today.

Joshua Tomolak:

Thanks for having me, Louis. It’s a real privilege to have come. This is a full circle moment for me going from being a student of your podcast, to working alongside you, to being a guest. So I appreciate you having me.

Louis Diamond:

Amazing. I’m excited for this one too, because you have a fresh and in the weeds perspective that a lot of our guests simply don’t have. So why don’t you start off, you spend your time helping advisors evaluate independence every day. So working with advisors who are already independent, for the most part. And to me, it feels like the independent space has really evolved dramatically over the last decade. I mean, this podcast is really the epicenter of that to prove that out, but give us a little background on your past roles in the space and then we can get into what you’re seeing right now.

Joshua Tomolak:

Yeah, I’d be happy to. So I took a very non-traditional path into wealth management. I spent a decade as a deep sea Navy diver, and upon completing my service there, I ended up working for TD Ameritrade. And in my role there, I spent about six years doing nothing but helping financial advisors explore the RIA space, whether that was to join or partner with an RIA, sell to an RIA, or in most cases, launch their own RIA. And one of the things that I ultimately came to terms with is it’s just not the right model for everybody. While I’m a huge advocate for it, we would often lose business to the major broker-dealers of the world. And at the time, I really didn’t understand why. In the last six years at Diamond Consultants has been a very interesting purview into what a lot of the broker-dealers have done and are doing to make themselves more RIA-ish and be very compelling to the right advisor.

Louis Diamond:

Perfect framing. Your background is incredibly germane to the folks you work with. So let’s start off with the softball here. What are you seeing right now?

Joshua Tomolak:

It’s not so different than the rest of the industry, the wirehouses, the regional firms, things of that nature, that if you took 10 firms, they’re all likely to go different directions, even if they were identical practices. That could be… A third would go from an independent broker-dealer to another independent broker-dealer. Certainly the supported RIA space is growing every day and has created a lot of very fun and unique solutions for advisors, very customized and curated. And then I think there’s still a lot of really great sophisticated teams and individual contributors that are making the decision to go hyper entrepreneurial and launch their own individual RIA. So the movement’s really all over the board from my perspective.

Louis Diamond:

It does feel like it’s no longer independence is an alternative option or it’s on the fringes. It’s very front and center whether for breakaways, which is a big topic on our podcast, but in general, the infrastructure has become much, much more sophisticated today than ever before. Advisors have way more tools in their toolbox to serve clients, whether in the private markets or through technology. And it’s no longer that if an advisor’s independent, they’re in the minor leagues where they don’t have the same ability to serve clients like they did if they’re at a big bank or a private bank or a wirehouse. Do you agree?

Joshua Tomolak:

I absolutely agree. And I’m reminded of a question I got one time from a great team that I worked with in New York. They asked me, “Are there really more options than ever before? Because all we see is one firm selling to another.” And I think that’s a really great point. There’s far less broker dealers on the street than there were even five years ago. But for every Commonwealth, for example, that sells to an LPL, up pops three or four really cool private equity-backed, sophisticated RIA platform firms that are built to service their own unique advisor base.

Louis Diamond:

I think that’s right. Sitting on the sidelines, sitting on top of everything going on in the industry, I feel like capital is always an interesting topic forever. If an advisor wanted to move within the independent world or break away from a big firm to go independent, the only way to get capital was to go to an independent broker dealer. So we still see that, but I feel like today between all these minority acquisition opportunities, we’re seeing firms acquire practices at time of transition, which is somewhat new. There’s debt solutions, recruiting deals are way up for firms that are paying forgivable loans. RIAs now would, in some cases, will pay a forgivable note. What are you seeing there as far as the availability of capital and just deals in general?

Joshua Tomolak:

It’s a great question and I didn’t want to take the low-hanging fruit, but capital’s been a huge innovation, I guess, in the last five years I’d say. Just to give you rough quotes, please don’t hold me to it, but traditional transition broker-dealer deals were five years ago, 40 to 60% of Trailing Twelve revenue today are somewhere between 90 and 120%, sometimes north of that for the right team. That’s really meaningful money for the team that is thinking about foregoing a wirehouse deal, for example. I’d also say a lot of these firms are getting hyper-creative in how they solve for capital. The minority investment piece that you mentioned is very interesting. We’re seeing a lot of privatized forgivable notes in the RIA space where third-party or private lenders are basically lending the money and the RIA is making the payments on that forgivable note as long as the advisor is affiliated with them.

So there’s been a recognition among the RIA space to get away from the, “Oh, they just took a check” type of mantra, and to say, “Look, I understand there are capital needs. These people are taking a risk. We need to solve for that.” So we’ve seen a lot of that in the marketplace.

Louis Diamond:

Very interesting. I think another thing financially, and then we’ll keep the train moving, that I know I’ve seen, and maybe you can weigh in if you’ve seen the same, is the cost to an advisor or a business owner to join an independent BD or to join an RIA has come way down, probably in part because of Schwab going to zero on trading. That’s been a catalyst. But it feels like we used to say independent BDs were expensive relative to the RIA world. And in some cases, they certainly could be. And if you’re at scale, maybe you can pick up a point or two being in the RIA world versus a BD. But when you have some of these BDs that have a basis point admin fee or no admin fee at a certain size and the payouts I feel like are similar, maybe have gone up a little bit, but it’s more so like the administrator fees, the platform fees, the program fees.

Anyone who’s not in that world, it’s like, “What are you talking about?” But basically the way that these broker-dealers make money, it seems like there’s been a pretty big differential in the exchange of value where advisors now get more services, better technology, get more money to join them and get it at a lower cost. Do you agree?

Joshua Tomolak:

I absolutely agree. I think that maybe that’s one of the larger changes that we’ve seen, and it’s probably one of the benefits from a lot of the industry consolidation on that independent broker-dealer side. The economies of scale of these folks have allowed them to increase their tech spend, increase their service capacities all while offering it to the advisors at a cheaper price. And when I was at TD Ameritrade, one of the biggest pitches was the idea of a 100% payout and you control the fixed expenses, your technology compliance, et cetera. But what’s changed is that broker-dealers are pretty darn comparable on the expenses. All of those admin fees and things you mentioned will still exist, but they’re on a much smaller scale. And I think the question a lot of advisors are asking is, “Am I getting congruent value from my broker-dealer for what I pay for?” And while that answer might’ve been no a couple years ago, today the answer is more often yes.

Louis Diamond:

Yeah, I would agree. A lot of times we work with advisors who are starting an RIA or affiliating with an RIA or going to a BD and they see how big the deals are in the independent BD world and the payouts are really high and the fees are relatively low. And honestly, it is a hard decision or calculus to make, like, “How does it make sense for me to turn down this extremely lucrative deal when my ongoing economics are going to be somewhat similar in the BD world versus in the RIA space?” I think it’s just an interesting dynamic and we’ll get more into that distinction. One of the stars of the show right here is we’ve seen a ton of advisor movement across the industry. Our annual advisor transition report said that in 2025, over 11,000 experienced advisors changed firms, which is a large number.

A lot of those numbers are within the independent world. So advisors who are 1099 through a BD or through an RIA transitioning to another platform or organization or starting an RIA. So why do you think we’re seeing so many advisors reconsider their current firm or their platform or their broker-dealer today than in years past?

Joshua Tomolak:

It’s a jarring number. 11,000 is definitely a significant amount of advisor movements. To me, it comes down to a few things, but I will say that it’s almost always a conglomeration of pushes and pulls. Pushes being inherent frustrations with your status quo, pulls being the new sexy, shiny things that you see in the marketplace that could be really impactful for your business. To me, it typically comes down to one of three things, at least on the push front, that drives advisors to movement. Service being number one, technology being number two, and economics being number three. And if we were just going to unpack those, I think service being, “Can you call somebody that knows your business, that knows your name? Are you getting the correct answers? Are you being pushed through a phone tree? And even if you’re not doing it, is it taking up a meaningful amount of time of your staff’s free time?”

On the technology front, there’s very significant tech spends happening in the industry right now. I think Raymond James and LPL reported, for example, they spent 500 million in 2025 on a tech spend. So advisors are going to the places that are making their life easier. People are looking for a mechanism to really scale their business without having to add staff and a lot of expenses to the bottom line. And technology is just the fastest, most efficient way to do that most times. And then economics, certainly a lot of advisors and teams have built phenomenal businesses and they’ve made a great living without really stressing out about the economics. And they eventually get to a point in their business where what they were giving up as a million dollar producer is far different than what they’re giving up as a $4 million producer. And back to the congruent value, it perhaps stops to make as much sense.

Louis Diamond:

Well said. I always say when the cost-to-value ratio is out of whack, that’s when advisors sit up and take notice. And not to name names of firms, but there definitely are firms that are more expensive. And even if you look at how much a wirehouse or a Ed Jones advisor paid their firm, it’s like, “What got me here is not necessarily what’s going to get me there.” And while the name on the business card, the resources were incredibly impactful, and I’m so grateful for what my firm, my broker-dealer did for me when I was just starting or when I was smaller. Now the business is bigger, I rely upon different resources or I don’t need the firm as much. So I’d rather plow the cost savings either into income for myself or invest it in areas that are most germane to my business. And it’s usually when that kind of light bulb moment goes off, that’s one of the major pushes that cause advisors to evaluate other options.

So I agree with you, those are the major push factors, but then what are the pull factors? What are the major advancements or changes across the independent space that’s causing advisors to say, “Hey, okay, I might have some frustrations, but at the same time, I also need to find something that’s more than marginally better than the firm I’m at. Otherwise, why am I going to go through the hassle, take the risk, et cetera? So what are some of the pull factors that advisors are latching onto today?

Joshua Tomolak:

Sure. And I might say with one final push factor, there’s a straw that breaks the proverbial camel’s back when you’ve been told for however many years that this change or that change is coming down the pipeline and it never happens. And it translates well into the pull factors is do they do what they say they’re going to do? The talking points really for the pull factors are exactly the same. So the counterpoint to service is perhaps having a direct relationship with the chief compliance officer at a firm or having a dedicated service representative that knows their stuff inside and out and can get you the answer even if they don’t know it off the top of their head. Having the technology to rebalance a household in two clicks instead of two hours. In economics, I think it’s really a transparency of economics. We’ve both worked with some really significant firms that have looked at their P&Ls and said, “where the heck is the money going?”

And we’ve looked at the same P&Ls and said, “I have no idea,” because it’s so convoluted. People are happy to pay for good service, good technology, good products, but they just want to know where the money’s coming from. So I think it’s a yin and yang. The same things that they’re the push are often the pull.

Louis Diamond:

Definitely. I’ll give you a couple other from my perspective. I’ll say first specific to the independent BD world, and then we’ll dive into the RIA, I think it’s a little bit different. But I think some other will say innovations or changes that are causing advisors to really perk up and listen and really make the case to themselves that life will be better at this new organization than the status quo or staying put. We’ve seen major advancements in transition support, whether it’s being able to do a transition without a shred of paper, being able to… I mean, we’ve seen some independent advisors move their entire book within two weeks, which never would’ve happened before. So the firms that I’d say are playing offense, the larger firms that are winning, they have insane headcount around transitions and are always investing in technology, whether now on the AI front or in general.

And we’ve seen transitions, they’re never easy. So that’s not a comment to say it’s easy, but a lot of the friction, a lot of the manual work has been taken away, which is massive. You definitely mentioned the significant technology spend. I mean, just the innovations going on across the industry. There’s definitely some firms that are laggards on technology and others that are light years ahead, whether because their tech is more integrated or they’ve built out their platform to be more, we’ll say modular, to plug in different third-party softwares where an advisor can really customize and create their own tech stack. I think there’s been some changes on compliance. It used to be if you’re at an independent BD, you had to be the OSJ by yourself or you had to roll up under an OSJ. But now most BDs offer home office supervision, so a big friction or pain point is taken away.

And then I’ll give you a bridge to talk about what we’re seeing on the RIA side. But we’ve also seen, I would say, a real blurring of the lines between what you would traditionally think of as an independent broker dealer versus what was an RIA. So whether it’s an internal pathway where it’s like, “Start off on our independent BD platform, get the big deal, get the support, but then you can ditch that and just use this as a custodian or you can sell the business to us when you want to retire and convert to W2.” So in that vein, transitioning internally to an RIA, give me the same points like, “What are the major advancements or changes you’re seeing on the RIA side today?”

Joshua Tomolak:

I love that you said that because it’s been one of the most interesting changes to watch. Independent broker dealers becoming more like RIAs, and to your point, being more flexible, having more optionality, a more curated experience in some cases. And in many cases becoming closer to independent broker dealers with some of these massive shops that we’ve seen be created over the last five years that now have hundreds, if not thousands of advisors. To your question on the internal RIA slide as we sometimes call it, this really didn’t exist many places a few years ago. And I think it’s been created as both originally a retention tool in many places for the advisors that were with a major independent broker dealer and they ultimately wanted to have their own ADV and their own RIA. And the firm didn’t want to lose all the assets to an independent custodian so they gave them the green light to…

And it’s ultimately became a sales tool in many cases. Just to use a couple of examples across the industry, I mean, Raymond James has Raymond James Custody Services, which has attracted a lot of really sophisticated teams. I know Wells Fargo Finance done something similar and even the counterparts over at Cetera and Osaic are trying to do the same thing. So it’s a recognition in my view that we want to keep the best talent possible. And if these folks are ultimately going to go RIA anyway, it’s less about the money and more about the flexibility and control that it offers them. So what can we do to keep those folks on board? And rightfully so, a lot of senior management of these firms have said, “Let’s not lose these teams. It’s going to be a lower margin business for us, but at the rate that they’re growing, it’s going to pay off in the long run.”

Louis Diamond:

Well said.

RIAs are now more mainstream. And some of these RIAs, they’re either resembling independent BDs or I would even go so far to say the valuations that are even publicly available on some RIAs is definitely having people take notice. I mean, Cerity Partners recently raised capital at an over $8 billion reported valuation. Crescent was well over a billion. Firms like Mariner, Creative Planning, Mercer, Wealth Enhancement Group, and there’s many that I’m missing, are all worth a couple billion dollars or more and growing. Do you think that’s had an impact on the legitimacy or the staying power of the RIA model?

Joshua Tomolak:

Oh, absolutely. There’s no doubt about it. I mean, those groups that you mentioned and many more are winning some of the biggest teams on the street. I mean, if you pull up a run-of-the-mill advisor hub article, for example, you’ll see as many of those RIAs win significant businesses as you will their broker-dealer counterparts, partially in my opinion, due to the massive valuations these firms are fetching. And it’s much more of a partnership in the sense that joining a Crescent or a Wealth Enhancement Group, as you mentioned, you’re a part of a boutique group of maybe a couple of hundred very sophisticated high-producing advisors all playing under the same banner, all rowing in the same direction, and that creates substantial growth.

Louis Diamond:

Exactly right. I think two other things to me that’s driving the legitimacy or the growth of the RIA segment, there’s so many different outsourcing solutions that have popped up, whether it’s more of a… We’ll say a bundled or a package outsourcing solution through firms like Dynasty and Sanctuary. LPL has done a ton with having a shared services outsourcing model. So you have those. But you also have, I mean, probably 10 different firms I could think of that can be an outsourced chief compliance officer. You have tons of marketing agencies that specialize in helping RIAs. You have all these FinTechs popping up to support the RIA space. Really, it’s like anything and everything can be outsourced now. And even the big Wall Street banks like UBS, Merrill, et cetera, they’re attempting to sell and distribute product into the RIA space. Venture funds, private equity funds, anyone you talk to is trying to get a piece of the RIA space, which means there’s more product and platform availability than ever before.

And I think it’s massive because one, it’s a catalyst for teams who say, “I love everything about the RIA world. I just don’t want to do it on my own,” or, “I don’t know where to start.” But also it means that they can look their clients in the eye and say, “Hey, not only do I have the same stuff that I had for you at XYZ firm, I can actually do more for you.” And even if you look at what the custodians are doing on the lending side now, Schwab owning a bank is massive and being able to facilitate mortgages, securities-backed loans, things that didn’t really exist in the past. I think it’s a very exciting time for advisors either that are independent or are considering the independent space because you have all these choices and it’s really like, “Choose your own adventure. Give me your top five things you want.” I’m sure it exists and we can find it and make it happen. And I don’t think we’d have the same confidence in that statement 5, 7, 10 years ago.

Joshua Tomolak:

I couldn’t agree more. That’s such a huge development is the marketplace of third party vendors in any kind of capitalism environment. There’s problems that people encounter and there’s really smart people that are trying to make a lot of money that go to market to solve them. And we’ve seen a ton of that over the last few years.

Louis Diamond:

Exactly right. Yeah, it’s like also… If an advisor looks around and says, “Hey, this is what I want,” and it doesn’t exist, oftentimes that’s a light bulb moment to be like, “Okay, I’ll go build it. I’ll do it on my own.” Whether it was Stewart Partners when they launched a number of years ago or Hightower, Dynasty, et cetera. They were all started by people that said, “Hey, I see a big gap in the ecosystem. Let’s create a business and raise capital to go solve it and then deliver this service to other like-minded advisors or business owners.” Honestly, it’s a treat to be able to watch all this happen in real time. We probably should have laid the groundwork with this next question, but I think it’s an important one. What’s the difference between a independent broker-dealer and an RIA? Really basic foundational. It sounds like the lines are blurred. There’s probably a lot of similarities. Advisors are successful in both. It’s not like one’s better than the other. How would you explain the differences, if a client of ours asked, “What’s the difference between an independent broker-dealer and IBD versus an RIA”?

Joshua Tomolak:

Get into the core of it. Again, the lines are blurred, and I’ll stay very high level on the strategic differences, but I like to use this example. I drive a Toyota Tundra. Really like the truck, gets me from A to B. Now, if I were getting to a point where I wanted a new vehicle, if I were to go get another Toyota Tundra because I really like a lot of aspects of it, but I want the one with the bigger screen and the bigger tires and the power seats, and I have rolled down windows because I have a fear of drowning. But if I want a lot of the bells and whistles, but I want to keep the foundation, that’s what I align to a independent broker-dealer to independent broker-dealer. You like the foundation of everything all under one roof. You like a lot of the resources, but you have some meaningful frustrations and you want to see if another provider in the market can solve for those or you can upgrade.

If I instead, Louis, decided that I wanted a sports car or a Jeep Wrangler or something, I would be looking at a different category altogether. That’s how I articulate the platform space. They provide the same services and support in many cases that an independent broker-dealer does, think of marketing and a tech stack and regulatory oversight and a fellowship in a community, but they’re built on an RIA TC registered chassis. They’re typically far more customized so you can shop the street to get a lot more of the things that you like, though you are walking away from maybe some of the things that you’ve liked in the independent broker-dealer model. So I guess that’s the highest level I might explain it, just a little bit more minutia in any broker-dealer is going to be a FINRA registered, FINRA member broker-dealer. So they’re subject to the FINRA rules, which basically means it’s the compliance interpretation of those rules that they have to follow. So LPL’s rules may be slightly different than Cetera’s than Ameriprise’s because it’s based on their interpretations of the rules.

In the RIA space, everybody really operates on the fiduciary standard. So it’s just a different lens that from a compliance standpoint, business is looked at. And a lot of people would make the argument that it’s just easier to get things done when you’re looking at something from that lens. I might’ve gone too compliance nerd on you there, but I’d be curious what you think some of the major differences are.

Louis Diamond:

Yeah, I think that’s right. I mean, it sounds like if you’re in the RIA world in some capacity that you as the advisor or business owner are going to have a little bit more control and autonomy and flexibility. One, do you think that’s true? And what are the reasons why that is? Is it platform? Is it strictly just compliance is easier? What are the different ways that an RIA would have more or less flexibility than someone who’s with an independent BD?

Joshua Tomolak:

Yeah, I think it’s overwhelmingly true, but it certainly depends on your business. Within most RIA platforms, you’re going to be one of a couple dozen, maybe a couple hundred, where you’re going to have people within that firm that really know your business. So the experience in getting things done is much less about, “Can I do this,” or, “Can I not do this?” And it’s, “Louis, I understand you asked for this. We’re going to run into these issues, but let’s figure out how to get to yes.” So it’s far more curated by people that are not operating on black and white rules and can actually figure out how to get to yes for your business. The other thing I would say is that most significant RIA platforms have multiple custodial options. So many times you’ll see as few as two or as many as five. So if an advisor or a team is trying to bring on a new piece of business or do something creative, that might be something they can use a different custodial relationship to accomplish.

It might be something that Goldman Sachs does really well but is in its infancy at Fidelity, or it might be international business that’s approved on Pershing’s platform but not Schwab’s platform. So the RIA partner that you’re with can really look at those custodians agnostically and say, “What’s the best home for this business? What’s the best way to get this done for Louis?” There’s a couple examples of where I see the flexibility in practice.

Louis Diamond:

Yeah, I think one more too would be the concept of being able to shop the street. I’ve heard it described as becoming a buy-side advocate for your clients versus being a professional seller. So meaning, if I’m affiliated with an RIA or I’m operating my own RIA, there’s no selling away like there is at a wirehouse or at certain BDs. So if I have a client who’s trying to get a $10 million loan for a new building that they’re breaking ground on, if I’m at UBS, Merrill, Morgan Stanley, captive to a BD, I can go to my firm and say, “Hey, this $10 million loan, here it is. What are the terms? What are the rates? Will you take on this business?” And the firm will say, “Yes. No. Yes, here are the terms. Here’s the caveats, et cetera.” But it’s a very closed market process and an advisor has to live and die by what their firm says.

Versus in the RIA world, it’s, “Okay, I have relationships with nine different banks and I can go to these different banks and private credit funds and whoever and really create either an option process for my client or really just help them in a fully agnostic open way.” And we see the same thing when it comes to alternative investments. No one at a wirehouse, let’s say, is complaining that they don’t have enough alts that they can offer clients. Those firms have done an amazing job with really boiling the ocean and having tons and tons of options for private investments, hedge funds, et cetera. But if you’re in the RIA world, you can take it to the next level and say, “Hey, this $3 million startup company that my friend is starting, I’m going to help them raise capital,” or, “My client wants to get a syndicate of investors together to have a direct investment into a qualified opportunity zone fund that they’re starting. Let’s do it when we can advise on it.”

So it really expands what an advisor is able to do on behalf of clients. Like to me, that’s the most interesting or exciting part of the RIA model. You can get some of that within the BD world, but to me, when an advisor’s business becomes more sophisticated as far as what their end client’s needs are, it tends to translate better to the RIA world than the BD world. Not to say there aren’t ultra-high net worth focused advisors at BDs, but because of that additional flexibility, autonomy, customization, et cetera, that speaks more RIA. So again, absolutely not down at all on the independent BDs because I think there’s a massive home for them. Josh, let me turn it back to you. I’m rambling now. Give me the pitch for an independent BD. What are the things that are misperceptions that people have? What are the advantages that an independent broker dealer like an LPL or a RayJ or a Cetera have over RIAs or over other models in general?

Joshua Tomolak:

Absolutely. And I’d say I’ve learned more over the last six years from some of your ramblings than most people learn in an MBA course, so keep doing what you’re doing. But it’s funny being in this position now, having spent so much time sort of selling against the IBD model within TD Ameritrade, but what I’ve learned is it’s a good home for everybody. And a lot of times the advisors that they’re entrepreneurial enough where they like having their name on the door, but they’re not so entrepreneurial where they want to build everything out themselves, that’s where the independent broker dealers absolutely kill it. Their economics have gotten to a point where they’re really competitive. They offer transition capital that isn’t even going to be comparable in the RIA space unless you’re selling a minority share of your business. And you mentioned LPL, or we could really list all of the major ones, there’s not a department that they don’t have.

It could be as nuance as finding 403(b) payroll slots or it could be as mainstream as fixed income or setting up events. There are all kinds of really neat departments that these all under one roof independent broker dealers have invested in. And a lot of times they make an effort to make you very much aware of all of the support because most people don’t use it. So I would say for the advisors that are looking to get their improved Toyota Tundra, then you can get probably 70 or 80% of what you want within the independent broker-dealer world. And you can also keep 20 or 30% of the stuff, maybe more that you really liked at your previous firm. So I think that’s where it really shines. I sometimes call it an incremental change rather than a transformational change. But for many advisors, incremental is really good enough if you get to keep the familiarity of how you’ve been doing business for the last 20-some years, but you’re able to get net improvement on the things that were really bothering you.

Louis Diamond:

Well said. Something that I’ve seen that’s been… I guess this could be either pro or con depending upon the advisor, but with some broker dealers, letting an advisor co-brand with them or really having a real consumer-facing brand, whether it’s, “I’m a franchise owner with Ameriprise,” or, “I’m independent through Raymond James,” or, “Running my own practice through Wells Fargo FiNet,” or, “I’m independent with Northwestern Mutual.” There’s definitely some brand cache or brand familiarity with some of those firms that may or may not be the same if you’re in the RIA world. So I would agree there’s a lot to like about the independent BD world and there’s a fit for people that is absolutely better with independent BDs than on the RIA side. Even if some people would say RIA is better, we’re cleaner, I wouldn’t say that. To me, it’s all about what an advisor’s goals are and then matching that up with what these firms do.

And there’s never a perfect option. I jokingly say, “If there was a perfect firm, we wouldn’t be in business.” Every firm has their advantages or disadvantages. And depending upon where an advisor’s coming from, their style of business, their pain points, that’ll match up really well with on firm or one type of firm or one model than the other.

Let’s pivot a little bit to the RIA world. A lot of your comments have been more about advisors affiliating or joining RIAs, this whole supportive version of independence concept. But what about advisors who want to go and start their own RIA? Either they’re leaving a captive firm and taking the entrepreneurial route and starting their own firm, or they’re leaving an independent BD to go start their own RIA. What do you see as some of the biggest misconceptions that advisors have about that move?

Joshua Tomolak:

That’s probably my favorite topic because there are the most misconceptions I think in this space.

Louis Diamond:

I’d agree.

Joshua Tomolak:

And I would say there’s 9 out of 10 conversations that I have with advisors and teams, they start off with the launching an RIA in mind or at least RIA curious and they want to understand what’s out there. And probably less than half the time do these folks end up actually launching their own RIA, which is okay because the ones that do are massively successful and they know they’re dang sure that’s exactly what they want to do. I think it gets a little bit romanticized sometimes that they’ll say, “Oh, I’ll just give Schwab a call,” or, “I’ll just give the custodian a call,” as if they were shopping independent broker dealers. That’s fine. You can do that and they will help you, but there’s quite a bit more to think about. And it’s not, in my opinion, the same as evaluating independent broker dealers.

If it’s all right, I was taught the four pillars of the RIA model. I can go through that with you really quickly. So the way to think about the RIA space is in four pieces. And shout out to a friend, Eli Suarez, that taught me this years ago. The first pillar… Thinking of four pillars on a bar stool, if you will. The first one being administration. And this is your compliance, this is setting up your ADV, your LLC, all of your business formation documents. The second piece being technology, what do you actually want to use? Because the benefits of the broker-dealer world and the supported independent world is they’ve already built it for you. They’ve already paid for it and scraped their knees building it. In this case, you have to. And for some people, that’s really exciting to source financial planning software and portfolio management software and your CRM and tax software, et cetera. For some people, it just sounds like a huge headache.

The third pillar being custodians. I have them third because you want to make sure that the right custodian can integrate properly with the technology that you’ve sourced that you’re passionate about. And then ultimately transition. What does a transition really look like? What are my legal and regulatory requirements? How does this work? What are the timelines? Things of that nature. So I guess I would say in closing that if those four things are things that you really want to own, then you’re in a really good position to consider an RIA launch. What do you think, Louis?

Louis Diamond:

I think that’s a great framework to break it down. Not just be like, “Okay, I can tolerate that,” or, “My team can do it,” but I think you have to be pretty excited about rolling up your sleeves and customizing and doing it yourself because in our experience, there’s a nominal differential between the economics of running your own RIA versus affiliating with an RIA or going to an independent BD. All the extra work and responsibility, you’re not really going to make it up, at least on the front end, on a higher net payout. So it has to be more about what the model means to you and having a vision that you don’t think anyone else can accomplish other than yourself.

And looking at that crazy ever-expanding Michael Kitces’ FinTech map and there’s 500 different logos on it and being like, “Yes, that’s what I want. I want to go through this. I want to pick the seven pieces of my tech stack that work for me,” rather than getting, “Here’s the tech stack, take a demo, you like it, you don’t like it, take it or leave it.” To me, the two biggest misconceptions people have about the RIA world is one, “I’m going to have to be a full-time chief compliance officer,” and just that compliance is this boogeyman, this terrible, scary thing. In some ways it is. But the reality is most, especially startup RIAs will fully outsource compliance to a firm or they’ll hire a compliance consultant or firms that are big enough even will hire a CCO or repurpose someone on their team to be CCO. But compliance is much more streamlined and simpler than BD compliance. And ultimately, it’s compliance that’s being built for your business rather than compliance that’s being built for a publicly traded multinational company that supports 20,000 financial advisors.

So I think compliance is always a big misconception. It’s definitely what a lot of firms will pry upon when they’re saying like, “Oh, you’re going to own all the legal and regulatory requirements. You could, but it’s definitely not a requirement.” And then I think another one is folks sometimes underestimate and overestimate the operational burden and how much work it is to start an RIA. Sometimes people just… They’re perfect for the RIA world, that’s their goal, but they get stopped in their tracks. They don’t really know what to do. But what we’ve seen, we said it earlier with so many different outsourcing solutions and different service providers that have popped up, if you have the fire in your belly to go build something, it doesn’t mean you’re doing it by yourself. I mean, that’s what firms like ours do. The custodians are very helpful. On the flip side though, I have seen advisors chasing payouts say, “Hey, I’m just going to go start an RIA because I want to make another 1 to 3%,” or whatever it comes to and they drastically underestimate what it really takes to build a successful firm.

Joshua Tomolak:

Exactly right. I think that’s my favorite one, Louis, overestimating and estimating the operational burden there is you could have the same conversation with two teams and it can go the completely different direction.

Louis Diamond:

Josh, let’s wrap here. I got one more question for you that I think is an exciting one, but give me three key trends or storylines that most people don’t know about or aren’t talking about that you’re passionate about or that you’re sharing with advisors or counseling today.

Joshua Tomolak:

Sure. This is the free advice portion. And I’ll tell you what, Louis, if it’s all right with you, I’ll give you two and I would love to hear one from you as well. The first one I’ve seen in both the independent broker-dealer and RIA space is the minority investor concept. A lot of folks will talk about the idea of taking chips off a table and starting to partially monetize your business. I think that’s all important, but what I’ve found is that a lot of advisors really want their partner, whether it’s an RIA broker dealer to help them grow. And that could be with M&A opportunities, that could be with traditional recruitment of advisors, that could be building a business plan. But the minority investment part really helps accelerate that for a lot of businesses because all of a sudden, not only are you cashing out a small part of your business, but you’ve just created an ally with the parent entity, it is now much more likely to help you grow in that capacity because they’re insulated from it and they profit when you profit.

So I think it’s easy to be shortsighted and say, “Well, my equity’s going to keep growing. Why would I sell you a piece of this?” But I counsel folks often to really think about what that long-term strategic partnership is and making somebody a real equity partner rather than just a vendor that provides you with technology and regulatory coverage. The other one I’d say is that… And this one’s really important to me, that business formation is far more important than your assets under management. Said a different way, the way you build your business is going to make your business far more valuable than the number of dollars underneath your name. And what I mean by that is, just to use an example, a sophisticated, well-built, centralized, scalable and repeatable business, whether it’s an RIA with a broker-dealer that is going to fetch a far higher M&A multiple than a OSJ that’s five times the size that just has a bunch of 1099 independent advisors underneath the umbrella.

What we’ve seen in the M&A space is that if you’re going to shell out 50, 60, $80 million for somebody’s business, you want to know that you have this business for the long term. So I would certainly counsel people that have been around maybe far longer than me to take a look at how you’re building this and put together a business plan on what those next 10 years should look like and not necessarily fall into the trap where your only revenue source is the override that you receive from a firm and then you in turn pay to the advisors on your team.

Louis Diamond:

Well said. I really like that line. We’d probably do a whole episode on what are the tips and tricks for building a business with the end in mind? Like the Covey quote, “Begin with the end in mind.” Transitions are like… They’re a bear. I mean, there’s no way to sugarcoat it. Advisors, when they hear transition, if you ask them, “Don’t think about it, give me your reaction.” “Terrible, risky, a lot of work. I’ll never do it again. My friend did it and it was terrible. What if my clients don’t come?” It’s all these negative emotions. And in many cases, I don’t blame an advisor because it is a big act. But to me, if someone is weighing making a transition, whether a wholesale business model change going from being an employee to being independent, going from being an advisor at an independent BD to starting an RIA, or even going independent BD to independent BD, it’s an opportunity if you rise to the occasion to build with this next act with intentionality.

So whether it’s restructuring compensation for your team, converting people from 1099 to W2, putting in place new workflows, changing how investments, instead of it being each individual advisor doing investments to more of a centralized model, cleaning up workflows, really investing in data, investing in AI. It’s something that I think, again, we can have a whole episode on it, but I think it’s a great one. Build the business the right way. And obviously, businesses that are larger, theoretically, sell for more, but we’ve certainly seen businesses that are half the size of a larger one sell for a similar amount or more because they did all the right things and the larger one did the things that really turn off a buyer or detract from a valuation. Let me give you one more and tell me if you agree, but I think we’re in this moment when Altruist, the upstart, a new kid on the block custodian, they launched a basically tokenization of cash in a way to automatically agentically source or sort cash to the highest yielding money market.

And you’re like, “This is fricking wonky. Louis, why are you telling us this?” I think this is an important one just to keep a watchful eye on. I have no idea how this is going to shake out, but really the biggest way that independent BDs or even custodians like Schwab and Fidelity really make money, it’s not on their overrides from practices or the admin fee or the custody fee. It’s really on net interest margin. So how much the broker-dealer or the firm is making on client cash and brokerage accounts relative to what they’re paying out the client. It’s essentially like free margin to these firms. And this concept, I think, has massive potential for disruption for the business model. Again, I don’t know what it’s going to look like, whether it means platform fees that are instituted at all these firms, whether it means certain models would be more beneficial than others, whether it means nothing’s going to change, which is probably the right answer given this industry.

But it’s something to keep a watchful eye on just if your firm institutes a new platform fee or there’s a fundamental way in which your firm can no longer make money. How are they going to make it up? Are they now going to be uncompetitive? They’re not going to have as much scale or profits to invest in the platform. Is it going to cause even more consolidation in the industry? So to me, that’s the one pretty under the radar, pretty wonky storyline that I don’t think enough people are talking about, but has the biggest possibility for disruption across their space than anything I’ve seen in a while.

Joshua Tomolak:

Sure. That’s the whole iceberg. Not a lot of people are talking about it. It’s not poking out of the ocean, but it’s going to be continuously brought up. I think it’s a question that a lot of advisors are going to have to ask these firms. And at the end of the day, the firms aren’t the bad guys. They have to make money too to provide a quality product. So where the money comes from matters.

Louis Diamond:

Exactly. Josh, this has been awesome. I learned a lot talking with you and just having your objective consulting hat on what I think are really the differences between IBD and RIA and some of the key trends and storylines to watch has been instrumental. I’ll also give a plug that on our website and we’ll link to it in the show notes, we have a really helpful one-page reference guide going through the differences between independent BDs or IBDs and RIAs. So feel free to click on it. We’ll make sure it gets in your inbox. Josh, thanks again for joining us today.

Joshua Tomolak:

Yeah, thanks for having me, Louis. It was a pleasure.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibilities seriously and are dedicated to your clients. But are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery is designed to help you ask the right questions and think critically and objectively whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

Matt Kilgroe — President & CEO, Cyndeo Wealth Partners

Matt Kilgroe shares how Cyndeo Wealth Partners grew from a newly launched $1.2B RIA to a $3.5B enterprise, and why the next challenge isn’t independence, but building a firm capable of reaching $25B. 

In Summary

Five years after launching Cyndeo Wealth Partners from UBS, Matt Kilgroe returns to the podcast to discuss what happens after independence. Rather than focusing on the transition itself, Louis and Matt explore the next phase of growth: scaling an advisory business, attracting talent, developing niche expertise, taking on outside capital, and building an enterprise designed to last. Along the way, Matt shares how Cyndeo expanded from $1.2B to $3.5B, why serving professional athletes required a different business model, and what led the firm to partner with Rise Growth Partners as it looks toward a $25B future. 

The Storyline

For many advisors, independence is viewed as the finish line.

For Matt Kilgroe, it became the starting point.

When Cyndeo Wealth Partners launched in 2020, the goal wasn’t simply to leave the wirehouse behind. It was to build a business with the flexibility to grow in ways that simply weren’t possible before.

Five years later, that vision has evolved into something much larger. Cyndeo has nearly tripled in size, expanded its niche serving professional athletes and entertainers, recruited advisors, added specialized operational talent, and recently welcomed Rise Growth Partners as a minority investor to help accelerate its next phase of growth.

The conversation explores what changes when firm leaders stop thinking like advisors managing successful practices and begin thinking like CEOs building enduring enterprises. The discussion spans succession planning, capital strategy, recruiting, organizational design, and the mindset required to scale from billions to tens of billions—all while remaining focused on clients and culture. 

Topics Covered

• Building an enterprise beyond independence
• Scaling from $1.2B to $3.5B in assets
• Organic growth versus recruiting
• Serving professional athletes and entertainers
• Why fiduciary independence matters for niche client segments
• Building operational infrastructure for growth
• Partnering with Dynasty Financial Partners
• Minority capital and Rise Growth Partners
• Succession planning and employee ownership
• Thinking from $3.5B to $25B

> Download a transcript of this episode…

Listen and Learn Highlights for Advisors

What did Matt learn after transitioning nearly 98% of his clients? (06:20)

Why client relationships—not firm logos—proved to be the firm’s greatest asset during one of the most challenging transitions imaginable.

How did Cyndeo nearly triple in size in five years? (16:10)

Matt discusses the combination of niche specialization, disciplined organic growth, recruiting, and operational investment that fueled the firm’s expansion.

Why has Cyndeo become a destination for professional athletes? (17:15)

The conversation explores how deep industry expertise, fiduciary flexibility, and specialized service created a business that would have been difficult to build inside a wirehouse.

Why bring on a minority capital partner when the business was already thriving? (24:15)

Matt explains why succession planning, future recruiting, and long-term enterprise growth made outside capital the right decision.

How should advisors think about ownership versus compensation? (35:40)

A candid discussion about enterprise value, equity, and why many advisors underestimate the long-term economics of ownership.

What does it actually take to scale toward $25B? (42:20)

From hiring executive talent to expanding geographically, Matt shares how he’s thinking about the next chapter of Cyndeo’s evolution.

Key Takeaways

Independence creates opportunities that extend well beyond higher payouts, including enterprise value, recruiting flexibility, and ownership.

Scaling a business requires investing in operational leadership, not just adding advisors.

Specialized client niches demand expertise that goes well beyond investment management.

Outside capital can accelerate growth when it’s aligned with long-term strategy rather than an exit.

Building an enduring enterprise requires thinking differently about succession, talent, governance, and equity.

https://youtu.be/WRYJd9Lkt7o

Quotable Moments

“Don’t rent your practice. Own it.”

“You can’t work in those niches and not be a fiduciary.”

“We’re not done.”

“The road from $3B to $25B is going to really compound on your equity.” 

FAQs

Why did Cyndeo decide to take on a minority capital partner?

To support its next phase of growth, strengthen succession planning, recruit additional talent, and benefit from the experience of leaders who have successfully scaled wealth management businesses before.

How did Cyndeo grow from $1.2B to $3.5B?

Through a combination of consistent organic growth, specialized client niches, advisor recruiting, and investments in operational infrastructure.

Why is serving professional athletes or other niche client segments different from serving traditional wealth clients?

Niche client segments often face unique financial decisions involving private investments, business opportunities, and career transitions that require specialized knowledge and a fiduciary framework.

What advantages did independence create that weren’t available inside a wirehouse?

Matt points to greater flexibility around private investments, the ability to build specialized client experiences, reward employees with equity, and create an enterprise with lasting value.

How should advisors think about building versus joining an independent firm?

The discussion highlights the tradeoffs between creating your own firm and joining an established independent enterprise, emphasizing that ownership and long-term equity often matter more than headline payouts.

What does Matt believe is required to build a $25B firm?

A willingness to invest beyond advisors alone, adding executive leadership, expanding geographically, recruiting strategically, and maintaining a long-term enterprise mindset.

To support its next phase of growth, strengthen succession planning, recruit additional talent, and benefit from the experience of leaders who have successfully scaled wealth management businesses before.

Through a combination of consistent organic growth, specialized client niches, advisor recruiting, and investments in operational infrastructure.

Niche client segments often face unique financial decisions involving private investments, business opportunities, and career transitions that require specialized knowledge and a fiduciary framework.

Matt points to greater flexibility around private investments, the ability to build specialized client experiences, reward employees with equity, and create an enterprise with lasting value.

The discussion highlights the tradeoffs between creating your own firm and joining an established independent enterprise, emphasizing that ownership and long-term equity often matter more than headline payouts.

A willingness to invest beyond advisors alone, adding executive leadership, expanding geographically, recruiting strategically, and maintaining a long-term enterprise mindset.

Related Resources

Article: Your Practice Isn’t Worth What You Think
Most advisors misjudge their business’s value, not because of the number, but because of the framework. Learn what really drives enterprise value.

Rise and Reinvent: Joe Duran on Building and Rebuilding World-Class Firms
He’s built and rebuilt some of the industry’s most successful firms and now he’s helping others do the same. In this episode, Joe Duran, the founder of Rise Growth Partners, shares lessons from building, selling, and starting again, and how staying curious and adaptable fuels lasting success.

Matt Kilgroe
President/CEO

Prior to launching Cyndeo Wealth Partners in 2020, Matt ran advisory teams at Merrill Lynch and UBS Financial for 29 years. Providing guidance, counsel, and strategy for families the firm serves is Matt’s passion. In addition to his role as an advisor, Matt works in a leadership capacity for Cyndeo while also helping with business development.

Matt has been recognized by Barron’s as a Top 1000 or Top 1200 Advisor consistently since 2009. In 2020 Forbes named him to their “Best-In-State Wealth Advisor” list. A graduate of Eckerd College, Matt has served on the Board of Trustees at his alma mater since 2012. His three children are his pride and joy. Daughter Carrington owns Sunstate Yoga studio in St. Petersburg, son Kent is a financial advisor with Cyndeo, and daughter Jillian recently graduated Florida State University. An athlete in college, Matt continues to enjoy staying in shape, playing basketball, and bike riding.

NOTE: The views and opinions expressed by the guests on this podcast are their own and do not necessarily reflect the views and opinions of Diamond Consultants. Neither Diamond Consultants nor the guests on this podcast are compensated in any way for their participation.

View the transcript of this episode…

True Alignment: Advising Business Owners on Wealth, Significance, and Value

A conversation with Jason Diamond, Nick Hubert and Taylor Gentry – Founding Partners at Panoramic Capital Partners.

Jason Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is True Alignment: Advising Business Owners on Wealth, Significance, and Value. It’s a conversation with Nick Hubert and Taylor Gentry, Founding Partners, Panoramic Capital Partners. I’m Jason Diamond and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent.

Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Jason Diamond:

Advisory firms that work with business owner clients typically operate through a fairly traditional wealth management lens. The business may be the source of the wealth, but the advice itself often centers around investments, planning, and asset allocation, yet Panoramic Capital Partners approaches that equation differently.

Nick Hubert and Taylor Gentry are the founding partners of the roughly $450 million RIA, serving about 150 families with a seven-person team. And while they come from very different professional backgrounds, Nick with more of a relationship and storytelling orientation, Taylor from the analytical and private equity side, they’ve built the firm around a shared philosophy tied to what they call personal significance, personal wealth, and personal value. A big part of that philosophy, or the north star as they put it, is applying some of the same accountability and long-term thinking frameworks commonly seen in private equity to the advisory relationship itself, not in a transactional sense, but in helping clients think more intentionally about decision-making, alignment, and outcomes over long periods of time.

As a result, our conversation delves deeply into the private equity world, reframing how clients and advisors should consider this important tool as both a growth mechanism and a strategic part of their client’s plans. We talk about how that perspective also shapes not only how they think about serving business owners specifically, but also the role private equity should play in wealth management. Then we take a view of their long runway and how they and other younger advisors might see things differently about building firms today and why clarity of vision may matter more than sheer scale in the years ahead, and much, much more. It’s a narrative that is refreshing and informative, so let’s get to it.

Taylor, Nick, thank you so much for joining. Walk us through your background. What brought you to the world of wealth management? Nick, let’s start with you.

Nick Hubert:

Sure. I think I got my first taste of the industry actually in a sophomore year of college internship, or I interned at Morgan Stanley here in Oregon. I studied finance and accounting at University of Oregon, and so I had this affinity for finance and markets and had that privilege of having that internship. So I had it early on in my career. Ultimately ended up setting my sights on doing investment banking and going that route and did that for a short period of time. Ended up not going very long due to a medical reason, so you don’t have to be that sorry for me. And ultimately started my career in business consulting before pretty quickly realizing that I want to get back to finance, back to investing these things that just felt like core competencies and that thing that you keep coming back to when you’re alone in the middle of the night thinking about stuff, it was always that. Just had this desire to work with smaller units than large corporations, which is great for wealth where you get to work with families and small businesses. And so it was just a natural alignment that took me back full-time to the space in 2016.

Jason Diamond:

I like the framing it through the size of the unit you’re working with and having more of an impact on the family.

Taylor, what about you?

Taylor Gentry:

I’m a little more circuitous, if you will. Spent a couple of years in investment banking, so you can be sorry for me. Nick and I met in undergrad at the University of Oregon, had the opportunity to work in this investment group together where we were investing a portion of the university’s endowment. And like Nick, interned in wealth management and kind of walked away from it going, “Boy, that’s boring. I don’t really like that.” And so moved to New York, cut my teeth in banking for a couple years and we were working… So an investment bank for context, helping companies raise debt, raise equity, and with mergers and acquisitions, we’re working with huge companies. So the Mattels of the world, the largest toy company in the world.

Like Nick, realized, “Hey, I’m going to work with smaller companies that we can get our arms around a little bit better and be more helpful with and have a bigger impact on.” So spent about 10 years with a private equity firm in the western half of the US and we invested in companies in what’s referred to as the lower middle market. So companies doing 50 to 300 million of revenue. And we would invest in those companies, grow those businesses and then look to sell them. Awesome experience, learned a ton, got a bunch of experience around how to invest in companies, how to grow businesses.

Then had the opportunity to step into the CFO seat of a couple of different operating companies during that time. It was just a great learning ground, but also to see a whole bunch of different situations. Nick and I have always invested in things together. We’ve worked on things together and we’ve always wanted to work together full time. And a few years ago, the stars really just aligned to say, “Hey, what would it look like to create a differentiated offering in the wealth space where we can blend my background on companies, transactions, how to draw on scale and all those pieces and really marry that with the wealth management piece?” And Nick will get into that further, but it’s just a really unique way to partner with families and companies that are smaller which can have a really high impact experience with those families and really move them through their life journey, if you will.

Jason Diamond:

Yeah, there’s a lot to unpack there and we’ll get to some of the elements of how you run the business today. First of all, you can’t fool me by using a toy company as your example to make investment banking more interesting. I’m just kidding. Actually, my real takeaway there is you have a skillset that is incredibly relevant in the current wealth management ecosystem, especially in the model you’re currently in. So let’s talk about that a little. Tell us about your current chapter, which is Panoramic Capital Partners. Who do you serve? What types of clients? Give me some perspective on size as well.

Nick Hubert:

I’m going to take this first. Taylor can do the PE background side and give you a bunch of numbers. I’ll give you the story and see if we can piece it together that way.

Jason Diamond:

I get the impression you guys use that line a lot.

Nick Hubert:

Oh, no, that’s the first time. How’d it land? Jason, I spent eight years at our prior firm with our third founding partner, Andrew, and he was at that firm for 30 years. And so we’ve got this core DNA that we’ve always carried of serving high net worth families in a very holistic and deep planning-based capacity, which I think a lot of modern firms say that. And so that’s not necessarily that different, but it is a DNA that carries through.

When we got struck with this vision of launching Panoramic and what inspired us to build the firm, it was as, Taylor outlined, around this idea of how do we partner with entrepreneurs and business owners more holistically across their entire entrepreneurial journey, not just around the exit as is so often where the gravity of the conversation sits. And so our firm vision and inspiration was all around that. And since launching in May of 2024, it has been about how do we bring that vision to life with a different business model. And to your point, there’s a bunch to unpack there, but that is ultimately the founding vision of what we are trying to build here overall and what inspires us every day to say, how do we, as Taylor mentioned, bring the combination of skillsets to bear in a way that allows us to be a better partner along the entirety of the journey as opposed to just towards the end when assets traditionally show up, so to speak?

So that’s a story from a vision perspective. Taylor, I don’t know what you want to add to that.

Taylor Gentry:

As Nick outlined, it’s the ability to work with folks throughout the lifecycle. So in private equity, you invest in a company, you work with that management team for three to seven years and then you sell the business and move on to the next project or deal. And really, it’s the deal mechanic that is the value creation. Whereas, with what we are building here, we have the opportunity to really step along the journey with folks when they are in the early phases building what we talk about as the middle phase of allocating, and we’ll talk about this further, and then really the third phase of stewarding capital along the way. And it’s a life cycle or entrepreneurial journey that we’re able to be hand in hand with folks over decades opposed to measured in three to five year spans.

Jason Diamond:

So it sounds, and you’ve both kind of touched on this now, your different backgrounds, you view as very much a positive because it gives you, Taylor, the more in the weeds analytical perspective. Nick, you’re probably more the storyteller. Do you find that to be a benefit when you’re running your firm every day? And are there instances when it’s a negative? Is there ever a time when you say, Taylor, just maybe more for you, not coming from this world, you don’t speak the same language?

Nick Hubert:

Do you want me to drop off the call so Taylor can be honest and he can give you the scoop and then he can jump off and I’ll give you the scoop?

Taylor Gentry:

Jason, we talk about that a lot, honestly. I think it is atypical for someone with my background to step into the wealth space maybe more so. And we leverage that because we have the ability to work with folks on how do you drive value in the company, how do you set the business up for a potential sale exit or transition internally? But this business, historically, we’ve talked about it as almost like two tracks. You have Taylor on the quote unquote business consulting or the business work track and you have Nick on a wealth management track. It’s really not the case. And really, the power is the ability for these two pieces to come together and there isn’t a conversation we have with clients where those two perspectives and backgrounds or contexts aren’t married into one to create really truly holistic advice.

And so Nick will probably tell you otherwise, but I haven’t seen an area yet where our two backgrounds has been a negative. It’s actually been immensely positive. And then on top of it, in terms of kind of building out the firm, Nick is more of a traction visionary and I’m more of the traction implementer. What’s amazing about it from our perspective is the partnership we have allows us to, A, recognize that, B, name it, and then C, leverage it in terms of being able to dole out duties and maximize our success together.

Jason Diamond:

Nick, anything you’d add?

Nick Hubert:

I think that’s all right. I mean, Jason, your question was from an operational perspective. I think a lot of Taylor’s view is from a client perspective, which is spot on that the overlap of that is really helpful for clients and I think what allows it to be a different experience for them. Internally, operationally, I think that where you could see friction there amongst partners with differences, and I think you do see that, and at the same time, Google was the one who did team research 15 years ago where they put out what you really want, is similarity and vision and differences in skillset when building a team. And so I think we’ve been intentional about that and it’s been really helpful for… Taylor and I functionally met in a quasi-professional setting back in 2011 and developed a friendship quickly, so we’ve got that deep level of friendship that underpins all of it. And same with Andrew and our time working together.

So part of it is there’s just such a strength of relationship amongst us that we give space for each other’s differences and look for those as assets as opposed to negatives, but in some sense, beauty in the eye of the beholder as is the case with anything.

Jason Diamond:

Yep. I appreciate you adding that context. I’ll be honest that when I first encountered your firm, my reaction was your core value prop of serving business owners is not all that differentiated. And then I learned more about the way in which you serve business owners. Can you talk about that? Because a lot of advisors in general, but then I think more specifically, a lot of RIAs would say, “We service primarily business owners.” Tell me how do you do it in a way that’s different and meaningful?

Nick Hubert:

I’ll take a first stab at that and then Taylor can maybe add on with specific stories. The wealth space is an awesome business and it’s a place where it’s very difficult to differentiate. And so we think a lot about that through the lens of how do we grow this business well for the long period of time to create opportunities for clients and employees. And so we spent a lot of time thinking about that, not only for the sake of differentiation, but also how do we actually just continue to add value to clients? Because if we add value in a different way, growth will take care of itself.

I’d say one way of cutting that is we revisit the mission is through this idea of, okay, if I want to be a partner along the journey, it’s about more than a single transaction, more than a single exit, whatever that might be, or a series of transactions as wealth is often created over a series of transactions. It’s this idea of how do we focus on wealth creation and driving business value as the engine of wealth creation for entrepreneurs and what we call personal significance, which is the life of the entrepreneur. And so there’s a next click down framing of our framework that we work through that lens.

I think the most important piece for us has been how do we build a business model that actually brings that to life and that’s the trick because we can say that, and if we basically still just operate out of an AUM-based or an asset advisory fee-based business, the reality is my incentive is still towards getting assets out of the entrepreneurial environment, so to speak, into a place that I can manage them, which may or may not be the best thing for the entrepreneur based on where they are at. And so our current work continues to be around how do we build that business model. So layering in different ways of engaging, whether it’s a retainer fee or some other way of engaging so we can start earlier when assets aren’t there and actually encourage the entrepreneur, “No, keep reinvesting in your business. It’s your highest rate of return right now and it’s where the investment needs to go.” I don’t want to have a conflict in giving that advice.

And so I think step two here has been building that business model from an actual engagement perspective to enable us to enact the vision. And then I think the third piece is how do we then build tools that are different than just evaluating pre-exit planning, and as is so often, the toolkit, but actually saying, okay, what are the value drivers of a business? And this is probably where Taylor has a lot more to add because it’s 101 of the PE model, but how do we take the mission and vision of an entrepreneur, what we call north stars, translate those into value drivers, ensure those tie to strategic initiatives in the business, ensure it ties to reporting, and ultimately, how capital is allocated between the business and other investments?

So then that’s our toolkit that we continue to build out to deploy the mission through our business model with tools that back it up. So that’s how we frame it right now. Taylor, we can share stories about how that’s come to fruition to create different outcomes.

Jason Diamond:

Taylor, I’d love to hear that. Let me just add maybe my understanding, because this is what helped me, I think, to really understand how you defer, and Nick and Taylor, correct me if I’m wrong, it sounds like the typical advisor thinks about an entrepreneur, a business owner relationship as the next liquidity event in most cases. And you take the viewpoint that it’s a journey, in some instances, 30 years in the making. It’s not even about liquidity event might come that’s beside the point. Is that a fair summary?

Taylor Gentry:

Yeah. We talk about it as a growing business is a healthy business, a business that is creating incremental value and adding to the multiple in terms of how the business is valued in the marketplace is a healthy business. And so whether you are going to sell that business or retain that business into perpetuity, let’s make a really valuable business and grow a very healthy business. And that’s what we do with clients.

Nick laid out the north star framework. And so how do we actually go about engaging with folks on a practical level? It does start with the north star framework. It’s got five steps to it as Nick outlined in terms of defining the north star, where we’re going, what we’re trying to do and that’s across those three pillars, personal significance, personal wealth and business value. And that personal significance has to be held at that same level. Otherwise, we find folks that are mid 50s, their business is crazy valuable, they’ve got a lot of dollars, but their family life isn’t where they want it to be because they didn’t take care of that along the way.

So we lay out a place map that says, “Hey, these are the north stars that we are aligning on and coming back to every month when we work with these owners.” We then push that into, okay, what are we trying to do on the business side of the equation? Let’s lay out what is going to drive the value of the business from a multiple and enterprise value perspective. We push that into a set of strategic initiatives that is tactical, who owns what, when’s it getting done, and are we red, yellow or green on it? We then build out the performance reporting package with folks. And so that is a monthly reporting package that says what happened last month and what operational data are we looking at to be able to improve the business month over month and get a good feedback loop going into the company. And then the last piece is around capital allocation that Nick mentioned where if the business generates a million dollars, where’s that capital going?

I think there’s a lot in there and it’s really deep, but if you zoom all the way back out, it’s take a private equity style playbook where private equity firms come and invest in a company. And what do they do after close? They put in place good financial reporting, good operational reporting, and then hold the team accountable to that reporting and those results on a monthly, quarterly, and annual basis. And so this is not rocket science or something that’s never been seen before. It’s just most business owners that have never experienced this private equity world don’t have access to it and don’t know how to go about doing it. It’s a relatively long process to get that installed with companies and with teams to really dig in and understand it, but it’s building out those packages to be able to say, “Okay, what happened last month? What changes do we need to make and what are we doing from a initiative perspective to drive the business forward?”

So to Nick’s point, it was previously, this was all about liquidity planning or from a wealth management perspective, it’s about the exit. This is about how do we make a more valuable business along the way, and that’s going to be good for the entrepreneur as they move through the journey.

Nick Hubert:

When we were around the dinner table, the proverbial dinner table creating the vision of this firm, it was around this idea of the silver tsunami and everything that everybody reads in the headlines of this massive wave of transition, this generational transition of business ownership that we could help facilitate. So we launched with that thesis in some sense.

In addition to this broader journey perspective, we have gotten to this place by following the market and listening to what entrepreneurs actually want through the big unlock was honestly in a deal process with one of our clients where we realized, “This is a great deal. This person’s going to put a ton of money in their pockets, secure their future,” and it’s completely the wrong outcome for the entrepreneur because it’s thinking all about the deal, not thinking about what this person didn’t want was an exit. They wanted a different relationship with their business, and that required, what do you actually want out of life, that personal significance piece? And it required, “Hey, if we can actually create a layer of team members and reporting that allows you to manage this like a board chair would do as opposed to a highly engaged CEO. That’s actually what you want. You don’t want out of this business. You want to still have this be a huge rock in your life.”

And so we’ve ran through that door, said no to the deal with them and have been building the infrastructure around this, and that was the unlock and aha moment for us. There’s something bigger here and that’s what then inspired, in some sense, the broader build out of the toolkit, but I think puts more meat on the bone of actually saying no to a deal, which is not the classic wealth manager outcome to get to a way better outcome for the client and is ultimately still an awesome client for us as a firm and somebody that we can go build with for the next 20 years.

I think just telling it through the lens of a story that’s different than what’s normal, so to speak, is a way to frame that up.

Jason Diamond:

It’s such a hyper focus on a fairly long-term and honestly nebulous potential outcome. You don’t have certainty. That, I think, is why most advisors would prefer the near-term liquidity. I mean, it’s not a secret, right? You can bill on assets, firms are incentivizing it and it’s a pretty direct recipe to net new asset growth, but it’s certainly a refreshing point of view. It resonates with me. I’m wondering if it’s resonated with clients and prospects. I guess what I’m asking is, do they feel that this is something different than the typical wealth management experience for this type of client?

Nick Hubert:

Yeah, Taylor, tell that story of the guy who said, “I’ve had this, but I felt alone.” I think that story of partnership, you tell pretty well.

Taylor Gentry:

Yeah. Jason, it was actually that same client, he had a investment banker, a wealth manager, attorney, and a CPA. CPA said, “The deal’s terrible, you shouldn’t do the deal.” Investment bankers obviously incentivized to do the deal. And so he’s saying, “You should do the deal.” That’s how he gets paid. He had a wealth manager who was silent and he had an attorney who just pushing paperwork.

Jason Diamond:

It’s like the start of a bad joke.

Taylor Gentry:

Yeah. No, seriously, it’s pretty remarkable. It’s like this guy did what he was supposed to do. He put the team of resources around himself. He got professionals in the seat. It’s that no one could connect the dots of all four of those people because they have the seat of those four people.

And so it’s really resonated because there’s an ability to see a bigger picture and connect these dots and say, “Okay, this investment banker is saying X because of A, B and C.” And the CPA is saying it’s a bad deal and that it’s not a market deal. It’s 100% a market deal. This deal is right down the fairway in terms of what the market should value your company at and they just don’t understand how the transaction mechanics should work. And so it’s worked really well from that perspective of being able to be the quarterback or centralized point or personal CFO for folks in understanding where interests lie and also being able to think about what they are pursuing in a bit of a different lens.

I think the second piece on that is where does it resonate for folks? I think that there is a gap in the marketplace that we are still working to close, and that gap is that business owners do not know what this monthly reporting package looks like. They do not know what really good reporting on their business looks like in terms of they have always run their… You’ve got a business owner. They’ve run their business for 10 or 20 years. They have a pulse on the business from their gut feel. That does not mean that the business has been optimized, is ready to go to the next level or is ready for a transaction and go through a transaction because they have not done the work on the backend to understand the moving pieces of the business at a granular level.

This recording package, we oftentimes get this confusion around, well, I’ve got a temporary CFO or a controller or X, Y, Z. That is very different than what we’re talking about. Well, that is all accounting, close the books, have clean numbers. What we’re talking about is how do I marry operational data in the business, number of units ships, number of jobs completed, time on job, operational data to the financials in the business so I can then go make adjustments operationally on how to improve the business and continue taking steps forward.

Jason Diamond:

It’s very clear. Nick, anything you’d want to add to that?

Nick Hubert:

I’d say it’s easy to still cut that from a deal lens and say, look, when an investment partner comes to evaluate a business to sit in their seat for a moment, they’re going to look at the replicability of what that leader has done without that leader still in the seat. And if so many businesses are still reliant on that person and this gets talked about as processes, reporting systems, that ultimately results in a discount to the value of the business because although it can be viewed… For the leader, it’s like, it’s that control thing that entrepreneurs deal with. It’s what made them good. It’s what got you there. And so that transition is really hard. And that’s important from a deal lens because that does a direct impact to value.

And to widen out the scope beyond the deal and to think about the entrepreneur’s life, this goes back to the dynamic that a lot of times entrepreneurs look for the exits because they’ve built something that it’s now owning them and what they’ve built is not resulting in the life that they want. And so how can we use this system to actually change that relationship, as I mentioned earlier, with the business so that they can run it more like an executive might and get out of the knife fight, so to speak, that often is how this can feel for a lot of folks, even for pretty large businesses. It can just feel like you’re a firefighter, you’re in a knife fight, whatever you want to use for that terminology. I think it’s as much about creating a different life outcome and different relationship and owning and leading a business as it is in driving deal value.

Jason Diamond:

Taylor, maybe I’ll ask this of you. Forgive the question, but private equity, I think in our space, has a little bit of a negative stigma at the moment. I don’t think that’s true across the board. I think people appreciate generally the need for capital and there are certainly benefits of private equity. But I’ll say as a whole, advisors are, let’s say, suspicious of private equity. You ever get that pushback? Does anybody ever view your experience or the way you position the story as a negative?

Taylor Gentry:

I think most people that we talk to don’t know what private equity is. They may have seen it in the headlines. They may have some sort of connotation around it. They won’t come out and say that they don’t like it. They don’t know why they don’t like it. The average American business owner, they don’t know what it is or what it means. So yes, you do have to fight that because of the headline piece around private equity, bad actor ABC, and that’s what gets the headlines.

I think what private equity is really good at is taking a business that is not optimized or not running on systems and processes that it can run on. Again, it’s not rocket science is not crazy hard. It’s just the private equity world has created ways to install systems and process that improve the value of the business by way of providing visibility to financials and operations in a way that the owner previously didn’t have.

And so for us, we view it not by any means as the end all be all or the answer. There are clients we’ve worked with that have taken private equity capital and grown successfully, executed on some acquisitions and then exited again. There are clients that have evaluated those transactions and said, “Hey, not for me.” We are actually fairly agnostic to it. What we really spend a lot of our time on is what are we solving for? What’s the end game? How do we use this private equity transaction to get to where we’re trying to go and is it what we want at the end of the day? Because the reality is, if you’re going to stay on and run that business with private equity investment in, there’s a higher expectation on what you need to do Monday morning than when you owned it yourself and it was a little bit of your personal piggy bank too.

Jason Diamond:

I love it because you bring it back to the north star concept.

Taylor Gentry:

Yes, that’s exactly right. It’s what are we solving for and what game are we playing to be able to get to where we ultimately want to go? And for, as Nick mentioned that client that turned down the deal, it was a private equity investment. We got very clear with that, “Hey, here are going to be the expectations. You will have a monthly financial reporting call. You’re going to have quarterly board meetings.” These are things that need to happen in this business to be able to upgrade the management and cadence in this company. You don’t have to do it all tomorrow, but that is how you make a more valuable company, is installing some of these systems, process and cadence. And so we’re working with him now on doing that, just in a private context instead of in the private equity backed environment.

Nick Hubert:

I think there are three things embedded in this. I’d say number one, to Taylor’s point, this is a massive black box, in some ways by design. Wall Street’s had not a great reputation for a very long time of putting things behind the paywall, so to speak. And so we think a lot about our job as empowerment and education.

Jason Diamond:

Education, yep.

Nick Hubert:

Yeah. And so part of it is just, number one, how do we just demystify this thing and name things and take away the go to or bad? Because it can be that, but it should not be that from a core basis. That’s number one.

Number two, a lot of entrepreneurs feel like they cannot get access to this ability to professionalize or level up or whatever these things are without bringing on that investment partner. And so part of our motivation is how do we actually bring this skillset in without needing to bring on an investment partner because oftentimes, that investment partner comes when you’re done, and so you don’t actually get to experience it. That’s number two.

Number three is, Jason, part of your point earlier was like there’s still a trap here of potentially being able to get motivated primarily by the exit. And so again, that gets back to our business model, making sure our price Racing is right, all that good stuff. And it’s also the reality that a lot of businesses, if you just look at a very broad scope of American businesses, a lot of them don’t have value in the marketplace in a massively material way and/or won’t exit in a traditional way. And so the wealth creation journey then becomes much more of a conversation of, how do we manage the balance between investing in the company and distributing out of the company to invest elsewhere because we should actually be creating investment assets along the way because when you get to the exit, there’s no better power position at the moment of exit than already having financial security to some degree and giving you choice in the right deal, not the highest and best deal because you need to fill the piggy bank for retirement.

Jason Diamond:

I just want to be sure to ask because you did mention a couple times your pricing structure. How have you set it up so that you can be more agnostic about this as opposed to the typical… You want to talk about it for a minute?

Nick Hubert:

As it’s structured now, it starts with a retainer earlier on where we are working… As Taylor mentioned, we are going deep in the operational build of the business. We will do that on a monthly retainer. We’re engaging consistently. As assets get built up and if assets get built up, we start to chew that retainer down as assets go up. I think what we are ideally trying to figure out, and still honestly have not figured out yet, is how do we get to parity so that we don’t create an… I want to be able to work agnostically with a client to say-

Jason Diamond:

Yeah, I love it.

Nick Hubert:

… regardless of how I’m engaging with you, that’s the goal. So I’d say we haven’t cracked the code on exactly what that is yet, but mechanically, we’ve got the levers to pull to say how we price and move that retainer down is basically allowing to keep it at par, so to speak, for the client and allowing us to say, “I’m here to engage in making the best wealth creation outcome for you along the way, whether that’s investing in the business or investing outside the business.”

Jason Diamond:

I think that’s the right recipe. I agree. The levers can be fine-tuned, but to me, that’s the model you want to create where you can credibly look your prospects and clients in the eyes and tell them, “Our job is to serve you in the best way… We’re sitting on the same side of the table as you.”

I want to turn this inward for a second. The home cooking concept. M&A, within the RIA independent space, is obviously a hot topic. Have you thought about it? Do you think it’s a critical part of a potential growth trajectory of a healthy, independent firm? I’m curious your perspective. I feel you, Taylor in particular, probably have a unique lens on this coming from the world you came from.

Taylor Gentry:

Yeah, Jason, I think if Nick and I wanted to put as much money as we possibly could in our pockets as fast as humanly possible. It’s a pretty easy recipe. It’s go get some private equity capital backer, roll up a few RIAs, get to a few billion of AUM and then sell it to the next private equity firm or roll it to the next private equity firm, do that a few times. We’d all make plenty of money and go on our way.

We’ve been really intentional on this front, and again, I talk about this is what we want to do for the next 30 plus years. And really being intentional around building a business that has that enduring nature to it, decided to take private equity capital on, you are on a shot clock to some degree. Yes, you’re trying to build a best business, all of those pieces. You get cadence. You get capital. There’s a ton of value there, but you are on a shot clock that is not a shot clock we’re trying to get on at this stage.

I’d say we opportunistically are looking at acquisitions. So we think about it, and Nick and I talk about it all the time, how much of our time should we be spending on acquisitions? And we think of it as 80/20 or even 90/10, 80% or 90% organic growth-focused, 10 to 20% acquisitions-focused. And so we’re actively evaluating those consistently and see deals on a monthly basis that we look at and evaluate, but it’s less of the focus today than it could be down the road.

Jason Diamond:

And Nick, do you think of that when you guys talk? Do you guys call that your true north? Do you think the same way you coach your clients and prospects to say, “For right now, it wouldn’t be the right move for us to take private equity capital and to do this acquisition rollup strategy because A, B and C are more important for us”?

Nick Hubert:

Yes. I think if we take our life north star for Taylor. I’m speaking for Taylor, but we’re close and so we share this of… To Taylor’s point, the life outcome of scaling that quickly with that type of capital backing is likely to create a life that I don’t actually want that’s not good for me, not good for my family, and honestly, not good for our clients at this point. And so that overrides in this case, even though the wealth, north star might say, “Hey, absolutely do that.” At some point something has to win. And so that is true.

At the business side, as the north star is motivated by this mission of the entire entrepreneur journey, the worst thing I could do is shortcut my ability to be on that journey for a long period of time. One of our friends in this space says, “The best thing I can do for my clients is still be in the seat 30 years from now because I’ve lived a good life that enables that.” And I think that’s spot on for us, is everything, it’s so easy in today’s world to be consumed by short-termism and we are intentional in ensuring that we don’t succumb to that. While still recognizing to your point, I mean, you’re in this all day, Jason, right? There’s a massive opportunity in front of us to be thoughtful about how acquisitions fit into this. And I think we want to be open to that in a way that ensures we just don’t lose the core of the goodness of what we’re trying to build.

Jason Diamond:

I think that’s the right answer. The only wrong answer in my mind is we’re not open to this or we’re closed to it. To not at least be opportunistically aware of the dynamics in the market, I think is naive. But also, I’ll be honest, Nick, when I think about the concept of the north star, I have a hard time imagining, because we use a similar concept when we counsel advisors. What is your true north or your north star and your best business life, whatever you want to call it? To me, it does include absolutely the personal piece. I think it’s hard to define it only on the economic verticals because, I mean, I think about this for a transitioning advisor. Almost never is the conversation about crunch the spreadsheet and get us the biggest check possible. It’s, yeah, sure, transition capital is important, but it’s let’s also, we want a better work life and we want freedom to market and blah, blah, blah. To me, I think it’s a completely fair way. You two are looking at it at least for now and I assume you reserve the right to revise that opinion down the line.

Nick Hubert:

I think acquiring for size and scale is as often the headline is, yeah, we’re not into that at this point because I think… And yet, hey, if the right acquisition with the right people came along in that, we’d be extremely excited and would move very quickly to execute on that. So it’s a little bit of a both hand.

Taylor Gentry:

Yeah. Jason, I think it goes without saying, but my background on having done a bunch of transactions of businesses like this, it’s a natural fit for us to have this as a lever. And so we are looking at deals. We just haven’t prioritized it as the top priority.

Jason Diamond:

I think also where you are, 2024 was the launch of the business. It’s pretty common to see, all right, let’s nail this, let’s get our feet under us, client service model and then we’ll start to think about that down the line.

A couple other things I want to ask you about running an independent firm. This is a pretty glowingly positive review, I think, of your ability to service clients, your ability to grow and to build and run the business that you want. Has there been anything negative that you haven’t enjoyed about running and operating this business, other than working with each other, of course?

Nick Hubert:

No, I was going to say, I’m like, can we get Taylor off the call again?

Taylor Gentry:

Jason, maybe I’ll take a first cut at it. I think for both Nick and I, it’s just the administrative components of running an independent business that we don’t enjoy candidly. I don’t think many people would. That said, you come full circle and it is a pretty glowingly positive review of running an independent business because we get to run it in the way that we see fit. And oh, by the way, we use the same things that we use with our clients. So the value drivers we’ve talked about, we have a value drivers worksheet. We refresh it every six months. Nick, Andrew, and I get together every six months and we’re 18 months into this thing and we’ve already got this cadence and system to it, if you will. So I personally really enjoy the running the business piece of it from a macro perspective. Yeah, I’m responsible for running our fee billing and running the math on all that and getting that done, for example.

Jason Diamond:

I think that’s actually a very thoughtful answer. And I appreciate you saying I enjoy running… I feel the same way, by the way. There’s some elements of running a business that I think are immensely fun. I think it gets painted with this brush of, “Ugh, running the business is the hassle and I want to work in the business.” Agreed, nobody likes invoicing and accounts receivable for the most part, but Nick, what are your thoughts on this?

Nick Hubert:

Yeah, I think mine is different a little bit coming from a different background where it’s easier for me to sit with the rose-colored glasses of the joy of the freedom that we have in this model. At the same time, when I’m counseling folks who are talking with folks or mentoring folks, younger people who are thinking about, “Okay, I want to go start my own thing,” I’m like, “Hey, it’s like I’m the same way. I want to look in the mirror and think I’m the boss or I’m one of the bosses and we get to go build this.”

Then the reality is, at the end of the day, if there was something that you didn’t want to do that had to get done and you didn’t do it, you got to look in the mirror and be like, “Well, you’re the boss, you didn’t do it.” It’s the both sides of the coin that I think a positive, negative cut is one way to look at that because it can feel that way sometimes. And the reality is every job has 20 to 30% of it that you just don’t enjoy doing, and that’s totally true.

Jason Diamond:

It’s why they call it work. That’s why they pay you.

Nick Hubert:

They’d be pretty quick to point out that I’m the one of the partnership group that they’re going to have to chase for a smaller administrative item because, yeah, I honestly, just similarly speaking, don’t enjoy that. I want to go talk to clients. I want to go focus on building what we’re building. In finance speaks, it is a higher beta to just the all encompassing realities of running a business that is really hard to underscore without being in the seat. And yeah, there’s definitely 20 to 30% of that I would love to wave a magic wand and say, I don’t have to do anymore.

Jason Diamond:

Yeah, I appreciate that.

Nick Hubert:

You can’t have one without the other. It’s both sides.

Jason Diamond:

I think it’s getting easier and I think it’s getting more offloadable and some of it probably gets more… In some ways, more offloadable as you scale, but then you get a new set of problems, probably two, because you’re dealing with bigger… It’s a never ending. I think most business owners would agree with that. And you said it well, you take the good with the bad and overwhelmingly, most people we speak with in the independent space feel as you do, which is, are there things I would prefer to offload or that I would prefer not to do? Of course, but that’s almost just the price you pay for the freedom and for doing all the things you want to do.

Two more questions that I want to be sure to ask about where this has been a great episode. One is AI. Need to know your thoughts. Is this coming for our jobs? Do you think your firm is positioned to capture either asset flows or also just to leverage this technology and use it to serve clients better? Just give me your thoughts.

Nick Hubert:

I think, in some sense, it would be irresponsible as people this early in our entrepreneurial journey and thinking about how do we optimize what we do for clients to not be engaging with AI in some way, shape or form, at least in an evaluative posture. So we are actively, in a bunch of different ways, whether it’s buy it off the shelf or build it, continuing to find ways to think about, not only how do we drive efficiency, because there’s an obvious surface level dynamic of if I can save time and spend more time with clients, that is a go to thing objectively. And there’s this deeper dynamic of if it can amplify what…

Actually, back to your prior question, if it can amplify what I’m best at and enjoy and reduce what I don’t enjoy, that’s a massive win. And I think we’re on the surface of seeing that. That’s the opportunity we are motivated by that and pursuing that. And at the same time, I would say an operational principle that really is important to us, and you can almost call it a north star within the business is client security can never be put at risk for the sake of our own growth, our own efficiency, or anything else. There’s, I think, still a question mark as to how we think about trusting this. And so we are very cautious as we think about we will never try to move so quickly on any technology, whether it’s AI or otherwise that we risk our clients in some way, shape or form, because the reality is we are also in a context where AI is, when pulled, one of the least popular things happening in the world today for the average American. And so there’s no kudos here for being a leader.

Jason Diamond:

I totally agree. The first mover advantage here is slim to none.

Nick Hubert:

Yeah, you don’t want to be the one sticking your neck out on this in our industry. And yet there still objectively has a potential to be better for the clients. Navigating that I think is messy.

Taylor Gentry:

I think the only thing I’d add, which is pretty short, is the use of these tools has the ability to create a better deliverable for clients on a more consistent basis. And marrying that with exactly what Nick just outlined around the risk is really the magic piece here. And so I think, to the extent we can get it implemented effectively with the security, but also with, this is going to result in a lot better outcome for clients across the board, that’s a pretty attractive objective to go after and it’s pretty exciting to be in the industry with that now on the forefront in terms of ability to improve that experience over time.

Jason Diamond:

Yeah. No, that’s a good color to add. I want to end here with a potential HR violation, but you’ll forgive me. I’m not going to ask about age, but you are clearly both relatively young advisors. And this is a hot button issue in our industry, the idea that there are not a lot of talented, young next gen advisors at a time when a lot of gen one or older advisors are retiring out of the business. So what would you say… I think one of you made the comment earlier, it’s not necessarily the coolest industry to go into at 23 years old right out of school. I think more commonly people go into sales and trading, investment banking or some of the other finance verticals. What would you say to younger folks interested in wealth? And maybe I’d ask also, do you have any thoughts on how we solve this next gen talent crisis? And if you’re both secretly 90 years old, you can just do it.

Taylor Gentry:

You talking my internal age or my actual age?

Jason Diamond:

Why don’t you go first?

Nick Hubert:

Yeah, go ahead, Taylor.

Taylor Gentry:

I think there’s two threads here. The first is it’s not a sexy industry to go into and not as sexy as an investment banking, private equity shtick, if you will. I think from my perspective, it’s really important what you’re working on. The ability to be in a firm like what we are building with the diversity of work that is available is a little bit like the world’s your oyster and we’re designing it with that in mind. For Nick and I, the ability to work on many different situations throughout the day and throughout the week is actually why this business is so attractive and interesting and why we want to do it for 30 years. And so we’re building with that context. And so, in some ways, it’s almost like a plug for younger advisors, the ability to work in a firm like what we’re building where you’ve got this diversity of work that is not just trading stocks and bonds or just spreadsheeting or just financial planning. This is a much broader expression and experience than what I would call “traditional” wealth management. So I think that’s the key on that front.

Then, on the talent development side of the equation, if you will, this AI thing is going to be a big question mark. And what I mean by that is there is significant training that will be required in, call it traditional wealth management or the firm we’re building with regard to folks’ ability to actually learn when you can plug it into AI and get an answer that you don’t have to critically question or think through. And so there’s going to be a significant learning curve for folks that we’re going to have to continue to train and educate on in order to produce talent that can be long-term sustainable and beneficial for clients more writ large.

Jason Diamond:

Nick.

Nick Hubert:

Well, first and foremost, we haven’t given our third partner enough here of time. I think we have a tremendous benefit of having a multi-generational team at the partnership level where he’s in his mid to late 50s and can bring that additional experience to bear and as is necessary, and as is important because investing is an experienced business and a lot of clients want that. And so the power of that matters. I think that actually speaks to firms being willing to think of partnership at that level that partnership is not reserved for just once you’ve been there for a long time. So I think it’s getting at like, how do you share ownership earlier, do it in a way that is actually giving people a stake in the outcome and allowing that elevation to happen. I think that’s number one.

Number two, honestly, the existence of people like you and your team and that your family has built over the years, Jason, is awesome. And because of the ability for you to help people navigate and see how easy it is to actually run this business and build this business in some sense… And that’s in the broader spectrum of having seen. We work with so many different types of companies. We sometimes say our business is so much easier to run and it has come so far with technology and with people like you who are providers to us to allow it to be easier for us so to speak. That’s a big deal. I think that should be talked about more that there is a massive… What that allows is more time to, as Taylor mentioned, build what you actually want because you can outsource the compliance piece in a major way that allows you to not spend as much time on that as you used to.

So I don’t think that gets talked about enough. And I think if you just zoom out and view this in the perspective of post-2020, there was this massive movement of entrepreneurship through acquisitions and people looking at this idea of how do I get the life I want by way of not having to be on a two-year clock to go to the next job to the next job. Have something that I can have a long-term impact on where I get to build something and have employees. This is the perfect space for that because it’s such an awesome business where you get to work so intimately with people and clients and their life outcomes. They’re, again, relatively speaking, easier businesses to run relative to what’s out there. I’m just baffled by the fact that it is not seen a larger wave of younger people coming out of these more “traditional” paths and seeing this as an awesome place when they’re willing to go buy an HVAC company.

This is so much easier than that. So honestly, I think part of it’s just we all live coming from being in this space longer, we get stuck in our wealth management lane and I think it’s easy to then nitpick and get stuck in there. But when we take a more global perspective, it’s a massive opportunity that I hope more people take advantage of.

Jason Diamond:

Thank you for highlighting that. We call it the ecosystem of support for financial advisors, and it’s gotten so much more robust through the years. And a lot of times, people focus on the negatives of compliance burdens have gotten heavier and competition has gotten fiercer. And yes, that’s all true, but the flip side is the point you just made, Nick. So I appreciate you bringing that up.

Any last words of wisdom you’d want to share with our audience? This has been a fantastic episode and I can’t wait to have you back on to revisit the growth trajectory.

Nick Hubert:

Yeah, I’d say just thank you for the time. We’ll plug the podcast. We’ve enjoyed you guys for a really long time and being able to have the resource of what you guys have built is actually… In our partnership meetings, we’re bringing you guys up with some consistency. So thank you for the gift that you are to the industry and continuing to create opportunity for folks like us to come on here.

Jason Diamond:

Thank you so much.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibility seriously and are dedicated to your clients, but are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery, is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

True Alignment: Advising Business Owners on Wealth, Significance, and Value

A conversation with Jason Diamond, Nick Hubert and Taylor Gentry – Founding Partners at Panoramic Capital Partners.

Jason Diamond:

Welcome to the latest episode of our podcast series for financial advisors. Today’s episode is True Alignment: Advising Business Owners on Wealth, Significance, and Value. It’s a conversation with Nick Hubert and Taylor Gentry, Founding Partners, Panoramic Capital Partners. I’m Jason Diamond and this is the Diamond Podcast for Financial Advisors.

Mindy Diamond:

At Diamond Consultants, we help elite advisors identify the right environment for their businesses to thrive, whether that’s at a wirehouse, boutique, or independent firm. With nearly three decades of experience, we’ve guided thousands of advisors and represented more than a quarter of a trillion dollars in assets transitioned. And each year, one in four advisors managing a billion dollars or more who change firms are our clients. Our process is education-driven and based on building relationships, starting as your strategic partner well before you’re even thinking of a move. To schedule a confidential conversation, call us at 908-879-1002.

Wondering why advisors change firms and where they’re headed? Are transition deals going up or down? Those very questions and more inspired us to create our annual advisor transition report. It’s the award-winning, data-driven resource designed for advisors that connects the dots between the motivations around movement and the firm’s appetite for top talent.

Arm yourself with the knowledge you need to make smart decisions. Download your copy at diamond-consultants.com/transitionreport.

Jason Diamond:

Advisory firms that work with business owner clients typically operate through a fairly traditional wealth management lens. The business may be the source of the wealth, but the advice itself often centers around investments, planning, and asset allocation, yet Panoramic Capital Partners approaches that equation differently.

Nick Hubert and Taylor Gentry are the founding partners of the roughly $450 million RIA, serving about 150 families with a seven-person team. And while they come from very different professional backgrounds, Nick with more of a relationship and storytelling orientation, Taylor from the analytical and private equity side, they’ve built the firm around a shared philosophy tied to what they call personal significance, personal wealth, and personal value. A big part of that philosophy, or the north star as they put it, is applying some of the same accountability and long-term thinking frameworks commonly seen in private equity to the advisory relationship itself, not in a transactional sense, but in helping clients think more intentionally about decision-making, alignment, and outcomes over long periods of time.

As a result, our conversation delves deeply into the private equity world, reframing how clients and advisors should consider this important tool as both a growth mechanism and a strategic part of their client’s plans. We talk about how that perspective also shapes not only how they think about serving business owners specifically, but also the role private equity should play in wealth management. Then we take a view of their long runway and how they and other younger advisors might see things differently about building firms today and why clarity of vision may matter more than sheer scale in the years ahead, and much, much more. It’s a narrative that is refreshing and informative, so let’s get to it.

Taylor, Nick, thank you so much for joining. Walk us through your background. What brought you to the world of wealth management? Nick, let’s start with you.

Nick Hubert:

Sure. I think I got my first taste of the industry actually in a sophomore year of college internship, or I interned at Morgan Stanley here in Oregon. I studied finance and accounting at University of Oregon, and so I had this affinity for finance and markets and had that privilege of having that internship. So I had it early on in my career. Ultimately ended up setting my sights on doing investment banking and going that route and did that for a short period of time. Ended up not going very long due to a medical reason, so you don’t have to be that sorry for me. And ultimately started my career in business consulting before pretty quickly realizing that I want to get back to finance, back to investing these things that just felt like core competencies and that thing that you keep coming back to when you’re alone in the middle of the night thinking about stuff, it was always that. Just had this desire to work with smaller units than large corporations, which is great for wealth where you get to work with families and small businesses. And so it was just a natural alignment that took me back full-time to the space in 2016.

Jason Diamond:

I like the framing it through the size of the unit you’re working with and having more of an impact on the family.

Taylor, what about you?

Taylor Gentry:

I’m a little more circuitous, if you will. Spent a couple of years in investment banking, so you can be sorry for me. Nick and I met in undergrad at the University of Oregon, had the opportunity to work in this investment group together where we were investing a portion of the university’s endowment. And like Nick, interned in wealth management and kind of walked away from it going, “Boy, that’s boring. I don’t really like that.” And so moved to New York, cut my teeth in banking for a couple years and we were working… So an investment bank for context, helping companies raise debt, raise equity, and with mergers and acquisitions, we’re working with huge companies. So the Mattels of the world, the largest toy company in the world.

Like Nick, realized, “Hey, I’m going to work with smaller companies that we can get our arms around a little bit better and be more helpful with and have a bigger impact on.” So spent about 10 years with a private equity firm in the western half of the US and we invested in companies in what’s referred to as the lower middle market. So companies doing 50 to 300 million of revenue. And we would invest in those companies, grow those businesses and then look to sell them. Awesome experience, learned a ton, got a bunch of experience around how to invest in companies, how to grow businesses.

Then had the opportunity to step into the CFO seat of a couple of different operating companies during that time. It was just a great learning ground, but also to see a whole bunch of different situations. Nick and I have always invested in things together. We’ve worked on things together and we’ve always wanted to work together full time. And a few years ago, the stars really just aligned to say, “Hey, what would it look like to create a differentiated offering in the wealth space where we can blend my background on companies, transactions, how to draw on scale and all those pieces and really marry that with the wealth management piece?” And Nick will get into that further, but it’s just a really unique way to partner with families and companies that are smaller which can have a really high impact experience with those families and really move them through their life journey, if you will.

Jason Diamond:

Yeah, there’s a lot to unpack there and we’ll get to some of the elements of how you run the business today. First of all, you can’t fool me by using a toy company as your example to make investment banking more interesting. I’m just kidding. Actually, my real takeaway there is you have a skillset that is incredibly relevant in the current wealth management ecosystem, especially in the model you’re currently in. So let’s talk about that a little. Tell us about your current chapter, which is Panoramic Capital Partners. Who do you serve? What types of clients? Give me some perspective on size as well.

Nick Hubert:

I’m going to take this first. Taylor can do the PE background side and give you a bunch of numbers. I’ll give you the story and see if we can piece it together that way.

Jason Diamond:

I get the impression you guys use that line a lot.

Nick Hubert:

Oh, no, that’s the first time. How’d it land? Jason, I spent eight years at our prior firm with our third founding partner, Andrew, and he was at that firm for 30 years. And so we’ve got this core DNA that we’ve always carried of serving high net worth families in a very holistic and deep planning-based capacity, which I think a lot of modern firms say that. And so that’s not necessarily that different, but it is a DNA that carries through.

When we got struck with this vision of launching Panoramic and what inspired us to build the firm, it was as, Taylor outlined, around this idea of how do we partner with entrepreneurs and business owners more holistically across their entire entrepreneurial journey, not just around the exit as is so often where the gravity of the conversation sits. And so our firm vision and inspiration was all around that. And since launching in May of 2024, it has been about how do we bring that vision to life with a different business model. And to your point, there’s a bunch to unpack there, but that is ultimately the founding vision of what we are trying to build here overall and what inspires us every day to say, how do we, as Taylor mentioned, bring the combination of skillsets to bear in a way that allows us to be a better partner along the entirety of the journey as opposed to just towards the end when assets traditionally show up, so to speak?

So that’s a story from a vision perspective. Taylor, I don’t know what you want to add to that.

Taylor Gentry:

As Nick outlined, it’s the ability to work with folks throughout the lifecycle. So in private equity, you invest in a company, you work with that management team for three to seven years and then you sell the business and move on to the next project or deal. And really, it’s the deal mechanic that is the value creation. Whereas, with what we are building here, we have the opportunity to really step along the journey with folks when they are in the early phases building what we talk about as the middle phase of allocating, and we’ll talk about this further, and then really the third phase of stewarding capital along the way. And it’s a life cycle or entrepreneurial journey that we’re able to be hand in hand with folks over decades opposed to measured in three to five year spans.

Jason Diamond:

So it sounds, and you’ve both kind of touched on this now, your different backgrounds, you view as very much a positive because it gives you, Taylor, the more in the weeds analytical perspective. Nick, you’re probably more the storyteller. Do you find that to be a benefit when you’re running your firm every day? And are there instances when it’s a negative? Is there ever a time when you say, Taylor, just maybe more for you, not coming from this world, you don’t speak the same language?

Nick Hubert:

Do you want me to drop off the call so Taylor can be honest and he can give you the scoop and then he can jump off and I’ll give you the scoop?

Taylor Gentry:

Jason, we talk about that a lot, honestly. I think it is atypical for someone with my background to step into the wealth space maybe more so. And we leverage that because we have the ability to work with folks on how do you drive value in the company, how do you set the business up for a potential sale exit or transition internally? But this business, historically, we’ve talked about it as almost like two tracks. You have Taylor on the quote unquote business consulting or the business work track and you have Nick on a wealth management track. It’s really not the case. And really, the power is the ability for these two pieces to come together and there isn’t a conversation we have with clients where those two perspectives and backgrounds or contexts aren’t married into one to create really truly holistic advice.

And so Nick will probably tell you otherwise, but I haven’t seen an area yet where our two backgrounds has been a negative. It’s actually been immensely positive. And then on top of it, in terms of kind of building out the firm, Nick is more of a traction visionary and I’m more of the traction implementer. What’s amazing about it from our perspective is the partnership we have allows us to, A, recognize that, B, name it, and then C, leverage it in terms of being able to dole out duties and maximize our success together.

Jason Diamond:

Nick, anything you’d add?

Nick Hubert:

I think that’s all right. I mean, Jason, your question was from an operational perspective. I think a lot of Taylor’s view is from a client perspective, which is spot on that the overlap of that is really helpful for clients and I think what allows it to be a different experience for them. Internally, operationally, I think that where you could see friction there amongst partners with differences, and I think you do see that, and at the same time, Google was the one who did team research 15 years ago where they put out what you really want, is similarity and vision and differences in skillset when building a team. And so I think we’ve been intentional about that and it’s been really helpful for… Taylor and I functionally met in a quasi-professional setting back in 2011 and developed a friendship quickly, so we’ve got that deep level of friendship that underpins all of it. And same with Andrew and our time working together.

So part of it is there’s just such a strength of relationship amongst us that we give space for each other’s differences and look for those as assets as opposed to negatives, but in some sense, beauty in the eye of the beholder as is the case with anything.

Jason Diamond:

Yep. I appreciate you adding that context. I’ll be honest that when I first encountered your firm, my reaction was your core value prop of serving business owners is not all that differentiated. And then I learned more about the way in which you serve business owners. Can you talk about that? Because a lot of advisors in general, but then I think more specifically, a lot of RIAs would say, “We service primarily business owners.” Tell me how do you do it in a way that’s different and meaningful?

Nick Hubert:

I’ll take a first stab at that and then Taylor can maybe add on with specific stories. The wealth space is an awesome business and it’s a place where it’s very difficult to differentiate. And so we think a lot about that through the lens of how do we grow this business well for the long period of time to create opportunities for clients and employees. And so we spent a lot of time thinking about that, not only for the sake of differentiation, but also how do we actually just continue to add value to clients? Because if we add value in a different way, growth will take care of itself.

I’d say one way of cutting that is we revisit the mission is through this idea of, okay, if I want to be a partner along the journey, it’s about more than a single transaction, more than a single exit, whatever that might be, or a series of transactions as wealth is often created over a series of transactions. It’s this idea of how do we focus on wealth creation and driving business value as the engine of wealth creation for entrepreneurs and what we call personal significance, which is the life of the entrepreneur. And so there’s a next click down framing of our framework that we work through that lens.

I think the most important piece for us has been how do we build a business model that actually brings that to life and that’s the trick because we can say that, and if we basically still just operate out of an AUM-based or an asset advisory fee-based business, the reality is my incentive is still towards getting assets out of the entrepreneurial environment, so to speak, into a place that I can manage them, which may or may not be the best thing for the entrepreneur based on where they are at. And so our current work continues to be around how do we build that business model. So layering in different ways of engaging, whether it’s a retainer fee or some other way of engaging so we can start earlier when assets aren’t there and actually encourage the entrepreneur, “No, keep reinvesting in your business. It’s your highest rate of return right now and it’s where the investment needs to go.” I don’t want to have a conflict in giving that advice.

And so I think step two here has been building that business model from an actual engagement perspective to enable us to enact the vision. And then I think the third piece is how do we then build tools that are different than just evaluating pre-exit planning, and as is so often, the toolkit, but actually saying, okay, what are the value drivers of a business? And this is probably where Taylor has a lot more to add because it’s 101 of the PE model, but how do we take the mission and vision of an entrepreneur, what we call north stars, translate those into value drivers, ensure those tie to strategic initiatives in the business, ensure it ties to reporting, and ultimately, how capital is allocated between the business and other investments?

So then that’s our toolkit that we continue to build out to deploy the mission through our business model with tools that back it up. So that’s how we frame it right now. Taylor, we can share stories about how that’s come to fruition to create different outcomes.

Jason Diamond:

Taylor, I’d love to hear that. Let me just add maybe my understanding, because this is what helped me, I think, to really understand how you defer, and Nick and Taylor, correct me if I’m wrong, it sounds like the typical advisor thinks about an entrepreneur, a business owner relationship as the next liquidity event in most cases. And you take the viewpoint that it’s a journey, in some instances, 30 years in the making. It’s not even about liquidity event might come that’s beside the point. Is that a fair summary?

Taylor Gentry:

Yeah. We talk about it as a growing business is a healthy business, a business that is creating incremental value and adding to the multiple in terms of how the business is valued in the marketplace is a healthy business. And so whether you are going to sell that business or retain that business into perpetuity, let’s make a really valuable business and grow a very healthy business. And that’s what we do with clients.

Nick laid out the north star framework. And so how do we actually go about engaging with folks on a practical level? It does start with the north star framework. It’s got five steps to it as Nick outlined in terms of defining the north star, where we’re going, what we’re trying to do and that’s across those three pillars, personal significance, personal wealth and business value. And that personal significance has to be held at that same level. Otherwise, we find folks that are mid 50s, their business is crazy valuable, they’ve got a lot of dollars, but their family life isn’t where they want it to be because they didn’t take care of that along the way.

So we lay out a place map that says, “Hey, these are the north stars that we are aligning on and coming back to every month when we work with these owners.” We then push that into, okay, what are we trying to do on the business side of the equation? Let’s lay out what is going to drive the value of the business from a multiple and enterprise value perspective. We push that into a set of strategic initiatives that is tactical, who owns what, when’s it getting done, and are we red, yellow or green on it? We then build out the performance reporting package with folks. And so that is a monthly reporting package that says what happened last month and what operational data are we looking at to be able to improve the business month over month and get a good feedback loop going into the company. And then the last piece is around capital allocation that Nick mentioned where if the business generates a million dollars, where’s that capital going?

I think there’s a lot in there and it’s really deep, but if you zoom all the way back out, it’s take a private equity style playbook where private equity firms come and invest in a company. And what do they do after close? They put in place good financial reporting, good operational reporting, and then hold the team accountable to that reporting and those results on a monthly, quarterly, and annual basis. And so this is not rocket science or something that’s never been seen before. It’s just most business owners that have never experienced this private equity world don’t have access to it and don’t know how to go about doing it. It’s a relatively long process to get that installed with companies and with teams to really dig in and understand it, but it’s building out those packages to be able to say, “Okay, what happened last month? What changes do we need to make and what are we doing from a initiative perspective to drive the business forward?”

So to Nick’s point, it was previously, this was all about liquidity planning or from a wealth management perspective, it’s about the exit. This is about how do we make a more valuable business along the way, and that’s going to be good for the entrepreneur as they move through the journey.

Nick Hubert:

When we were around the dinner table, the proverbial dinner table creating the vision of this firm, it was around this idea of the silver tsunami and everything that everybody reads in the headlines of this massive wave of transition, this generational transition of business ownership that we could help facilitate. So we launched with that thesis in some sense.

In addition to this broader journey perspective, we have gotten to this place by following the market and listening to what entrepreneurs actually want through the big unlock was honestly in a deal process with one of our clients where we realized, “This is a great deal. This person’s going to put a ton of money in their pockets, secure their future,” and it’s completely the wrong outcome for the entrepreneur because it’s thinking all about the deal, not thinking about what this person didn’t want was an exit. They wanted a different relationship with their business, and that required, what do you actually want out of life, that personal significance piece? And it required, “Hey, if we can actually create a layer of team members and reporting that allows you to manage this like a board chair would do as opposed to a highly engaged CEO. That’s actually what you want. You don’t want out of this business. You want to still have this be a huge rock in your life.”

And so we’ve ran through that door, said no to the deal with them and have been building the infrastructure around this, and that was the unlock and aha moment for us. There’s something bigger here and that’s what then inspired, in some sense, the broader build out of the toolkit, but I think puts more meat on the bone of actually saying no to a deal, which is not the classic wealth manager outcome to get to a way better outcome for the client and is ultimately still an awesome client for us as a firm and somebody that we can go build with for the next 20 years.

I think just telling it through the lens of a story that’s different than what’s normal, so to speak, is a way to frame that up.

Jason Diamond:

It’s such a hyper focus on a fairly long-term and honestly nebulous potential outcome. You don’t have certainty. That, I think, is why most advisors would prefer the near-term liquidity. I mean, it’s not a secret, right? You can bill on assets, firms are incentivizing it and it’s a pretty direct recipe to net new asset growth, but it’s certainly a refreshing point of view. It resonates with me. I’m wondering if it’s resonated with clients and prospects. I guess what I’m asking is, do they feel that this is something different than the typical wealth management experience for this type of client?

Nick Hubert:

Yeah, Taylor, tell that story of the guy who said, “I’ve had this, but I felt alone.” I think that story of partnership, you tell pretty well.

Taylor Gentry:

Yeah. Jason, it was actually that same client, he had a investment banker, a wealth manager, attorney, and a CPA. CPA said, “The deal’s terrible, you shouldn’t do the deal.” Investment bankers obviously incentivized to do the deal. And so he’s saying, “You should do the deal.” That’s how he gets paid. He had a wealth manager who was silent and he had an attorney who just pushing paperwork.

Jason Diamond:

It’s like the start of a bad joke.

Taylor Gentry:

Yeah. No, seriously, it’s pretty remarkable. It’s like this guy did what he was supposed to do. He put the team of resources around himself. He got professionals in the seat. It’s that no one could connect the dots of all four of those people because they have the seat of those four people.

And so it’s really resonated because there’s an ability to see a bigger picture and connect these dots and say, “Okay, this investment banker is saying X because of A, B and C.” And the CPA is saying it’s a bad deal and that it’s not a market deal. It’s 100% a market deal. This deal is right down the fairway in terms of what the market should value your company at and they just don’t understand how the transaction mechanics should work. And so it’s worked really well from that perspective of being able to be the quarterback or centralized point or personal CFO for folks in understanding where interests lie and also being able to think about what they are pursuing in a bit of a different lens.

I think the second piece on that is where does it resonate for folks? I think that there is a gap in the marketplace that we are still working to close, and that gap is that business owners do not know what this monthly reporting package looks like. They do not know what really good reporting on their business looks like in terms of they have always run their… You’ve got a business owner. They’ve run their business for 10 or 20 years. They have a pulse on the business from their gut feel. That does not mean that the business has been optimized, is ready to go to the next level or is ready for a transaction and go through a transaction because they have not done the work on the backend to understand the moving pieces of the business at a granular level.

This recording package, we oftentimes get this confusion around, well, I’ve got a temporary CFO or a controller or X, Y, Z. That is very different than what we’re talking about. Well, that is all accounting, close the books, have clean numbers. What we’re talking about is how do I marry operational data in the business, number of units ships, number of jobs completed, time on job, operational data to the financials in the business so I can then go make adjustments operationally on how to improve the business and continue taking steps forward.

Jason Diamond:

It’s very clear. Nick, anything you’d want to add to that?

Nick Hubert:

I’d say it’s easy to still cut that from a deal lens and say, look, when an investment partner comes to evaluate a business to sit in their seat for a moment, they’re going to look at the replicability of what that leader has done without that leader still in the seat. And if so many businesses are still reliant on that person and this gets talked about as processes, reporting systems, that ultimately results in a discount to the value of the business because although it can be viewed… For the leader, it’s like, it’s that control thing that entrepreneurs deal with. It’s what made them good. It’s what got you there. And so that transition is really hard. And that’s important from a deal lens because that does a direct impact to value.

And to widen out the scope beyond the deal and to think about the entrepreneur’s life, this goes back to the dynamic that a lot of times entrepreneurs look for the exits because they’ve built something that it’s now owning them and what they’ve built is not resulting in the life that they want. And so how can we use this system to actually change that relationship, as I mentioned earlier, with the business so that they can run it more like an executive might and get out of the knife fight, so to speak, that often is how this can feel for a lot of folks, even for pretty large businesses. It can just feel like you’re a firefighter, you’re in a knife fight, whatever you want to use for that terminology. I think it’s as much about creating a different life outcome and different relationship and owning and leading a business as it is in driving deal value.

Jason Diamond:

Taylor, maybe I’ll ask this of you. Forgive the question, but private equity, I think in our space, has a little bit of a negative stigma at the moment. I don’t think that’s true across the board. I think people appreciate generally the need for capital and there are certainly benefits of private equity. But I’ll say as a whole, advisors are, let’s say, suspicious of private equity. You ever get that pushback? Does anybody ever view your experience or the way you position the story as a negative?

Taylor Gentry:

I think most people that we talk to don’t know what private equity is. They may have seen it in the headlines. They may have some sort of connotation around it. They won’t come out and say that they don’t like it. They don’t know why they don’t like it. The average American business owner, they don’t know what it is or what it means. So yes, you do have to fight that because of the headline piece around private equity, bad actor ABC, and that’s what gets the headlines.

I think what private equity is really good at is taking a business that is not optimized or not running on systems and processes that it can run on. Again, it’s not rocket science is not crazy hard. It’s just the private equity world has created ways to install systems and process that improve the value of the business by way of providing visibility to financials and operations in a way that the owner previously didn’t have.

And so for us, we view it not by any means as the end all be all or the answer. There are clients we’ve worked with that have taken private equity capital and grown successfully, executed on some acquisitions and then exited again. There are clients that have evaluated those transactions and said, “Hey, not for me.” We are actually fairly agnostic to it. What we really spend a lot of our time on is what are we solving for? What’s the end game? How do we use this private equity transaction to get to where we’re trying to go and is it what we want at the end of the day? Because the reality is, if you’re going to stay on and run that business with private equity investment in, there’s a higher expectation on what you need to do Monday morning than when you owned it yourself and it was a little bit of your personal piggy bank too.

Jason Diamond:

I love it because you bring it back to the north star concept.

Taylor Gentry:

Yes, that’s exactly right. It’s what are we solving for and what game are we playing to be able to get to where we ultimately want to go? And for, as Nick mentioned that client that turned down the deal, it was a private equity investment. We got very clear with that, “Hey, here are going to be the expectations. You will have a monthly financial reporting call. You’re going to have quarterly board meetings.” These are things that need to happen in this business to be able to upgrade the management and cadence in this company. You don’t have to do it all tomorrow, but that is how you make a more valuable company, is installing some of these systems, process and cadence. And so we’re working with him now on doing that, just in a private context instead of in the private equity backed environment.

Nick Hubert:

I think there are three things embedded in this. I’d say number one, to Taylor’s point, this is a massive black box, in some ways by design. Wall Street’s had not a great reputation for a very long time of putting things behind the paywall, so to speak. And so we think a lot about our job as empowerment and education.

Jason Diamond:

Education, yep.

Nick Hubert:

Yeah. And so part of it is just, number one, how do we just demystify this thing and name things and take away the go to or bad? Because it can be that, but it should not be that from a core basis. That’s number one.

Number two, a lot of entrepreneurs feel like they cannot get access to this ability to professionalize or level up or whatever these things are without bringing on that investment partner. And so part of our motivation is how do we actually bring this skillset in without needing to bring on an investment partner because oftentimes, that investment partner comes when you’re done, and so you don’t actually get to experience it. That’s number two.

Number three is, Jason, part of your point earlier was like there’s still a trap here of potentially being able to get motivated primarily by the exit. And so again, that gets back to our business model, making sure our price Racing is right, all that good stuff. And it’s also the reality that a lot of businesses, if you just look at a very broad scope of American businesses, a lot of them don’t have value in the marketplace in a massively material way and/or won’t exit in a traditional way. And so the wealth creation journey then becomes much more of a conversation of, how do we manage the balance between investing in the company and distributing out of the company to invest elsewhere because we should actually be creating investment assets along the way because when you get to the exit, there’s no better power position at the moment of exit than already having financial security to some degree and giving you choice in the right deal, not the highest and best deal because you need to fill the piggy bank for retirement.

Jason Diamond:

I just want to be sure to ask because you did mention a couple times your pricing structure. How have you set it up so that you can be more agnostic about this as opposed to the typical… You want to talk about it for a minute?

Nick Hubert:

As it’s structured now, it starts with a retainer earlier on where we are working… As Taylor mentioned, we are going deep in the operational build of the business. We will do that on a monthly retainer. We’re engaging consistently. As assets get built up and if assets get built up, we start to chew that retainer down as assets go up. I think what we are ideally trying to figure out, and still honestly have not figured out yet, is how do we get to parity so that we don’t create an… I want to be able to work agnostically with a client to say-

Jason Diamond:

Yeah, I love it.

Nick Hubert:

… regardless of how I’m engaging with you, that’s the goal. So I’d say we haven’t cracked the code on exactly what that is yet, but mechanically, we’ve got the levers to pull to say how we price and move that retainer down is basically allowing to keep it at par, so to speak, for the client and allowing us to say, “I’m here to engage in making the best wealth creation outcome for you along the way, whether that’s investing in the business or investing outside the business.”

Jason Diamond:

I think that’s the right recipe. I agree. The levers can be fine-tuned, but to me, that’s the model you want to create where you can credibly look your prospects and clients in the eyes and tell them, “Our job is to serve you in the best way… We’re sitting on the same side of the table as you.”

I want to turn this inward for a second. The home cooking concept. M&A, within the RIA independent space, is obviously a hot topic. Have you thought about it? Do you think it’s a critical part of a potential growth trajectory of a healthy, independent firm? I’m curious your perspective. I feel you, Taylor in particular, probably have a unique lens on this coming from the world you came from.

Taylor Gentry:

Yeah, Jason, I think if Nick and I wanted to put as much money as we possibly could in our pockets as fast as humanly possible. It’s a pretty easy recipe. It’s go get some private equity capital backer, roll up a few RIAs, get to a few billion of AUM and then sell it to the next private equity firm or roll it to the next private equity firm, do that a few times. We’d all make plenty of money and go on our way.

We’ve been really intentional on this front, and again, I talk about this is what we want to do for the next 30 plus years. And really being intentional around building a business that has that enduring nature to it, decided to take private equity capital on, you are on a shot clock to some degree. Yes, you’re trying to build a best business, all of those pieces. You get cadence. You get capital. There’s a ton of value there, but you are on a shot clock that is not a shot clock we’re trying to get on at this stage.

I’d say we opportunistically are looking at acquisitions. So we think about it, and Nick and I talk about it all the time, how much of our time should we be spending on acquisitions? And we think of it as 80/20 or even 90/10, 80% or 90% organic growth-focused, 10 to 20% acquisitions-focused. And so we’re actively evaluating those consistently and see deals on a monthly basis that we look at and evaluate, but it’s less of the focus today than it could be down the road.

Jason Diamond:

And Nick, do you think of that when you guys talk? Do you guys call that your true north? Do you think the same way you coach your clients and prospects to say, “For right now, it wouldn’t be the right move for us to take private equity capital and to do this acquisition rollup strategy because A, B and C are more important for us”?

Nick Hubert:

Yes. I think if we take our life north star for Taylor. I’m speaking for Taylor, but we’re close and so we share this of… To Taylor’s point, the life outcome of scaling that quickly with that type of capital backing is likely to create a life that I don’t actually want that’s not good for me, not good for my family, and honestly, not good for our clients at this point. And so that overrides in this case, even though the wealth, north star might say, “Hey, absolutely do that.” At some point something has to win. And so that is true.

At the business side, as the north star is motivated by this mission of the entire entrepreneur journey, the worst thing I could do is shortcut my ability to be on that journey for a long period of time. One of our friends in this space says, “The best thing I can do for my clients is still be in the seat 30 years from now because I’ve lived a good life that enables that.” And I think that’s spot on for us, is everything, it’s so easy in today’s world to be consumed by short-termism and we are intentional in ensuring that we don’t succumb to that. While still recognizing to your point, I mean, you’re in this all day, Jason, right? There’s a massive opportunity in front of us to be thoughtful about how acquisitions fit into this. And I think we want to be open to that in a way that ensures we just don’t lose the core of the goodness of what we’re trying to build.

Jason Diamond:

I think that’s the right answer. The only wrong answer in my mind is we’re not open to this or we’re closed to it. To not at least be opportunistically aware of the dynamics in the market, I think is naive. But also, I’ll be honest, Nick, when I think about the concept of the north star, I have a hard time imagining, because we use a similar concept when we counsel advisors. What is your true north or your north star and your best business life, whatever you want to call it? To me, it does include absolutely the personal piece. I think it’s hard to define it only on the economic verticals because, I mean, I think about this for a transitioning advisor. Almost never is the conversation about crunch the spreadsheet and get us the biggest check possible. It’s, yeah, sure, transition capital is important, but it’s let’s also, we want a better work life and we want freedom to market and blah, blah, blah. To me, I think it’s a completely fair way. You two are looking at it at least for now and I assume you reserve the right to revise that opinion down the line.

Nick Hubert:

I think acquiring for size and scale is as often the headline is, yeah, we’re not into that at this point because I think… And yet, hey, if the right acquisition with the right people came along in that, we’d be extremely excited and would move very quickly to execute on that. So it’s a little bit of a both hand.

Taylor Gentry:

Yeah. Jason, I think it goes without saying, but my background on having done a bunch of transactions of businesses like this, it’s a natural fit for us to have this as a lever. And so we are looking at deals. We just haven’t prioritized it as the top priority.

Jason Diamond:

I think also where you are, 2024 was the launch of the business. It’s pretty common to see, all right, let’s nail this, let’s get our feet under us, client service model and then we’ll start to think about that down the line.

A couple other things I want to ask you about running an independent firm. This is a pretty glowingly positive review, I think, of your ability to service clients, your ability to grow and to build and run the business that you want. Has there been anything negative that you haven’t enjoyed about running and operating this business, other than working with each other, of course?

Nick Hubert:

No, I was going to say, I’m like, can we get Taylor off the call again?

Taylor Gentry:

Jason, maybe I’ll take a first cut at it. I think for both Nick and I, it’s just the administrative components of running an independent business that we don’t enjoy candidly. I don’t think many people would. That said, you come full circle and it is a pretty glowingly positive review of running an independent business because we get to run it in the way that we see fit. And oh, by the way, we use the same things that we use with our clients. So the value drivers we’ve talked about, we have a value drivers worksheet. We refresh it every six months. Nick, Andrew, and I get together every six months and we’re 18 months into this thing and we’ve already got this cadence and system to it, if you will. So I personally really enjoy the running the business piece of it from a macro perspective. Yeah, I’m responsible for running our fee billing and running the math on all that and getting that done, for example.

Jason Diamond:

I think that’s actually a very thoughtful answer. And I appreciate you saying I enjoy running… I feel the same way, by the way. There’s some elements of running a business that I think are immensely fun. I think it gets painted with this brush of, “Ugh, running the business is the hassle and I want to work in the business.” Agreed, nobody likes invoicing and accounts receivable for the most part, but Nick, what are your thoughts on this?

Nick Hubert:

Yeah, I think mine is different a little bit coming from a different background where it’s easier for me to sit with the rose-colored glasses of the joy of the freedom that we have in this model. At the same time, when I’m counseling folks who are talking with folks or mentoring folks, younger people who are thinking about, “Okay, I want to go start my own thing,” I’m like, “Hey, it’s like I’m the same way. I want to look in the mirror and think I’m the boss or I’m one of the bosses and we get to go build this.”

Then the reality is, at the end of the day, if there was something that you didn’t want to do that had to get done and you didn’t do it, you got to look in the mirror and be like, “Well, you’re the boss, you didn’t do it.” It’s the both sides of the coin that I think a positive, negative cut is one way to look at that because it can feel that way sometimes. And the reality is every job has 20 to 30% of it that you just don’t enjoy doing, and that’s totally true.

Jason Diamond:

It’s why they call it work. That’s why they pay you.

Nick Hubert:

They’d be pretty quick to point out that I’m the one of the partnership group that they’re going to have to chase for a smaller administrative item because, yeah, I honestly, just similarly speaking, don’t enjoy that. I want to go talk to clients. I want to go focus on building what we’re building. In finance speaks, it is a higher beta to just the all encompassing realities of running a business that is really hard to underscore without being in the seat. And yeah, there’s definitely 20 to 30% of that I would love to wave a magic wand and say, I don’t have to do anymore.

Jason Diamond:

Yeah, I appreciate that.

Nick Hubert:

You can’t have one without the other. It’s both sides.

Jason Diamond:

I think it’s getting easier and I think it’s getting more offloadable and some of it probably gets more… In some ways, more offloadable as you scale, but then you get a new set of problems, probably two, because you’re dealing with bigger… It’s a never ending. I think most business owners would agree with that. And you said it well, you take the good with the bad and overwhelmingly, most people we speak with in the independent space feel as you do, which is, are there things I would prefer to offload or that I would prefer not to do? Of course, but that’s almost just the price you pay for the freedom and for doing all the things you want to do.

Two more questions that I want to be sure to ask about where this has been a great episode. One is AI. Need to know your thoughts. Is this coming for our jobs? Do you think your firm is positioned to capture either asset flows or also just to leverage this technology and use it to serve clients better? Just give me your thoughts.

Nick Hubert:

I think, in some sense, it would be irresponsible as people this early in our entrepreneurial journey and thinking about how do we optimize what we do for clients to not be engaging with AI in some way, shape or form, at least in an evaluative posture. So we are actively, in a bunch of different ways, whether it’s buy it off the shelf or build it, continuing to find ways to think about, not only how do we drive efficiency, because there’s an obvious surface level dynamic of if I can save time and spend more time with clients, that is a go to thing objectively. And there’s this deeper dynamic of if it can amplify what…

Actually, back to your prior question, if it can amplify what I’m best at and enjoy and reduce what I don’t enjoy, that’s a massive win. And I think we’re on the surface of seeing that. That’s the opportunity we are motivated by that and pursuing that. And at the same time, I would say an operational principle that really is important to us, and you can almost call it a north star within the business is client security can never be put at risk for the sake of our own growth, our own efficiency, or anything else. There’s, I think, still a question mark as to how we think about trusting this. And so we are very cautious as we think about we will never try to move so quickly on any technology, whether it’s AI or otherwise that we risk our clients in some way, shape or form, because the reality is we are also in a context where AI is, when pulled, one of the least popular things happening in the world today for the average American. And so there’s no kudos here for being a leader.

Jason Diamond:

I totally agree. The first mover advantage here is slim to none.

Nick Hubert:

Yeah, you don’t want to be the one sticking your neck out on this in our industry. And yet there still objectively has a potential to be better for the clients. Navigating that I think is messy.

Taylor Gentry:

I think the only thing I’d add, which is pretty short, is the use of these tools has the ability to create a better deliverable for clients on a more consistent basis. And marrying that with exactly what Nick just outlined around the risk is really the magic piece here. And so I think, to the extent we can get it implemented effectively with the security, but also with, this is going to result in a lot better outcome for clients across the board, that’s a pretty attractive objective to go after and it’s pretty exciting to be in the industry with that now on the forefront in terms of ability to improve that experience over time.

Jason Diamond:

Yeah. No, that’s a good color to add. I want to end here with a potential HR violation, but you’ll forgive me. I’m not going to ask about age, but you are clearly both relatively young advisors. And this is a hot button issue in our industry, the idea that there are not a lot of talented, young next gen advisors at a time when a lot of gen one or older advisors are retiring out of the business. So what would you say… I think one of you made the comment earlier, it’s not necessarily the coolest industry to go into at 23 years old right out of school. I think more commonly people go into sales and trading, investment banking or some of the other finance verticals. What would you say to younger folks interested in wealth? And maybe I’d ask also, do you have any thoughts on how we solve this next gen talent crisis? And if you’re both secretly 90 years old, you can just do it.

Taylor Gentry:

You talking my internal age or my actual age?

Jason Diamond:

Why don’t you go first?

Nick Hubert:

Yeah, go ahead, Taylor.

Taylor Gentry:

I think there’s two threads here. The first is it’s not a sexy industry to go into and not as sexy as an investment banking, private equity shtick, if you will. I think from my perspective, it’s really important what you’re working on. The ability to be in a firm like what we are building with the diversity of work that is available is a little bit like the world’s your oyster and we’re designing it with that in mind. For Nick and I, the ability to work on many different situations throughout the day and throughout the week is actually why this business is so attractive and interesting and why we want to do it for 30 years. And so we’re building with that context. And so, in some ways, it’s almost like a plug for younger advisors, the ability to work in a firm like what we’re building where you’ve got this diversity of work that is not just trading stocks and bonds or just spreadsheeting or just financial planning. This is a much broader expression and experience than what I would call “traditional” wealth management. So I think that’s the key on that front.

Then, on the talent development side of the equation, if you will, this AI thing is going to be a big question mark. And what I mean by that is there is significant training that will be required in, call it traditional wealth management or the firm we’re building with regard to folks’ ability to actually learn when you can plug it into AI and get an answer that you don’t have to critically question or think through. And so there’s going to be a significant learning curve for folks that we’re going to have to continue to train and educate on in order to produce talent that can be long-term sustainable and beneficial for clients more writ large.

Jason Diamond:

Nick.

Nick Hubert:

Well, first and foremost, we haven’t given our third partner enough here of time. I think we have a tremendous benefit of having a multi-generational team at the partnership level where he’s in his mid to late 50s and can bring that additional experience to bear and as is necessary, and as is important because investing is an experienced business and a lot of clients want that. And so the power of that matters. I think that actually speaks to firms being willing to think of partnership at that level that partnership is not reserved for just once you’ve been there for a long time. So I think it’s getting at like, how do you share ownership earlier, do it in a way that is actually giving people a stake in the outcome and allowing that elevation to happen. I think that’s number one.

Number two, honestly, the existence of people like you and your team and that your family has built over the years, Jason, is awesome. And because of the ability for you to help people navigate and see how easy it is to actually run this business and build this business in some sense… And that’s in the broader spectrum of having seen. We work with so many different types of companies. We sometimes say our business is so much easier to run and it has come so far with technology and with people like you who are providers to us to allow it to be easier for us so to speak. That’s a big deal. I think that should be talked about more that there is a massive… What that allows is more time to, as Taylor mentioned, build what you actually want because you can outsource the compliance piece in a major way that allows you to not spend as much time on that as you used to.

So I don’t think that gets talked about enough. And I think if you just zoom out and view this in the perspective of post-2020, there was this massive movement of entrepreneurship through acquisitions and people looking at this idea of how do I get the life I want by way of not having to be on a two-year clock to go to the next job to the next job. Have something that I can have a long-term impact on where I get to build something and have employees. This is the perfect space for that because it’s such an awesome business where you get to work so intimately with people and clients and their life outcomes. They’re, again, relatively speaking, easier businesses to run relative to what’s out there. I’m just baffled by the fact that it is not seen a larger wave of younger people coming out of these more “traditional” paths and seeing this as an awesome place when they’re willing to go buy an HVAC company.

This is so much easier than that. So honestly, I think part of it’s just we all live coming from being in this space longer, we get stuck in our wealth management lane and I think it’s easy to then nitpick and get stuck in there. But when we take a more global perspective, it’s a massive opportunity that I hope more people take advantage of.

Jason Diamond:

Thank you for highlighting that. We call it the ecosystem of support for financial advisors, and it’s gotten so much more robust through the years. And a lot of times, people focus on the negatives of compliance burdens have gotten heavier and competition has gotten fiercer. And yes, that’s all true, but the flip side is the point you just made, Nick. So I appreciate you bringing that up.

Any last words of wisdom you’d want to share with our audience? This has been a fantastic episode and I can’t wait to have you back on to revisit the growth trajectory.

Nick Hubert:

Yeah, I’d say just thank you for the time. We’ll plug the podcast. We’ve enjoyed you guys for a really long time and being able to have the resource of what you guys have built is actually… In our partnership meetings, we’re bringing you guys up with some consistency. So thank you for the gift that you are to the industry and continuing to create opportunity for folks like us to come on here.

Jason Diamond:

Thank you so much.

Mindy Diamond:

As a financial advisor, you hold yourself to the highest standards of integrity, honesty, and credibility. You are successful because you take your professional responsibility seriously and are dedicated to your clients, but are you living your best business life? Are your goals aligned with your firms or could a better option exist? Should I Stay or Should I Go? is a book written with you in mind. It’s a self-guided journey that walks you through the key steps that we take with our advisor clients. This strategic thought process and roadmap to professional self-discovery, is designed to help you ask the right questions and think critically and objectively, whether you’re considering change or not. Learn how to get your copy at diamond-consultants.com/thebook.

 

From professional golf to a nearly $5B multi-family office, Constantine Hatzivassiliou explains why the best advisors become the first call when life gets complicated.