Episode Transcript
[00:00:00] Matt Sonnen: Welcome back, everyone to Episode 19 of The COO Roundtable. We are still at home, we’re still wearing our masks. We’re still social distancing. In fact, PFI permanently moved out of our office space this past weekend. We were in a shared office environment. There were multiple businesses operating on the same floor. It just didn’t feel safe in the new environment to have a lot of outside people (outside of our tiny little circle of just our employees) milling about and using the common areas. Ironically enough, we had spoken to several movers that were going to come in over the weekend and move our furniture and equipment for us. One of them called us late last week and he said, “I’m so sorry, two of my family members that I live with, they’re in the hospital, I’m going to need to quarantine myself, I’m not going to be able to help you move.” It’s still out there people! I know everyone across the country is tired of sheltering in place. Everyone, myself included, we’re all chomping at the bit to get back to normal but we keep watching the number of cases still fluctuating, and here in Los Angeles in particular, we’re still at all-time high. Please stay vigilant, do what you can, and protect yourself and protect those around you. I’ll step off my soapbox. I can say that we have two industry heavyweights joining us today. This is going to be a fantastic discussion. We have Michelle Thetford, she is the COO at HighTower. We all know that HighTower has made significant changes to their business model over the past few years, and Michelle joined as COO last summer. We’ll talk about all of that. Michelle, thank you for being here.
[00:01:37] Michelle Thetford: Thanks, Matt. I appreciate the invite. Glad to be here.
[00:01:40] Matt Sonnen: Great. Joining Michelle is Mike Reed from Dakota Wealth Management. Mike is the COO and Managing Partner, working closely with Peter Raimondi. Everyone knows Peter has had a long and successful career in the RIA space. Mike joined Peter two years ago from outside the industry and we’ll talk about that in a bit. Mike, thank you so much for being here and sharing your perspective with our listeners today.
[00:02:06] Mike Reed: Hey, Matt, thank you for the invite. I’m honored to be on the show with Michelle.
[00:02:12] Matt Sonnen: Thank you. We’ll start with Michelle. As I said, everyone knows HighTower, but things have changed quite a bit recently. Everyone is intrigued by what you have going on there. Michelle, can you give us an overview of HighTower?
[00:02:28] Michelle Thetford: Sure. HighTower has been in existence for just over 11 years now. The business model obviously has evolved quite a bit. I joined the firm last summer as you mentioned. We at this point, have about $57 billion under management with 108 different advisory businesses. Within those businesses, we have over 225 advisors. The firm obviously started, a lot of people know the history, focused on wirehouse breakaways, and that history really has evolved completely to where we are now, really focused on advisors. We consider ourselves an investment advisor at our heart and soul, with services within our company to provide service to investment advisors. We are not in the breakaway space anymore. The M&A focus we have now is really an investment advisor businesses. Clearly, inorganic growth is key to us, but we are very diligent not to take our eye off of organic growth. In 2019, we had just over 9.5% organic growth, which we feel is pretty healthy given the industry where that number is in the low digits, but we’re not done. You’ll find as we talk today, a lot of our investments and initiatives are around providing value-added services to our advisors to help them grow organically. Again, I appreciate the time with you today.
[00:04:00] Matt Sonnen: Great. Mike, Dakota Wealth with Peter’s name associated with it, Dakota Wealth definitely gets its share of headlines across the industry. Can you tell us a little bit about the firm?
[00:04:09] Mike Reed: Sure, Matt. That’s a big advantage for us. It makes my job a lot easier. We founded the firm in 2018. We currently have $1.2 billion under management. 30 staff members, 30 team members, we like to call them. Actually, 27 of them are partners. They have equity in the company. We service primarily high net worth individuals, those who have a desire to have their wealth evaluated and managed holistically and individually, including their investments, estate planning, and tax planning. We offer all those services. We’ve grown pretty quickly. We launched in 2018 with approximately $450 million under management and we’ve increased by about 170%, mostly through top-line growth over the past two years. We are growing right now — looking at how we’ve done in this year to date — by about 15% organically. Non-organically, it really just depends on what the future holds with respect to our current environment. We are eager to merge with firms that are like-minded, but we’re very selective. We turn away probably 80% of the merger candidates that we meet early-stage because they’re just not a cultural fit. Then we are very careful in our due diligence process. We don’t really have any growth goals, we feel that’s limiting. Just let it come. We could be $2 billion by the end of the year and $5 billion in the next two to three years, or we could be $1.5 (billion). We’re going to see how it goes, but our culture is so important for us to protect. That’s what we’re doing and two years in and we’re having a good time.
[00:05:55] Matt Sonnen: Great. As I mentioned, you joined Peter from an entirely different industry. Can you tell us about your transition into wealth management and how your outsider’s perspective has helped you in this new venture in your career?
[00:06:10] Mike Reed: Sure. It’s a little interesting, my background. I’m a classically trained medical practitioner and quickly realized that business development, team building, and being entrepreneurial were truly my calling. After I earned a master’s degree in orthopedic rehabilitation, I went on to get a doctorate in organizational management with a specific emphasis on spine surgery. I had a 28-year career in medicine. I developed 14 ventures ranging from LLCs to C-corps and nonprofits including a national nonprofit. In 2011, I merged my medical concierge firm with Hospital for Special Surgery out of Manhattan. I joined their executive team and that was a lot of fun. I helped them develop their southern footprint. After spending three years with them, I was offered the position of executive director for the North American Spine Foundation, where we established international presence and congressional support for our initiatives. I did that for three years. That was really an eye-opening experience with respect to fundraising and managing these national initiatives. Had a lot of success. We moved our operations to Chicago, and that was under the auspices of a large professional surgical society. My wife and I, we have two boys, we wanted to stay in South Florida. I launched a consulting firm. During all those 28 years, my dearest friend was Peter Raimondi. We’ve been friends for almost 30 years now. We’re very close in many regards and we got to see each of our careers evolve over time. In 2013, Pete approached me about becoming COO of Banyan Partners. That was the firm that he owned at the time. It just wasn’t a good time for me and I wasn’t available. In 2017, when Pete was sitting on the sidelines after leaving Boston Private (which is private wealth), Boston Private bought Banyan Partners back in 2014. In 2017, Pete was sitting on a non-compete and he approached me about the idea of Dakota. The time was right, and my career was at a point where it just seemed to be an exciting opportunity. I decided to leave the field of medicine. I’ve been in the finance profession with Pete working on Dakota for about three years now. Primarily overseeing all daily operations, inspiring our team, caring for our teammates, and spearheading all of the M&A due diligence and integrations. It’s been a blast, Matt. This field is very exciting, there’s a lot happening. I’ve been able to take a lot of the things that I learned in a very challenging field, that being medicine and healthcare, and bring some of that knowledge and perspective to what we do at Dakota. We’re having a good time.
[00:09:23] Matt Sonnen: That’s crazy. Wow, you’re coming from somewhere completely different, but your background is in organizational management. I talk about that constantly on this podcast. That’s the role of the COO. It’s not a technology job. You’re not sitting in the server room plugging in wires. It’s all about organizational management. This is going to be a great discussion as we dive deeper into these topics. Michelle, you’re like me, you’ve been in this industry your entire career. Most notably, you were at Charles Schwab. Tell us a little bit about your background and how this opportunity at HighTower came about.
[00:09:58] Michelle Thetford: Yes, you’re right. I have been in financial services my entire adult career and this is the business I’ll be in until I retire. I entered this business, to be honest, by accident when I got out of college with my degree in advertising from Michigan State. I was a Spartan. I, of course, moved back home to take advantage of the free rent while looking for my big break in advertising and after about three months of watching that nonsense, my dear mom gave me my first lesson in economics and announced I would start paying rent the following month. Which meant that I had to go out and get the first job I could find and that happened to be a receptionist job at a small broker-dealer in downtown Minneapolis. I started filling in for some of the sales assistants, with the advisor teams, and when they were out, I realized that I really love this business and was shortly moved off the receptionist desk to the operations manager for the largest advisor group within the firm and I worked for them for a number of years. Well, that was a great education because as an advisor group working with high net worth clients, we did it all. We started the first hedge fund, we did commission business, we did a fee business, we did IPOs, we did investment banking. It was a phenomenal way to learn this business. That then took me to leading the operations department for three of the AIG Broker-Dealers in sunny Phoenix. I just took that to a bigger scale and from there realized that this business was getting more complicated all the time and deliberately took a sidetrack in my career path to take a compliance role at Schwab, their custodian platform. My thought process was if I was ever going to run a business in financial services with advisors, I really needed to understand the rules of the road and how the regulations and the risk and all that works because I did not want to beholden to someone to tell me how to do that. I didn’t plan for that side role to last a decade but it did and during those 10 years at Schwab, it was a tremendous opportunity to work with all the advisors on the platform and actually, I was the only compliance person that the relationship management team was taking out to visit with clients to solve complex issues about exceptions. It was unheard of, and quickly realized, not so quick after 10 years, but realized there was going to be a point I had to either stay in a compliance risk path or make my way back to the business side. When I had the great opportunity to do that and assumed a role with the advisor services business at Schwab to lead the complex solutions group and the risk group. There I worked across the business and with many, many advisors who used that platform and really was the problem solver, and managed the risk, and had taken that to just an incredible experience to where now I bring it all together. And last summer had the opportunity to join HighTower and come back to my roots. All of those roles I’ve had through this 20 plus career path now come together and I feel like I’m home again, back on the business side of working in an advisor firm. The technology is different but the basics, the issues, they’re all still the same. It has been a great experience to come back to this side of the business.
[00:13:38] Matt Sonnen: This is always my favorite question of this podcast because all of our guests, both of you included, of course, everyone here has had such great experiences but interwoven in everyone’s personal stories are these little things. Mike says, “Well, my family we didn’t want to be in Chicago, we wanted to move back so I had to figure something out.” Your story, everyone can relate to that one. “Well, my mom stopped paying my rent. I had to go figure something out.” Then these little tiny things just lead to these amazing careers and opportunities. I love hearing everybody’s story so this is great. I was on my Coronavirus soapbox earlier, I’m sorry for that. Let me ask both of you how this transition to working from home has been for both of your organizations. You’re both running larger than average firms so I’m curious what the adjustment’s been like and if at this point you even have plans yet to get back into the office. I’ll go to Mike first. How have you guys been handling this new working environment?
[00:14:36] Mike Reed: Coming from the field that I was in, I learned over the 28 years that it’s really important to plan for the worst and hope for the best. We had our continuity plan in place. Of course, living here in South Florida with hurricanes always a threat, we really had something very comprehensive in place. Even for our offices in Ohio, New Hampshire, and the Boston area. When we started seeing what was happening in January, in February, my Director of Technology, Luke Baxter and I, really got together and started examining where everyone was relative to their home environment. We didn’t really have to do very much. Ordered a few monitors for some people, maybe a couple of laptops, but we really didn’t miss a beat. We made a move to the home environment in the middle of March. That was about two weeks before Florida shut down and we’ve been running seamlessly since that time. We created a very detailed reopening plan. That plan needed to be modified for different regions of the country and we paid close attention to what the governors were doing in those areas as well as their public health systems. Most of our offices are reopening. Some have half the staff working out of the office, others have full. We’re doing all the things that we need to do. We’ve had one person in the firm contract the virus to date. So far, everyone else is in good shape and our productivity hasn’t been affected at all.
[00:16:19] Matt Sonnen: Great. Michelle, what’s been the experience like at HighTower over the past couple of months?
[00:16:25] Michelle Thetford: A lot of similarities with what Mike talks about. I too had run teams in multiple occasions in my previous experience at Schwab and had activated BCP plans numerous times as I had teams in Denver with blizzards and South Florida with hurricanes. We too started extensive BCP drills end of January, early February. We were rehearsing and running mock people working from home for several weeks through February. When things finally came about in March, they came up very quickly and we too went remote in our corporate offices in Chicago and New York right around the middle of March as well. We made those decisions very quickly and we didn’t miss much of a beat either. We had people with equipment already. During our drills, we’d identified monitors and things like that so we were able to transition literally within a 24-hour period. It took us a couple of weeks to get the kinks worked out. Luckily, we had a lot of technology infrastructure in place so we did not have any backlogs or delays or anything like that in our operations area and things have been running quite smoothly. There were some things we focused on right away because we realized digital with paperwork was more important than ever. It’s not just digital from a custodian perspective. There’s also digital from a HighTower perspective. We obviously have our own client agreements and forms that our advisors need to use. We very quickly mobilized on expanding our technical policy around digital. Approving all digital tools that our key custodians offered for use. We also were able to create and approve and implement policy allowing for our advisors to execute HighTower forms internally through digital means as well. We were able to be very digital within a couple of weeks of going remote. We’re now in the summer, planning what the returns look like from the corporate perspective and we’re not planning people to go back into the corporate offices before September. We’re now in the planning stages of PPEs and partitions and hand sanitizers and just the incredible amount of planning you have to do for that. Then we do have some of our advisory teams slowly going back and face approaches in their offices and know the plans that we’re working on with them one by one because, to Mike’s point, our teams are in 34 states and each state has a different dynamic going on right now. We’re running both of those in parallel.
[00:19:24] Matt Sonnen: That’s great. That’s internally how you’ve been dealing with it. Let’s talk externally. We’ve talked about how both of your firms are very involved in M&A and onboarding of advisors. I’m curious what impact this has had on M&A activity at both of your firms and then from an operational perspective, how have you convinced advisors that are looking to join your firms that this is “business as usual?” Michelle, I’ll go to you first. How have you handled this from a deal structure?
[00:19:54] Michelle Thetford: Deals are still on. We’re very active in the M&A space. We have eight or nine deals we’re working on signing and closing right now over the summer. We haven’t missed much of a beat in our pipeline but we have had to really retool the entire M&A process, everything from how you prospect, and you have those conversations about advisors looking to join our community, all the way to the integration piece, which I’m responsible for. We have hosted several virtual prospecting or what we call them “VIP Experiences” where the executive team spends a day on a video experience with advisors considering fit to join us. That’s been quite successful. In this day and age, people are getting pretty used to the Zooms and the WebExs and you can do a really good experience with that. We aren’t planning to travel anytime soon for prospecting so all the conversations you would have had in person we’re just moving to a digital platform. On the integration front, we’ve gone through and retooled our entire integration process at this point. It will all be virtual. We have reorganized the training that we provide advisors when they join our community. For example, I normally would send someone from my organization out to the advisor’s office for a week or so to do like a hands-on training and help them with detail. We’ve now converted all that to a schedule to do it online and you have to do that in smaller chunks obviously because it’s very difficult for us as adults to sit in front of a video camera for eight hours. We’ve had to change our schedule and sequencing of how we do training. We’ve created training videos, we’re using a vendor called Brainshark where they’re small couple of minutes segments of how to do things and those have been very effective. We’ve just really had to go through and reorganize our whole process too. That took us probably 30, 45 days to nail down but we’re now back fully-focused on deals. We’re not missing much of the reach we have, again, several closing this summer but it is a process to go back in and retool all those things where you would have just put somebody on the road for a week or two to now come up with content and schedules of how you’re going to deliver that through a virtual experience. That is a very specific project we did.
[00:22:30] Matt Sonnen: Fantastic. Mike, you’ve said there’s been some adjustment from a deal-making perspective for you guys.
[00:22:36] Mike Reed: Yes, it’s been a tremendous adjustment, in fact. One of our biggest differentiators in Dakota are the relationships that we develop, not only with our team members, those ongoing relationships but new relationships. When we look at an M&A opportunity we’ve spent a great deal of time, boots on the ground getting to know the people, getting to know the staff, allaying any concerns or anxieties. All of that takes time and oftentimes a personal interaction. This has been a big change. We’ve worked hard to adapt obviously video conferencing and teleconferencing and whatever else it might be. We’ve done everything that we possibly could do to maintain that personal relationship not only with how we’re sourcing the opportunities but also those relationships that we have in the pipeline and then our own staff, but it is a challenge. We travel quite a bit, we meet a lot of people personally and it has definitely slowed us down. We still have a nice pipeline, we have a couple of opportunities right now that look very, very exciting. In fact, we think by the fall we might be closing on one but again it’s very important for us to stay connected with these people. It’s not all mechanical. The one thing that we’re very thankful for throughout this process with respect to the perspective of sellers, is we’ve had some great press coverage over the past couple of months. We had an article in Forbes that featured our insights and our preparation during this pandemic and then our CEO Peter Raimondi was just selected as a finalist for two WealthManagement.com Awards, one for CEO of the year, the other for our approach to M&A. That’s helped us with sellers in validating the quality of how we run our business and our operations. As Michelle was saying, we’re just adjusting, adapting, and I think this is going to be the way it’s going to be for the next six months or longer so we’ll just forge ahead and hopefully, things will continue to develop the way we had planned.
[00:25:02] Michelle Thetford: Mike brings up a really good point about part of the lead generation process is really making sure your brand is out there, that you’re heard in the marketplace. We too had to keep focus on that and continue with figuring out a way to host virtual events. We’re going to host one here at the end of July, our first true virtual conference type of event. We’re still trying to get our messages out there. At the same time when you’re retooling your process, continuing to make sure you follow up with your brand and your marketing program is important also.
[00:25:48] Mike Reed: Just to echo what Michelle was saying, we have our Director of Marketing Communications…And that word “communications” has been so critical to the point where she’s created a formal communications plan for our internal engagements and external. We’ve really had to think it through so that we’re protecting our brand, we’re protecting our reputation, and we’re staying connected because staying connected now looks very different than it used to.
[00:26:20] Matt Sonnen: You bring up branding, one of the key components of successful M&A transactions is obviously the ability to maximize the synergies between the buyer and seller. From a branding perspective, I think both of you take different approaches at both of your firms and branding is always a big component of the negotiations between a buyer and seller. Michelle, when an advisor or a firm joins HighTower, how do you handle their existing brand?
[00:20:00] Michelle Thetford: Brand is a very personal decision to our advisors and we’re certainly comfortable to let advisors keep their brand, if that’s what they like. We try to be brand-agnostic, if you will. We have advisors who join us who are very passionate about keeping their brand, we’re totally fine with that and support that. We also have advisors that join our community who then want to use our brand. At HighTower we just refreshed our brand last year with new design and colors and look and feel and some advisors have wanted to take advantage of that. We’re very open to that but we do have certain things that give the economy of scale for advisors joining us and that we do not bend on. The key thing to that is the ADV, advisors joining our ADV, we administer a lot of their technology, we administer their HR, their benefits, their 401(k) plans, things of that nature. With those economies of scale, clients and employees of the advisory firm will see the word HighTower in different venues whether it be at the bottom of a form or on a paycheck stub for their employees. Regardless of what decision the advisor makes we then spend a lot of time customizing their integration plans to address all those nuances. When they choose to keep their own brand we get very detailed about how then to promote the new partnership with HighTower, our Chief Marketing Officer comes in and helps them build a strategy around that. We spend time with their teams explaining that their culture, their autonomy in the office will feel very much the same as it always has. We don’t take on a touchpoint to their clients, they maintain that spirit with their clients. We are very flexible when it comes to their brand and their passion around keeping it.
[00:28:56] Matt Sonnen: Mike, I think Dakota Wealth has a different perspective by having the advisor or the firm take on Dakota’s branding, how do you believe that adds to the synergies of the merger?
[00:29:08] Mike Reed: We do approach it differently. We’re very passionate about our brand and what it means. The word Dakota is actually derived from the Sioux Nation, actually more specifically from the Lakota language and the word Dakota means “friend and ally.” That’s the kind of firm we’re looking for and we’re looking for their interest in feeling that way about us as well as in our team. It’s very important for us that they put on our brand, whether it be on a hat or stationary or in their office. We did our Springside Partners acquisition, Carina Diamond, who’s our Chief Experience Officer in Akron, just had her office completely redone and has Dakota all over the place and artwork very similar to what we have in our home office here in Palm Beach Gardens. Brett Orvieto who’s in our Fort Lauderdale office did the same thing with his office. You walk in and it looks very similar to our headquarters office. We even have an office in New Hampshire. Marilyn Rios, she did the same thing, put our logo up there it’s just– we all feel more connected that way. It’s part of our culture, part of our vibe. Everyone feels like they’re part of the family. That’s what we look for when we go out and look for a possible merger. Both Pete and I have been on the sell-side. Each of us once in our career have sold our firms, one time each. We have been through the pain of seeing our baby that we grew and nurtured sort of disappear overnight with that acquisition, and we didn’t want that to happen in Dakota. What we’ve done is on our website, we’ve created this historical timeline when we do an acquisition, we memorialize the firm that we’re merging with we memorialize their name, their history, and we put it on our website so that it can live in perpetuity very important to us. Then we’re very slow and very careful about transitioning. Some of the firms that we’ve acquired have wanted to do it very quickly and change everything. Others have wanted to do it more slowly and one thing at a time, we don’t have any mandate with that regard, and we’re very sensitive to it, but it is important to us that people are working towards wearing the same colors and the same logo.
[00:31:47] Matt Sonnen: In terms of culture, that is what you’re really talking about. One of the things I always love talking about on this podcast is the COO’s role in people management. I think I said it earlier, a lot of people think that it’s really that the COO role is really just a technology role, but I think 75% of the COO’s job is tied up in HR. Mike, can you speak to the people side of your job and what impact you as the COO have on the culture of the organization?
[00:32:16] Mike Reed: Sure. When Pete approached me about joining him and envisioning Dakota and putting together the pieces, one thing we discussed right out of the box was how we were going to run this firm. I came from a concierge medical business model, in many of the things I did, Pete has been known for his high touch approach, but we both were on the same page for many things, but this thing really most importantly, and that is, we both believe that our team members, our staff, our partners, they come first before our clients. I know that sounds strange and may rub people the wrong way, but we firmly believe that if our team members are getting everything that they need, if they’re jazzed every day that they come into the firm because their needs and expectations are being attended to, we’re sure by default that the clients are getting extraordinary service and that’s the way we’ve always run our firms. Thankfully he and I were on the same page and that’s what we’ve done. We’re very serious about that, anything from professional development to someone’s personal challenges and everything in between are my number one priority, everyone knows they can call me 24/7, any day of the week, and I’m here for them. It’s just how we run Dakota. I would say about 80% of what I do throughout the day is personal interaction, helping someone envision their professional path or dealing with an issue, could be HR benefits, could be workflow, could be anything, but it’s really people-driven and I think my background as a caregiver has helped me enormously in this area. I really love it every day.
[00:34:09] Matt Sonnen: That’s really interesting. Michelle, you and I have discussed this in the past. You’ve said that given today’s current environment with employees displaced from the office, it has made you devote even more time to managing the people. Talk to us a little bit about that.
[00:34:25] Michelle Thetford: I mean, Mike’s right. This business at its heart is all about people. It’s all about their relationship. It’s interesting during the first three months of COVID and working remote, I felt like my world was upside down and that I was used to spending so much of my time to your point, focused on managing people, managing relationships with our advisors, managing our relationships with our custodians, really 100% dealing with people and the issues that were on their plates. Then the first three months we were remote suddenly it was a lot of technology and technology became almost three-quarters of my day for the first several months we were out. I miss the people. I was glad to get back to the people part of it because after we got our digital policies made, we got people settled in. Well now it’s how do you make this work day in and day out? There’s a different issue that comes up in this environment than before, something as simple as one of our advisor teams would make an error on a client account of the custodian. I’m suddenly getting ahold of the right people to get that fixed and you can’t just see a client and get something signed, how you get authorization. Suddenly you have to do that in a different way. I’m back now to spending most of my time with people and managing things, but you have to do it in a very different way. The issues that they bring to you for help are very different. We actually engaged with the ________Institute to come in and talk to the executive leadership team at HighTower about how we should approach and evolve our management style with our advisors and with our teams in this environment of COVID and the stress that goes with it. You have to approach that very differently than you’ve done in the past. In the past, when you would see these people every day, you would get a good vibe, yes, they’re good, you would have your pleasantries, but now, you have to be much more deliberate and thoughtful on, are you people really okay? Or are they struggling with something? There’s personal dynamics going on here that normally would have no bearing on work, suddenly do. We have associates with young children who have no summer programs because our corporate offices are in big cities, they had to find a place to work remotely for the summer that just wasn’t conducive to having them stay in the cities with small kids and no programs. We’ve had to work with our staff to, in some cases, work from other locations for the summer, while we’re working from home. You have people that need different scheduling based on trying to do homeschooling, you have people that need different support because they have elderly parents that they now have to provide more help to so they don’t have to go out and get supplies. You have to engage with your teams on a very different basis than you had in the past, to really be there for them to work through all of this. I feel like we’ve gotten into a good rhythm of that. Now we’re really back to focused on continuing with our performance management. We have a very robust performance management program at HighTower with quarterly check-ins, development plans, annual performance reviews. Those things are all still ongoing and they’re more important than ever because it gives managers a key touchpoint to have a really heart to heart conversation with employees about not just living in the moment of COVID, but reminding them “Hey, you still have a career here. Let’s continue on building your skills. Let’s flip to the future. I know we can’t send you to that class, but that class is now online. Why don’t you do that?” I’m figuring out ways to keep teams engaged. When we first went to remote the Zoom Digital happy-hour was the thing and we did that. We did Bingo. We did standing meetings, you wore sunglasses to a meeting or hat meeting, that was all really fun to people engaged for the first, probably two months, and then really ran its course. Now you’re having to look for different ways to keep teams feeling connected. With it being summer, for example, we’ve kicked off a team walking meeting where instead of doing a video call for a regular standing team meeting, I’m on video, everybody puts their headphones on and they all go for a walk during that meeting. We’ve had to be really creative about building those touchpoints. Teams don’t feel isolated and they can still have that synergy working with each other, but it’s different. You have to really think through, how to stay connected with your folks and one benefit, I will say of all this is for me personally, with my direct reports, I talk to them more now than when they sat next door to me. We joke about that because we end every day in my team with a leadership team check-in and it’s just time for us to talk and get caught up on our day. That time we just didn’t take before. We always had as more of a staff meeting to talk about business items, but really that daily connectivity is something we all look forward to every day. The people aspect of this is more important than ever to keep people hopeful and keep them engaged. You really have to focus on it.
[00:40:30] Matt Sonnen: The virtual walking meeting, that’s one I haven’t come across. You read a lot of things about the benefits of walking meetings in a non-pandemic world, but to make them virtual that’s – I love that idea. That’s a new one for me. That’s great.
[00:40:48] Michelle Thetford: Well, as I said, the first two months of doing all of these video fun things they were great but they just ran their course. Now we’ve really had to start getting creative for people to have those touchpoints. This is one of our first forays into that. I had my first one here the other day, and it was actually a lot of fun to tell you the truth. One challenge you have in the virtual walking team meeting is the mask. You have to get your headphones, your ear pods situated just quite right so you can understand each other through the mask you’re out walking. We got it done.
[00:41:34] Matt Sonnen: That’s great. That’s a fantastic idea. We’ve talked about the COO’s impact on M&A, we’ve talked about the COO’s impact on culture. To wrap up I’d like to talk about another key aspect of the COO’s job, and that is freeing up the advisor’s time to do what they do best, which in my mind, most advisors should be focused on client service and prospecting. Michelle, I know HighTower spends a lot of time with advisors to ensure they’re focusing their energy on the most productive tasks. Talk to us a little bit about your views around all this.
[00:42:11] Michelle Thetford: We do. We focus a lot of energy to give support to both our advisors and what we call our field professionals that are operational members of the advisors team supporting them. We give support to both groups. On the advisor side, we do promote how important it is for them to focus on growth of their business, servicing their clients that is really their mojo if you will. We approach that from several angles. One, we’re very focused on value-added service type support. One example of that is just today we announced the addition of Stephanie Link who joins us as our Chief Investment Strategist. She will oversee our outsourced Chief Investment Officer function. We do have that value-added service to help advisors outsource investment management choice so they can again, focus on growing their business and their client relationships. We’ve launched an education series called Elevate. There’s several modules you can take in that. One is strictly a growth dedicated module to help advisors create a plan to grow their business. I’m sponsoring and presenting a series around using digital to build scale and efficiency with your business. We offer regular consultation with our advisor teams managing their P&Ls and how to forecast costs and how to think strategically in this environment where it’s more important than ever and look to the future. Most of our advisors teams have dedicated — “Advisor Success” is a team we call to help them review those things. We’re always looking to engage with them and support them on their own internal marketing strategies. We’ve launched a platform called Engage which is powered by Snappy Kraken in the background and there’s custom content on there just for HighTower that allows advisors to really use a digital platform to power their marketing endeavors. It’s been an incredible game-changer for us and bring so much more opportunities to advisors to really launch a robust marketing strategy in a very efficient way with very unique content that’s customized to their business. One of our core focuses, as I say, is really those value-added services to get advisors focused on their business and how to grow it.
[00:45:03] Matt Sonnen: Great. Mike, I’ve heard you discuss this topic of alleviating advisers time on other podcasts you’ve done. What do you think of the division of labor between the advisor and COO director of operations type role?
[00:45:16] Mike Reed: As you know, Matt, in our previous conversations, we believe very strongly on having a group of people that are focused on running the business and those who are working in the business. We have a team of seven people in operations that have no client-facing responsibilities whatsoever. Their primary responsibility is to make sure that anybody that has a client-facing responsibility is fully supported and has everything that they need. Now, sometimes when we do an acquisition, we run into, this happens oftentimes, we run into advisors who are wearing multiple hats. Some are involved in compliance issues, some are involved administratively, and many of them hate doing those things. Really what they want to do is they want to service their clients. They want to grow their business. They want to interact with their clients and help them grow their wealth. The way we approach this as very much the way Pete and I approached our relationship. When we came together, I had served as CEO for 20 years in the firms that I was running in developing. Here I am going to be supporting Pete as his chief operating officer. It gave me a real exciting opportunity to support him in the way that I had always hoped to be supported in the role that I had prior to joining him. What we did was I said, “Listen, we’re gonna take a piece of paper. We’re going to draw a line down the middle and on the left side, I want you to write down all the things that you love doing, and on the other side, I want you to write down all the things that you hate to do.” Basically my job description became everything that he hated to do. I wanted him to come in every day, doing those things that jazzed him, made him excited about coming into work every day and those things that he didn’t enjoy doing, I was going to take off his plate. Now, maybe I didn’t do them personally, but I was going to find someone who could be on my team to get those things done. We did the same thing with our advisors. We really encourage them to sit with us and talk it through and identify the things that they truly love, because typically the things that they love are the things that they’re strong at and vice versa the things that they hated, the things that their weakest at. We try to take as much off their plate as possible. Unfortunately, some people find their relevance and being dizzy and doing lots of things, and it takes time for them to relinquish those unnecessary tasks to us, but that always happens in time. What they find is that they’re usually much more productive and much more successful, and we’re more successful as a company. That’s how we go about it and whatever the resources we need to put in place to support that, we’ll get it done.
[00:48:00] Matt Sonnen: I love it, fantastic. Well, you two are so personally impressive and obviously both of your firms are industry leaders. I’ve really been humbled to have both of you on the podcast today. I can’t thank you both enough. Thank you, Michelle and Mike, for sharing your experiences and your thoughts with us.
[00:48:18] Michelle Thetford: Thanks very much, Matt. I appreciate it, enjoyed the time.
[00:48:23] Mike Reed: Matt, thank you and enjoyed being a part of this and sharing the time with Michelle.
[00:48:29] Matt Sonnen: Great, thanks. Well, that is a wrap on Episode 19. Thanks, everyone for listening. I’m excited that our next episode will be our 20th. I know that doesn’t sound like a very large number, but when we’re only doing these once a month, number 20 is a nice little milestone for us. Please tune in next month and we will talk to everyone soon.
