Episode Transcript
[00:00:11] Luke Sonnen: Hi. I’m Luke Sonnen. Welcome to The COO Roundtable, powered by PFI Advisors. Here is your host, Matt Sonnen.
[00:00:24] Matt Sonnen: Welcome back, everyone. This is Episode 37 of The COO Roundtable, and we have two highly accomplished guests with us today. I’ve really enjoyed speaking with both of them in preparation for this interview. We’ve had some amazing conversations about the state of our industry and how both of them are structuring their firms for the future. Let’s dive right in because we have a lot to talk about today.
Joining us today from WealthSource Partners, they have offices all over the country, is Jason Mirabella. Jason lives in Indiana, and he is the Chief Platform Officer. For those of you thinking, “Well, wait a minute. Chief Platform Officer? That doesn’t sound like a COO to me,” let me just read you his job description and I’m quoting here.
“As the Chief Platform, Officer, Jason is responsible for the strategic development and ongoing innovation of our unique client experience and advisor platform. On any given day, this might mean he’s leading efforts to create and support cutting-edge client service models, or he’s out seeking the best new advisor to join our team.” As you can see, based on that description, he is perfect for our discussion here on this podcast. Jason, welcome to The COO Roundtable.
[00:01:36] Jason Mirabella: Thanks, Matt. I’m happy to be here.
[00:01:37] Matt Sonnen: Great. Then joining Jason is someone I’ve known for many, many years, Tom Preston of Brighton Jones in Seattle. Tom is the Director of the Client Service. Again, for those of you saying, “Wait a minute. The Director of Client Service? That’s not a COO either,” I’m going to read from Tom’s job description. It says “overall responsibility for client retention, satisfaction, and engagement, operations management, client surveys and feedback, service team member development, strategic planning, and process improvement.” That is exactly what all of our listeners are working with or working for at all of their firms. I’m very excited to have Tom join us. Tom, welcome so much.
[00:02:18] Tom Preston: Matt, thank you. Appreciate it. It’s great to be here, looking forward to it.
[00:02:22] Matt Sonnen: Great. Well, Jason, I’m going to start with you. Why don’t you give us a little background on WealthSource Partners?
[00:02:27] Jason Mirabella: Sure. WealthSource was technically founded in 2009. I came over through acquisition. I was a partner in a firm called SurePath Wealth Management. We also had a company called The Model FA and we were acquired by WealthSource Partners in early 2021. Post-merger, we’re at about $2 billion of AUM, and we have about 39 employees, and about roughly 30 advisors across the United States, including our independent and employee channel.
Our ideal client, I would say is in the $1 million to $5 million range. We’re able to offer full wealth management services, including financial planning and investment management. Historically, we’ve grown through acquisition. Our plan is to continue to do so. WealthSource has doubled their AUM in the last two years and we’re on track to double it again over the next 12 to 18 months.
[00:03:21] Matt Sonnen: So you said 39 employees, 30 advisors. That’s additive, so it’s 69 total people. You don’t have just nine support staff supporting the 30 advisors.
[00:03:30] Jason Mirabella: Correct.
[00:03:31] Matt Sonnen: Right. That’s what I figured. I just wanted to just make sure. Okay, cool. Well, Tom, I’m sure many of our listeners know the Brighton Jones name, but why don’t you tell us a little bit about the firm?
[00:03:41] Tom Preston: Sure. Brighton Jones was founded right at the beginning of the century in 2000. Jon Jones and Charles Brighton are the co-founders. Today, we have AUM of about $8.5 billion. I suspect that we will be at $10 billion by the end of 2022. We have 225 total employees. I would guess that 150 to 175 of those are in some advisory capacity and so the rest are non-advisory and support.
Our ideal client, well, our wealth management division is called Personal CFO. That was a term that Jon and Charles coined back in the day. As everybody on this call probably knows, that’s become a bit of a ubiquitous title. At the time, Personal CFO was a deliberate attempt to create an independent advisory structure that was different from what we were seeing in the marketplace with the product-driven brokerage. When we think about the ideal client, it’s typically someone who is interested in independent advice and typically has scarcity of time.
One of our most popular personas is called Corporate All-Star, which is another way of saying a busy working executive. We typically work well with clients who are super intelligent, who have the ability to do the work themselves if they only have the time. They’re really comfortable delegating and making decisions quickly. That typically is a profile that works well for us.
Then we tend to work best with clients with AUM, say, between $3 and $15 million. In terms of how we’ve grown historically, we may be the only firm that’s been on your show that has grown 100% over the last 21 years, completely organically. During those early years, Jon and Charles were our rainmakers and so most of the growth happened first through self-generated referrals. Then later through client referrals, as we brought on more business. In 2007, we joined the Fidelity referral program.
That was a large leap forward in terms of having a new channel to get new clients from, and that was also the first year that we expanded our offices beyond Seattle and we opened our first office in San Francisco, and that helped create a new market for us there. Since that time, we opened another 4 offices through 2018, and then as recently as 2021, we opened 6 new offices and so we have 12 currently.
In 2018, we introduced digital marketing and paid media. That’s another new client channel that we have in addition to Fidelity and our other traditional ways of getting new clients. What’s the growth vision for the future? Our primary goal is to be one of the last firms standing. Matt, as you know, and Jason, there are huge amounts of consolidation going on in our industry right now.
We, as a purely organic independent firm, want to continue to grow and we want to be one of the last national firms of relevance in the country. Part of how we’re going to do that is to continue to grow organically. We’re going to be opening 30 new offices in tier 1 markets over the next three to five years. We’ve got a 10-year growth plan that says by 2030, we should be at $300 billion in revenue, about $40 billion in assets under management, and about 1,000 employees.
[00:06:54] Matt Sonnen: You talk about how rare it is that you’ve only grown organically. We’ve been talking for nine minutes maybe, I would say that that means there’s probably been 16 RIA acquisitions since we started talking. It is crazy what’s going on in our industry. I appreciate that uniqueness that you’ve grown organically. Also, what’s unique about your story, Tom, is you’ve been at Brighton Jones for 18 years. That is incredible. Give us a little bit of your career journey that brought you to the position that you’re in today.
[00:07:24] Tom Preston: Sure. I was born in a log cabin. Oh, wait, you don’t want me to go that far? No. Okay. Brighton Jones is actually my third career. I came in 2003 when I was 38 years old. I had just sold an unrelated private business and I was looking to break into a new industry. The joke goes that I joined the financial planners’ association and lucky for me, the website listed all the member firms in alphabetical order and I found Brighton Jones in the first 10 minutes.
I really liked the website, I really liked the message, and Charles was one of the few owners who reached back out and was willing to talk to me and the rest, as they say, is history. I started at Brighton Jones as an associate advisor. Again, I was completely new to the industry and so I was there to just contribute in any way I could while I was learning. I worked for four years as an associate advisor, primarily with Jon and Charles.
In 2007, when we got to about $500 million in AUM, Jon asked me to transition out of working in the business to working on the business. I have to give him so much credit for having the vision even back then when we were still relatively small to recognize that as a company that was really poised for growth, he knew that if we didn’t put in systems and procedures and job descriptions and defined rules, that we were just going to spin out of control. It was a pretty remarkable first step where I became director of client service and then very shortly thereafter, we hired our first COO as well.
[00:09:00] Matt Sonnen: Great. Jason, looking at your LinkedIn bio, you’ve had some twists and turns. There’s been some acquisitions in there. You mentioned that’s how you joined WealthSource Partners, was through acquisition. Tell us a little bit of your career path that led you where you are today.
[00:09:13] Jason Mirabella: Sure. I started my career in 2000 straight out of college, right at the end of the tech bubble and into a three-year recession. That, I think, was to my benefit, that understanding that things don’t go up forever and things aren’t always good I think is a good skill to have in operations in general. From the start, I’ve taken a very entrepreneurial approach to my work. My attention intends to always has been drawn to ways that I can improve process and the business overall, regardless of what role I’ve held along the way.
I’ve also tried to be strategic in selecting opportunities that have given me broad exposure to as many aspects of our business as possible, whether that be when I started in the insurance industry with the executive benefits, I’ve held positions in an investment capacity, I’ve been a paraplanner, and I’ve worked strategically with owners to do what I’m doing now, essentially. Oddly enough, the goal has been since college to be in either a COO or CO-like position. I thought the more areas of the business I could expose myself to, the better off that I would be.
I think to be an effective operator, to hold positions like Tom and I hold, it’s very important to have a broad skill set and be able to understand each area of the business and how everything impacts everything else. I think having that mindset has now given me the ability to really understand the root causes of various challenges that we’re facing day to day, and then be able to operate at a high level to make the strategic macro changes that are going to end up in delivering good outcomes.
The last few years have been, like you said, a pretty crazy ride. I started a wealth management business in 2014. I merged with SurePath Wealth Management. I started working with Patrick Brewer and we grew up pretty fast. We also had a marketing and practice management consulting company called Model FA. Those businesses were acquired, and the position that we created within SurePath to address some of these strategic operational challenges that every RIA faces, I took that into this into WealthSource and have been advocating for a specific focus on really the product, which is the advisor experience, the client experience, and how we can do things as operators to level up the lifestyle and experience of our stakeholders. That’s my story.
[00:11:41] Matt Sonnen: That’s great. I agree with ever everything you said. Entrepreneurship and everything is so trendy right now, I don’t understand the notion of the 21-year-old CEO founder of a business. I just think everything you said about, you have to go and figure out how processes work and scalability, et cetera, and then you can go start a firm.
I don’t get it, the 18-year-old [laughs] starting it. I love everything you said. That was great. Your job titles that we talked about a little bit, they’re slightly different, but I think at the end of the day, your roles are very similar. You’re both focused on that client experience and determining the firm’s best service model for your diverse set of clients. Tell me how your role fits into the org chart of your firms. How do you work with the other C-suite executives of the firm and how do you ultimately work with the advisors at the firm as well? Jason, I’ll go to you first on that one.
[00:12:34] Jason Mirabella: Sure. After our acquisition earlier this year, I really advocated for splitting up operations into two positions. We have a COO and then there’s me, the CPO, Chief Platform Officer. Our COO oversees the administrative operations, such as HR, legal compliance, finance and accounting, et cetera. The CPO is really a position focused on, again, the advisor and client experience, standard operating procedures, culture, and making sure that we’re really maximizing collaboration, accountability, and productivity across the business, specifically through our technology and project management systems.
I think a big part of fast tracking, we’ve talked about this before, the move to RIA 2.0, evolving the business past managing as a sales organization, and managing RIA as a real business. One of these things is getting away from the old, what we call “the access” to platform for advisors, which historically has done a good job in enabling advisors to run their business, but mostly leaves it up to them to determine its operational structure. We’re trying to take most of the focus off the commodity aspects of the platform in favor of building what we would call a “true value-added partnership” that creates a higher level of intimacy with our advisor teams and blurs the line between where platform ends, and the advisor begins.
I like to say that the CPO’s job is to make it very hard for advisors to leave, and if they do, make it hurt really bad. It’s pretty easy to replace things like investment strategies and compliance services. However, it’s leaving deep practice management support, collaborative strategic planning, intentionality around improving the lifestyle of stakeholders and the advisor teams is extremely disruptive. We think that approach will both attract new partnerships and then give them a reason to stay with us for a really long time.
[00:14:28] Matt Sonnen: I love it. Tom, how does the Director of Client Service fit into the overall org chart at Brighton Jones?
[00:14:36] Tom Preston: Right. Jon often says that there’s four things that we do at Brighton Jones. We get people and we keep people. We get clients and we keep clients. We’ve been using that paradigm for quite a number of years. When I first moved into my role as Director of Client Service, I was also asked to head our HR. First time we ever had a Director of HR as well. Using that construct, I was leading three out of the four boxes, if you will, of the organization, and Jon’s primary role was to get clients.
Fast forward to today, we’ve got a much different structure. Our C-suite is comprised of a Chief Operating Officer, who’s responsible for things like keep and get people as well as finance technology, et cetera. We’ve got a Chief Marketing Officer, a Director of Corporate Development, a VP of Corporate Development that focuses primarily on new markets and new business lines, a Chief Revenue Officer that is responsible for get clients, a Chief Investment Officer, and then a VP of Client Experience, which is where I live.
Client experience essentially owns keeping clients. I currently report into Carley Dillon who’s our VP of Client Experience, and that role directly reports in to Jon. The way that I work with the C-suite is through weekly meetings. Jon and his senior-level team have what’s called an “alignment meeting”, which happens every Monday. Then the whole idea is to make sure that as a leadership team, that we’re all highly aligned on what our objectives and key results are. We’ll talk a little bit more about how we do goal setting later on.
In the afternoon, we have what’s called a “senior lead advisor meeting”. All of our service teams are broken into service pods. We’ve got about 15 of them across the country. Roughly in some markets like Seattle, which is our headquarters, we’ve got multiple pods within a given geography. Most other pods outside of Seattle are one to one. One pod per geography. For any new emerging markets, we’ve got one pod, which is basically a conglomeration of those developing ones and then they will at some point grow up and become pods all by themselves.
The idea of the afternoon senior lead advisor meeting is to make sure that what we’re talking about as a senior leadership group is being cascaded to our senior lead advisors, and we’re also getting feedback from our senior lead advisors on what’s working and not working that, as a management team, we need to focus on. The communication should be going both ways. The high-level objectives are being cascaded down to service teams, and then boots on the ground issues that are being encountered by our service teams bubble up. People like my myself are there to catch those problems and document them and hopefully then move on to solve them.
We have a working agenda where these to-dos are captured and then every week, we check them to see what our progress is. As we make progress, we knock them off the list. Day to day, a big part of my role is to support client service operations. In addition to focusing on being proactive and strategic on keeping clients, there’s just the stuff that’s got to get done. We have systems and procedures. We have relationships with our primary custodian Fidelity. There are hiccups that happen every day. Part of my job is also fighting fires and checking in one on one with team members to make sure that they’re feeling supported.
[00:18:04] Matt Sonnen: One of my favorite movies of all time is Bull Durham. [chuckles] Tim Robbins has a quote. One point in the movie he says, “Baseball’s a relatively easy game. You throw the ball, and you catch the ball.” I love the way you’ve broken down not only just RIAs, but business in general. Our job is to get some employees, keep the employees, get some clients, and keep the clients. I absolutely love that.
As we’ve had our conversations, the three of us leading up to this interview, one of the things we’ve talked about among the three of us was this general opinion in our industry that “operations is boring,” or there’s a big belief that the sales folks are the most important around here and you operations folks are just an expense. The sales team may say, “We’re the ones bringing in the revenue.” You both have some interesting thoughts around this mentality that unfortunately is- in my opinion, is very pervasive in our industry. Tom, I’ll start with you. What are your thoughts around this silly notion of sales versus operations?
[00:19:00] Tom Preston: I think I’ve got a couple of thoughts. The first one is, I just find myself shaking my head whenever you mention this, that this is a sentiment that other firms have, simply because I think it misses out on such great potential for growth in the firm. I think, obviously, the feeling I have is happiness because if some of these folks are competitors, then there’s probably not as much that I need to worry about if the attitude is that operations can’t really move the needle.
I’ve already kind of jotted down the members of our C-suite and of course, having a Chief Revenue Officer is paramount to growing our business. I don’t mean to discount the importance of growth. It is part of what we call our winning formula. I think I mentioned this to you, Matt. When we talk about our winning formula, the first thing we talk about is having a highly aligned team, making sure that through that process that I just described, our leadership team and our senior lead advisors are highly aligned in terms of what we’re working on. Super important that we’re all growing in the same direction.
We try to promote what we call a “one-team culture” where everyone is asked for their input. As Jon would say, “We all get a say, we don’t all get our way.” We all want to make sure that we’re getting the best ideas, but ultimately, our leadership team needs to lead. If people aren’t speaking up, then silence is agreement. “As the team goes, so do I” is another phrase that we use quite a bit around one team.
The other components of the winning formula are client obsession, which is where Carley and I spend most of our time thinking about how to create a better experience for existing clients and how to create service models and business opportunities that are going to attract more clients. Growth mindset is another pillar of the winning formula. The last one which I mentioned to you is operations as a strategic advantage. We firmly believe that, again, the firms that are going to be surviving over the next 10 years, they’re either going to be doing what most firms are doing, which is busily consolidating.
In our opinion, consolidation for most firms is really a consolation prize for lack of growth. If you’re not effectively growing as a firm, you need to get some size and scale. The best way to do it is to acquire another firm. As we all know, that can be a pretty exhausting process from finding the right fit and then integrating technology and people and such. We would rather spend that time, instead of consolidating, just growing and growing organically.
Operations, everything that we bring to bear every day in the areas of finance, technology, our ability to recruit internally for new candidates, the ability to train internally, the ability to provide our teams with support across business lines, these are all strategic advantages that help us grow faster. We place a huge premium on our ability to be flexible and to adapt. If you look at the pandemic, for example, on March 16th of 2020 across the country, we were all sitting in our offices doing work in-house. On March 17th, we were all 100% remote doing work from our homes. It happened in a day.
Every single Brighton Jones employee already had a laptop. We’d issued those a couple of years ago. We’d switched over to Zoom from GoTo Meeting. From a technology standpoint, we didn’t miss a beat. I still talk to some advisors who, in the first few months following COVID, had to force their teams to come into the office because they had no remote technology or they couldn’t adopt the mindset of going virtual. That’s just one small example of having an operations mindset helped us propel ourselves much faster than most firms.
[00:22:41] Matt Sonnen: I think it’s a great example. Jason, what do you think of this make-believe conflict? Hopefully it’s a make-believe conflict, but in some firms, I think it is real, but this conflict between sales and operations.
[00:22:51] Jason Mirabella: I agree with all of what Tom said. I do think operations has a branding problem, for sure in our industry. And we certainly have some legacy issues to deal with, particularly in our industry, the term in general conflates strategic operations and the building of service model with the execution of commodity tasks like paperwork, which I think has opened us up for getting gaslit into believing that operations should take a subordinate role to sales and relationship management. Unfortunately, it’s also led to autocratic team structures, which are destructive to a business, in my opinion. It serves no one, especially the advisors.
In my opinion, if you want to create a great business, you need to flatten your advisor teams, give them agency, give your support staff agency and empower them to manage up. You do this through strategic operations. The autocratic model tends to result in a very reactive support staff who’s usual default is to kind of rely on the directives of elite advisor or somebody higher than them. That said, I’m not that worried about it. To Tom’s point, I view this as an opportunity. Industries tend to evolve and work these things out over time as competition increases.
I think that’s what we’re going through now as our industry has evolved past the sales organization into managing RIAs as real businesses. As competition increases and the sophistication of running these businesses increases, I would say that if you’re saying things like “operations is boring and salespeople are the most important people around here”, you’re probably falling behind right now. If you’re saying it in 5 to 10 years, you’re probably not growing, fired, or out of business. I think we just have to wait. I tell the other partners on the team that “Sales gives you the opportunity to have the business, but operations is the business.” I think the industry is coming around to that slowly but surely.
[00:24:46] Matt Sonnen: Slowly but surely, I think you’re right. I hope you’re right. As I said at the top of the hour, you’re both in charge of building the client experience at your firms. I want to talk a little bit about client segmentation. Many advisors will really push back hard when I bring that word up because they immediately think that client segmentation is all about firing the bottom 10% of your clients, or maybe not firing them but drastically limiting the number of services offered to a certain segment of your client base.
I think both of you would agree that client segmentation is really about honing in on who your ideal client is, and then determining the proper service offering based on the needs or wants of that ideal client. Tom, I know Brighton Jones has done a ton of work around client segmentation. Can you talk to us about how you approach this?
[00:25:34] Tom Preston: Yes. Happy to, and I agree with you, Matt, that it’s probably a pretty misunderstood topic. I was listening, this morning actually, to JD Bruce from Abacus on Michael Kitces, who’s doing a great discussion around how Abacus thinks about segmenting their clients. When I think about what segmentation means to us, I think it’s less about that and more about delivering the right level of value for each client.
As I mentioned, when we started in 2000, the landscape was brokers and investment products. As two people who were looking to create an independent advice model, it was a pretty easy bar to exceed. We led with objective advice and fee-only compensation. We provided tax compliance services, and we touted ourselves as total balance sheet managers. Our goal was to find clients who needed a personal CFO.
You’re the CEO of your life. You have goals and objectives. We’re there to be that independent voice that’s going to provide you with advice that’s tailored to be in your best interest because we have no conflicts of interest. That was the business model. We want to own your whole balance sheet. We don’t want to just get certain accounts on your platform and focus on performance. We want to see the big picture because if we can see that whole balance sheet, all your assets, all your liabilities, regardless of whether they’re considered part of our AUM structure, we’re just going to better job and it’s going to lead to better outcomes.
Now, the industry is moving towards some planning, some tax, some total balance sheet management. I’d say the window that we created in terms of how we went to market and how effective we are is starting to narrow. For us, it’s about needing to stay 5 to 10 years ahead of the competition by pivoting to what we call “beyond the balance sheet”. Now we’re looking at introducing programs like Women Living a Richer Life. We’ve got a whole program that’s tailored towards our women clients and helping understand them, their unique needs, strategies, etc.
We have strategic philanthropy which is designed to help client clients think beyond simply giving and more about aligning their time and money with their passions and purpose. We’ve got a communities manager who’s really focused on identifying other affinity groups that clients want to know one another in based on their passions and their hobbies and their interests.
Finally, we’re doing what we call purpose planning, which is for those clients who realize that they’re at what we call vocational freedom, which is that point in your life when you don’t have to rely on a paycheck to live your lifestyle, like “what is my purpose in life? How do I think about my remaining years through a lens where I’m being true to my values?” When I think about client segmentation, I think about trying to meet every one of our clients where they are on this continuum.
It would be great if every single one of our clients embrace total balance sheet management and beyond the balance sheet. It’s our goal to figure out where each one of those clients is on that continuum and just keep moving them up the value stack. To use a parallel to some work that Fidelity has done on the concept of value stack, they would say at the bottom of the stack are things like opening accounts and doing basic money movement, and then the next level up is going to be things like reports and deliverables and maybe some communication portals, and then the next level up is going to be advice. That’s the top of the pyramid.
For us, advice is now the middle of the pyramid. What we’re looking at and saying is what clients really need is to move up that stack and start thinking about how their money and their values align. When we approach each relationship, we’re trying to figure out, where is this client right now? We do have our share of investment-only clients, people who just come to us because they say, “I want good returns. Sure, if you want to do some planning for me, that’s fine, but that’s really not going to keep me here one way or the other.”
We have other clients who totally embrace total balance sheet management, but the idea of talking about mindfulness and emotional and social intelligence or our JEDI initiative, which is our Justice Equity Diversity and Inclusion, or Women Living a Richer Life for these other beyond the balance sheet programs that I’ve mentioned, that doesn’t resonate with them. In some cases, clients think it’s a distraction, “Why are you wasting your time talking about these things when you really should be managing my money?” We’ve got different clients at different places, and it’s our goal to not necessarily put them in a box, but just help them along on that journey to where we find the optimum level of value to deliver to them.
[00:30:21] Matt Sonnen: That’s great. Jason, what role does client segmentation play in your build-out of the client experience?
[00:30:27] Jason Mirabella: Client segmentation is definitely an exercise all firms need to go through. It’s by far the most important thing that a firm can do to inform how you want to build out your infrastructure. What decisions you’re making from a technology standpoint, decisions you’re making from a positioning to marketing standpoint. It’s important and we do it at WealthSource and it’s every client has a specific offer. We identify how many touches per year. We’re reaching out to them what we’re doing in those meetings, so we have specific offers for each client.
With that said, I also think if client segmentation is done right, it might put you in the situation to have to make some tough decisions, because if your focus is on profitability, sometimes creating an exit plan for bad fit relationships is the right thing to do. If you look at other firms and other industries, they’re not trying to create products and offers for everybody.
Obviously, we serve a lot of different client profiles, but I think as a part of this process to play devil’s advocate, you need to think about each offer as a separate product. If the product is creating a segment, a product for a segment of a client base that adds more complexity to your operations, or the need for additional expertise, or the need for additional technology tools that are outside of your core stack, it may not be the best decision for the RIA or the advisor long term.
If you believe that time is a scarce resource and that the advisor cannot manage an infinite number of clients, then I like the idea, in general, of figuring out what you want to be really good at, and then building a cohesive infrastructure behind it to that specific goal. I always tell the advisors I work with, in our industry, operational chaos is built brick by brick with compromises and fee discounts. By making the right strategic decisions now and focusing on the right client, finding those 150 to 200 relationships per advisor that really fits the segment of the market that you do want to be really good at serving, you’re setting yourself up for success. Because any time that you make a compromise or discounting fees, all you’re really doing is punting problems into the future.
I try to at least instill that mindset where we need to have some flexibility to go up and down the value chain, but the idea that the same firm that’s delivering a white-glove wealth management offer with four client touches at meetings a year, and the same firm is going to create a robo investment-centric, one touch a year offer is interesting to me at the least. It’s almost like you’re running two separate businesses. I just like to keep that this is all important, but I think sometimes you got to make tough decisions and figure out who you want to be and who you want to serve.
[00:33:28] Matt Sonnen: No, it’s perfect. I think a lot of firms are running two completely different firms under one roof and so I think everything you said, that’s exactly right. Let’s jump to key performance indicators. What KPIs do you both calculate to gauge the health of your organizations? Jason, I’ll let you tackle this one first.
[00:33:47] Jason Mirabella: I have three areas of KPIs that I look at, three categories. The first is client experience, the second is efficiency of operations, and the third is human capital hiring decisions. The first one is client turnover. The second one is net promoter score that we’re actually just rolling out. This is a new one for us. That’s going to be captured through client satisfaction surveys. The second category is efficiency of operations, so the three things that we’re really focused on, gross profit per employee because that gives us an idea of how are the systems that we’re putting in place, how efficient are they? How many people do we have to hire to manage how much profit?
The second one is AUM per household and AUM per account. These are metrics that just give us an idea of the quality of clients that are being brought in to make sure that we’re not bringing in bad-fit clients. A lot of advisors, by nature, they want to help people. You got to be careful with advisors, bringing in anybody that can fog a mirror, so this is a great KPI to keep track of where are we headed from an average household, average account standpoint.
Then the third and final one is human capital and hiring decisions. A lot of the systems and project management methodologies that we’re putting in place on platform, these KPIs really serve as a way to identify how many people we need to bring into those service teams. For instance, an associate, somebody that’s supporting an advisor, can they handle 300 households? Can they handle 500 households? Do we have the ability to assign that associate to one advisor, two, three? We’re keeping track of the capacity of the advisor. What’s the capacity of the associate? What’s the capacity of our operations desk? That information informs a lot of our hiring decisions on platforms.
[00:35:36] Matt Sonnen: Your KPIs go hand in hand with Tom’s simple thought process of hire employees, keep your employees, hire clients, and keep your clients. I love it that they actually tie together really well.
[00:35:50] Jason Mirabella: I think you got to be careful with KPIs. They’ve got to be actionable. It can become a situation where if you have too many KPIs, it becomes very noisy and the information becomes less actionable because there’s just a lot of complexity, and these conversations that you’re having with other partners become– It’s just like, what to focus on? I like to keep it pretty tight as far as KPIs go.
[00:36:12] Matt Sonnen: It’s great advice, absolutely. Tom, what metrics are you calculating?
[00:36:16] Tom Preston: I echo what Jason said. We like to consider ourselves a data-informed organization, not necessarily a data-driven one. We’ve worked really hard to harness data. I think it’s important that most data that we collect in our business is directional at best. It’s giving us a high-level overview of where things are going, but the more specific you try to get, the less and less effective it is.
Like you said, Matt, when I think about KPIs for the business, I think in terms of that get people, keep people, et cetera. On the get people side, I shared with you that we hired 80 people virtually in 2021, and that doesn’t happen without keeping really good stats internally in terms of outreach to prospects, how many interviews we’ve had. We keep all that in a product called Lever. We have dedicated people for interviews for interview teams. We call it our SWAT team. The hope is that we can look at each of our new candidates through a very consistent cultural and a competency lens so that we can make better decisions.
On the keep people side, we survey our folks. We have an internal score, we call it the love score. How much do you love Brighton Jones on a scale of one to five? In those survey requests to team members, we ask them to provide as much candid feedback as they can. All of our surveys are attributed so when I get survey back from somebody, it’s got their name on it. Culturally, we think that that’s just the way we want to go because we want people to feel like they work in an organization where they can voice their concerns and that we can take very positive steps to help address them as opposed to an anonymous suggestion box that doesn’t always render feedback that’s actionable.
On the get client side, we use a system called Marketo on our website, and that helps us track what we call marketing qualified leads, which then go to the top of our sales funnel. We track things like response time to prospect inquiries. We track time from when a client first or a prospect first contacts us. How long does it take to get through our four-stage pipeline? Obviously, we’re tracking new business revenue to goal both at the pod level, at the business line level, and at the firm level.
Then on the keep client side where I spend my time, like Jason, we use the net promoter score system. We’ve had that in place for about four years now. Our minimum standard for net promoter score is 80, and our standard for overall satisfaction, so an answer to the question, “How satisfied are you with the service that you’ve received from Brighton Jones?” On a scale of 1 to 10, we want to be at 9. Currently on overall satisfaction, we average 9.4. On net promoter, we’re averaging around 84.
We also spent a lot of time on client and revenue retention. Our standard there is to retain 98% of all of our clients in revenues in any given year. 2021 was a difficult year in terms of client retention. We did not hit that mark and it was challenging on a number of fronts, but I think we’re making good progress and in turning those numbers around. Like Jason, we look at the pod level and try to figure out client capacity per advisor. We look at things like day since last contact. We want to make sure that we understand when clients have been, when we’ve reached out to clients. Client review turnaround, how much time in between formal meetings that we’re having with clients.
Both of those last two are self-reported by our teams through Salesforce. Then finally, we’re bringing on a CDP, a client data platform, and that system is going to try to help us to develop some predictive analytics around things like measuring client engagement, looking at all of our platforms and seeing the different inputs and which clients are engaging in terms of maybe it’s email activity, phone activity, attending events, opening emails, et cetera, identifying who’s likely to churn or leave and who’s likely to refer. These are three areas that we hope to have better data on in 2022.
[00:40:15] Matt Sonnen: This has been such a great discussion. I can’t thank you both enough. We’ve really gone deep. My last question, I want to ask you both to look into your crystal ball, and based on your predictions for both the industry and your firm specifically over the next, call it 18 months, what are you most focused on today to ensure success in that near-term, 18, 24 months, something like that? Jason, I’ll let you go first.
[00:40:40] Jason Mirabella: This is an odd question for me because I’ve been a DFA guy for my entire career, and I’ve been telling clients that I don’t have a crystal ball my whole life. I feel like, to a certain extent, that holds true here. It’s hard to predict where the industry’s going. I think particularly for us, we’re in a hyper growth phase right now, so at least right now I’m not too worried about where the industry is going or what our competition is doing.
My main focus, and I think this whole idea speaks to what all RIA firms can do to reach their goals, is one, particularly for me, I’m really focused on all of these new partnerships that we’re bringing in, making sure that their first experience with WealthSource is a good one. Making sure that their transition is seamless, that we white-glove these transitions so that when all their clients are over, they feel like they made a great decision in coming to board.
Other than that, I wake up and try to control the controllables, improve the value of the platform for our advisor teams, improve the client experience, improve the lifestyle of all WealthSource stakeholders, not only the advisors but the employees as well. That said, I think these also represent the key differentiators in our industry moving forward as it continues to mature and get more competitive. Regardless of how our industry evolves, the intention and focus around these areas of the business transition, and the things I mentioned around advisor client experience and just making the lifestyle of all of your employees and advisors better, all the firms that are focused there, the best chance for success.
[00:42:15] Matt Sonnen: Tom, where are you focusing most of your time and energy as we head into 2022?
[00:42:20] Tom Preston: Like Jason, I’m a DFA guy, and we always tell our clients, “We don’t predict, we prepare.” When I think about preparation for 2022, as I’ve shared with you, I think a lot about what we’re going to look like, knock on wood, in a post-pandemic return to office. I think we’ve got two very important constituencies that we need to focus on in 2022. One of them is all the new clients that we brought on, and the other is all the new team members that we brought on.
When we were all 100% virtual, it was a pretty easy way to do business. Easy in the sense that it was straightforward. We had no choice. All of our employee onboardings were virtual, all of our client meetings were virtual, and we were all dealing in a level playing field. But a year later, our team members are suffering. They’re suffering from isolation.
They haven’t had the opportunity to really experience what it’s like to be a Brighton Jones team member, and an important part of that is the day-to-day interaction and collaboration with their team members.
A huge focus for us is going to be getting a more active cadence within our offices to bring those new team members in and make sure that they are connected and have that strong sense of belonging in our organization. We’ve also got another 375 clients that we brought on this year. As I shared with you, we don’t even know what their eye color is. We’ve got to make a very conscious effort to get face to face with those clients as well, for a couple of reasons. We say at Brighton Jones, “Our number one job is to build trust with clients,” and the way we do that is through an equation, that we say, “Credibility plus reliability plus intimacy equals trust.”
I feel like for a lot of those new clients we have, they felt the credibility and the reliability, but we haven’t experienced the intimacy yet. We haven’t been able to make genuine face-to-face connections, which is so vital to our business. Part of what we need to solve for those clients is to make sure that we are connecting personally with them, because it’s such an important part of not only retention but also future referrals.
[00:44:21] Matt Sonnen: You guys, both, have been so great. This has been a really detailed discussion on how to build the proper client experience and how to gauge the firm’s success moving forward. Those are all things I know our listeners are going to get a ton of value from. Thank you, both, Tom and Jason, for being here.
[00:44:38] Tom Preston: Thank you, Matt. I really enjoyed it. I suspect Jason would say the same thing. It’s just it’s fun to talk about our business. It’s a very rewarding one.
[00:44:45] Jason Mirabella: Yes, for sure, Matt. Thanks. I appreciate the invite.
[00:44:47] Matt Sonnen: Thank you both. Well, that is a wrap on Episode 37. Thanks, everyone, for listening, and we will talk to you soon.
