Episode Transcript
[00:00:11] Luke Sonnen: Hi, I’m Luke Sonnen. Welcome to The COO Roundtable, powered by PFI Advisors. Here’s your host, Matt Sonnen.
[00:00:24] Matt Sonnen: Welcome everyone to Episode 41. We haven’t had an episode like this one for quite some time. Today we’re going to talk with three professionals that are spearheading the business management of one RIA, and that RIA is Vestia Personal Wealth Advisors. They’re headquartered in Nashville, Tennessee. They have offices in Fort Wayne, Indiana; Indianapolis, Indiana; Los Angeles, and Omaha.
Vestia manages over 500 million and specializes in serving physicians, which is really interesting. Mark Tibergien was quoted last week (he was the keynote speaker at Citywire’s conference) he said on stage, he said, “Firms that have a niche or a technical specialty are the ones growing in our industry and driving the business forward.” I couldn’t agree more with that, so we’ll be sure to dive into Vestia’s niche during our conversation.
Joining us to talk about how they divide and conquer the management of the business is recently named CEO, Lauren Oschman. Lauren is a co-founder of the firm and was promoted to CEO just a few weeks ago prior to the recording of this episode. Lauren, congrats on that, and welcome to the podcast.
[00:01:30] Lauren Oschman: Thanks so much, Matt. It’s exciting to be here.
[00:01:34] Matt Sonnen: Awesome, and joining Lauren is the former CEO. Lauren took his place. He’s now serving as a member of Vestia’s board, and that’s Tommy Martin. Tommy’s also a co-founder of the business, and he has some really exciting things going on in his new role. I’ll let him explain all of that in a second. In the meantime, Tommy, thank you for being here.
[00:01:52] Tommy Martin: Yeah, Matt. Thank you also for having me.
[00:01:55] Matt Sonnen: Awesome. Finally, and most relevant to our COO Roundtable here, we have partner and chief operating officer, Brad Quick. Brad joined Vestia after a long career in the orthopedic industry. I’ll let him describe his career path. It’s a fascinating story. Brad, welcome.
[00:02:12] Brad Quick: Thank you very much. Thrilled to be here.
[00:02:15] Matt Sonnen: All right. Let’s dive into it. Lauren, I’ll let you tell us a little bit about Vestia and the unique niche that you’re serving.
[00:02:22] Lauren Oschman: Sure, I’d love to. Maybe I’ll start out by talking a little bit about the firm and how we approach client service. That would be helpful. Then I can talk a little bit of how we’ve built our niche. As you mentioned, Tommy and I are two of five initial founding partners. We launched Vestia in January of 2018. Tommy, I don’t remember the exact number, but I don’t even know that we had 200 million under management when we started.
[00:02:48] Tommy Martin: Yes, it was right around that mark.
[00:02:50] Lauren Oschman: Yes, right around 200 million. 10 team members. Today, Matt, as you said, we’re 500 million. We’ve over doubled our– or we’ve about doubled our team, so definitely can back up what you’re saying about the growth or the power of growth that can come with having that niche because I think that’s huge credit to just why we’ve been able to grow so quickly, especially as a new firm.
Surgeons have what they call a first assist when they’re doing a surgery. The assist is someone who is assisting them in a surgery, who knows them so well that they can know what instrument they need and have it in their hand before the surgeon even asks for it. This is the picture that we are running after when it comes to what we want to be for physicians only for their financial life. We want to be this first assist for their financial life. They’re looking to buy and sell a house, we’re running the numbers, of course, but then also reaching out to the banks we know that have specialized physician mortgage products, figuring out what’s going to be the best one for them and going to them with that.
There are proposed changes in tax law. We are specifically reading those updates through the lens of how it’s going to impact physicians and medical practices. When we go out to the doctor, that’s being proactive, saying, “Hey, here’s how we want to position you in case these come to pass, or here’s what we’re going to be ready with.” There’s been new guidance on student loan forgiveness lately. That’s a huge thing.
Physicians have a lot of student loans. We know exactly what physicians qualify for those programs and exactly what to do. Actually, in a lot of those cases, Matt, we’ve gone to the doctor, told them that they are going to qualify for the program and what to do, and they haven’t even seen the headlines about it yet. Trying to go to them with the solution before they even ask the question is really what we’re striving to do in terms of building out our client service.
Then in terms of that niche that you talked about, the founding partners actually came out of a firm that were already serving physicians. We can’t take credit for that niche. What we did and what I think is really unique and just an additional testament to the power of the niche is we decided to really double down on that and use it as our engine for growth.
If you think about, we’ve taken a lot of what we’ve built our firm off of out of the medical world. Perhaps not surprisingly. If you have shoulder pain, you go to your primary care physician and you say, “Hey, I’m having a shoulder pain.” He might see you, talk to you, order a scan, and then is going to refer you to the local orthopedic practice. When you call that orthopedic practice and you say you’re having shoulder pain, they’re going to get you right to their shoulder person. They’re not going to say, “Hey, here’s our knee person, but it’s all the same. Joints are joints.” They’re going to get you right to the person who can deliver the specialize care that you need.
We use that concept to develop niches within our niche. Jackie Dunson and I who are both female advisors on our team launched a women in medicine or female physician practice group in 2020. We have a workshop. We have materials. We have a tweaked process or refined process that specifically connects with female physicians. That’s been highly referable. We’ve gotten a lot of new business from that just because female physicians aren’t used to being specifically spoken to, especially not in financial conversation, so we’ve gotten a lot of traction with that.
You’ll hear a lot more about Brad’s experience or his background in the orthopedic surgery space, but he knows all of the most influential people in orthopedic surgery in the United States. In 2021, we actually used that as the foundation for an orthopedic surgery practice group. We have the ability to analyze a surgery center buy-in for a physician and even connect to them with people who can provide services for that surgery center. Really honing in on what do orthopedic surgeons need, and we have two advisors who lead that practice group.
For the purposes of your audience, what I think the benefit is of the niche, beyond just marketing, is that it’s really helped us design our process, our pricing structure, our service models because we know exactly who it is that we are trying to serve. We can be crystal clear about exactly what we have to deliver to support that group, and then we can build all of our processes and KPI’s around that.
[00:07:28] Matt Sonnen: We’re not a marketing podcast by any means, but just think about it. Who’s going to get hired? You using phrases like first assist and being able to use the analogy of the shoulder doctor versus the knee doctor, et cetera, or someone saying, “We provide holistic financial planning to those with more than three million of investable assets.” Which happen to be doctors happen to fall into that, but which one is going to get hired?
[00:07:53] Lauren Oschman: I would hope us every time.
[00:07:55] Matt Sonnen: Right. I don’t know why it’s still pushback on, “Oh, we don’t want a niche because we’re going to lose to many clients by narrowing our focus.” It’s crazy to me.
[00:08:11] Tommy Martin: Matt, that’s always been the hardest part. To go really, really deep in the niche, you almost have to burn the ships. Most firms don’t want to burn the ships. We haven’t fully burned the ships, but a solid 90% of our business is focused in our niche. Then anything else that’s outside of that, we make sure that our systems and processes are still designed to fully support it.
[00:08:38] Matt Sonnen: The leads us perfect to our next question. I’m going to go to Brad with this one. Talk to us about how you’ve added services and business lines over time. You’ve even spun off some related companies all in this effort to support the broader needs of your specific client base.
[00:08:56] Brad Quick: Sure, Matt. One of the things that first comes to mind, which is probably the best example of this, is our contract negotiation business. As we learn because we do deal a lot of training and a lot of education for graduating fellows, we learned earlier that they’re sitting across the table from people who negotiate these contracts for a living, who knows what an RVU is. For example, you talk about some of the specific language which we learned. RVU is an example of that. Where now these graduating fellows are sitting across from people who not only knows what an RVU is, but knows what the prevailing rate in an area is, how much other people are generating.
For us, we just wanted to start it out by equipping our graduating fellows with information so they could be intelligent and know if they’re getting a good deal or not. That’s certainly progress them to a full-blown contract negotiation business where we can sit next to our clients, to our surgeons, to our doctors, and help them negotiate those contracts or just really well equip them to know what’s important in their contract, what is negotiable or what’s not. That’s just one great example I think of something, a line item we’ve added, which is actually a full-blown P&L now and a great service to our clients. They go in well equipped when they do have a contract negotiation.
[00:10:13] Tommy Martin: Matt, I just want to add, under Brad’s leadership, we’ve had examples with our doctors where we’ve helped get them an extra $120,000 a year. I can think of multiple examples there. $250,000 a year. What was happening was our doctors were working at the 75th percentile but maybe they were only getting paid at the 50th percentile for their role.
Through our contract negotiation arm, think of it a lot like a sports agent for doctors, we go in, walk beside them, help coach them on how to negotiate, and actually get their income up where it should be. We’re talking real money. In a lot of firms, they’re trying to figure out how to capture as much wallet share from the clients’ investments or savings as they can. Well, part of what we said is, let’s just go increase the wallet, then it’s easy to capture more wallet share.
When we’ve helped them get an extra $250,000 of income, when we’re asking them to save a really big chunk of that, it’s a pretty easy lift. It’s been just awesome. Brad coming in with this outside lens from outside of the financial industry, he didn’t have these handcuffs on that we see a lot of times where people say, ugh, we can only do this set of services. Brad’s lenses were fully open to, what else can we do that our doctors actually need? That’s how contract negotiation got a lot deeper.
[00:11:42] Brad Quick: It really, Tommy, goes back to what Lauren talked about just the mental picture of us as being that holistic everything that touches the doctor and just everything that can impact them significantly, for example, their compensation. We want to make sure that we have a part of that, that we’re able to add value there.
[00:12:01] Tommy Martin: Matt, one of the things I loved, we went out and actually surveyed our doctors because there was a day we were thinking about being just a pure fee-only wealth management financial planning firm. I don’t throw stones at anybody who’s doing that, but we’re a very, very data-driven firm. That’s why, as you hear more from Lauren later, you’ll get an understanding of some of the things that she and Brad are looking at day in and day out. We actually went out to our clients and we said, “Hey, what is it that you want us to be doing for you?” I loved their answer. I loved it. Lauren, I’ll let you share it. It’s just so powerful.
[00:12:40] Lauren Oschman: They said anything that you can do with excellence.
[00:12:45] Tommy Martin: They already trust us, Matt. They already trusted us. It’s no surprise. It was, “Look, we already trust you. If you can do more for me– I call it the business of life. They were saying, if you can take more of the business of life off my plate so I can be a better doctor or I can be a better husband or wife or mother or father, those are what they wanted to spend their time on, not the business of life. That’s what we’ve just consistently tried to add, is, what else can we do for them that helps remove some of that business of life for them?
Some other services have popped up in addition to contract negotiation. Most recently, we’ve added a healthcare venture capital arm. It’s called Mammoth scientific. We have a healthcare venture capital fund. This was just a very natural outgrowth of the work we were doing for doctors. Brad, we’ve also added some research and development tax credit opportunities. How did that come about?
[00:13:49] Brad Quick: That’s great, Tommy. One of our new partners actually was exploring this and ran it by me. He happens to sit in the same orthopedic practice group as I do. One of the things that was consistent to me in my days in orthopedics because I worked with– Lauren said earlier all. I know some, not all, but of the innovators in the orthopedic space. What all those folks had is patents. They had intellectual property. They were developing things. They were putting out true R&D and developing things without getting compensated for that.
Well, this R&D tax credit was one that came up. We’re literally able to go and save them again on some of their prior taxes, some of these R&D tax credits because they are generating intellectual property. They are doing things unique and true costs associated with that. That was a really significant value for us that we were able to add as well.
[00:14:43] Tommy Martin: Lauren, I know we’ve also been doing a lot of highly specialized work in the insurance pays for doctors.
[00:14:50] Lauren Oschman: Yes. One of the most crucial pieces of a physician’s just foundational financial plan is going to be their risk management strategy. Having really high incomes as Tommy talked about is great for us in terms of what we have to plan with. It also puts a pretty big target on a physician’s back and puts them at pretty high risk if something keeps them from being able to make that income. We talk to them about their home and auto insurance strategy. We look at their umbrella insurance.
That’s something that just in my talking with other advisory firms about what they do in their financial planning process, that’s not standard across the board for us because that’s that liability protection. If a doctor gets into a fender bender and happens to get out of the car wearing scrubs or I had a client, a physician client, who got out of the car after rear-ending another car, it was not significant damage, at least the way he told it to me. Because the person that he hit had seen his face on a hospital billboard, attorneys very quickly got involved. This is a very high-risk area for physicians and one where we need to make sure that they’re protected.
Then disability insurance is huge for doctors as well for a similar reason. If I develop a slight tremor, it would probably be a nuisance for me, but I would be able to figure out how to go about my day. I’d still be able to talk to you. I’d still be able to do all of these things. If a highly specialized surgeon develops a slight tremor, their career is probably over. Making sure that they have adequate protections in place for their family, for their cash flow so that they don’t have to sell their house, pull their kids out of school, upend their entire life just because they develop a slight tremor is a really crucial piece of that strategy as well.
[00:16:42] Tommy Martin: Matt, when we first got into doing the insurance side, it was like, well, we know we should. We weren’t excited about it, but now, 15 years later, we’ve had many claims where we’ve had physicians that have passed away in their 30s or 40s with very small children. We’ve had physicians that have gotten disabled and can no longer practice medicine. We’ve had physicians that have gotten temporarily disabled, and we’ve had a lot of physicians who have gotten sued.
This aspect of risk management, I personally went from, “We’ll do it because we have to,” to, “No, we’re really passionate about it now,” because we’ve just experienced so many instances where, without this, everything else we were doing in their plan or everything else we were doing in their investment life just didn’t matter. Now, we’re really passionate, and we’ve actually had the opportunity to help build out some highly specialized opportunities for doctors in the risk management space that are customized to them.
We’ve worked with some major Fortune 100 insurance companies to build physician-specific products. We’ve worked with banks to build physician-specific mortgages. We’ve worked with law firms to build physician-specific asset protection planning strategies just on the idea of we know these things actually do happen to a lot of doctors, and we want to make sure that none of this would actually throw off their full financial plan.
[00:18:17] Matt Sonnen: I like to think that our listeners are very sharp and with it. I’m stating the obvious, but I do want to just point out the difference between your value proposition and the value prop that I was used to in the ’90s when I got into the industry, which was I managed a 25-stock portfolio, and we believe it can beat the S&P 500 in both up and down markets. You should hire me as your financial advisor. There’s a slight difference between what you guys are offering and that pitch, which I was– that’s what I grew up on.
You guys are so amazing. I want to hear about your backgrounds. Lauren, I’m going to go to you first. Walk us through your career path and progression that led to your recent promotion to CEO.
[00:19:01] Lauren Oschman: My story is truly intern to CEO. Pretty fun. Almost 15-year journey here is how long I’ve been doing this. I actually started in the industry fresh out of college at the firm that I had just roundaboutly ended up interning at before my senior year of college. That was the firm that I started my career with. Tommy’s favorite part of this story, he’ll bring it up if I don’t. When I was finishing my internship, they basically told me, “Hey, you’ve well exceeded our expectations. You’ve done a really, really good job. We would love to have you back. If you end up deciding you would like to work in the industry, we would love to have you back as a client service manager.”
I was thinking that I wanted to get into the industry. I was looking for a job. I did an econ and finance degree at Vanderbilt. Was looking for a job with an advisory firm. Actually, I felt like, because that firm, all of the advisors were men, all of the support staff were women, I felt like I was being put in the box and being extended that opportunity. I actually didn’t call them when I was job searching. They ended up finding out that I wanted to be in the industry and so they called me and said, “Hey, why din’t you reach out to us?” I said, “Well, I don’t really want to be a client service administrator. I’m looking to start out as an advisor. If you would like to interview me to be an advisor, then I would love to talk with you.”
They actually did. Interviewed me for an advisor position. I mean, I was 21 years old, fresh out of college. Actually, started the branch in Nashville for that firm. They had the physician niche. I had a lot of success building a financial planning practice essentially from scratch. My dad’s a cardiologist, so I think I had a pretty unique understanding of what doctors needed beyond what you could just see on paper. You can look at the dollars and cents of the whole thing and look at the value of the investment portfolio and all of that.
I grew up with a physician, and so I saw what true sacrifice it took and the whole of the anxiety, all of that risk management stuff that we talked about. I watched my dad go through a lawsuit that was pretty yucky. Thankfully, he went to a jury trial, jury ruled in his favor, but it was very impressed upon me what physicians needed was a true partner, well beyond just someone to manage their portfolio. I think because I could tap into that, I had a lot of success building my practice working with physicians.
Tommy was at that firm. He had actually become the president of the firm and needed someone to lead the advisory teams. He asked me to do that, and that’s where he and I started working together. Huge credit to him. If anyone wants to know how to develop young rising talent, Tommy is one of the best of the best at knowing how to do this. He made some investments in me to help me become not just a leader, but a leader that could be trusted, which was really key to my ability to lead our advisory teams at that firm. He got me connected with some really great mentors who could teach me things that he didn’t know as well as they did.
We just, at the end of the day, had a really similar approach to taking care of clients but also had a lot of similar beliefs about how to take care of employees and realize that the employees are really the one who make your firm and make your client experience. That was super important to both of us. When I ultimately decided to leave that firm, Tommy was on the shortlist of people that I wanted to collaborate with in the future, and as they say, the rest is history.
We launched Vestia. I slid into that same position of leading the advisory teams. At Vestia, Tommy was the CEO. I’m I think a decade younger than him, so we both were thinking that in the future I probably would be taking over for him, and so he was mentoring and training me to that end. Then with this success, I’m sure he’ll talk about that he’s seen with this new venture capital firm, it became very apparent to us recently that just it was time to make the transition. It was time to have someone every day focused on Vestia and someone everyday focused on Mammoth. That was when we made that transition official, which was just last month.
[00:23:20] Matt Sonnen: We’ll go to Tommy in a second, but let’s jump to Brad. I mentioned in the intro, Brad, you came from outside the financial services industry. Obviously, with the niche, it makes sense, but walk us through the various zigs and zags of your career to where you are today.
[00:23:36] Brad Quick: Yes, zigs and zags is probably a great way to put it, Matt. I’ll start with, I had a fantastic mentor. I was a 23-year-old kid working at GE, and there’s a guy, a vice president of the company at GE, who at the time (these guys had houses that were paid for and 7 series beamers and things like that) he took some time out of his day to mentor me, and that really impressed me a lot as far as my career and my ability to mentor others to see someone like that as a role model.
The thing that he impressed on me was, always know where you’re going, ‘where do you want to get to?’ For me, while there’s a lot of zigs and zags I’ll share here in a second, I’ve always had this guiding light of – I knew I wanted to be a commercial leader. I wanted to run businesses, things like that, and really be in a leadership position. That was the one consistent, but if I back up all the way from when I graduated at Purdue as electrical engineer, that’s the backdrop. When I graduated at Purdie as an electrical engineer, I did go out as a sales engineer, so right away, I knew I didn’t want to design things sitting behind a desk all day, so went and sold power equipment. Did that for a while.
Then went to GE where I met this wonderful mentor, Dave Moman, who helped me crystallize long-term vision. Over the dozen years I was at GE under Jack Welch, was able to grow as a leader, grow as a sales and commercial and business leader, and so that was the consistency there. Then enter– When Welch left and Immelt took over, it was clear that our business wasn’t going to make the cut, and so to me, I was at crossroads.
I went ahead and jumped into another commercial leadership role at an orthopedic company just down the road. That allowed me to keep doing what I love doing, which is the commercial side and the marketing and business side and do it in an orthopedic company where we were making hip and knee replacements for a third of the population or something like that. That was the next step for me, so I was able to jump into orthopedics and have a pretty good career there with J&J and then with Zimmer Biomet over 15 years, where, at the peak, I wound up running about a $3 billion company from the product management side before I made the switch and came over to work for Tommy.
That’s something where Tommy, for a long time, I’ve known him. Again, Lauren talked about the development that Tommy has and just an amazing person for the ability to develop talent and put together the pieces in an organization. Tommy and I have been talking for a while about someday because of my orthopedic knowledge and just the fact that I knew so many of these surgeons maybe come over and work with him. It just so happened that Tommy needed someone to help run the business and, as a side hustle, be able to talk to some orthopedic surgeons who are friends and see if they wanted to come join us as clients.
That’s been my journey. Again, the consistency being I always knew I wanted to be a leadership marketing business kind of person, but certainly from power to orthopedics to wealth management, a bit of a change here and there.
[00:26:56] Matt Sonnen: Great. Then, Tommy, we’ve touched on it. You’re moving into a new phase of your career. Talk to us about how you ended up where you are today.
[00:27:04] Tommy Martin: Well, I’ll get there in just a minute, Matt, but I got to say a few things about bringing in Brad because I know this is one of the things that RIAs think about a lot, is what’s the right time to bring in talent to the organization that’s not necessarily a client-facing advisor? I want to speak to that real quickly, and why did we bring in an outsider to become not just our chief operating officer, but also our day-to-day president.
It was really twofold. First, one of the things that I saw on Brad was just this incredible way that he’d risen as an executive but also had a family that still adored him. I know, across our team, that was something that every single team member that we have, every single partner Lauren and I have, every team member that supports the firm, every single one of them was just in that stage of life saying, “How do I make sure that I don’t get to the end of this ladder and find out I totally blew it because now I don’t have a relationship with my kids?”
I kept looking at Brad in the community and seeing his adult daughter would still put her head on his shoulder, or when he was around his adult sons, they just wanted to be near him. That was one thing that really, really attracted us to Brad. Outside of the normal resume things, just seeing, “This is a guy that we love the way he’s operated as an executive but still has this incredible relationship with his family.”
Then internally, the biggest challenge I was seeing across our partnership group was that we had really gotten stuck in what I now call the tyranny of the OR. What I mean by that is there’s a lot of times in an organization when people get stuck in a this OR that mentality. One of the things Jim Collins talks about is you’ve got to get out of the tyranny of the OR and really help the team embrace the power of the AND. Where we were getting stuck, Matt, was people that were believing we can’t grow the firm AND make sure we have outstanding quality control under the hood in our operations. It was really this mindset of it’s either/or. Grow the firm or have quality control.
We’d been stuck in that place for a couple of years. I wish I could tell you I’d been a better leader to help unstuck us, I just wasn’t. That’s the bottom line. The number one thing when I sat down with Brad and said, “Brad, I want to bring you in as our day-to-day president. You don’t have a client-facing role, but we want you to come in, and I need you to get our team unstuck so that they start believing that we can actually do both; We can grow this firm and we can have an outstanding client experience with incredible quality control under the hood.” That’s what he’s helped deliver every step of the way. It’s been one of the best decisions we’ve made as a firm. I know a lot of firms just get stuck saying, ‘I’m not sure if we can bring in outside talent yet.’
[00:30:18] Matt Sonnen: You said it so well, and it’s very powerful for this group, the COO Roundtable. I think a lot of these folks have been brought in for those exact reasons that the firm seems stuck. I think you’re exactly right. Everybody says, well, we can grow, but we’re definitely going to get a drop-in service. And that’s the main job of a COO, is how do you have more and more clients AND, to your point, keep the level of service up. I love everything you said.
[00:30:49] Tommy Martin: Yes. Not getting stuck in the tyranny of the OR. Matt, you had graciously asked about my background. I grew up in financial services. I certainly didn’t set out thinking that’s where I was going to be. I actually had a triple major, my freshman year of college, and music was one of them. Anybody that would hear me sing or play the piano or anything, you would just look and say, “Oh my gosh, how did you think music was in your future?” It was just nowhere even close. Now, my wife is incredible, my son’s incredible in that department, but that gene was nowhere near me.
I got involved with the financial firm at age 19 as an intern, never thinking I was going to make a career out of it, and just fell in love with it. It allowed me to exercise both sides of my brain. That’s what was so exciting. Allowed me a place where I could just genuinely care about people and help them, so I fell in love with it. Spent 20 years really growing a practice and built this just phenomenal practice specializing primarily with orthopedic and neurosurgeons and other high-income physicians. Absolutely loved it, but had the opportunity to step in and become the CEO at a financial firm that had nearly 300 employees.
It was a little bit of a time of turbulence under the hood with that firm, and so stepping in was really my first entry into a major leadership role. Matt, I blew a lot of it. There are a lot of things I didn’t get right, but I learned a lot from that. The most important thing that I did and that I’m very proud of was got a really robust team in place to help support that company. That was one of the challenges. As we’d continue to grow it, we just had not kept up in investing in our people to help develop them to be ready for that growth. That was one of my most important lessons.
When you hear Lauren talk about my passion for people, it really came from realizing how badly we’d blown it in building out a nationwide financial firm, but not continuing to invest in our people along the way to help them be ready for the scale that that then required.
As we launched Vestia, I was really honored to be asked by the team to help come launch and get everything moving, and it’s just a tremendous opportunity. I really got a redo. Still, a lot of things I didn’t get right, Matt, but certainly, did a lot better on the people department and making sure we were developing our people and investing in them.
Ultimately through that, had the opportunity, with Brad and Lauren doing such an incredible job running the day-to-day under the hood at Vestia, taking great care of our doctors, I had the opportunity to further some of the work that had grown up in our workings with doctors. We’d started to do some special purpose vehicles, which I didn’t even know what that was at the time, but it was just one investment at a time in a very specific medical project. This had come up with some of our doctors who were some of the leading doctors in their specialties in the world.
We had gotten the opportunity to help with some of these special purpose vehicles, and they had just taken off and really exploded. Today, our firm oversees about $75 million just in these special purpose vehicles. That tells you just the way that they grew very, very quickly. By the way, that’s two special purpose vehicles now account for $75 million of firm assets that we help oversee. I just had the time of my life doing it, just absolutely loved it.
Brad and Lauren were incredible. They just said, “Hey, look, just move over to the board. Continue to be here and support us from a strategic standpoint, but go build up this specialized offering for doctors. It’s only going to help us grow the firm.” We never knew at the time how much it was going to help us grow the firm. Then we were able to launch, with some of the leading doctors in the world, we were able to launch a formal venture capital fund last year, it’s called Mammoth Health and Tech Fund. Through that, we started to see some incredible wins in being able to go upmarket as a firm at Vestia.
One of the first examples I have, we got referred to someone who invested $100,000 in our venture capital fund but ended up bringing to the firm a $35 million relationship. A week later, we had somebody that was a $25 million example, very similar. A week following that, a $20 million example, very similar. It’s just been on and on and on. Having access to a highly, highly specialized offering within our niche, it’s been just a catalyst to make it go even faster. The flywheel is turning easier and easier and easier.
My new mission ultimately in support of Vestia, but also from a broader personal standpoint, my personal mission has become to help create 1 million jobs and help save 10 million lives by bringing new medical advancements to the world. It’s such an honor for me to not have to choose but to get to be able to support Vestia from a board standpoint and be there as Brad and Lauren see fit but then also to– the spinoffs that Brad talked about earlier, to be an important spinoff, helping bring the future of medicine to the world in a really meaningful way. It’s just been so rewarding I think for all of us.
[00:37:20] Matt Sonnen: Brad, one way to support all of this growth, you guys have been a big adopter of the EOS framework. How have you gone about implementing that at the firm?
[00:37:30] Brad Quick: One of the things that struck me initially when I started was this EOS thing that the team was using. At the time, I had never heard of it. Obviously, I’ve read all the books now, multiple times, but if I had a dollar for every meeting I sat through on one of the very large GE, J&J could be bureaucratic meetings where a lot of people got together, had great discussions and nothing happened afterwards. Nobody had a takeaway. You get together weeks later and nothing had happened.
One of the things that I love, it just resonated well with me with EOS is just the whole framework from tracking of progress to setting rocks to having a vision you’re marching to. Really all six aspects of the organizational leadership checkup, vision, people, the data for score carding, the issues that you solve, the processes that you set up with and followed by all, to gain traction, all that just really resonated to me. I’ve been super passionate about it, but we’ve been very intentional of driving it and making sure that everybody has scorecard measurements. All our people have regular check-ins from their management each quarter to know how they’re doing, just all the aspects.
We have a fantastic partner also, Justin Miles, who’s a partner of ours who helps us drive it. Just super intentional. We use all the different aspects, and we have just a fantastic vision, our VTO, which we all are rallying behind and it just makes a ton of sense to the entire team. It’s something we get excited about when we see this is exactly who we’re going to be and just watch ourselves progress and actually accelerate past some of our key early measures as far as where we want to be as an organization.
[00:39:16] Matt Sonnen: Well, something else that the firm has adopted beyond EOS is the balanced scorecard, which is something that came out of Harvard. Tommy, why don’t you talk to us a little bit about that?
[00:39:26] Tommy Martin: Yes, definitely. Thanks, Matt. Two things I’d love to talk about as it dives into that. The other, before I come back to balance scorecard, is just overall governance. As I know, a lot of firms struggle with this. What I always encourage firms to think about, even if it’s the same people doing the same things initially, to be really, really thoughtful about, what is the role of an owner versus what is the role of an executive team member? Because firms have to decide, if they want to scale– any professional firm has to decide, are we going to be run by a committee of all of our partners, as you try to scale, as you can imagine that’s just going to get to be a bigger and bigger number, or are we ultimately going to be governed by an executive team who has the responsibility and the fiduciary duty to do what’s best for the business and ultimately, for the partners? I’ve seen a lot of professional firms try to govern themselves by a big committee. I’ve never seen an example that works. I am a firm, firm believer, 180%, that the executive team leadership model is what makes the most sense.
Then you have to be really thoughtful about well, does the executive team decide everything? Are there things that a partner and owner, an equity owner should have a vote about? What are the things they have to trust the executive team for? A lot of firms struggle with that, because often they’re adding one partner, who becomes part of the de facto executive team, and then they add another then another, and they never really get to this point where they think about what’s an ownership role, versus what’s an executive team role? Just a really, really important aspect of scale. It ultimately should be built into the operating agreement of the business.
Ours is very specific about what an owner has a vote on and what they don’t, and bottom line is they don’t have a vote on most things. The executive team has the authority to execute the vision of the company the way that they should. Part of that, then, is the balanced scorecard, and what do we mean by that? As you mentioned, this is a framework that came out of Harvard Business School and it’s absolutely my favorite framework in business. I love the way that we’ve integrated it into our EOS thinking, and the idea of the balanced scorecard is if we want to ultimately drive great financial results, how do you do that?
Well, the balanced scorecard looked back at all the research and said, how do you build a great enduring company? You really have to pay attention to four aspects. There’s four key stakeholders of the business. You have your shareholders. When you’re looking at profitability, you’re thinking about, how is this business going to perform from a shareholder perspective? Well, how do you get the best profits possible? You have to look at how is the business performing from a customer perspective? Because if we’re not outstanding for our customers, then we’re not going to be outstanding for our shareholders. Well, how do you make sure you’re performing well for customers?
You look at how are our processes performing? We look at it from that angle. That’s where you get into quality control. Are we getting things done right the first time? How do you have great processes? This is where it all comes back to and you heard this from Lauren, and you see the passion from Brad. If you want great processes, and you want to have an outstanding customer experience that drives great profitability for your business, it all starts with your people. We have to look at it from an employee perspective, and how do we make sure we’re developing and supporting the best people we possibly can because they ultimately drive all those other things under the hood.
Then- I absolutely love this. When Brad came in, one of the things that we added was this additional focus on, what are we doing for our community? We also wanted to look at the community as a stakeholder and say, as we have profits, how are we making sure that we’re also being outstanding citizens in our community, and allowing our employees to do those things?
All of that has led to a very, very specific focus, and where it integrates back to our EOS and our planning, is, when we look at our three-year picture, that’s part of the EOS model, when we look at our three-year picture, we break it down into those five segments. How do we look for our people? How does our processes look? How do we look for our customer? How do we look for our owners? And how do we look for our community? When you look at the business from all five of those angles, or four, whichever, when you look at the business that way, it’s really hard to miss something and not think about all these stakeholders. It just helps create a really, really robust plan for long-term development.
[00:44:38] Matt Sonnen: As we think about that scorecard, what other metrics are you tracking in order to gauge the health of your organization? Brad, I’ll go to you first on that one.
[00:44:49] Brad Quick: Yes, of those things, to me what’s super important, probably the first of those is our team member perspective, that making sure that they’re in a good place, they’re healthy, they’re engaged. One of the things that come with my gray hair and being part of several organizations, I’ve been party to a lot of different surveys to try to get to the bottom of that. I really love the Gallup one and we’ve had a version that looks like the Gallup to get to the bottom of how are our employees doing? Are they super-engaged? Even from there, what are the biggest things to work on?
What’s been fantastic about the team that Tommy’s assembled, and Lauren and others before I got there even was, it is a super-engaged team with amazing values. That culture, that survey that we get really reinforces that but it does, I love our team, because they’re so honest, they’re so passionate, they’ll tell us. We’ll see- each year we’ve seen great progression, we’ve seen great engagement. 100% of the team said they would recommend Vestia to work, which is unheard of, crazy. That culture survey gives us a really good number, numeric value, to see trends and then also to see what to work on, and we come back and we work on that stuff. That’s, to me, a really good one.
[00:46:06] Lauren Oschman: I’ll chime in there too, Brad, just in terms of employee engagement. We do that culture survey once a year, we see the results, we want to make sure that that momentum is maintained throughout the year. Especially having a team that is scattered across the country, it can sometimes be hard to really feel that engagement. What we’ve noticed we’ve really encouraged team members to be active in our RingCentral, it’s an internal chat, like a Slack or something like that, to be active and highlighting the great work that they’re seeing their team members do.
We see a lot of really great shoutouts, “Hey, so and so helped me out on this,” or had a question or I had to– Someone shared last week that she had the opportunity to go with her niece on a field trip and it happened to be that she was the only one from her team in the office that day, and she reached out to someone who was in her position on another service team, who was willing to cover for her for those few hours while she was gone, and so she highlighted that.
What we’ve noticed is, if we see that go quiet, like if no one’s highlighting anyone else, if no one’s talking about anything exciting going on with a client or new business development opportunities like that, we probably need to go start checking in with people because there’s probably some way that we need to support the team a little bit better, but if that’s active, and people are highlighting each other and highlighting great things that are going on, we’ve experienced that that’s pretty real and that’s a good gauge on how people are doing in between when we’re formally surveying them.
[00:47:41] Matt Sonnen: Tommy, what else are you guys tracking for the health of the organization?
[00:47:46] Tommy Martin: Yes, we also want to look at our processes, Matt. A lot of times I think people will overcomplicate some of it when it comes to the processes. Here’s what I’ve learned. What we ultimately want to do is we want to minimize waste within the organization. What do I mean by waste? I mean, a piece of paper touching unnecessary people, something that has to get redone because it wasn’t done correctly the first time, on and on and on. If we can eliminate waste, we can really streamline our efforts, and we pay attention to our first-time right percentage. If we’re having to do rework, that means there’s a breakdown in the process somewhere.
Then as it relates to quality control, we have a rule that’s really, really simple but it’s the most powerful thing I’ve ever learned as it relates to operations, that prevention is always always better than detection. My favorite example, if you try to go into Amazon, and you try to check out and you haven’t entered your ZIP code, you can’t check out. They’re preventing you from checking out because there’s an error. That first-time-right percentage is going to go way up because they’ve prevented the error before it could even happen.
Instead, what a lot of financial firms do is they’re just chasing their tail all day and they’re just constantly detecting problems, fixing one at a time, but not going back to the root cause of those issues and making sure they never happen again, by preventing them from even being possible to occur in the future. We are really, really heavy on prevention is always better than detection.
[00:49:31] Lauren Oschman: Yes, and then from the customer perspective, again, we have bucketed our measurables so that they fit the criteria of the balanced scorecard that Tommy was talking about. We initially were talking about, should we do like a net promoter score? I know a lot of firms do that. We went to our client service team members, and we said, “What do you track to feel like you’re doing a good job?” Because these are mostly self-starters. They all have their way that they know that they’re doing a good job with their clients.
Overwhelmingly, I was so impressed that almost all of them said some version of, “If clients are asking me questions, then I know I’m not doing a great job, or we’re not doing a great job setting expectations, letting them know what’s next or keeping them updated.” This actually goes back to what I love so much about it is it ties back to one of our firm values. We try to stay really true to the values that we set when we started the firm. One of them is never let them guess. We don’t want people coming to us because they’re wondering what’s going on, or worse, wondering what’s going on and not even asking us about it. We don’t want that happening with our team members either.
This is essentially what our client service team members were saying they were tracking, was if ‘I’ve left a client guessing, then they’re probably not that satisfied. I’m probably not doing my job.’ And so that actually is right now, our main customer measurable is the number of times that someone reaches out to us because they’re guessing about what’s next, or they don’t understand what’s going on because we have not proactively updated them. That’s then a lot of what we talk about in terms of our client service is ‘how can we be proactive so the clients aren’t coming to us?’ Again, it goes right back to that whole concept of the first assist.
[00:51:20] Brad Quick: Tommy and Lauren, if you don’t mind, I’ll cover the fourth. One of these, the firm owner perspective, I think because there’s two really cool measurements there, which I think are again, can be a bit unique. One, share price. Obviously, that’s something that’s important to the owners. It’s important to know that that is going in the right direction and what’s neat is even despite the fact that we’ve added new owners, we’ve added- not only added but then built up shares. In some cases with those owners. We’ve continued to grow that share price in excess of 20% a year. Really cool to see going from 36 to well over 80 now and continuing to grow.
As we forward project with the growth we’re seeing that will continue to do nothing but go in the right direction. As an owner, that’s really good, and you see, even despite adding new owners, that the value you have is going the right way. That’s one of the two key ones. The other one, which is a bit interesting is the revenue per team member. This one to me is like the three bears story where there’s too much. If you’re going well north of the $300,000 target we’ve got, that probably says, “Man, we need to start looking, is there something going on where maybe somebody’s going to be stressed because they’ve got too much they’re doing,” at least we want to check into that.
If it’s too low, we also want to check and say, “Maybe we’re getting ahead of our skis a little bit from a person investment,” and just check in on that. I think that’s a really good second measure for us is what is that revenue per team member? Is that where we want it to be?
[00:52:56] Tommy Martin: Brad, one of the things I’ve appreciated so much is you really helped our partners get their heads around the idea that even when we add a new partner and it’s diluting percentage ownership, as long as we’re focused on overall share price and my number of units isn’t changing, then it really is a good thing. I see this happen with too many firms. They don’t have a Brad helping them see the bigger picture and so they don’t want to add new partners because they’re worried about dilution. Our example is my share price, Lauren’s share price, all of our partner share price continues to go up, even though our percentage ownership is going down.
At the end of the day, that’s the sign of a really, really healthy firm that’s on its way to being able to scale. Just throw that out there for lots and lots of firms, they’ve been too hesitant to give up ownership. They’re trying to protect their percentage of the pie, when what they should really care about is the size of their slice of the pie. As long as that pie is getting significantly bigger, their percentage doesn’t matter because their individual slice of pie will continue to grow. Ultimately, that leads to the fifth thing we’re looking at, which is how are we impacting the communities where we have offices and team members?
That was really important to us is how do we be great citizens? What we realized, Matt, was that our people are passionate about different things, so instead of mandating any one cause or passion or anything, what we said to our people is, “Look, these are some broader things that we’re excited about as a business. It’s a pretty broad list. Pick anything in this vicinity and we’re not just going to match your financial contributions, because that’s easy, but we’re also- if you give your own time, we will also match dollars because of your time.”
For every hour that an employee goes out and volunteers in an organization in their community that they are passionate about, we will match that hour with a $50 contribution to that organization. We do this for every employee right now, up to $500 per quarter and we’re really excited to continue to increase that as we continue to become more profitable as a business.
[00:55:29] Brad Quick: Tommy, I love to see the participation among the team and how many people really take that to heart and are making a difference in their communities.
[00:55:37] Matt Sonnen: Talking about how you’re taking care of the employees, I think that’s fantastic by the way, but talking about how you’re taking care of the employees, we’ve had such amazing growth in our industry over the past 24 months. One thing that we’re talking more and more to our clients about is employee development, and I know you guys have a really unique take on employee training. Lauren, why don’t you walk us through that?
[00:56:00] Lauren Oschman: As I’m sure most firms do it at their fledgling stage, we’re looking at where we have to onboard our first new Vestia employee. It was actually my personal client service administrator who’s still with us and she’s amazing. She’s developed phenomenally. We had to figure out how we were going to train her. We’ve since brought on a lot of other servicing advisors, we brought on a new lead advisor and because everyone has “a day job,” where they’re actually working with clients and doing all of that, we couldn’t separate that time and say that we were going to create some training department or robust training program.
That seemed like a herculean task, so we looked to the medical training world. We were like, “Hospitals don’t have training departments and they teach people how to do heart surgery. How do they do that?” If you talk to a physician about how they were trained during their residency or fellowship, which is that point where they’re actually in the hands-on phase of learning how to be highly specialized, they have this model of, I do one, we do one, you do one. First, it’s I do it and you watch me, the next one we’ll do together, and then the next one you do it, I’ll watch and provide feedback. Every new iteration of something that you encounter, you can follow that model.
Something that seemed very daunting actually became very simple very quickly, because the question you ask of the newer advisor, or the less experienced advisor is: “Have you done this before?” If they say no, it’s, “Have you seen it done before?” Well, no. Okay, great. Then let me do this one and you watch, and then you know where to go with the next one and then the next one. We figured if that’s good enough to train someone how to do heart surgery, then it’s probably good enough to train someone how to do specialized financial planning.
[00:58:06] Brad Quick: I can pile in on that Lauren. In my 15 years of ortho, I went to a number of cadaveric sessions where I saw that work exactly, and by the end, then a lot of the fellows, or even the attendings who were learning a new procedure, were at least starting to be very comfortable and they would even try to get in an extra one or two after that. So I can say firsthand, I’ve seen that work in the orthopedic world.
[00:58:32] Lauren Oschman: The cool thing too is it allows employees to take ownership over training within their teams without having to understand how to design some kind of training curriculum. If we bring on a new client service administrator, one of our existing more senior client service administrators can follow this model with the tasks that have to be done to be a great client service manager at our firm. It’s really cool that it’s easy to understand, it’s easily scalable.
And then something else– This is something that Brad has really encouraged. I saw it modeled very well from Tommy over time, is making an investment understanding that our people are such a big part of the product that we deliver as an advisory firm. We have to be developing our people on a broader scale as well, not just leaving it up to each individual person to choose designations and things like that they want to pursue, but actually choosing some things as a firm that we want to invest in helping the entire firm get better at. Tommy had set this example. Brad actually put a budget line item behind this and has a set amount of money each year that we are aiming to spend on team development.
This isn’t team-building exercises. This is like we bring in some experts in communication and we have them work our team through an intensive two-day workshop on how to be more effective communicators, or we did a deep dive on insights. Is a personality profile that we use in our hiring process, and we’ve also started to use that with clients to know how to most effectively communicate or deliver service to different clients based on sort of how they’re wired in their brain to understand things. We had a two-day intensive training on insights that really helped all of our team to speak the same language and ultimately end up developing or delivering a better product to our clients, a more effective product to our clients, and then more effectively support each other.
I think that’s been a huge key to our success, and part of the reason that, as Brad said, 100% of our team members would recommend someone else work here. It’s because like, our investment in them does not stop at hiring them and paying them a salary. We continue to invest in them, we continue to try to support them, we invest in the causes that they care about, and that to me is one of the most important things that you don’t want to lose sight of as you’re looking to grow a firm, because your people are truly the most important thing. I think, to all of this. You can’t deliver the product, you can’t support the clients.
[01:00:58] Matt Sonnen: That’s exactly right.
[01:00:59] Brad Quick: To add on to that, Lauren, even- we put our money where our mouth is there because for example, licensure, whether somebody gets a promotion or not somebody, that gets their Series 65, somebody gets their CFP, we pay them for that and so it’s something that they see that’s important because we’ve got money behind it.
[01:01:16] Tommy Martin: Absolutely, and Matt, it’s truly been the joy of my career, the most important joy of my career to see our team members develop over time. One of our partners today was a student I had when I was teaching a CFP course in an undergrad program. Today, he’s one of our partners, running an entire practice and he’s just absolutely phenomenal. We have another partner that came from a different firm, where he didn’t feel like he could be himself and be proud of the fact that he was gay when he was at work. Now with us, he gets to be who he is, day in and day out and we absolutely love having him as a partner at our firm.
What I hope you’re hearing throughout this, as you know, Brad and Lauren and I, we are simply the mouthpieces of Vestia, but we’re standing on the shoulders every single day of people that are just absolutely top rate in the industry. Our partners, we could not have better partners if we asked for them. Our team members, our future partners, it has just been an absolutely incredible experience to stand on the shoulders of these giants and we get to get out there and talk about the firm and try to make it look good. We wouldn’t be doing any of this if not for all of their tireless work to make us the great and incredible firm that we are, and we’re just so honored to have a team like that.
[01:02:52] Matt Sonnen: Our listeners know that I’ve stolen Mark Tibergien’s phrase about our industries need to evolve from a collection of practices to real businesses. This has been really fascinating talking to you guys today because the three of you have really taken a methodical approach to structuring your business, whether it’s through EOS, or the balanced scorecard or your approach to succession planning or employee training, whatever it may be. I think what you’re doing is really just great and I know a lot of people benefited from your wisdom today. Lauren, Tommy, and Brad, thank you so much for being here today.
[01:03:25] Lauren Oschman: Thanks, Matt.
[01:03:26] Tommy Martin: Thanks Matt, really appreciate it.
[01:03:28] Brad Quick: Thank you.
[01:03:29] Matt Sonnen: Great. Well, that’s a wrap on episode 41 everyone. We will talk to you soon.
