EPISODE 26

[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 back everyone to Episode 26 of The COO Roundtable. We have two more fantastic guests joining us today. Both happen to hold the exact title of Chief Operating Officer. Both firms are right around $3 billion of AUM, and both firms have three office locations. First up is Kelly Downs of Berman Capital Advisors headquartered in Atlanta, Georgia, with additional offices in Chicago and Austin, Texas. Kelly, thank you so much for being here today.

[00:00:49] Kelly Downs: Thanks for having me, Matt. I’m excited to help spread the word on the importance of operational roles in the field.

[00:00:55] Matt Sonnen: Awesome. That’s what we’re here for. Then joining Kelly is Matt Ran of Telemus Capital, which has two offices in Michigan and another in Chicago. I don’t want to take away from Matt’s accomplishments — not only is he the COO, but he was named a partner of the firm late last year. Congrats on that, Matt, and welcome to the podcast.

[00:01:13] Matt Ran: Thank you, excited to be on. I emailed Matt a little bit ago talking about how much I enjoy listening to it. Excited to be on.

[00:01:20] Matt Sonnen: Cool. Well, thank you both for being here. Kelly, I’m going to start with you. Why don’t you tell us a little bit about Berman Capital Advisors?

[00:01:26] Kelly Downs: Sure, I’d love to. Berman Capital Advisors was founded in late 2010. We just hit our 10-year anniversary, which was great to celebrate, even though we had to do it virtually. Now, at the end of the year, we just crossed over $3.2 billion in assets under management. For our team, we’ve got about 30 people on our team, continuing to hire, so that number just continues to grow. Our clients really range from entrepreneurs, community leaders, and executives. The target client that we work with really is one that allows us to be involved in many aspects of their financial life. We want to be involved not only in investments, but also in estate, tax, and risk decisions.

Really, those relationships are ones that allow us to be really most impactful because we’re involved in so many different aspects and can make more informed recommendations. Some clients don’t want that, and that’s okay, too. Really, each relationship is unique. As a firm in the investment space, we focus a lot on alternative investments. Then in addition to the investments, the family office activities keep us busy. In terms of the past 10 years, if we’re looking back at the growth of the firm, most of our growth, which we’re really proud of, has come through client referrals. We don’t really do traditional marketing campaigns, but keeping clients happy, asking for introductions and referrals has been a very natural way for our business to grow.

I think that is the approach we continue, but aren’t necessarily opposed to any other, growth opportunities that may be inorganic as long as it’s the right decisions for clients and the firm. I should mention that Justin Berman is our founder and CEO, he founded the firm after leaving Goldman Sachs, and really wanted to build a business that was independent and wasn’t tied to an investment platform, and really can make decisions that were in the best interest of the client and not necessarily making money for the firm by its investment decisions. That led him to start the firm. It’s been a great 10 years, and we’re looking forward to the future.

[00:03:28] Matt Sonnen: That’s great. You talked about the breadth of services, we’re going to touch on that in a later question, but I’m going to throw it to Matt first. Telemus is part of the Focus Financial Network of firms. I actually have been in your offices. I don’t remember it was 2013, 2014-ish. When I was working at Focus. I’ve been in your office. I’ve met Gary and Lyle several times over the years. I know a bit of the Telemus story. For the listeners, Matt, why don’t you walk us through the details of the firm?

[00:03:54] Matt R: Yes, Telemus is a family business for me. It was started by my dad and two uncles. My dad started his career at Merrill Lynch, I think in 1981. My mom’s brother joined him in 1987. Then Lyle, who was married to my mom’s sister joined in 1991. They’ve been together almost 30 years now. Crazy to think about that. Telemus was started in 2005, Valentine’s Day, actually. With the idea that they wanted to do good by the client. They didn’t feel like they could do that at the brokerage house. They wanted to do things how they wanted, when they wanted.

They didn’t want to have people pick and choose things for them. That’s how Telemus got started. I believe when they got started, they’re about $1.2 billion. We are a little over almost $3.5 billion today. We have just under 50 employees in 3 offices. We actually just went through a whole marketing rebrand. Thinking about our ideal clients, we’ve bucketed them into eight different, what we’re calling “client communities”. Those are entrepreneurs, professionals, new investors, living in retirement, company executives, newly independent wealthy families, and then of course, the institutional investor.

Historically, we’ve grown both organically and inorganically. Right after we got started, we acquired a firm in Arbor, Michigan, which is where we have another office. Then a little over three years ago, we acquired a shop in Chicago. That’s been the path of $1.2 billion to the $3.5 billion that we are today.

[00:05:21] Matt Sonnen: I love the eight client communities. It’s so funny because I’m an “ops” guy. I shouldn’t be talking about client segmentation as much as I’ve found myself talking about it recently. We wrote an article about this too. You can’t pick your org structure, your tech stack, you can’t do any of that until you know “Who are we trying to serve?” I love that you’ve narrowed it down. There’s eight, “communities” is a cool word too. Eight client communities. I’ve found myself talking with clients a lot more about that. Before we go and pick all the parts, (you have to ask yourself), “How are we building the firm?” Who are we building it for? Like I said to Kelly, we’re going to talk about breadth of services here in a second. I love that eight client communities, that’s cool.

[00:06:02] Matt Ran: Yes, we focused them on complexities. Each of those have their own independent complexity to it. A lot of them have the same AUM range. It’s more, and as Kelly alluded to, what we can do for their financial life. We talk about financial life a lot, being financial life managers. What we can do in each of those communities, financial life is how we try to give our value-add to them.

[00:06:25] Matt Sonnen: That’s very cool.

[00:06:25] Kelly Downs: There must be something in the water, we actually went through a similar exercise this past year. [chuckles] I think it really is important to think about who you best service and really going to focus on those types of relationships, so you can be the most effective. Again, something in the water.

[00:06:43] Matt Sonnen: Yes, that’s cool. It’s super important, and I’m hoping more and more firms are thinking about it. We get the one call out of the blue, “Hey, PFI, which reporting provider is the best one? I’ll just go buy that one.” They think I’m just trying to be a consultant and get some long, complicated engagement. It’s just I need to know who you’re serving before I can answer that question. I’m glad that both of you have tackled that. That’s great. Kelly, let’s talk about you personally. I always say this on the podcast, I lurk on LinkedIn, so I look at everybody’s backgrounds.

You spent nine years at Fisher Investments before you joined Berman Capital Advisors. Over the past 10 years, you’ve had a number of different positions at the firm, which is always cool. Including, you were a wealth advisor. I always find that fascinating for COOs. Give us a little background on your career.

[00:07:30] Kelly Downs: Sure. I’ve had a number of different interesting roles over the past 20 years. You are right, I did start my career in California at Fisher Investments. Looking back on that, I feel very, very fortunate to have started my career at a firm like Fisher. They really pride themselves on building employees from within. Over the nine years that I spent at Fisher, I did everything from operations, client service, recruiting, management, trading, client reporting. I was able to spend time in so many different parts of the business, it gave me such a unique perspective on not only their career paths that are available within the industry but what I was good at.

It pushed me to do things that maybe I wasn’t ready for or didn’t feel prepared for. One of the things that I could remember is after being at the firm for maybe a year and a half, they said, “Kelly, we’d like for you to manage this team.” I’m, at that point 23, what do I know about management? They identify something in their employees, and then push them to do things they felt like they were ready for and able to take on. That really pushed me to learn more about the business and master certain parts that I wanted to spend more time in and figure out what I didn’t like or what I did like.

I can remember, one of my last roles there was managing the trading desk. I had never worked in trading before. I didn’t know really anything about trading. I walked in really intimidated, but it ended up being really one of the roles that I enjoyed the most if I look back on my career at Fisher because I had to learn.  I had to learn the job, I had to learn the team to gain their respect. I also had to trust them to help me make decisions. Is it great? Not within a training program, but it certainly, for me, was a training ground that I’m super grateful for having at that stage in my career. After being there for about nine years, I was eager to move back closer to family. I had family in Atlanta, so Atlanta was a target.

My uncle had a close friend who worked at Goldman Sachs and suggested that I apply. I did six months later. Moved to Atlanta started working there. My friend’s uncle happened to be Justin Berman, our founder and CEO of the firm. He and I didn’t really interact much at Goldman. We were on different teams. He knew my background at Fisher. When he left a handful of months after I started, he started his firm and then a couple months later, called and ask if I was interested in joining. I then took the chance to get back into an environment that was more entrepreneurial, really in one that I could create my own path and not be restricted to a certain title or a role, or part of the business.

Really, that’s been the best decision, and that’s the environment I feel like I thrive in. Over the last 10 years, you’re right, I have been a part of every role at Berman at some point except for research. I believe that’s just the experts and the CFAs of the world. Really, much like my time at Fisher, I think that the path throughout Berman has helped me see the business through a lot of different angles. It allows me to make better decisions or at least I know what questions to ask or things to consider. I’ve always really liked working with clients. I think that if you don’t have a client, you don’t have a business.

The focus on clients has been really important to me, and that really led me to the role of wealth advisor for a couple of years. Operations has really been where I felt most effective, and so I moved into the COO role in late 2018. Really, that time as a wealth advisor helped me bridge the gap between operations and advisors. I think that it’s hard for both sides to understand each other, and being able to speak from both parts of the business, it helps. I talk to operations about or we’ll think about, from a wealth advisor, what they have to do with the client as a result of this process or the situation and vice versa.

It’s important for both parties to understand each other and work together to really make sure it ends up being a positive client experience. That’s where I am today. I’m happy to be in the role. I really do like being that person that people come to for help and with questions. It’s been an interesting career, but operations has been my comfort zone, for sure.

[00:11:49] Matt Sonnen: It’s so funny, I talked about lurking. I saw you have almost 10 years at Fisher, you’ve been at Berman for almost 10 years. I thought, “I probably shouldn’t mention, in only nine months at Goldman, something weird happened. I don’t want to bring that up!”

[laughter]

[00:12:02] Kelly Downs: It was a call from Justin Berman was the weird thing. [laughter]Goldman was great. Firms like Goldman Sachs, they’re huge, and they have so many smart people, so many resources. Personally, from an employee standpoint, I just wanted to have more flexibility. I can remember back in the early days of Fisher, and this was years ago, being in the mail room stuffing envelopes for client statements. Those were some of the fond memories that I have — really just getting your hands dirty into a firm that’s still building up process and structure. That is what I really found in Berman. 10 years in, we’re still doing that, really, in certain parts of the business. I like that get your hands dirty, be able to make decisions pretty easily. Nothing happened at Goldman. It was just a call from Justin.

[00:12:54] Matt Sonnen: That’s why I brought it up. This is why this is always my favorite question interviewing people.When I was younger, I got so upset when people would say to me, “Oh, things happen for a reason.” You’ve crossed paths with Justin at Goldman, and then it led to a 10-year plus, your continuing career now, in the RIA space. It’s just so funny how people’s paths cross and zig and zag, and you found the job at Goldman, you wanted to move back to Atlanta. It’s just amazing to me how everybody’s careers line up where they are.

[00:13:24] Kelly Downs: I think Justin and I just had lunch, and he’s like, “Do you want to come work for me?” I’m like, “Okay.” It was a very easy conversation but great decision for me.

[00:13:33] Matt Sonnen: That’s so cool. Matt, I’m going to move over to you. This is really rare to have two COOs and both have been advisors at one point in their career. You’ve also been in the advisor side of the business before shifting into the COO role. Give us a little bit of your background.

[00:13:47] Matt Ran: Yes. Like I said, family business for me. I’ve been in and out of the office before Telemus was even started. I remember going into my dad’s Merrill office when he had the Bloomberg stacked on top of each other, and it was taller than I was. Then I actually interned for them when they were at UBS. Basically, the year when I was a senior in high school, was the year before Telemus was actually started. I’ve been in and out, like I said, my whole life. I like to joke I might be the oldest child, but I’m definitely not the favorite. The business is definitely the favorite.

I started in September. My first day of work was September 2nd of 2008. About two weeks later, Lehman went under and I remember, I’m an econ major sitting in the middle of the pit just wondering. I didn’t really realized how bad things were. I remember my dad coming out and saying to me, “I hope this will be the bottom of your career.” That was in my first two weeks at work. So far, he’s been right. Obviously, some hiccups here and there, but nothing quite as bad as that. I started as an intern, actually. I was sitting in the pit. I was assisting our, what we called at that time, wealth analyst, helping doing proposals, asset allocation, rebalancing.

Then from there, I became, what we call, a wealth analyst at the time myself, and I grew to be an advisor. Real shortly into that, I realized I didn’t want to be an advisor. I just had more bigger picture things in mind and wanted to grow the business by making it, as I like to joke, a machine and making processes in place. Over time, I’ve just acquired more things at the office as people have left. Eventually, I took over the technology role as our director of technology, moved into a different position. I took over marketing and business development when our marketing person moved back to Cleveland. Then took over client experience and then eventually, took over operations and became a COO just in that path.

Over time, just kept getting more and more knowledge as I worked in those different roles. The technology people will refer to, what I would call, an ethernet cable is a Cat5 cable, and I remember having a conversation with these people about what Cat5 cable. I’m googling what this is. They’re talking about switches. This is a completely foreign language to me. Now, I like to say, I’m not fluent, but I’m at least conversational in a lot more languages within operations than I previously was just by acquiring the different roles within the firm and then having to learn the stuff on the spot. Google and a lot of other things are amazing tools. They quickly get your knowledge base up quickly.

[00:16:20] Matt Sonnen: That’s exactly right. We all know that 2020 was a wild year that required all of us to scramble and institute new technology and new procedures at their firms just to keep things chugging along and allowing everybody to just keep servicing the clients. I’m going to Matt first on this question. Is there anything that you scrambled to implement this year that has actually worked out so well you think you’ll continue into the future with that, whether it’s a technology or a process, or just a different way that your firm’s doing business these days?

[00:16:51] Matt Ran: Yes, absolutely. I’m sure you just heard the little notification that popped up as I was speaking, which would be Slack, which has become our inter-office email. We went Work From Home, I think it was about March 16th. As I was talking to Matt before we started, our office at that time looked like it had been pillaged. We basically let everyone take their computers home. I have been slowly rebuilding the office and letting people keep their equipment. I was really thinking about how we were going to collaborate more efficiently now that everyone is not in the office. You can no longer really pop into someone’s office if you have a question.

The 50 one-word email chains were getting very cumbersome very quickly. I was really thinking about how can we not have those conversations, not have to pick up the phone if you don’t necessarily need to, you just need to get a quick answer. We put in Slack, and Slack has been amazing. We rolled it out really slowly. We just got a few people going on it here and there, and as more people started to enjoy the experience, we started telling other people at the office about it. We officially rolled it out as our inter-office communication tool at the beginning of the year, and it’s been amazing.

We’ve started to build out channels, a couple engagement, employee engagement, and then our new thing is creating “Corners of Our Office.” We have an investment corner and it’s basically, “Ask our investment team anything.” Instead of sending those emails to our director of investments or our trader, and that information might be something that everyone would want to see. We’ve created an investment corner where they can ask that question out in a public forum, and our director of investments or whoever can answer that investment question. There’s a whole string of history there. We put our client experience notes in there. It’s been a really great thing in terms of employee engagement and something that we are continuing to build out as we continue on into this year.

[00:18:39] Matt Sonnen: Yes, it’s a big one. We’re only a whooping four people, and as soon as we started the work from home, the communication in the email channel was becoming cumbersome. We did the exact same thing, we switched over to Slack. There’s a lot of different tools that firms have gone to, but I think that’s been very important this year, is getting internal communications into one area, whether it’s instant messaging or whatever, Slack, and then just using email for client communications. That’s been a huge one for a lot of firms.

[00:19:08] Matt Ran: We actually have an instant messaging tool, and we can’t shut it down because it’s integrated into our phone. The group chats don’t save, and history’s not there, and you can’t really search for things. Compared to Slack, where everything is really neatly organized, you can search for things, you can put documents in there. Like I said, it’s been a great addition to the office.

[00:19:31] Matt Sonnen: That’s cool. Kelly, what’s something you guys implemented this year that you think you’re going to continue to use into the future?

[00:19:37] Kelly Downs: I think it all goes back to communication. We are heavy users of Microsoft Teams. We used to use– it was Skype, and I think right in March, April-ish, they put that product down and then moved to Teams. We’ve got very familiar with Teams very, very quickly because we had to have a replacement for being able to pop up and say, “Hey, I have a question.” We have a very open office, so there are no offices. In our office, everyone sits out together, and that is to allow for that collaboration and that quick communication. Teams has really been able to be a nice substitute for that. Hopefully, we’ll get back to a point where we can have some face-to-face interactions again.

We do really miss that collaboration. Now, if I have to call someone, I always do a video call. We’ve made some mandates that if you’re on a meeting, you need to have your video on, so you can at least simulate that in-person feeling. The Teams was really, for us, from a communication standpoint– we actually had implemented something in 2019 that really helped us in this environment. In 2019, early part of the year, we had a suggestion from an employee that we allow people to work from home. I think that most people, specifically in this industry, I feel like we’re sometimes late to adopt things that maybe different industries are more easily or more accepting of.

Initial gut was like “No, no, no we can’t have anyone work from home,” but we said, “Let’s think through this and see how we could make it work,” because one of our priorities is really keeping our team happy and engaged and loyal and with us for the long haul. “How can we make this work? Can we make it work?” We really thought through if and how we might be able to move forward with that suggestion. We had a trial run where we let it happen for a quarter before we said, “This does or doesn’t work.” We had a team of people that said, “From each different team within the organization, think about the things that you would need to modify to allow for a team member to be able to work from home.”

Everyone put together this plan. We have some stipulations around it, like you can’t work from home on a Monday or Friday because those are really more meeting days, and there’s some other things that you had to adhere to. We were really pleasantly surprised that it worked. December of 2019, we made it official. It was one day a week, so it wasn’t full time or more than one day. Really having done that when we had to work from home in March, it was pretty seamless. People had their setup, everyone had laptops, people had to get a little bit more comfortable because they were there more than just that one day a week.

I’m really thankful that we had that suggestion because it made, again, that transition pretty seamless, and we had everything set up to still be able to connect with team members but also clients. From a client side, we started a Berman Capital Network series of calls. We wanted to be in touch with our clients more, we wanted to provide calls and resources that were not just focused on investments but rather more related topics but also unrelated topics. I think it was in the summer we had, I think she was a therapist, present on wellness and mindfulness during the pandemic and how to work through that personally.

That was our highest attended call that we had. Those investment-related or ancillary topics but also just unrelated investment calls, I think those will be things that will continue because they really resonated with our client base, and it’s nice that they feel like we’re trying to take care of the whole person and not just the investment side of their lives.

[00:23:15] Matt Ran: We did a very similar thing. We’ve been doing them as webinars. Our next webinar is with an infectious disease doctor to talk about the COVID vaccine. We’ve actually been, very similar to you Kelly, really we’re trying to be a value-add to the client any way that we can. A lot of people had a lot of unanswered questions, and we got a really, really good network. We just wanted to tap into that network as best as we could to get information out to our clients, prospects, whoever is on our distribution list and really be a resource for everyone whenever we can.

[00:23:45] Kelly Downs: Yes, agreed. We’re having our investment call next week, and the back half of that call is an epidemiologist from Emory. It’s going to talk about COVID, the new variant, the vaccine. I think that those are just really interesting topics for people and hoping that it pulls in people that may not be interested in hearing an investment presentation for the full hour, so they can get a little bit of two different topics that might interest them.

[00:24:10] Matt Ran: Same thing with the PPP and CARES Act, we partnered with attorneys and CPA firms, and we actually try to do the marketing ourselves and have them give us lists, so we can take all the information. They’ve been super, super successful. We found we’ve got a lot of new contacts, and a lot of new interests from people we probably wouldn’t have had any connectivity to because of it.

[00:24:31] Matt Sonnen: That’s really smart. Those COVID talks are definitely going to be highly attended, so that’s a cool marketing idea for sure. You both went and talked about communication. It leads right into this next question. Everyone that listens to this podcast knows I always love talking about culture and how the COO is so integral in impacting the culture of the firm. Matt, other than Slack and the communication side of it, what have you been able to do from a culture perspective during this work from home environment? How have you maintained the culture of the firm through this time?

[00:25:00] Matt Ran: It was actually through a lot of other people who just wanted to connect with one another. They missed the office, and so we had a few employees take initiative and created a daily coffee hour– coffee, not hour but coffee, like 15, 20-minute check-in. It was a Webex call that anyone could join. It was just a quick break in the middle of the day if you didn’t have anything going to have some coffee and chat. I’m not going to say everyone would join all the time, but you’d get basically everyone from a client service manager to someone in finance to one of the partners in these calls, and the chats would really go anywhere.

They’d be basically trying to recreate what would happen in the lunch hour or if, like I said, you ran into somebody in the coffee room. Then that went into a happy hour later in the day after that, after the work hour was over. At 5:30, we had a standing happy hour. It was at one point every day, which I think got a little unhealthy at some point, but morphed into a once a week thing. Same thing, it was a nice way to wind down the day. I think a lot of people in the middle of working from home were having problems separating the end of the day because you don’t really go home anymore. I know for myself, I try to change out of the clothes I’m wearing, so at least they have some transition.

We were having a happy hour and same thing, a lot of great conversation, some work. Some would be funny work-related stuff, others would be very random about what was going on in the world at the time, and it just brought our offices a lot closer together especially for the satellite offices, the people in Ann Arbor and in Chicago, where there’s not as many employees as there are in our headquarters. There was no office anymore, and so there was no barrier. You would get the same interaction with somebody that you not necessarily would if you had been in the office with them. I just think at the end of the day, it brought our other offices closer together because everyone was on the same playing field.

[00:27:04] Matt Sonnen: When this all happened, everyone freaked out, rightfully. Everyone said, “Oh, my god. We’re going to be so far apart. Culturally speaking, we’re all separating.” I hear story after story like that in roundabout ways, some of us feel even closer to one another because of this and having access to different people in the organization that we wouldn’t have run into in the office, et cetera. That’s very cool.

[00:27:29] Matt Ran: I will say, we actually have done some fun other things too. Like we did for our company holiday party, virtual cooking class. It was from a local chef that we actually do a lot for our marketing events with, but he delivered food packages and we sent out ingredients list of people that were out of town. Again, just an amazing night. Something that we probably wouldn’t have done if it wasn’t for this. Again, the feedback we received from everyone was over the top.

[00:27:57] Matt Sonnen: Kelly, what have you been able to do from, I was going to say culture building, but culture maintaining standpoint during this time?

[00:28:03] Kelly Downs: Yes. One of the things that Matt said really resonated I’ve told people, and I don’t know where I heard this, but “We’re not working at home, we’re living at work now.” It’s really hard to separate those two worlds that are happening in one space. In terms of culture, we, for a couple of years now, have had a team-building committee and it’s just made up of a handful of people from different parts of the business who have volunteered to plan events for us. In the past, we’ve had events at least once a quarter. Sometimes, we have smaller events once a month, but those events would be things like you’re going to a sporting event or you’re doing a cooking class or a laser tag or something, obviously, in person.

We really tasked them with figuring out how to continue to do those things in this environment. Definitely have done happy hours. Back when we were in the office, we would do happy hour every Friday at three o’clock, which was fun, and not everyone would participate. It would just be a nice way to wind down the week. We’ve done some of those virtually. We’ve done two separate gift exchanges. We actually had a team member, may have been in May when that was really a time where we were all– People are still struggling now, but then it was like, “Oh gosh, how do I adjust to this change in life?” Many schools were still closed, I think some still are.

This person basically said, “How about we do some gift exchange? It’s almost a secret or white elephant gift exchange or something?” We did that, and you drew names, and you were surprised to receive a gift. It was a really nice way for people to lift spirits of their team members or their teammates, even though we’re not able to do it in person. We did that for the holiday as well. For our new hires, we’ve done coffee chat. Continue to try to drive some of those events, but just do it virtually. Again, requiring camera on even if you just worked out, we’ve got to be able to see your face, so we can feel like we’re in person. We did a trivia virtually, we’ve done a couple of those, which are pretty fun.

2020 was a really big year for us because we had our 10-year anniversary. At the beginning of the year, we had these grand plans for an actual in-person event with our team, our clients, and we were so excited about throwing a big party to celebrate it. Obviously, we had to shift and find other ways to celebrate and connect with the team. We did a couple of videos, one that was actually client-facing, but a couple that were internal just to help celebrate it, but not let it pass just because we couldn’t do it in person. I’m thankful that we had that committee that could focus on that.

I think a nice way to still maintain that culture has really been a big part of our firm, and the team feels very well-connected. That was one of the biggest concerns we had coming in. It was not only taking care of our clients but making sure our team was okay. We’re actually in a couple of weeks hosting a little lunch and learn for a team focused on mindfulness. It’s got every source that are coming in to teach us how to get through, however long we have in this pandemic.

[00:31:06] Matt Sonnen: That’s great. Business-wise, the markets were so ugly in the very beginning of all this, but crazy enough that the market’s really rallied, and a lot of firms grew through all of this. A lot of RIAs, our industry specifically saw a lot of growth. Kelly, what growth initiatives are you focused on in 2021?

[00:31:26] Kelly Downs: In 2020 we not only continue to grow our client base but also our team. One of the things that I’m really proud of is that we hired 5 new employees for a firm of 30 people. That’s a pretty big number of new hires. It’s not impossible because we were actually looking at the start of the summer, and we kept thinking, “When we can get back in the office to do these in-person interviews, then we’ll be able to move forward with them.” There came a point when we just said, “We can’t wait. We have to actually move forward with these plans. We have to figure out how to do it in a different way.”

I’m proud that we were able to really hire those five people and we had never met them face-to-face, which again, seemed impossible. It made us shift our training program. We can no longer rely on, “Oh, you’re a new hire. You just go sit with so and so,” and that’s how you train. It forced us to put together more training, onboarding resources for those new hires because we had to. So far so good, things have gone well. We’re actually, for 2021, those practices are going to continue, and we are still hiring right now. I’ve got three positions that are posted right now, that we’re actively interviewing for. We anticipate hiring probably 6 new team members through the course of 2021.

Those lessons that we learned last year related to headcount growth will continue to be used well into this year. Although, I hope at some point I can do an in-person interview again.

The growth of our client base, that always is a focus. We at end of last year, or the end of the third quarter, we hired a person in Chicago to focus on business development efforts there. Previously, Justin Berman had been the primary source of new business in addition to our wealth advisors who get client referrals that Justin was really leading the business development efforts with the help from our president David Fisher.

It’s nice to have a person that is still training and getting up to speed on the business before he goes out and starts to meet with people, hopefully, when he can do that safely. It’s nice to have someone else to focus on that and diversify our efforts when it comes to new business. Most of that’s been done via Zoom and over the phone thus far in the year. Hopefully, soon enough, we’ll be able to get back in front of people and clients and prospects. We’re growing in two different ways, headcount and client base.

[00:33:55] Matt Sonnen: Yes. It’s always chicken and egg. Do you hire ahead of the clients or do you wait for the clients?

[00:34:02] Kelly Downs: That’s the vicious cycle. It’s the hardest thing to do, is to time hires appropriately. I’d always loved to hire early, but it seems like with the growth that we’ve seen, it’s hard to keep up.

[00:34:13] Matt Sonnen: Yes. Absolutely. Matt, what growth-oriented projects are you working on for 2021?

[00:34:18] Matt Ran: We have a few. M&A, obviously, always something that we’re thinking about, and really just making the firm as attractive as possible for people that would want to join us and we’re having talks with. There’s a lot of different variables that go into that. Whether that’s building out more ancillary services and being able to do more for the client. We started a family office division in 2020. We started a corporate executive service branch. Kelly’s familiar with the AYCO Model, it basically comes from that. I will say, our ancillaries business last year accounted for about 10% of our revenue. The year before, it was probably closer to 4% or 5%.

We are really building out these ancillary services to do more for the client, and make it an attractive place for people to work and want to bring their business over because they can do more at Telemus than they can anywhere else. At the same time, we’ve got a lot of operation and client experience things that we’re trying to put in place. We’re completely revamping our onboarding process. We are completely revamping our website. We did our deliverables last year, and just trying to get all of the offices’ best practices into one place. It’s been a struggle. As we had acquired firms, they’ve just been used to doing what they have been doing.

We’re making a really, really big initiative to integrating the best practices from everyone into our firm, as I keep saying, to make it the most attractive place for people to come work. At the end of the day, and keeping employees happy is what we care about.

[00:35:42] Matt Sonnen: That’s fantastic. We alluded to it earlier, the client’s stickiness. What can you do to make yourself indispensable to the client? We all know that traditional asset management, I’ll even call it “stock picking,” we all know that’s been commoditized to a certain extent. It’s tough to maintain our fee levels if we’re only providing that basic asset allocation decisions for our clients. I’m curious what your firms are doing to broaden the client relationship. Matt, I’ll, go to you first on that one. You’ve alluded to it a little bit already, but what else are you doing for that client stickiness?

[00:36:13] Matt Ran: Yes. My dad likes to use string theory, and he was at a conference I think back in his Merril days and a guy presenting threw out a string, and someone caught it and says, “That’s your relationship with your client when it’s just investments or stock picking”. He yanked the string away and said, “That’s poor performance, and there goes your client.” Then he threw out six ropes, and he pulled that same investment rope away and said, “This is what your relationship with the client is when you’re doing tax planning, you’re doing financial planning, you’re helping out with estate planning, you’re doing all these other services.”

That’s the model that we’ve built off of. Continuing, as I said, building out these solution sets for the clients, so that we can, as Kelly and I both said earlier, really be financial life managers for the client. Right now, we have a financial advisory offering, which is pretty much wealth advisory insurance that we partnered with someone with, so we can do both life and property and casualty. We have a virtual CFO services, corporate executive services. Really not making our relationship fully on investments, but really trying to be that holistic financial life manager for the client to create the stickiest relationship that we can.

[00:37:24] Matt Sonnen: Great. Kelly, I know you had talked about the family office services, but what broader services are you guys offering?

[00:37:30] Kelly Downs: I think just like Matt said, we want to look at the entire financial life. We want to integrate ourselves into every decision. To me, if a client is talking to their advisor and they say, “Paul, I need to call my attorney and check up on this question on this trust or something.” The advisor, in my opinion, should say, “Let me reach out to them and get that answer for you. Let me coordinate a call where we both talk about that.” We want to be involved in those conversations because, A, it helps us understand what’s going on outside of just the investments. B, we want to take work off of the client’s plate.

We want the clients to have peace of mind to go off and focus on the things that are important to them and help them understand and feel confident that the things that we’re doing, the financial side of things are taken care of and handled. That would be everything from estate planning to working with attorneys, tax planning with their accountants. Even things like bookkeeping. As much as we can do to, again, help take things off of their plate, the better and the stickier the relationship. The goal is really to make yourself officially irreplaceable because you’re doing so much for them.

Justin always says that the one thing that we can control about these relationships is the service we provide. That’s why doing as much as we can really help set us apart and make the client feel like they’re getting the most value and the most out of the relationship.

[00:38:57] Matt Sonnen: That’s fantastic. I love the strings too, Matt. That’s a cool analogy. [chuckles] Last question for you both, as we’ve discussed, you both have been at your firms for over a decade. You both have had many different roles along the way. Ascending to the COO position isn’t always easy. What advice can the two of you give to our listeners? I’ve talked about this a lot. We’re in this industry that focuses so much on salespeople, so much on advisors. What have you both been able to do as operations professionals to advance your careers and stand out at your firms? Kelly, I’ll go to you first on that one.

[00:39:32] Kelly Downs: I think the first step is to realize that there is a career path in operations. I think a lot of people outside of the industry or entering the industry think that that’s the advisor track is really the only track. I think understanding that there is growth opportunities in operations, you can build a career sticking in operations, get more responsibility, et cetera. I have always believed that really the way that you earn respect is by doing. There’s no job that is too little for me. I continue even today to do things that if someone really asked you, “Kelly, why are you doing it?” “I don’t know. It just needs to be done, and so I’m going to do it.”

That’s simple office tasks, opening mail, whatever. I’ve never, in my career, been above doing anything because it wasn’t “in my job description.” I think that you really do yourself a disservice if you think like that because every opportunity that you have to do something is a way to learn, to gain experience, expertise, to gain respect, et cetera. Really, as I mentioned within Berman, I’ve done virtually every job aside from research. I do feel like people think that I’m a person who they can go to for advice, for help, even just to share frustrations or excitement.

Make yourself involved in all parts of the business that you can get involved in and get your hands dirty. I think that that helps me even today stay fresh, be able to speak and lead and make decisions with really direct knowledge because I’ve been in their shoes, not 10 years ago, but maybe last week.

[00:41:24] Matt Sonnen: I love the quote you had that you “gain respect and trust by doing it.” It’s exactly right. That definitely has to be the COO mentality. “Just whatever needs to get done around here, I’ll be the backstop and make sure it’s getting done.”

[00:41:37] Kelly Downs: That’s right.

[00:41:38] Matt Sonnen: That’s great. Matt, how have you navigated your career into the COO position?

[00:41:45] Matt Ran: Like I said earlier, I really just started absorbing other operations at the firm. Really, my training was on the job literally. I will just say, I think Kelly’s quote’s amazing. That’s really how you earn respect is being the one on the ground, being the change engine, being the voice for the back office. Because without the back office, especially when you get to a size like Kelly and mine, the office can’t function without the back office. It is so important to put effort, time and energy, and people to grow those practices. I’ll say, I have just taken on a lot of different responsibilities over time. I went and got my MBA focused on leadership and management to get my skill set up there.

It was not something that I typically– managing, especially it was not something I was good at. I’ve had to learn to become a manager over time. We’ve actually done the Schwab Executive Leadership Program. I just continue to try to learn as much as I can. I’m still, I believe, really young in my career. The more I can expose myself to people and be a fly on the wall, and that’s still learning stuff on the custodial side and learning stuff on the finance side, the marketing. I really believe that I’ll never know everything. The more I can get to trying to know everything, the more dangerous I’ll be. Like my grandfather used to say, try to be a Jack of all trades, just don’t need to be a master of any.

[00:43:29] Matt Sonnen: I love it. That’s great. This has been a really great discussion. I want to thank both Matt and Kelly for your time and your insights today. Thank you both for being here.

[00:43:38] Kelly Downs: Thanks for having us.

[00:43:39] Matt Ran: That for having us.

[00:43:40] Matt Sonnen: Awesome. Well, that is a wrap on Episode 26, and we will talk to everyone soon.