[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 34, We have two more amazing guests with us today – joining us from RegentAtlantic, headquartered in Morristown New Jersey and with a satellite office in New York City, is COO Jenn Papadopolo. And from Crestone Capital, headquartered in Boulder Colorado and with offices in Denver, Austin Tx, Los Angeles, and a brand new office in Salt Lake City, we have COO Matt Wiles. Jen and Matt, thank you so much for being here.
[00:00:54] Jenn Papadopolo: Thank you.
[00:00:54] Matt Wiles: Thanks for having me.
[00:00:55] Jenn Papadopolo: Thanks for having us.
[00:00:55] Matt Sonnen: Perfect. Jenn, I’m going to go to you first. Can you tell us a little about RegentAtlantic?
[00:01:00] Jenn Papadopolo: Sure, Matt. RegentAtlantic was founded in the early 80s and is really the result of two smaller firms coming together in around 1998. We’ve grown to almost $6 billion dollars in assets under management. We have over 70 employees. Most of our growth has been organic when we completed our first merger in August of 2019. Thanks for your help with that, Matt.
In the past, the majority of our new clients have come from referrals from clients and COIs. The past few years, we added a custodial referral network and that has shown some great success recently. We’re also exploring ways to expand our social media and digital presence. We really have to keep our momentum of growth going in order to help retain and keep our employees because they’re the driver of our growth.
[00:01:46] Matt Sonnen: Growth for growth’s sake is never great but yes, you guys are doing it in a structured way. I applaud it. I’ve been watching it closely, of course. We’ve done a few projects together and the growth to $6 billion now has just been amazing. Matt, why don’t you give us some background on Crestone?
[00:02:01] Matt Wiles: Sure. We were founded in 2001 by our CEO and Chief Investment Officer Eric Kramer. Matt, as you mentioned we are headquartered in Boulder. We have offices in Denver and have satellite offices in Austin, LA, and Salt Lake. Currently we manage approximately $3.5 billion in assets. We have 50 employees, our ideal client we’ve done a lot of work on this, are entrepreneurs, founders, and CEOs in the tech healthcare and consumer-focused businesses. Our core clients tend to have investment portfolios ranging from $20 million to $250 million.
They tend to be folks that are wanting and willing to delegate the management of their investment portfolio affairs. We also have a vertical service where we deal with founders that haven’t yet exited their businesses so we have a pre-liquidity service offering where we’re helping clients deal with what we call “pre-transaction planning”, any trust or estate tax type solutions that they might need. Historically our growth has been 100% organic. We get referrals from our incredible clients and professional network and haven’t been in the M&A game or anything like that. All organic up until this point.
[00:03:08] Matt Sonnen: You talked about some of the ancillary services that you’re providing, and I’ve never actually asked this to our guests before, but with the wealth management space, it’s getting more and more competitive as we all know, and with virtual meetings becoming so prevalent during the pandemic, location now has become this nebulous concept and we are all competing for clients across the country. We’re not really able to rely on just that proximity to the client as our big differentiator. Matt, I’ll go to you first, you rattled off a few of them, but what does Crestone do beyond traditional asset allocation and investment management for your clients?
[00:03:43] Matt Wiles: Sure. As I mentioned, we have in-house estate and tax planning resources where we’ll work with our client families to help provide guidance on what folks in their positions are doing or have done in the past from a planning perspective. We help with philanthropic and NextGen planning. From an investment portfolio standpoint, we obviously do traditional asset allocation and investment management.
I think the depth to which we approach it, I believe that is a true differentiator. Every client has their own investment policy statement that’s customized. We have an entire team dedicated to finding the best investment managers in the world. Our client portfolios tend to be more biased to “alternative asset classes” private equity venture, private equity real estate, hedge funds, et cetera. The access that our team has been able to get over the last 20 years is definitely a differentiator for us.
Then I think we’ve just given our entrepreneurs something that’s probably less quantifiable, is just the experience we have in watching the evolution of a founder bootstrap a business, grow it to something significant, and then exit it. That transition from running a business on a day-to-day basis, having control over the P&L and then generational capital of life-changing capital, and then in trying to figure out what to do with it is a path that not a lot have experienced.
We’ve seen the highs and the lows, the ups, and the downs, the good and the bad. I think that that type of stuff resonates with prospective clients, just the fact that we’ve seen people that have gone through and experienced similar to what they’ve gone through. Again, like I said, it’s tough to quantify that other than we could help advise on all the things that they’re going to come up in that transition.
[00:05:17] Matt Sonnen: That’s great. Jenn, what services do you think differentiate RegentAtlantic?
[00:05:22] Jenn Papadopolo: Our goal is really to give back our clients their free time so that they don’t have to worry about taking time to think about their portfolio, how to pay for their children’s college educations, or their own retirement. We really try to put together a plan for them that allows them to get back to the things that they want to do, whether it’s traveling, volunteering, spending time with their family, whatever makes them happy. Most clients come to us because they’re facing some kind of problem.
Chris Cordero our CIO likes to say “they have a spear in their chest and our goal is to set their mind at ease.” Whatever problem that is, can they retire, they have aging parents, they need to send their children to college, they have a child with special needs, whatever that problem is, our goal is to give them strategies so that they can meet that challenge and then go back to what they love to do. That’s really the value that we bring to our client.
[00:06:10] Matt Sonnen: You both touched on it. I think that’s exactly right. I think our industry is doing a much better job of explaining that than in the olden days. In the 90s it was “here’s your performance versus the benchmark” and that was it. That’s my value. I don’t know if we’re fully there, but I think we’re all doing a good job of saying, “It’s not about how much money you have. It’s how you’re using your money to do the things that you love and get the most fulfillment out of that.” I think you both touched on it great. That’s fantastic. Now for my favorite question of the podcast, Jenn I’m going to go to you first, according to your LinkedIn profile, you have been at RegentAtlantic, your entire career. I’m sure you’ve held a number of positions during that time on your way to the COO role, but can you walk us through your career progression?
[00:07:00] Jenn Papadopolo: Sure. When I started what would eventually become RegentAtlantic in high school, I was doing general office work. We made copies and we filed paper way back then. I decided I liked the industry. I liked the firm. I came back after college and I started doing things like opening up new client accounts, doing accounts transfers for clients, money movements, things like that.
Then I got to do a little bit of the financial planning work and then over time as things came up and I’d be like, “You know what? I can do that.” Whether it was taking care of the daily, download, running all the quarterly reports, getting billing done for the clients, then it became, “Hey, we’re having a new employee can get this computer set up?” “Sure. I can do that.”
Then it became “Hey, we have to do this annual ADV filing. Can you do that, Jen?” “Sure. I can do that.” It was slow at first, then all of a sudden it was like the owners realized, “Hey, we don’t have to do all this stuff anymore. Jen can do it.” It just really grew after that into everything from legal to financial, to the back law office operations, to HR, anything that wasn’t really touching the investments, making investment decisions, and working with clients, I just picked up over time and it all fell into my bucket of things that I do. I’m really much happier because I don’t think I would’ve made a very good advisor
[00:08:15] Matt Sonnen: I think that’s why it is my favorite question. It all comes down to just raising your hand, “Hey, I was the one that raised my hand for that. Then I raised my hand for this and then I raised my hand for that” and that’s how everybody through that operations track, not the advisor track, that’s pretty much how everybody progresses their career.
[00:08:31] Matt Wiles: Matt, this is your 34th episode of this. Have you ever had someone on that had been at the firm since high school?
[00:08:38] Matt Sonnen: I don’t think so. That’s a very good point.
[00:08:41] Matt Wiles: That’s incredible.
[00:08:43] Matt Sonnen: That really is.
[00:08:45] Jen Papadopolo: Thank you.
[00:08:47] Matt Wiles: What a story.
[00:08:49] Matt Sonnen: Yes. That’s amazing. Then, Matt, I have also LinkedIn stalked you, so you’ve held a few positions before joining Crestone almost 14 years ago. I know you’ve had a few different roles at the firm on your way to being named COO two years ago. Tell us a little bit about your career path.
[00:09:06] Matt Wiles: I had the good fortune of joining Crestone in 2007 and joined as an advisor and spent the majority of my career here doing that. I grew up on that side, started as an associate and just started to work with clients more and more, and eventually became a primary advisor on a handful of client accounts. Then I also took over some of the day-to-day management responsibilities of the advisory team.
Two years ago, I was approached by Eric Kramer with the opportunity to become the COO, a to be defined role, I guess. We knew at the time what the broad job responsibilities would be, but there was no specific job description. I took the opportunity with the one caveat being that I wanted to maintain client relationships. I felt like it was really important in this role to understand what the client was experiencing and maintain a pulse on their feedback. That was something that I had asked to maintain. Two years in, it’s been an amazing learning experience, been able to build an incredible team on the middle and back-office side. Quite frankly it’s made me a much better advisor having the COO role, just because dealing with the types of clients we do, businesspeople, entrepreneurs that are running a business, I now have insight and can be much more empathetic into the day-to-day decisions that they have to make to run a business. Yes, it’s been a wild ride, but I wouldn’t trade it in for anything.
[00:10:27] Matt Sonnen: I love it. That’s a unique perspective. Usually, it’s either-or— advisor or operations, advisor or operations, and you make a good point. It makes you a better advisor to be knee deep in the operations and understand all of that. It’s an interesting insight.
[00:10:42] Matt Wiles: Yes. I think I wouldn’t have been able to say that two years ago, but just that empathy part of when you’re talking to a client. Sometimes it’s just when you want to talk about their investment portfolio or something, it turns out they want to have a conversation about something going on with their business or whatever it might be. I feel like I do have more, I’m going to be more helpful on that front and that’s what this role has helped me learn.
[00:11:01] Matt Sonnen: Very cool. I’ve talked a lot on the podcast about how, in my opinion, 75% of an RIA COO’s job is really tied up in HR related activities. What’s interesting for both of you, both of your firms actually have a dedicated HR professional separate from the two of you. Jenn, I know you just recently hired a head of HR. Talk to us about what led to that decision.
[00:11:28] Jenn Papadopolo: Sure. At the end of the day the employees are our most important asset and as we got bigger, and we got more employees and we needed to hire more employees; it really is a full-time job. If you don’t bring a full-time person in there, something’s going to fall through the cracks, whether it’s you’re going to lose an employee because you’re not paying attention to what’s going on in compensation, what’s going on in benefits or just listening to them, to their concerns, their needs.
Over time, myself, and other folks on the management team we just couldn’t do a good enough job to make sure that our employees were happy, that they were getting what they needed from us, from everything— from questions on their benefits to, we have folks always needing questions on things like maternity leave, paternity leave. It really is a full-time job.
If you don’t admit that and you ignore that fact, then you are going to have a hard time, not just keeping the employees that you have, but finding employees because recruiting is a full-time job sometimes as well, especially now, it’s been very hard to find good employees with the COVID and the environment that we’re in right now. It really was important to us to make sure that we filled this role sooner rather than later.
[00:12:37] Matt Sonnen: Yes. I’ll remind everybody you’re at 70 employees and Matt you’re at 50, that has something to do with it too. Just the sheer number of employees you guys were juggling. Yes, I love everything you said there. Matt talked to us about the head of HR role at your firm and how you as the COO interact with that person on a day-to-day basis.
[00:12:56] Matt Wiles: Yes. We have an amazing head of people and culture Ronda Vitrano who has been a longstanding resource for our firm. She moved into a full-time role with us at the same time I was moving into the COO role. For the past two years we’ve been a part of our executive team together. She’s integral in the management of our firm and we have a very specific stated goal around attracting, retaining and developing talent and she takes the lead on that every day.
I echo everything that Jenn said in terms of, it is a full-time job, not only from chatting with our existing employees on just anything that they need to talk about, but also, it’s so competitive to hire talent right now. Having Ronda solely focused on that certainly makes my day to day easier. We work extremely closely together, speak multiple times a day and I certainly couldn’t be as effective in my day-to-day job if I had to take on that responsibility, I just wouldn’t be able to do it. She’s amazing and I’m really, really thankful we have her on board.
[00:13:53] Matt Sonnen: Perfect. I think our listeners know that one of the driving motivations for me to start this podcast was to combat the belief that many RIA owners have, which is that the COO is really nothing more than a tech nerd who manages the firm’s tech stack. I wanted this podcast to highlight all of the many areas of the business beyond just technology that the COOs are handling on a daily basis. We just talked about HR. This next question actually hits on the intersection of people and technology. I talked with many RIAs and COOs in particular who say that the technology choices are fairly easy for their firms, but the real challenge is getting the people at the firm to adopt and interact with the technology. Matt, can you talk to us about how you handle this balancing act of both people and technology?
[00:14:42] Matt Wiles: Yes. It’s a great question. Sort of laughing, because I’m the least technologically savvy person here. We have a team of five folks that are responsible for the management implementation of our tech stack. I think it’s interesting people would say that the technology choices are easy, and the challenge is the people and how they interact with it. I would say it’s easy to identify where technology might be able to help you.
For me, what I’ve learned over the past couple of years is that going to find the tools and then deciding whether or not you insource them or outsource them is really challenging. You go out and find tools that may meet the mark for 75% of what you need to do, but that extra 25% is so important that you can’t engage that tool. I think that we really try to focus on finding solutions and that could be just a Crestone problem where we’re just make things too complicated.
I think we found it challenging to find the right tool. What we really engaged to do is make the final decision to either insource or outsource or whatever it might be, I’ve found that it’s more likely to be adopted. Everybody talking, they’re talking about the people, it’s more likely to be adopted if you engage the end user in determining what tools or what solutions we prioritize and then have them involve the end user in the development and the onboarding of those tools.
For the larger projects that we initiate here, we create a team that includes a champion from the end user perspective that works with our technology team to deliver the tools to the firm. I found that doing it the other way, me and the technology team just decides to implement something and then presents it to the firm, the likelihood of it being adopted without a significant amount of pain is higher. Having said that we’ve certainly over the past 20 months of the COVID remote environment, there’s certain things that we just have had to do that have been “forced upon some of our employees,” which they’ve been great in terms of adapting to that. Overall, I think trying to involve the people in the development identification and the prioritization of what solutions we deliver really helps to make it easier for the transition.
[00:16:49] Matt Sonnen: You raised a good point. I’ve said this many times, I don’t know if I’ve said it on the podcast itself, but it’s ironic because the RIA industry is taking off and is so successful every day there’s another tech vendor that wants to service the RIA. It is a little overwhelming to try to choose. I always go back to my Luminous Capital days, 2007, 2008, when I built an RIA and was building the tech stack. It was pretty easy in 2007 or 2008, there was one reporting system at the time. There was like two CRMs to choose from. It’s very overwhelming now because there are so many choices. You raised a very good point there.
[00:17:26] Matt Wiles: Yes. Michael Kitces puts together this advisor tech solutions map, which is amazing. It’s incredible. I see it every month then you go on there and you’re like, man, there’s so many logos and we’ve looked at a bunch of them, but yes, it is just incredible the amount of technology that’s coming into our space.
[00:17:44] Matt Sonnen: Every month, the size of the PDF when you open it is larger and the font is smaller.
[00:17:50] Matt Wiles: It’s true, yes. Exactly.
[00:17:52] Matt Sonnen: Jenn, what have you learned over the years with respect to this balancing act of people and technology?
[00:17:58] Jenn Papadopolo: What I’ve learned is that I’ve had tons of folks come to me and say, “Hey, Jen, my buddy, over at X, Y, Z RIA uses the software. Can we get it?” We get it and nobody uses it, because the right questions weren’t asked, it’s like, “What are they using it for? Is this going to solve a problem that we have here?” It’s really not starting with any assumptions of any software that you’re going to use, but asking, “What problem are you trying to solve? What is the actual need that we have here?”
Once you get folks, to stop talking about, “hey, let’s use this, hey, let’s use that” and just focus on the need, sometimes you find out that the software that everybody wants to use isn’t really going to solve our problem. It’s really taking a step back and not talking about software but talking about the problem and how are we going to solve it. Once we do that, I think we’ve done a better job at identifying the software that we need to solve that problem, and then getting people to use it because it just isn’t there and not solving the problem.
I think that’s really been the biggest challenge is to get people to stop telling me what software we need and to tell me what problem they are having. I think if you just flip the questions around, I found it’s been much more successful.
[00:19:09] Matt Sonnen: Yes. That’s fantastic. I’ve talked about that at length to the “My buddy uses this and loves it.” Well, let’s talk about what that firm looks like and who their ideal client is. Like you said, is it solving the problems for them that we have? That’s a huge mistake people make with picking their tech stack. “Well, my buddy uses this. I think it will be great for us.” Well, they’re all in SMAs and our firm is all alternative investments or, whatever it may be, then you’ve got 70 employees.
“My buddy uses this. He has four employees, and it works great for them.” Well, it might not work for 70 employees. That’s a great point. There’s another one I’ve talked about before. The RIA industry, it’s such a sales driven industry. I feel that operations folks have a hard time standing out as there’s this general belief that if you aren’t bringing in the clients, you aren’t as important to our firm’s success. How do you both empower your operations teams? You both have talked about your teams. How are you empowering the teams to ensure that they’re getting the visibility and the credit that they deserve for all of the great things that they’re bringing to the organization? Jen, I’ll go to you first on this one.
[00:20:13] Jenn Papadopolo: We have a monthly firm-wide meeting and at the end of that meeting, we give out what we call the Pami Award. Pam was our receptionist for many years and she unexpectedly passed away, but she was the epitome of client service, of just making everybody that came into the office feel warm and welcome so we named this award after her. Anyone from the firm can be nominated.
Most of the winners are the back-office folks. To win, it’s just going above and beyond on client service. The winner of the last month’s award was our alternative investment specialist because he processed all of the paperwork for many, many clients going into a private offering and he just made everybody’s life easier. Our client relationships specialists are usually the winners.
They’re the folks on the front lines that the clients doing the account openings, the account transfers, money movement. Another regular winner is our manager of client operations. These are all back-office folks. It’s not the advisors, it’s not the financial planning analysts who were sitting in on client meetings and really have a lot of client interaction. It’s the folks who really make things work. It’s the folks that make them look good. I don’t know if it’s empowering them, but it’s definitely giving them the recognition that they really deserve.
[00:21:24] Matt Sonnen: I love it. The Pami Award. That’s fantastic. Matt, how do you highlight your team in the eyes of the owners and the advisors of Crestone?
[00:21:32] Matt Wiles: We do something similar just in terms of bi-weekly all-hands meetings and we highlight team wins across the organization. Then on a quarterly basis, we hand out awards for those that embody our core values. It’s a great way for people’s peers to call out folks for the stuff that they’ve done. I think one of the things that’s been a big objective of mine coming from the client side where you tend to get a lot of the credit for bringing on new relationships, et cetera, was trying to draw a clear line for folks on the more back-office side into how they impact the client experience.
I think we’ve done a pretty good job of identifying and giving people certain responsibilities for roles that do impact the client experience. Trying to draw that line closer has been really important. Then from an empowerment standpoint, what really opened my eyes is we have a ton of external relationships, even more so on the back-office side that a lot of our folks are responsible for. What I try to encourage folks to do is that type of relationship, how we work with those folks, how we challenge them to deliver better solutions to us helps the firm broadly. Trying to encourage folks to have a voice in that regard and own that relationship was very important to me.
[00:22:38] Matt Sonnen: Fantastic. I love it. Let’s end the discussion today with a very open-ended question. Very open-ended. Matt, what is the biggest challenge you’re facing today?
[00:22:48] Matt Wiles: I think it’s familiar to most folks, we spend most of our time talking about at a firm-level is how do we maintain our culture, both with our employees and with our clients? Pre-pandemic, we would host events almost on a monthly basis in person with clients. We haven’t been able to do that as much. Our team’s done a great job of shifting to more virtual-type engagements with clients. In some respect, we’ve been able to bring even more events and connections that we wouldn’t have been able to when we were trying to do it in person.
From the internal team side, culture’s always been such a big thing for us that we don’t– I guess we’ve hired something on the order of 20 folks during the pandemic so, really trying to make sure that we keep that cohesive culture together. As we’re expanding to other locations, that’s the biggest challenge for us right now. We definitely have had times when we meet as an executive team and want to go get everyone together in person for a great event or something and then COVID all smacks us in the face and renders that gathering probably not worthwhile. That’s the biggest challenge we have right now.
[00:23:49] Matt Sonnen: Forget COVID, just if you went from 30 to 50 employees in 18 months, that I think would make culture your top priority. [laughs]
[00:23:59] Matt Wiles: Yes. There’s been some turnover. It was probably going from call it 38 to 50 or something like that but certainly just maintaining that culture that we did have prior and I think we’re realistic in that. That’s changed. Just in terms of the ability to do it the way that we had done it before just doesn’t exist today, so we’ve got to be creative in that regard.
[00:24:21] Matt Sonnen: Yes. Absolutely. Jen, what is your top priority right now?
[00:24:24] Jenn Papadopolo: It’s the same. When are we going to return to work? Because there’s just a concern of losing the culture. We have hired a dozen or so employees over the past 18 months, they’ve never worked with everybody in the office, what is their experience going to be like? How are they going to really know what it’s like to work at RegentAtlantic? How do we balance people wanting to work from home permanently? Is that okay? Is that not okay? Is that going to hurt our culture? It’s everything that goes into preserving our culture but giving people some flexibility in working from home because we’ve proven that it works but we don’t know for how long, we don’t know at what point our culture will break down and that’s a real concern for us.
[00:25:03] Matt Sonnen: I think a lot of people are thinking those same thoughts. Those were great ones to point out for both of you. Thank you. This has been a fantastic discussion. I want to thank both Jenn and Matt for sharing your insights and your experience with us. Thanks guys.
[00:25:16] Matt Wiles: Thank you, Matt. Thank you, Jen.
[00:25:16] Jenn Papadopolo: Thank you, Matt. [chuckles]
[00:25:29] Matt Sonnen: That is a wrap on episode 34. I haven’t given a plug for the podcast in a while. Let me just be very salesy and say if you enjoy these discussions with RIA operations professionals, please subscribe and please share this podcast with your individual networks. We’d love to spread the word even further as we’re now approaching our third-year anniversary coming up in a couple of months, which is amazing we’ve been doing it this long. Thanks everyone for joining and we will talk to you all soon.