EPISODE 5

Matt Sonnen [00:00:24]Thank you Luke. Welcome everyone to Episode 5 of The COO Roundtable. We have two incredible COOs joining us today. They have a ton of valuable information to share so I’m just gonna jump right into it. Joining us today are Heather Fortner from Signature FD headquartered in Atlanta, Georgia and Lucas Winthrop from Winthrop Wealth Management in Boston. Thank you both for being here and for taking time from your busy schedules.

Heather Fortner [00:00:50]Thank you.

Lucas Winthrop [00:00:51]Thanks, Matt.

Matt Sonnen [00:00:53]So, Heather I’m going to go to you first. Can you tell us a little bit about signature FD?

Heather Fortner [00:00:58]Yes, Signature FD is an integrated wealth management firm in Atlanta, Georgia. We have about $3.6 billion in assets under management. About 80 to 83 employees right now. Fantastic firm. I’m really proud of it. We were founded in 1997. We were started by three staff accountants at Frazier and Dieter which is one of the largest, currently one of the largest, regional accounting firms in the southeast so we have a unique beginning coming out of an accounting firm that we still call one of our affiliates and one of our closest strategic partners today.

Matt Sonnen [00:01:44]So, I’ve been running into this more and more. So, I’m guessing they would do tax returns and the client would say “Wow, thanks you’ve got me X amount of money what should I do with it?” And then they decided somewhere down the line that hey we should get into the business of giving investment advice is that sort of how it came about?

Heather Fortner [00:02:02]You know, I think the vision was always around the fact that CPAs, as the trusted resource that they are, typically have for knowledge of transition events in client lives well before they happen. And so, they are in a very unique position to be able to help coordinate bringing the right additional professionals into the situation to wrap around a client’s transition event and get them situated well before the transition event ever occurs. And so, I think the vision there was, man this is a unique opportunity to really impact the lives of clients in a different and advantageous way. How can we build a partnership together that will allow us to have enormous impact in these clients lives, from the beginning? Really before the transition event even occurs. And so that has just been a beautiful partnership over the years and has really allowed us to surround the clients with all kinds of professionals that have been able to build integrated solutions and plans that will achieve a client’s goal and their life wishes.

Matt Sonnen [00:03:25]That’s great. Yeah, the true quarterback of the client’s financial life. That’s great.

Heather Fortner [00:03:31]Absolutely.

Matt Sonnen [00:03:33]So, Lucas tell us a little bit about Winthrop Wealth.

Lucas Winthrop [00:03:37]Sure. So, Winthrop Wealth was founded back in 1984 officially by both my father and my Uncle, Earl Winthrop and Mark Winthrop. And very similar to the way Heather’s firm was founded, both Earl and Mark came from the background of CPAs. Earl worked for the big four accounting firms and audit and Mark works for the IRS investigating abusive tax shelters. So, you know, a little bit different on the spin on how they get into the business, but they saw really that the brokers back in the late 70s, early 80s were not really working in favor of their clients. You know, they were slinging commission-based products and things that really did not make sense from the suitability perspective. And they just didn’t see true alignment between, the back then, well I guess, the broker which would be the financial adviser and the end client. So, they went out on a limb and they were really pioneers in the fee only advisory space, and this is back in 84 when nobody was doing it. And so a lot of what you see now is most firms are just catching up to something that we’ve been doing for almost 35 years which is I think as fiduciary, working on a fee only basis for clients, with their best interests at hand and they really started in the independent space. So, we’ve been operating in the independent space since really inception in 84. And so, we just hired our 17th employee. We’ve grown 100% organically, through word of mouth referrals, so we have a very high-quality book of business. And our client basis is really all about fit, right. So, we seek to work with really high-quality clients who align with us both philosophically and on a value basis. And that’s really what’s been the driver of our business and the growth that we’ve had. We’ve never gone out there and really had the goal to grow. So, we’ll get into it a little bit later. But that’s a little bit about our firm and I joined the firm in 2013 and my brother joined a year later in 2014.

Matt Sonnen [00:05:38]Perfect. Yeah so, I want to dig one… so that was the firm level now, you led me right to it. So, Lucas why don’t you just continue to talk to me about how you joined the firm. Your father and Uncle were very strategic in putting you and your brother Max into leadership roles. How has that kind of evolved?

Lucas Winthrop [00:05:58]I don’t know if they’re very strategic about it. I think they lucked out. If you ask me. So, as a family business I grew up around the business and I’m the younger of the two sons of Earl. So, the troublemaker that I was growing up, I was the one who was forced to spend the summers working in the office when my brother was off having fun and doing things with his friends. So, I learned a lot about the business from a pretty young age and was always fascinated by the relationships that my father had built with our clients and a lot of our best family friends really came through a business first relationship. So, it was pretty impressive to me to see how he had built these relationships with people who were clients first and then became best friends second. And then vice versa. I’d say it’s harder on the other side of that. Really how I came into this position was when I joined the firm in 2013, Earl and Mark were running an extremely lean business. There were two or three advisors with a couple of admins who were managing close to a billion dollars of assets. And a lot of what you’ve seen in the independent space is entrepreneurs, who they work in the business and they don’t work on the business. And that was a situation that we were faced with. And so, when I came into the business I was really wearing a lot of different hats and there was no set role or responsibility which is tough as a young person who is trying to figure out how to make it in this industry and have a career trajectory. It was wasn’t really set out in front of me and crystal clear. So, what I really did was look at the business as a whole and say “Wow, we really need to create some structure here.” This is more than it was 5-10 years ago, and the continuity and the scalability wasn’t there to continue to provide that elite level of service and value to the clients that we were doing. So, Max joined the firm, my brother, about a year later and without him I don’t think I could have done any of this. But we work really well together and we kind of assigned these roles to ourselves. And it wasn’t just that Earl and Mark were looking at us saying “Oh yeah, these guys can run the firm.” We really had to prove ourselves and so I don’t want to say that we were strategically placed into that role because again, both Earl and Mark were so focused on working in the business. And I think it took probably two or three years before they realized the direction that we were going. And they were really the first case for seeing our success which was being able to give them their time back to focus on the high value priority items that they wanted. And for both of them that was working with, spending more times with clients and deepening the intimate relationships that they have. So, again, we kind of created these roles for ourselves and I don’t want to say we’ve bitten off more than we can chew but we’ve got a lot on our plate.

Matt Sonnen [00:09:09]That’s great. And obviously PFI Advisors, we’ve talked about it a lot that the advisors should be spending their time focused on clients and prospects and bringing in “professional management” allows them to do that. And you guys have sort of built this role for yourself in terms of running the firm. That’s fantastic. So, Heather you’ve had, and I’ve listened to your podcast with Michael Kitces, you’ve had an amazing career trajectory during your time at the firm. Not only are you the COO today but you’re the CCO and you’re a partner at the firm to boot. So, can you kind of walk us through how you’ve navigated that career path to where you are today?

Heather Fortner [00:09:50]Yes, sure. I like to say that in spite of myself I have been blessed to get course direction along the way because if I had tried to chart my own course along the way I definitely would not have been successful. So, very different than Lucas, I really struggled to figure out what it was that I wanted to do. My dad very clearly said whatever it is, whenever you get out of college you are going to have to support yourself. So, very clearly and very quickly wanted to get a degree in finance but really had no idea what I wanted to do in finance and the options were endless. So, I started as an intern. I just, while I was still in school, started at a wealth management firm. When I got out of school, got hired by that firm. For about two years, did financial planning for that firm, got the client exposure, really enjoyed that exposure. They were forward thinking and started a trust company and offered me the opportunity to go and help build out the technology and operational platform for that company and that seemed exciting. And by that point I had realized enough about myself that being bored was was not good for me and that I needed a lot of intellectual stimulation to be my best person and so that seemed fun and so I did that. And once that got up and running, I just really realized that the banking environment wasn’t necessarily fulfilling the personal need that I had deep inside to connect with people and to make a difference in people’s lives. So, I was very blessed and very fortunate to find Signature FD. We were F&D Advisors at the time. I started as a client care associate. I just started to have opportunities to learn different areas of the business. We helped with mortgages, helped with insurance. Just really opportunities to learn the business side of things just by doing – the inside out and those are opportunities that not a lot of people get. I was very fortunate to have this with getting my master’s in professional counseling at night. And really the vision there, when I spoke about why I was doing that, was because in my time that I had had in the industry I’d seen enormous strain in families around communicating about money. And so, I really thought that I would have a career helping with true counseling and true financial therapy with families and what I realized, once I had that degree and was working in the firm, was that I had a unique skill set. And the marriage of my operational and organizational systems skills married with my passion for people was just much better suited to actually work on the business itself. And I think we can all agree that as a COO there’s never a boring day. So, everything’s different and coming at you very quickly and so the pace is something that I appreciate as well as the ability to truly take an organizational and systems approach to the world. Add in the human capital layer and make the enterprise run and function as best as it possibly can.

Matt Sonnen [00:13:35]So, the firm started in 97…what year did you join?

Heather Fortner [00:13:40]I joined at the beginning of 2003.

Matt Sonnen [00:13:42]Then, what year did you become the named COO?

Heather Fortner [00:13:53]2013, maybe ten years later.

Matt Sonnen [00:13:58]Wow that’s fantastic.

Heather Fortner [00:14:00]There were several steps along the way

Matt Sonnen [00:14:02]How big was the firm?

Heather Fortner [00:14:04]In 2003, were about $200 million.

Matt Sonnen [00:14:10]Wow.

Heather Fortner [00:14:10]Now we’re almost $4 billion. Yeah so, it’s been a fun ride. It’s an incredible firm.

Matt Sonnen [00:14:16]Absolutely. OK. So, I’ll stick with you Heather in that COO role, You’ve probably held every role at the firm. I would think from $200 million up to almost $4 billion. In the COO role what do you see, where do you see yourself fitting into the broader organization? What is kind of your primary role in your mind?

Heather Fortner [00:14:39]So, very clearly, I have I have not held every role. I have definitely not been an adviser and I want to give a shout out to all the advisors out there because of what they do and how they do it. It is truly special and takes a very unique skill set. What do I see my role as? So, we follow the Traction process at Signature FD and so my role as the integrator. Very succinctly, my role is to help create the vision and the strategy of the business plan of the firm to communicate that strategy out to the team and the people who actually are on the lines and make the firm run on a daily basis. And then just to resolve issues and remove obstacles for them. So, my job is just resource allocation. It is driving toward the strategic plan of what, we as a leadership team, have set out that the vision is to accomplish.

Matt Sonnen [00:15:48]That’s fantastic. And Lucas you and I have talked about this at length before too, you have sort of similar sentiment as far as what your primary role is. Where do you see yourself fitting into the overall organization?

Lucas Winthrop [00:16:00]Yeah, I think very aligned with Heather. But from our conversation prior, what I see really being my primary role here at the firm is to remove roadblocks for my team to be able to get things done. And what I mean by that, is we have you know we’ve added 8 people to our headcount in the last 18-24 months. Which for our size of firm is a lot. And so, we’ve almost doubled our team size and really we operate as an ensemble so clients are owned at the firm level not individual level with the advisors. So, what it really allows us to operate as a team and within that there are multiple departments. So, every department has their outcome and the things that they’re working towards. And something that I think is really unique to our firm is, I do a lot of networking in the industry and I meet a lot of our peers and the question that I always ask is: tell me about someone, who typically, someone who’s not executive level, is moving your business forward. And this isn’t the day to day, but they always tell me about the day to day answer. So, what we’ve really done here is as a COO working closely with my brother, who is the CEO, we’ve set up a culture of roles and responsibilities that are outcome based. So, you have the day to day but the things that you’re working on those are the things that move the business forward no matter how big or how small. And being able to remove the roadblocks that stand in the way of those team members. I mean that’s a that’s a 24-hour job. And I think Heather said it nicely. There’s never a dull moment as a COO whether it’s related to technology or human capital or client related. There’s always something interesting going on. And so, I think as our job as COOs is really to enhance the operation, work closely with the corporate planning, and to carry out the vision. And really, I think help execute that vision, right, because one of my favorite quotes is “vision without execution is just hallucination.” And I think that’s so true. Everybody has, you go to a conference and you go all these sessions and you have these awesome ideas that are gold and they’re going to move your business forward and you’re going to double the size of your firm next year because you implement all these things but everyone has busy lives and when you come back and you sit down your desk and you got 150-200 emails to respond to those ideas die on the whiteboard, right. So, the execution is everything and that’s what I think the role of the COO is there to do is to help not only the team execute but help drive the vision and make things happen.

Heather Fortner [00:18:54]Matt, can I add to that?

Matt Sonnen [00:18:55]Yeah of course. Yeah, please go.

Heather Fortner [00:18:59]I completely agree with everything Lucas said. I think in addition to that; a very important role of a COO is to help develop the people who are driving the execution of the plan forward. So, helping to bridge the gap between whatever that founding generation looks like that G1 and the G3 that will be the next wave of leaders in the firm. I really feel strongly that we as professionals have a responsibility and I feel strongly about the development of that next generation of leaders and really paying forward what has been poured into me by the founders of the firm. That trust and the the ability to take responsibility make enormous mistakes not do it well. But the coaching and the mentorship and the personal development that has been important to me to pay that forward to the next generation. I feel an immense responsibility for us as COOs to do that as well.

Lucas Winthrop [00:20:21]I would agree with that. I would agree with Heather with everything she said. The development of your people. I mean investing in them is what drives the business forward and creates a culture that has people that are going to be loyal to the company. And also having fun doing it. You have to make sure you’re having fun. If you’re not having fun doing it, it’s not worth doing.

Matt Sonnen [00:20:45]So, you both have alluded to it and we’ve heard it in a couple other of these podcast interviews. A lot of times, and this is wealth management or any other firm, the COO doesn’t really have a defined job description. Lucas you’re talking about you just sort of created the role. The job description is really nothing more than: well, just do everything else around here that isn’t getting done. And that’s about as is defined as it is. So, we put out a white paper at the end of last year and we tried to actually spell it out and we actually used some of the words you guys have used. So, we’ve drilled it down to three core responsibilities for a COO. Executing the company’s business plan, you both mentioned that. Going along with that, is upholding the firm’s culture. Again, I believe the advisor, which most of the time is the owner or one of the owners the owners of the business or the advisors, they should be out of the office most of the time. So, it’s very hard for them to be dictating the culture. So, who are the employees looking to? You know you mentioned having fun in the office et cetera. So, who are they looking to? They’re looking to the COO. So, that’s number one executing the business plan upholding the culture. Two, is what everybody thinks of which is just managing vendor relationships, building the workflows and the processes of the firm, and overseeing the firm’s technology stack. And then the third one, that Heather was drilling home there, recruiting, developing, and retaining the employees. And the goal of every RIA is how do we offer high touch service to more and more clients. We want more and more clients, but we also want to stay small, we want to feel very connected with our clients. We don’t want things slipping through the cracks et cetera. So, at a high level it’s we’ll just do everything around here. My question for you both is well, how do you divide your time? Because that is one of the goals of this podcast is to help COOs, they’re are so overwhelmed. Your to do list goes from the ceiling to the floor every single day. So, how are you dividing your time? And Heather we mentioned it; you’ve got several titles at the firm in addition to COO. So, if your day is it is the traditional pie graph, how are you dividing your day? How do you tackle the day and spend your time and energy?

Heather Fortner [00:23:04]So, I really try to focus on managing my energies and not my time. I mean my days are very regimented but that’s to manage home and my professional live as well. I’ve very clearly tried to set aside boundaries of what is acceptable for home and what is acceptable for work so that I can honor both of those well. So, just from a time blocking standpoint, my weeks and my days and my hours are very well intentionally blocked, and I schedule my calendar almost an entire year in advance just so that I can practice that intention. But I do really try to manage my energies more than I manage my time and be cognizant of the things that I am allowing to use my energy. And I think my philosophy over all of this is that the things, the skill set that got me to this role, these things that I was good at. The reality is that they’re not the same things that will make me successful in the future. And that quite honestly, we have hired amazing people who are better, more skilled, faster, and smarter than I am in most of these areas. And so the beauty of it is that one of the things that I really hone in on for my responsibility to the firm is just communication. And am I spending my energies wisely in filtering out what is noise, taking what is important, and constantly communicating those things to the team who will be the next generation of leaders who are better at the things that I used to be good at than I am today. And so, I really feel like it is a different skill set. Managing yourself well in this role is a different skill set than really what got you to this place. And I think that when you can maybe make that mind shift and realize that by delegating and by growing others you are creating growth opportunities that will impact the firm much more than anything that you could possibly do by yourself. I think that all of that becomes a lot easier.

Matt Sonnen [00:25:44]That’s fantastic. And then Lucas, I know you have, in addition to your operations roles, you have some client relationships as well. How are you managing your day to day? How are you juggling everything?

Lucas Winthrop [00:25:59]I think Heather again nailed it with time management, it’s huge, right. It’s the one commodity is the most precious commodity. It’s something that no matter how much money you have you can’t buy more of it. So, time management…I learned early on in my life as an athlete but it’s something that has definitely helped me schedule and coordinate how they attack certain projects and execute. But having the responsibilities as an adviser as well, I work with a limited amount of relationships. And that is actually more of a tactical play for me as a COO. We talked about the day to day administration of the firm, driving workflow improvements, and HR. Well, I beta test everything we do with a select group of clients which I manage and work with. So, they are my sounding board. They give me critical feedback for me to bring back to the team and something that I think a lot of firms do. It’s all about the client experience at the end of the day, right. What the client experience is what drives the direction of the firm. And so, the client experience has got to be damn good especially in today’s day and age when there’s so many different advisors out there and so many different options for managing or working with a wealth advisor or financial planner. And so, when we think about externally facing, the experience has to be good. But I think the lack of focus is on internal because you’re only as good as you are externally as you are internally. And your ability to execute relies on the efficiency which a lot of comes from workflow and the technology that you have in place to create those efficiency and transparency into the organization. But I’d say most of my time is really spent with my team here, building the team, investing in them, making sure that we have a really open relationship with everybody that works here. And so, we’re very proactive in everything that we do. Whether it’s the client relationship or internal relationships with the team members as we want to know about everything before there’s any problems so that we can resolve those issues. And I think culture building is probably one of the most important things if you look at our industry as a whole, we all know the statistics the aging advisors. Average age of 57 plus. Average age of a founder of a practice is in his or her early 60s. And so, they’re not spending the time to build the culture and it’s a big investment. And it’s honestly, I know we’ll probably cover this later on in the podcast but attracting young talent into this industry. We have a huge culture problem. And so, I spend a lot of my time working to build culture and a firm that has a really warm inviting culture where young professionals can feel like they have a career trajectory and they can have an impact and be a part of something greater. And so again a lot of different responsibilities but there’s so much that we do as COOs. For me, that second role as a wealth advisor is really how I beta tests everything we’re doing internally to get the feedback that we need because that’s something that’s really hard to ask for feedback in this industry just because of compliance reasons. So, you have to be working with people who you really trust to give you the feedback in a way that you can actually take that feedback and improve and get better. So, I’d say that really where I spend a lot of my time.

Matt Sonnen [00:29:44]Yeah. Ok, so, let’s go there you brought up the HR component. PFI, we’ve been asked many times, can we outsource the COO function to you? You’re in Los Angeles were in Florida or wherever it is. Can we just outsource that COO function because again, they’re just thinking of we just need somebody to work with our reporting provider and our custodian – you can do that remotely. And I’ve always said no I believe 75% of the COO role is that HR component. And so, Lucas you hit on it, I know you’ve done some interesting things to make the firm attractive not only to younger clients but to younger employees as well. So, can you talk to some of the initiatives you’ve incorporated?

Lucas Winthrop [00:30:31]Sure. I mean number is working together as an ensemble, as a true team. Letting everyone feel that they have a real impact on the things that they’re doing. And again, we talked earlier about our outcome-based approach and every single person our team is in one way or another moving the business forward towards that larger vision, that larger goal. And being able to execute is a team effort. It’s not an individual effort. So, I think the team has really been built to create a culture. It’s a culture where we have multiple advisors and no one’s trying to answer the phone when a prospect calls before the other adviser because that’s how they get paid. So, if an adviser brings in business, sure they get rewarded for that, but we don’t have people competing in-house to win business. It’s all rolling up to the firm level so that allows us to really pay our people extremely well. And I think that’s something that is a bit of a culture change from the old eat what you kill model. Furthermore, the technology component is huge. Younger people want to interact with technology. They understand how it can empower a company or an individual to be more efficient, to be armed with the data that they need without having to go and find it. And I think that democratization of knowledge makes the learning curve a lot easier especially when you’re looking at the partners of a firm or the founders of a firm who are, they’re much older, they’re twice my age. How do we extract that knowledge if I can’t sit down and spend time with them? So, it’s creating a really open culture and also being in a place where you can be loud about it. I’ve walked in many advisers’ offices and they’re stale, they’re cold, they’re not inviting. I think something Heather said earlier that really resonated with me was energy. We’re extremely sensitive to energy. The energy of the office something that we always say is, while we’re not as large as Heather’s firm, in our Boston location we have 10 people. We just hired our 11th for the Boston office. But if there’s 10 people in the office every one of those 10 people is 10% of the culture, 10% of the energy. So, if they’re coming in here and they’re in a bad mood or they don’t feel good and they’re not happy. That brings the energy level of the team down. And so, we’re very sensitive to that even in our hiring process. It’s we look for really good energy, people who can bring that good passionate energy to work every single day because that is what really drives the culture. And I think that’s what’s been really attractive. I mean, other than Max and I being extremely loud in the industry and trying to really disrupt financial services which is very difficult to do by the way, we get inbound resumes. We’re getting 15 to 20 inbound resumes of highly qualified professionals and people starting out in their career from other wealth management firms, from top universities in the country. We don’t have an issue of attracting talent and it’s something that I think really is unique for us because of the culture that we’ve built.

Matt Sonnen [00:33:58]Yeah and that’s a very good point when you’re 10,11 people in the office, that next hire is going to have a huge impact on the culture. That’s a good way to look at it. Heather, how are you approaching the HR function at Signature FD?

Heather Fortner [00:34:13]Yeah, I couldn’t agree with Lucas more. I think he makes a great point. If there’s one word that that people need to take away, its culture. Being intentional about building your culture whatever it is most important. We have put some safeguards in place intentionally on our hiring process. We use an industrial psychologist to help us vet potential prospects, perspective team members just for the fact that we want to be sure. I mean our culture is so important that it’s critical that we get it right. I think the flipside of that though is that…it’s a flip side but it’s a beautiful side to me as well, is that the culture will, if it’s strong enough, it will weed out people who do not fit or do not belong of its own accord. And then it’s leadership’s responsibility to be the guardian of that culture and to take necessary action as appropriate. And so being sensitive to that, being cognizant of that having enough EQ to know what your culture is. To build it intentionally. I think that when you start to talk about culture it can be very esoteric but there are tangible things that you can do as a leader to be intentional about building a culture and to me what culture is the alignment of building a place where humans thrive and if we can create that canvas then we can create that place where humans in their unique abilities are able to thrive and be their best people then they will only impact the lives of more clients in a more profound way. And so, we take that responsibility very seriously.

Lucas Winthrop [00:36:14]I love that you guys use a psychologist. We use a dog right now which works well. He’s got a good sense people.

Matt Sonnen [00:36:26]Now anyone interviewing is going to bring bacon in their pocket. For the onsite visit. The dog loves me!

Lucas Winthrop [00:36:33]Yes, you laugh about it but I’m telling you he has been able to weed out some people that didn’t check out their background checks and it’s pretty amazing because animals have a unique ability to sense energy at a much higher frequency and they know man. I’m telling you.

Matt Sonnen [00:36:55]Yeah that is funny. So, like I said I really do think that that HR component is so important, the culture is so important that is really the majority of the COO’s primary role. But technology, obviously the world we live in, technology is super important. It’s very important of how the employees are getting their job done, how the firm is interacting with clients. So, I do want to hit on technology. It’s somewhat of a religious debate. Both sides are very passionate whether you should build the technology in-house or you should buy it. And Lucas I know you’ve done a lot of customization around Salesforce and you focused a lot on building a truly integrated technology experience at Winthrop Wealth. Can you speak to that a little bit?

Lucas Winthrop [00:37:46]Yeah, it’s not easy. It’s expensive, it’s time consuming, and it takes a lot of hard work, but it can be done and there is a light at the end of the tunnel. I think we talk about technology one thing and I spend a lot of time in the space and we work very closely with our technology partners. We sit on multiple development boards and on some of those boards we’re the smallest firm by about 50,000 employees. So, we’re working in SMB space, the small-medium sized business space where we’re interacting with massive institutions. So, trying to make technology work for the small-medium sized business especially in financial services is something that we all know to be very painful, right. There is no out of the box solution. When a tech firm comes in and shows you a demo you want everything it does and more, but the reality is, it’s never going to work for you that way off the bat. It can be done but it’s going to take a lot longer than you expect and it’s going to cost a lot more money than you had hoped it would. And this is something that we realized early on. But the reality is what people don’t understand is that you have to define what success looks like off the bat. And a success is broken down into multiple milestones which lead up to the end all victory which is then just you’re at the point where you finally start seeing some ROI. But we’ve partnered with Salesforce, Addepar, eMoney and that’s Office 365 as our email and everything like that. And for us it was really figuring out how to build a transparent and efficient system that is fully integrated. To give time back to advisors, to really create true roles and responsibilities using the technology and empowering everybody to have full insight into business analytics. Which is something in the financial services industry that is very difficult to get. We made a higher about two and a half years ago and it’s our Chief Technology Officer, who has zero experience in financial services, had never worked in financial services or finance at all but knew how to make systems work. He has a really strong background in sales enablement and technology platforms and implementation. And that was a huge investment for us because it’s non-revenue generating and all these things that he needs to make things work cost a lot of money. And my brother Max and I have spent a ton of time integrating with him to design the systems, but it’s been about a three year journey for us and we’ve been doing a decent amount of events with both Salesforce and Addepar, eMoney. A lot of work a lot of time but the most important thing I would say for anyone listening when it comes to technology is before you go and vet products, before you buy anything, before you see a demo, define what using technology in your practice and the success of that looks like. And break it down into multiple steps because it’s going to cost a lot more than you think and it’s going to take a lot more time. But it can be done and that’s something that is when done correctly is it puts your firm in to the future. And last year the theme of our 2018 was future proofing. Which was a fun theme and that was really getting alot of these systems that we had to talk to each other and work in an integrated environment and the results have really been extremely successful and it’s really fun to see.

Matt Sonnen [00:41:41]Heather, it’s like I said it’s almost a religious debate where do you fall in the build versus buy the debate.

Heather Fortner [00:41:48]I love that you call it a debate. I totally appreciate everything Lucas said. I think we’ve taken the other side of the approach which is recognizing that we don’t want to be in the business of developing technology. We want to use the best technology that we can. We also understand that the industry is consolidating quickly, and things are changing quickly in the fintech space and I don’t want the chastity of our organization to ever be beholden to something that we can’t necessarily work ourselves out of. And Lucas is very correct it is very expensive, and it does take time and you have to have a true vision and strategic plan of where you’re going and what the expectation is and what the ROI is of that investment on the other side. And so, I think for us it’s a bit of risk mitigation. It’s a bit of understanding that we are not, that’s not our wheelhouse it’s not our specialty. We want the best platform that we can get, and we do want integration of our systems because we do believe that and an elegantly simple platform that allows us to operate with leverage and scale as efficiently as possible is right for us and the best thing for us. But we are definitely not in the business of creating that. Now we will leverage the right people to help guide that roadmap and we will leverage very skilled technology consultants to help us build integrations if we feel like they are necessary. And we use a very similar tech stack to Lucas except for Addepar, we are with Orion. So, definitely speaking the same language, definitely using similar tools but coming at it from a different approach.

Heather Fortner [00:44:04]Yeah. No that’s perfect. So, I have one last question. Neither one of you are the stereotypical RIA executive. So, I thought this would be a great question for both of you. What advice do you have for future more diverse generations that are looking to enter and or lead the RIA space in the future? Lucas I’ll go to you first.

Lucas Winthrop [00:44:28]Well number one, I’d say everything that we’ve done it might have been easier at a non-family firm. For us the family dynamic is extremely important and it’s something that is very precious, and you’ve got to make sure that that doesn’t get disrupted or affected by the business side of things and it’s very difficult. But yeah so number one, it’s far easier done at a firm where you’re not working with your brother, your dad, and your uncle. But what is going to drive or what would help young people get into leadership roles in the financial services specifically, RIA space. I think it would take the owners of the current RIAs out there to wake up and see that they’re not going to be able to do this forever and that their options are really quite limited when it comes to succession and we know the statistics. A lot of these people don’t have any idea what to do if they weren’t able to work starting tomorrow. Their firm really wouldn’t exist without them. So, the key person risk is so high. I think if they’re starting to realize and you have a couple options when it comes to: okay, I can get acquired by a bigger firm and consolidate or I’ve been working for 40 years and now you’re going to spend more time than you ever have to create the structure to be able to have the scalability and continuity to bring somebody younger in to help lead. And I think it’s a big topic of discussion but you’re starting to see that happening and I think that these owners are starting to wake up a little bit and say oh wow you know I really need a plan for the future. I’ve been helping my clients planning for the future and I tell them to do all these things about within their businesses and for their personal lives, but they haven’t really done it themselves. So, I think in general the owners are starting to see the light that if they want their legacy to live on in their business, they need to bring younger people in who have the energy to deal and run these firms. Because I’ll tell you it’s takes a lot of energy. I’m 29 years old and I’ll tell you, Max I work 80 to 100 hours a week and we’re still tired but we’re young and we’ve got the energy to do it. But we’re also passionate and we have a greater vision. So, really, I think it needs to happen at the ownership level of people who’ve been in this business for a while to go out there and recreate themselves by inviting younger people who are really smart and talented into their firms to help lead and relinquish some control. And that’s really hard. I think that’s the hardest part about young people coming in is that even if they do come in, the owners and the senior partners at the firm are not as willing to relinquish control and really allow the younger people to do what they do best because they don’t have 30 years of experience. But again, the day-in- age we live in, the resources are more readily available to us at the age of 30 than they were for a lot of these entrepreneurial partners when they were 30 or 40 or even 50 years old. So, we have the tools we just need the guidance and we need the barriers to be broken down to allow us to do what we do best. And I think with the guidance and the responsibility and the blessing to take something and really build it and define a new vision for these firms it’s something that will 100% help attract talent and really change…I think it takes a couple of years, but the people who have done this in the industry are really, they’re raving about it. And I can name…I’m sure you guys know who I’m talking about but there’s a number of firms out there that have already named their successors and those successors have been in the firm for 5-10 years and they’re the ones who are going to be taking over and they’re getting mentored and coached to do so.

Matt Sonnen [00:48:41]Yeah, you’re speaking on a COO podcast so yes, I don’t think you could have said that any better. So, Heather, what do you think the future leaders of our industry should be looking out for?

Heather Fortner [00:48:52]I think there are two things that really stand out to me. One is let go of the fear of failure and try new things. I think that one thing that has been very helpful to me in my career is even the things that didn’t necessarily make sense gave me a grounding in the firm and a background in the firm that was extremely important to me later. And so, if I was mentoring young leadership coming through it would be look, don’t be afraid of the blank canvas. It may not all make sense now but if there is an opportunity seize it. Don’t be afraid of failure. Don’t be afraid of pigeonholing yourself. Be open, be curious and feel free to put on the art smock and paint your reality the way that you want to paint it. I think that’s very important. I think the second thing that’s very important to me and I am I’m older than Lucas and I’m not working 80-00 hours a week. And I think that it’s critically important from the other side of the table as well for young leaders in our industry to acknowledge and to understand the importance and the care of the thing that we have been entrusted with. These entrepreneurs in our space. I mean they are pioneers. They have built an entire industry. And that is not to go lightly. That is not to be taken lightly. It is an enormous accomplishment. And these are their babies. These businesses are their life’s work and their legacy. And I think that as we are given opportunities to help guide the future and help lead the future and help take the next journey of this evolution of this industry I think we have a responsibility to do that with the utmost care and sensitivity and quite frankly respect of what they have built and what they have built for us to be a part of. And so, I don’t think that I had that knowledge or understanding or ability to get on their side of the table and see the world through their eyes, when I first started in this firm. And I probably meet a lot of really stupid mistakes because I was arrogant enough to think that I was better or have all the answers and quite frankly it’s quite the opposite. I had an enormous amount to learn and they stuck with me and and I want to honor that. And I just think that as a G2 coming in or G3 behind that, the more that we can honor that and treat that with the utmost respect, the better that transition will go for everyone and the more quickly we will make strides as an industry into the next level which is probably a profession.

Matt Sonnen [00:52:29]That’s great.  Everyone talks, there’s a lot of articles written etc. about empathy for the client and putting yourself in the client’s shoes. But I love what you said. We need empathy within the organization as well, within the firm and understanding the different roles and histories etc. That’s great. Very well said. Well, I can’t thank you both enough for sharing your experiences and wisdom today. Lucas touched on this a little bit I’m speaking to more and more firms lately. They’ve just sort of woken up one day and realized that they’ve had a ton of success in spite of not having formal business strategies in place. I think that some of the stories in the overall approach that you both have laid out today is going to help many firms and their COOs looking to evolve from practices to businesses. So, thank you again both Heather and Lucas. Thank you.

Heather Fortner [00:53:20]Thank you, Matt.

Lucas Winthrop [00:53:21]Thank you, Matt.

Matt Sonnen [00:53:23]Absolutely. Well that is a wrap on Ep 5 here. We’re looking to do something a little different for our next episode so please stay tuned for that in the coming weeks. And please subscribe to The COO Roundtable either on iTunes, Google Play, or you can get updates on new podcasts by subscribing directly to our blog at pfiadvisors.com. Thank you everyone for listening and we will speak with you very soon.