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Sharing Centralized Resources To Create Capacity For Growth


Executive Summary

Andy Schwartz Podcast Featured Image FAS

Welcome back to the 284th episode of the Financial Advisor Success Podcast!

My guest on today’s podcast is Andy Schwartz. Andy is a partner of Bleakley Financial Group, a hybrid advisory firm based in Fairfield, New Jersey that broke away from a major insurance company and in just a few years nearly tripled its size to over $9 billion in assets across more than 50 advisors.

What’s unique about Andy, though, is how he and his partners have built their firm into a platform that gives advisors the opportunity to leverage centralized large firm support services such as marketing, technology, compliance, and human resources, while still maintaining the freedom to run their own investment book of business how they see fit for their clients.

In this episode, we talk in-depth about how Andy and his partners run their firm as a form of cooperative with advisors sharing resources and additional services, to provide space and capacity to grow and scale their own practices, even including an in-house life coach (for both their advisors and their clients), how Andy and his partners purposefully do not receive any compensation as equity owners (making a living purely from their own practices’ P&L) and instead reinvest money generated by the firm back into the business to provide even more services their advisors can leverage, and how Andy attracts new top talent by not only trying to offer capacity and scale that is aligned to their advisors, but doing so while supporting a wide breadth of RIA custodians to give their advisors flexibility.

We also talk about how Andy accidentally started his financial services career in college by selling life insurance to college seniors after looking for a way to pay for his education, how after working at a large insurance broker dealer for over 30 years and becoming frustrated with corporate constraints, Andy made the difficult decision to walk away with his $3 billion practice and start his own firm, and how Andy approaches his leadership of the firm by viewing himself as a player and a coach (rather than simply an executive) as he maintains his own practice within Bleakley to show solidarity and create alignment with the other advisors in the firm.

And be certain to listen to the end, where Andy shares how, despite working hard for more than 3 decades on building an advisory firm and reaching $9 billion in AUM, he is still surprised at just how far it has grown over the years, how Andy has taken the approach that the moments when things go wrong can be viewed as learning and growth opportunities to better himself and to lessen the regrets he has in his own life, and why Andy believes it’s the combination of building credibility, and our own financial resources, that is the key to position oneself to truly make an impact as an advisor.

So whether you’re interested in learning about how Andy runs his firm as a cooperative and is able to offer advisors freedom and shared resources to leverage for their own practices, why Andy intentionally forgoes equity compensation and instead reinvests in tools and resources for the firm, or how Andy applies his unique leadership role to not only help his own practice reach their goals, but to also guide the firm as a whole to reach $9 billion in AUM, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Andy Schwartz.

Michael Kitces

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

Looking for sample client service calendars, marketing plans, and more? Check out our FAS resource page!

Full Transcript:

Michael: Welcome, Andy Schwartz, to the “Financial Advisor Success Podcast.”

Andy: Thanks. Great to be here. Big fan. So very excited to have a chance to talk to you.

Michael: Thank you. Likewise. I’m looking forward to the conversation today. And just some of the…I guess the journey that you’ve had through the industry, I find for most advisors in our careers, there’s kind of this process of sometimes we…some of us bounce around a bit in the first couple of years, just trying to find the right firm, the right platform, the right home. Every now and then we land it right the first time, but most of advisors, I find, actually, we make one or two changes in the first couple of years. And then eventually kind of you find the place that you’re going to stay for a while, and you might stay there for 10 plus years. And then often actually find there’s sort of this 10 to 15-year itch thing that happens where a lot of advisors, when they get to a certain stage of maturity, is like, “Okay, I’m kind of thinking about where I want to be for the rest of my career, the next 20 plus years to come.” And we make one more change. And that tends to be where we kind of live out our journey from there.

And I know you had a little bit of a different path. You spent more than 30 years straight out of college with one particular large firm institution, was there all the way through, decided to make a change a couple of years ago, grew 3x the size in a couple of years that you did in the first 30, which is sort of a fascinating transition into itself. And so, I think I’m just excited to talk about these journeys that we take of deciding what sorts of firms or platforms we’re going to be affiliated with. And when and how you get to the moment or the decision, I think including, especially when you’ve been at one firm as long as you spent time at one firm, to say, “I’ve been really happy and comfortable here, but I got to make a change for the next stage.” What gets you to the point after 30 years to say, “I don’t know if it’s the right fit anymore.”?

Andy: Yeah, I think for us…and again, I wasn’t alone, at the time, I had three partners. Today, I have four partners. So, we’ve always had a firm. And even when we were part of our old institution, we were, I guess, a district office, but we always operated as a firm. And our whole philosophy was always that we wanted to be the best that we could be in our marketplace. And that we did not want to have to say no to clients. And if clients said, “Can you do this,” we wanted to be able to say…and obviously within reason, but we always wanted to say, “Yes, we can do that for you.” And what we found was that the institution worth was awesome. I wouldn’t trade my experience over the first 30 years for anything. It was great culture, great people, a lot of learning. So, no regrets, certainly. But we just got to a point where we wanted to do more things, and we just weren’t quite fitting in to the box.

And I think anytime you work for a large company, no matter whether it’s a wirehouse, or whether it’s an insurance-based company, there always are going to be limitations, because they have issues. I mean, they’re trying to sort of corral all of these people into some kind of a manageable box. And so, I think what sometimes ends up happening is they build their resources, they make their investments, they spend their time and energy. And I don’t want to say at the lowest common denominator level, but certainly not the highest common denominator level, right? Because it’s just not a smart way probably to run a business. And so, we just got to a point where there were things that we wanted to do, including being multi-custodial. And so, we made the decision. We thought it would be best for our clients, and best for our future growth to make a move, and we did it. It was a little scary, for sure, I’m not going to…and it was painful. My goodness, it was painful. But I’m thrilled that we did it.

Andy’s Journey Into The Financial Advisory Industry [06:50]

Michael: So, I definitely do want to kind of come back to the scary and the pain at the point you actually decide you’re going to make a transition. But I think first is help fill us in a little bit more on just what this career looked like historically. So, what was the firm that you were building at? And what did it look like in, I guess, the first decade or few that you were there building in that environment?

Andy: I’m glad you asked, because I really wanted to go there. Because I always like to say that the best place to start is in the beginning. So, I sold life insurance my senior year in college. I’m in this industry, like probably a lot of the people listening to us today, completely by accident. I wasn’t an insurance major, and I certainly wasn’t an investment major. I was a marketing guy Glassboro State College. And I was really there for two reasons. pretty poor SAT scores, and I didn’t have any money. So, it was an hour from home, and it was something that my brother, Scott, and I, we’re twins, we could pay for school while we waited tables, or Scott worked at a men’s clothing store at the mall. So, we were able to kind of pay for our stuff and go to school. And so, my senior year, I had a falling out with the guy I was working for at a restaurant, and my ex-wife actually lived with an insurance guy, guy that had an office. If you can believe this, they sold life insurance to college seniors on notes, Fidelity Life, I’m not even sure if they’re still in business.

Michael: So, they were selling mini whole life policy to college seniors?

Andy: Exactly, you got it. They were selling what they called the College Plan. It was $50,000, whole life policy. And actually, halfway through, they became Universal Life. So, it was right when Universal Life hit the scene. And you would basically take a $10 money order because these people didn’t have checkbooks, and you would basically…they would sign a note. And then when they graduate from college, you would start to pay their premium. The crazy thing was, though, is that they would pay me $800 for every one of these policies I sold. And so, I come home, I say, “Oh, I’ve got to go back to start waiting tables at Ground Round.” I’m a little pissy about it. And Steve, the guy that she lived with, and who was my friend, who was the general agent for Fidelity, said, “Why don’t you come sell life insurance with me?” And this is July 1983, going to my senior year. So, I thought about it, and I said, “Well, I know pretty much everybody on campus.” It was interesting. And so, I’m sitting in August and studying for my insurance exam. I took my insurance exam late August, and I become a Fidelity Life insurance agent. And I do really well. I make an awful lot of money in 1983, ’84. And so…

Michael: I was just going to…

Andy: Yeah, please.

Michael: A thing about that. So, the commission at the time was $800 on a policy?

Andy: Yeah, I mean, I was…

Michael: Because that feels like a lot of money in the early 1980s.

Andy: Well, and actually, it might have been a little bit less, but I was making $3,000 to $4,000 a month in commissions. So, it was kind of crazy. And this is 1983, 1984.

Michael: Yeah. That’s good. That’s good money.

Andy: I probably could have supported a family of three or four, I guess, at the time. And then what happens is my brother, Scott, is working at John Wanamaker’s, which is sort of like a Lord & Taylor mid range department store in Deptford, New Jersey. We’re outside of Philadelphia. And he’s selling suits on commission. And my brother made $40,000 his senior year selling clothes 20 hours a week in John Wanamaker’s, the men’s department. So, we were working and making money. And so, I guess in April, my brother gets a job interview with what was the nucleus of our firm. It was brand new. So, he comes up, and he calls me from the turnpike from the payphone, because there were no cell phones. He’s all excited, “We’re going to be rich, and it’s going to be great.” I think I found the Holy Grail. I grew up in Willingboro, New Jersey. That doesn’t mean anything to you, but I was making more money in my senior in college than probably most of the parents that I was friends with. It was a very lower middle class town. And I thought, “Wow, I’m going to be rich, I’m going to make $100,000 some day selling insurance down there.” And so, I went up…

Michael: And then 100k was a big number in the ’80s.

Andy: And I tell you, I would have made probably $100,000 my first year out of college there, because they hand you a box full of orphan policyholders. And at the time, it was when Whole Life was converted to Universal Life. So, the pitch was really difficult. You’d say to the client, “If you pay the same premium, you’ll have 3 times more cash value when you’re 65. Would you like to do that?” And they were willing to swap these policies, these insurance companies, which I can’t understand how they could do that, but they did it, and paid you for it. But I went up to Northern New Jersey, and I met with what was the nucleus of the firm at the time, the original partners who were all gone at this point, and had been for quite a long time. And so, you can imagine my brother is a very, very attractive prospect. And so, the three or four or five of us were at lunch, and all the sudden, I start talking about how I trial close college seniors for life insurance. And it was kind of funny. All of a sudden, everybody turns their chairs, my poor brother, their backs, and they’re all circling around me, because, I guess, for them, it was kind of a fascinating situation.

Michael: It’s like the guy selling suits was one thing, but the guy who’s actually selling insurance, “We got to talk to this one.”

Andy: Yeah. So, I realized after talking to these guys, and they were involved, they were talking about planning, they were talking about investments, and investments in with some mutual funds, A-shares, whatever. They weren’t doing very much of anything. I mean, the senior partner that year probably made $28,000. He was living in a house with three other guys. It wasn’t like they were super successful, but they were very smart and they had a really good vision. And so, upon graduation, we both moved up to Northern New Jersey, and we started with the firm. So, at that time, there was one assistant, there were probably seven or eight agents. And that was the business.

And then, what had happened was, over time, we started to grow the business, and we started to share with each other staff to build out…we wanted to be doing planning. We got our CFPs right away. And I would say, it probably took me 10 years to get to a zero net worth, probably. I always used to talk to people, and I’ve done a lot of speaking over the years in the Northwestern system particularly. And I would always say that it’s never about expenses. It’s really about revenue. And so, our philosophy always was just to keep hiring really high quality people, keep improving sort of the product that we’re out there with. And not the insurance product, but the planning product. And we did that. And I was able to share those expenses with my three partners. And so, therefore, we could grow faster.

And then everybody’s businesses just kept growing. And then, ultimately, we become the biggest office within the system on the investment side. And I had the biggest investment practice. And then now, we’re, I guess, about $9 billion in assets. And financially, I never imagined that I would be in this situation I’m in.

Michael: How did you grow and get going in the early years? What did that first 10 years look like?

Andy: It’s nothing but activity. I didn’t have a particular market. I was 22 years old. I didn’t know anybody in Northern New Jersey. We didn’t come from any money, so we had no financial contacts. So, basically, like, I think, any good young, either insurance agent or good advisor would do to build a practice, it was basically activity. I made tons of phone calls, got referrals from everybody I could. Always asked for referrals, always networked, always paid attention. And worked really crazy hours, worked weekends, worked evenings, worked a lot. And slowly, it started to work. And the great thing about this business is, if you’re willing to put in the time, everybody, I believe, can be very, very successful. You just have to be willing to do the work. And something I heard a long time ago is that successful advisors are just really willing to do things that maybe unsuccessful advisors aren’t willing to do. And I think that’s really about the work. And so, I didn’t come up with a great idea. I wasn’t particularly smart. Just really put in the time and client build, and just built lots and lots of clients. I sold 450 life insurance policies my fourth year in the business, which is a lot of life insurance policies.

Michael: Sorry, how many?

Andy: Four hundred and fifty life insurance policies.

Michael: In a year?

Andy: In a year. Yeah, yeah. My fourth year in the business. Yeah. Yeah.

Michael: That’s more than a policy every day of the year. You’re doing a delivery every day of the year. I’m assuming some of that’s…there’s a family you get to deliver it more than one at a time.

Andy: Absolutely. It was a life insurance policy on someone, and a disability policy, and maybe a life insurance policy on the spouse, and maybe the kids. But that was the thought process. I couldn’t control the quality of the people that I saw at a meeting, I couldn’t control what I got in front of, rich people or not, people that had any money. But I could control if I got in front of people, right? Because that’s just a matter of work. And so, a lot of small stuff. Wasn’t making a huge amount of money, although I was making a lot more money than all my friends were. And then what ends up happening is, success begets success. You start to see better people and better people and better people. And if you have those habits, you take that 400 policy in a year, and all of a sudden you graduate to professional successful people. And then, all of a sudden, you really start to make money. And that was the process. So, it’s always been really about just activity, working really hard, building a big client base. And now, I’m basically able to harvest that client base I built. I thank the 24-year-old all the time, because it was really hard, and I wasn’t making any money. And it was really difficult and discouraging at times. But for whatever reason, I really believed that if I continue to do that, it would work out. And it did. It did.

Michael: So, I guess just help fill us in a little bit more, what was the activity? I mean, what are you actually doing to write 450 policies, 4 years in as, I guess, 26, 27-year-old by that time?

Andy: Yeah. At the time, I was basically in the medical market. So I was working with physicians, and I was working with residents. So, I had about five or six different hospitals that I sort of staked out. And what I would do in the morning is I’d go in early, around 7:00, 7:30, and I’d have a stack of yellow cards for each individual hospital that I worked at. And these were referrals that I gotten from other residents. And so, I would start calling. The first person that would agree to see me that day, and it was classic, stop by and introduce myself, have a cup of coffee, spend five minutes. And then if I…

Michael: Were you actually already there?

Andy: Oh, no, no, I was in my office in Fairfield. And then I would make my calls, and then I would set up my day. And then once I got to the hospital, if I maybe only had two or three appointments, I would get on the house phone at the hospital. And then I would start paging while I was there. Some days, I get lucky when I would bump into four or five or six people, and some days, I’d go drive somewhere, and I might see one person or nobody. But you just…it’s a numbers game. And then, the more you’re around, the more people that you sell, they introduce you to their friends. I could hang out in the on-call rooms. So, I spent a lot of time and got to know these people. And then what started happening, because…

Michael: It’s just like a little mini niche with a couple of your local hospitals, where you just got known as the go-to guy at the hospital.

Andy: Exactly. No different than if you’re staked out at some company. And I’m sure lots of people work with professionals in certain companies, same idea. Instead of being staked out at Nabisco or GE, I’m staked out at a number of hospitals talking to a bunch of residents. But the reason we did that was we knew that residents become doctors. And in the ’80s, even in the ’90s, that was a time where they came out, and they were business owners. And we knew that business owners would be our best clients, because they not only would buy life insurance, or disability insurance, we’d set up pensions. So, there were lots of things we could do with them to create what we would always describe as multiple streams of revenue, really maximize the efficiency and the profitability of a client. And then from there, that took us into the rest of the world. But that’s really kind of how it started. That sort of was what the day was like. And I would drive an hour to meet somebody that might or might not open their front door. But it was just a numbers game.

Michael: So, out of curiosity, do you think of that as still being representative and feasible for the business now?

Andy: Yeah.

Michael: Do you think that kind of thing would work? Or was that sort of a function of what it looks like at the time, but you can’t hang out at a hospital and calling people now?

Andy: Yeah. And I appreciate the thought. I mean, security is different. People don’t take phone calls. So, it is different. And I would say that probably in a hospital setting, probably not, although I don’t know, I guess it just depends on where. But I think the idea is, it probably has to be done a little differently today, just because of the way the world is today. But I would say, though, that the thought should be the same. If you’re a young advisor, and if you want to build a big practice, and I guess I don’t have the biggest practice in America, but I’ve got a big practice. And I’m just a regular guy, I’m no genius. So, the reality is that if you’re willing to put in the time, make the phone calls, be consistent. The biggest problem that most people have is they are not consistent. So, they’ll have a really big week, a really big month, where they really are busy and focused. And then I guess maybe they get paid, and then they’re not so nervous, they’re not so fearful, and then they slow down.

And so, for me, the key was to be consistent. And so, whether that sort of process is possible today or not, I’m not really sure. It’s certainly not my process. Now people call me, and I talk to them, and they basically agree to give us some money almost up front because the referral was so strong. And I pinch myself when I get off the phone because I can’t believe that this is what’s really happening. But I do believe, though, that it’s really about activity. It’s about being intentional. It’s about getting referrals. It’s about calling on people, and working really hard at it, and building a client base. And then, from there, you can leverage into almost anything you want to do. So, I do think that part of it’s still about work, it’s still about hard work, it’s still about making calls and putting yourself out there.

How Andy Transitioned From Insurance Sales To Investments [21:05]

Michael: So, out of curiosity, I guess in that kind of thread and pathway, you had this momentum on the insurance end. You noted that ultimately you ended out much more heavily on the investment side over time. When did that shift start to happen?

Andy: Yeah, early. And I was fortunate that one of my partners who hasn’t been… left the firm years ago, but he’s a really smart guy, and he liked the investment business. And so, he gravitated to that business. What I gravitated to was the idea that I loved the insurance business. I kind of like the idea that we were helping people, and that what we were doing actually mattered. If I sold 1,000 copiers, and I don’t know what they paid to sold a copier in the ’80s, but I imagine I would have made pretty good money. But not a huge social impact, not the guy that delivered the check, not maybe the most important person that someone unfortunately ever met, because maybe they died or became disabled, and we were the people that actually protected their families.

And so, to me, I love that aspect of the business. But what I didn’t like was I didn’t like the idea that I had to go out every year on January 1st and do it again. And it was all about how many things do you sell. I really wanted to get away from…because I knew that I could make a really good living, and I could make a million dollars a year my 10th year in the business, and that was fine. But you live in Northern New Jersey, you pay taxes, and whatever. You’re not super rich. And I didn’t see how that was going to become…I didn’t see how I was going to grow that by multiples. But the investment business and the idea that you get into a fee-based advisory kind of investment business, which we did almost right away. And I saw that if I could go and collect $10 million, then $20 million, then $30 million, then $50 million, the compounding impact on that was a long-term sustainable growth business. And that was very attractive to me. And so, I tried really hard to make that pivot as quickly as possible.

Michael: So, when, in practice, did that pivot start coming up for you? I mean, are we still in the ’80s, are we in the ’90s, are we into the 2000s?

Andy: Unfortunately, because I’d mentioned I wasn’t as smart as I would like to be, so probably took me about 15 years to really get focused on the asset collection business. So, we probably should have started a little bit earlier. And part of that was because of the environment we were in. And what was appreciated, and what was honored, was more on the premium side than it was on the investment side. The tools that were offered and created. We really had to build this thing out ourselves at that time. Now, obviously, they built out tremendous capabilities for these people. I mean, there are very, very serious competitors in the investment business today. But at that time, there really weren’t. But I would say about 15 years, and we really started to focus, hired people. We’ve made some great hires over the years. We have wonderful people that work within our firm. And we started investing in that side of the business. And that’s when we really started getting traction.

Michael: So, I’m just thinking almost kind of timing overall, 15-ish years, we’re basically into the late 1990s, where, again, markets are booming, there’s a lot more investment focus and discussion than there was before, a lot more public interest and desire towards investing. So, what did it look like, I guess, initially as you began to make that transition? Were there advisory and fee-based account options for you? Was this mostly going into the mutual fund business, and just starting to build A-Share or C-Share portfolios? What were you actually building as you tried to get it going?

Andy: Yes. I would say that, at that time, we were doing what we called fee in-lieu accounts by the… say mid to late ’90s. So, they weren’t technically advisory accounts, but you were charging a fee in lieu of commissions. And do you remember the Merrill Lynch rule and all that stuff that happened?

Michael: Yeah.

Andy: Yeah. So, it was before the Merrill Lynch rule where they sort of kibosh that. So, it would be C-Shares on the smaller accounts, and it would be sort of this fee in-lieu, so it was the precursor to what we think of as advisory accounts today. Smaller though. Then a good file could have been $500,000. And I was happy to take a physician out of practice, and start up a profit-sharing plan, and start out with $50,000 deposit. Anything that could be a new client that we could grow, I was very excited to do. And then eventually, I guess it probably took another 10 years before we were truly advisory. And then in 2015, we truly went independent advisory on multi platforms when we took the firm outside and went independent.

Michael: What was it like building this in the context of an insurance company? Because at the end of the day, you’re anchor to Northwestern. I mean, most of the major insurers through the ’80s and ’90s, all built out insurance broker/dealer divisions anyways, because they needed it in order to do the variable annuities, and variable universal life that was becoming popular. There were BD options at virtually all of these platforms. But RIA and hybrid was almost non-existent. And for a lot of them, they were still…they were insurance companies with the BD options. What was it like trying to build more in the investment direction, while you’re still doing this in the context of insurance company?

Andy: Well, probably would have been almost impossible by myself. So, again, this is where I was so fortunate to have partners, because since we were in an environment at that time, and again, things have changed dramatically since then, but at that time, there wasn’t a lot of investment being made by the institution. So, we were basically building out our own sort of investment process, if you will, hiring people that understood how to do this stuff, both from an administrative standpoint and from a proposal standpoint, where we hired a great guy from AllianceBernstein. We could hand him statements in a fact finder, he would come back with a review of what the clients were currently doing, and say they’re Merrill Lynch accounts, or whatever they were. And then make a proposal and build that proposal around planning. So, it was a retirement analysis, and it could have been in a state analysis, and it would have been insurance included, but also to grab and gather those assets.

Michael: So, you start going further down this investment road, I guess, into the 2000s, and I guess gaining more momentum. I know, ultimately, you were in an environment where there were sort of a lot of advisors affiliated with you or associated with you, in addition, your own client practice. So, was there some point where this transition from Andy’s building Andy’s clients and gathering more clients in an assets or management model to, “We’re building a firm of advisors,” and there’s lots of advisors affiliated? When did that transition start to happen?

Andy: Yeah, I would say that it probably started in earnest. In 2015, when we made the change, my role changed quite a bit. But I would say that my partners and myself always sort of delegated different responsibilities. We always sort of had two businesses. We had the firm, we had our individual practices. But I would say in the last…since 2015, but really, probably last 3 years or so. We went from three administrative professionals. We left and went independent with a COO, basically a… I guess, like a controller, and one other administrative person that was sort of responsible to help us run the firm. Today we have 16 people. We have 16 offices. So, I kind of think of myself as a player/coach now, because I really do have two jobs. I run my practice with a great team. And we have a little less than $2 billion under management. So, it’s obviously a large practice. But I do have a fantastic team that I work with, and I love. And they’ve been with me a long time. And they’re awesome. And so, I clearly could not do that without them.

And a day doesn’t go by where I’m not talking to somebody, and that includes Saturdays and Sundays and evenings. But the difference, I guess, for me, is that…and I talk about, because we interview a lot of advisors, we’re in the growth mode, we’ll onboard probably 8 or 10…well, maybe 8 advisors this year. And I tell people that there’s three differences, or there’s three things that we think about and believe that might be different. We think it’s about alignment, capacity, and scale. And we really run the firm like a co-op. So, I don’t make any money. And maybe I shouldn’t admit this, because maybe people will think I’m not very smart. But I don’t really make any money as an equity owner of Bleakley Financial Group, even though we had this big practice and generate lots of money. Because we reinvest all the money that we generate as a firm back into the business. So, we’re just growing, growing, growing the business.

But what I tell advisors on why I think they should be with us is we are perfectly aligned. The owners of the firm make their living the same way the advisor does. So, in the morning, if I come in and Zoom calls aren’t…the Zoom isn’t working because we’re having a problem with our server at LPL or wherever this stuff is being generated, I’ve got the same frustration that they have. Or if there’s something wrong with commissions, or if there’s something wrong with the Orion software, or whatever it is. If they go out to the marketplace, and somebody embarrasses them because something isn’t good, well, I’m experiencing the same thing. And so, we are all perfectly aligned. So, we are all spending our resources, our time, and our energy. We’re all sort of marching the same way, we’re all marching in the same direction with the same goal.

The capacity is that if you can get a bunch of people together, and you can share those resources, think about what you can build. I mean, I have a life coach here, full-time, she’s awesome. So, she talks to teams, she does assessments for all new hires, but she also talks to clients. And talk about wanting to make a lasting impression, or to create a really long-term relationship with the client, provide good planning, and provide good service, but help them with a crisis when they really need help, either them or their children. And do it for free, because we don’t charge for that. That’s really different, that this…

Michael: So, this is a life coach that’s on staff with the advisory firm?

Andy: That’s correct.

Michael: And working with both, advisors themselves and with clients?

Andy: Right. And really, mostly with advisors’ teams and the clients. Now, she’ll work with the advisors too, and several advisors take advantage of that. But it’s really the teams. I mean, we find that advisors, especially if they’re really successful, they’re typically not very good managers, they’re not necessarily very good communicators. And so, there’s a lot of dysfunction amongst teams. And so, what she helps do is she helps us…or she helps them get rid of all that dysfunction. And by the way, at the firm level as well, because there’s plenty of dysfunction…or was plenty of dysfunction when she got here, just in a partners’ meeting. It’s amazing to see a partners’ meeting today, and a partners’ meeting, say, five years ago. But yes. And that’s just one example of a resource. They don’t pay for it. It’s just, she’s here, use her or don’t use her.

Same thing with marketing. I mean, my CIO is Peter Boockvar. And I don’t know if you ever heard of Peter Boockvar or not, but Peter Boockvar has been a CBC contributor for 20 years. He’s a really, really smart, well thought of, individual. But he’s on once or twice a week, really brilliant. He sits in our office in front of his Bloomberg terminal. He is just a wealth of information, and knowledge, and help. And he does client meetings, builds…he runs two portfolios for us. And again, it doesn’t cost my guys anything to have that resource in our office every day.

Michael: So, the idea is just being large enough that you have the capacity to add these…

Andy: Exactly, skill.

Michael: …unique specialized positions, or support offerings.

Andy: Exactly. I mean, together, if you do $60 million in revenue, and you can generate whatever the firm keeps in an override, if you can reinvest that override to millions and millions and millions of dollars are being reinvested, where everybody would want it to be invested. So, if I were a CEO, or proper CEO, and I basically made my living growing our firm and managing our firm, well, a lot of the money that we reinvest as partners into the business would be taken out as dividends, or income, or profit, which is fine. That’s how people make their living. But since we make our living running our own P&Ls, that money can be reinvested into the business. I’m sure that doesn’t make us unique, but I think it definitely makes us different. And that’s really how we view this thing. We view this as a co-op. Right now, we’re 55, 54-ish advisors, on our way to 60 this year. And all kind of working together and sharing resources.

Why Andy And His Partners Decided To Leave Northwestern Mutual [33:46]

Michael: So, help us understand a little bit more. You’re growing under the Northwestern umbrella. I guess, how big did it get by the time you were getting a new…I guess, 2014, before you made a transition. What did it look like at that point?

Andy: Yeah. So, we were 30 advisors, and some younger advisors. At the time, we were willing to hire younger kids, because you could hire somebody out of school, or a couple years out, and they could sell insurance policies and make a living, and that was okay. We don’t do that anymore, because it’s impossible. That’s not the business we’re in. We’re hiring successful advisors that want to grow their businesses, not start a business. So, we had one office in Fairfield, New Jersey. We had a very small management team. We really had, at that time, before we decided to make the move, we had literally one sort of controller kind of guy, and we had a part-time CFO. Partners kind of whacked up responsibilities. And we really weren’t growing a lot. We didn’t have a recruiter. We didn’t really have the time.

And so, at that point, I would say that we were sort of cooperating and sharing resources, and just trying to improve the product offering, the planning offering that we had together by pooling our resources. Making a little bit of money as a partner, as a distribution, but again, our own P&Ls were how we are supporting ourselves. And it was fine. And we were $3 billion in assets at that time. And that was good. I mean, at the time that we made the move out, we were probably…I’m sure, we weren’t the biggest deal, but every major institution was all over us. Everybody was in my conference room. And it was flattering, because I just figured, we never paid attention to what’s going on out in the world. And so, I’m thinking, “Are we big? Are we small? I don’t even know.” But apparently, we were bigger than we thought, because everybody wanted to make a deal with us.

Michael: So, I want to come back to that in a moment, but I just want to understand the structure. Perhaps my own ignorance, but I thought the structure under Northwestern…I guess like most insurance companies and insurance BDs, it’s kind of…all the advisors have their own practices. I mean, they may have some support staff, or maybe a team member or two, but not 30-advisor sort of roll-it-up structure.

Andy: Yeah. The way their operations worked was you had district offices, and then you had managing offices. So, maybe you had some of the big office in, say, New York City. And that person might have four or five or six smaller offices under their auspice. So, we were the smaller office under the auspice of, say, the North Jersey managing partner, if you will, but our smaller office was bigger than the main office, it was much bigger. And they basically…one of my partners was the named manager, if you will. I think that’s probably more what people are calling it. We called it a district agent, but a manager. And then what we had was we had our own agreement, we had a partnership agreement that district agency actually belong to the four partners, not to the manager, if you will. And since the leases were in our name, and everything was in our name, we were kind of in control. And we ran our BD, if you will, with Northwestern Mutual, we ran our business through Northwestern.

Michael: Okay. So, functionally, you had kind of created this environment where, I guess, you…trying to think through structures. You had a partnership structure whose role was to manage the district agency, and then the district agency had 30-odd advisors that were rolled up under it that, I guess, you had to hire, recruit, train, work with under your local umbrella, presuming all local. They were all Jersey area, because this was regionally based?

Andy: Absolutely. Everybody was local. Everybody came into the office. This is obviously way before people were hybrid work environment. So, everybody lived here and worked here. And we were early adapters to that. But I would say, today, I’m sure there’s more of that going on within their system. And look, to their credit, they tolerated it, because I don’t think anyone ever really liked it. But the guy that ran New Jersey, who we sort of were under, he was an awesome man. And he basically got out of the way. He said, “Do what you want to do. Run a good business, and I’ll support you in any way you want to do it.”

Michael: So, you’re at 30 advisors, and increasingly investment focus. What was the asset base at that point?

Andy: In 2015, we were $3 billion in assets when we made the move.

Michael: Wow. That’s a big number. I mean, even for kind of rolling up 30 advisors under it. That’s a lot of advisory assets, particularly in insurance broker/dealer environment.

Andy: Yeah. We were the biggest office when we left.

Michael: So, now what leads you to ultimately say, “I’ve been here for 30 years, it’s been a good run. We got to grow up to $3 billion. They’ve allowed us some flexibility to have kind of this partnership structure of running our district agency.” Why change, and mess with that, introduce all this hassle and stress in your life? What led you to say, “We got to change this.”

Andy: I think part of the problem might be because I went into the business when I was 22 years old, so I’ve never really worked for anyone. I’ve always been basically a straight commission person. And anybody that works for a large institution today, whether it’s Northwestern Mutual, or whether it’s Bank of America, Merrill Lynch, or Goldman Sachs, it doesn’t matter who it is, everything has gotten very, very corporate. And we just got to a point and they’re, listen, awesome, awesome company. Some of the greatest advisors that I’ve ever met are advisors there. I mean, just quality, carrying, smart, successful. I mean, really just a high quality…I used to look forward to meetings just because I could be around these people. And so, great sales force, if you will.

But what happens is, I just found myself constantly fighting to do something, to do things I wanted to do that just did not seem to be things that everybody shouldn’t be able to do. And sometimes they would make an exception for me, but not for my partners. And it was just…it got to a point where I was just exhausted. And I was 50 years old…or 53 years old. And I was too old to fight anymore. And I had friends outside that were in the business. And I just thought, “If we’re ever going to do this, we better do it now.” And so, it was a little late, but better late than never.

Michael: Can you give me, I guess, just some examples? What were the things you were trying to do that they wouldn’t let you do that just so rubbed you the wrong way? Like, “I’m going to walk my $3 billion out the door.”

Andy: Yes. So, I mean, look. My guess is that some of the things that I couldn’t do then, they probably even can do now. So, I would say that, at the time, there were issues around 401(k) plans, and what could be advisory. It’s the same thing that everyone listening to me today has, where there’s something that they want, they need an exception, whether it’s a minimum…being able to reduce a fee, and you basically eat the discount, not having the…and again, all of these things could have been remedied. I don’t know, I don’t pay attention. It doesn’t really matter. But it’s just the idea that you cannot…you take all the risk, you do all the work, we hire our own people, we do everything ourselves. But then somebody else tells you what you can or cannot do. And that just gets old after a while.

And so, we just kind of felt like we just wanted a little bit more control over the quality. I could not have Peter Boockvar in my office in that arrangement, running two portfolios for our clients. I have a healthcare guy, David Mandelbaum, who is a rock star. David ran healthcare for one of the larger, most prominent hedge funds in the country for 15 years. That hedge fund went to a family office because the founder retired, and he happened to be a client of our firms. And now he runs a healthcare portfolio for me, and he’s another resource in my firm, and a really, really great guy to get on a phone with a client. And so, again, I couldn’t do things like that in that environment. And that doesn’t make them bad. It’s just complicated. It just made life too complicated.

Michael: Yeah. It’s a phenomena I feel like I’ve watched play out in a lot of the large firm environments over, particularly, the past 10 years, although it’s been there to some extent for a long time. In theory, one of the things that should scale really well in a large, firm environment is compliance. Compliance obligations are fairly fixed, and often repeatable processes. If you get to be a big firm, you should be able to create a lot of economies of scale to do compliance really efficiently. But in practice, what seems to happen is the larger the firm gets, the more advisors there are under the umbrella that could potentially do something wrong, and break a rule. And if you’re a chief compliance officer, and the reality is regulators are going to take a swing at your firm based on whatever the biggest knucklehead in the whole firm can manage to do, and fly under the radar, and get away with, so that only regulator catches it. And then comes in and punishes you for failure to supervise.

Just your natural course of action is, as a chief compliance officer, you make the most stringent rule possible to prevent the one biggest idiot in the entire organization from getting you sued or fined by a regulator. And for everybody else in the firm who’s actually just like a normal, good, competent, high quality advisor, your compliance processes end up being dragged down to the lowest common denominator. And the bigger the firm and the wider they recruit like, the better the odds they have one knucklehead somewhere in there that makes up really annoying compliance process that everybody else has to follow. And there just seems to be this weird anti-scaling effect that’s really cropped up in large firms in the past decade that everybody gets dragged down to the lowest common denominator.

Andy: A hundred percent.

Michael: The bigger the firm, the bigger the gap between the lowest common denominator and the average advisor. It just creates more frustration if you’re trying to do anything that’s the smallest bit creative, or outside the absolute standard lines that the lowest common denominator fits in.

Andy: It’s exactly right. So, what ends up happening is once you become an outlier, then it’s a problem. And really, we just became an outlier. When you’re always asking for that exception… And look, I get it, you run a big company, there’s 10,000 people out there, and only 6, or 10, or 12 people want this. Why bother? It’s not where you’re going to spend your resources. And we don’t want to have to worry about it. And these places…and I’m not saying Northwestern, I’m saying all of these big institutions today. I mean, they’re run by a lot of lawyers and accountants. And I get it, I respect…

Michael: They’re doing their job. It’s kind of how you got to play the game the way the rules are written right now.

Andy: It’s exactly right. I don’t criticize them for it. And yeah, I wasn’t mad at them. I thought they were awesome. It was just… And I hope they weren’t mad at us. It just got to a point where it just didn’t work anymore. And I think everybody should understand that. If someone were to leave me because it just wasn’t the best place for them to be the best advisor they could be, or build the best business they could build, I wouldn’t be mad at them. How could I be mad at them? Everybody should know to make that decision. But that’s all. And it’s across the industry, I think, and every big institution’s going to have that. When advisors become outliers, I think it’s a problem.

Michael: I mean, you have a… an interesting point and framing to it that, look, anyone in the firm can potentially deal with this. But if you end out being an outlier, if your practice doesn’t look as much like the typical firm in whatever environment you’re in, you’re going to whack into this bar, you’re going to whack into the wall a lot more. And that’s when…it makes sense to me, that’s when the frustration starts to build up. So, you make the decision, “We got to make a change.” I just guess, kick off that process. How does that actually work? I mean, who do you call? Or is to say like, “We have $3 billion, and we’re thinking about leaving. Shh, don’t tell anyone.”

Andy: I know. I know. So, remember, I have 30 advisors now. Fifty percent of the assets have always been the four partners. So, half the book was always secure because it was the 4 of us, but the other 50% is 25 other producers. So, the first thing you’ve got to do is you got to herd the cats, right? You’ve got to get everybody on the same page. And you’ve got to take a poll and say, “Okay, guys, this is what we think we want to do. Are you with us, or are you not with  us?” Because maybe you are $3 billion, or maybe you’re not $3 billion, right? You don’t really know.

Now, we brought all but, I want to say, two advisors with us. One small advisor, and one actually…there was one major disappointment out of the process, but whatever, it’s fine. And he’s done very well staying, and obviously, we’ve done fine leaving. But that was the first thing we had to do. Then we had to learn, we had to figure out…so we hired two key hires. And we brought over our current COO. And I would say that, without him, this would have been a disaster, because we didn’t even know what we didn’t know. And it’s a complicated process. And I talk to advisors all the time, because I want to bring them into my firm, and I’ll talk to a $200 million advisor, or a $300 million advisor, and they’re ready to get out, they want to build their own, they want autonomy, and they want…and I’m like, “No, no, no, trust me. You do not want autonomy, you do not want to do this on your own.”

Because the reality is that maybe they’re a little bit younger, and maybe they have a little more confidence than maybe I ever had, but the reality is they just don’t know what they don’t know. It is a very, very complicated process. And there’s a lot going on, and there’s a lot to build. And so, my advice always is try to…and it might sound self-serving, and it doesn’t have to be my firm, but try to bolt on to an independent firm that has already done all that. Because you do not want to spend the first two years in a transition just figuring out, and getting all your processes set up. And then spending time managing that process. So, again, scale. I think of a practice, it’s big enough to be independent, really the size we were. I even look at these billion-dollar firms, they want to create their own deal. And I just think that is not efficient. You need more scale today. This business got way too complicated.

So, we got everybody lined up. And then we started to talk to institutions. And we talked to Pershing, and Schwab, and Fidelity. And ultimately, we landed with LPL as our broker/dealer because they had this interesting hybrid model where you could have other custodians, because we wanted to be multi-custodial. We wanted to have more than one custodian. We wanted to have the flexibility. And today, we have five custodians on our platform, and we’ll probably soon be six. And so, that was something was important, and LPL made that relatively easy for us.

Why Bleakley Chose LPL As Their Broker/Dealer Platform [48:38]

Michael: Because I was going to ask, you had mentioned earlier being with LPL, why LPL? I mean nothing negative. Just there’s a bajillion broker/dealers, plus, I’m sure a lot of RIA custodians who are happy to ask for your business directly, so why LPL when everybody was knocking on your door?

Andy: Yeah. And I would say it was really the hybrid model that they were offering, because custody with Schwab and Fidelity as well. They made it pretty flexible for us to do that. So, that was really the determining factor. Because we had all the major institutions here. And it actually turned out to be a good choice for us. We had some growing pains. And I don’t want to say misunderstandings, but I mean, again, we didn’t know what we didn’t know. And the world changes and evolves, but it’s actually turned out to be a really good situation, what we used them for. And I don’t mean to be disrespectful, but they’re a vendor for us. That’s all all these firms are. They’re just vendors. We represent our clients, and it’s our job to get the best deal, the best pricing, the maximum flexibility, the best execution for our clients. And whichever of these institutions can do that, are the institutions that get their share of the business. And so, to us…to me, it’s not really that big of a deal. I don’t go to LPL meetings. I don’t really know anyone at LPL. But they are a…

Michael: So, how does it work for just who you’re affiliated with, and a point of contact or structure? Because you guys are a really large firm.

Andy: Yes. I mean, my COO, when we have a problem with LPL, that’s my COOs job. Or my…the guys that run our trading, or the guys that run those activities, it’s their job to have some counterpart. When my marketing guy’s got to get a letter approved, he’s got to counterpart LPL. But I literally have no contact. And my partners had no contact. Because there’s no reason to have contact. We have great professionals that work for us, and help us run the firm, and that’s their space. They know it better than we do. But yes, so that’s kind of how we view this. So, we don’t feel any tremendous connection to any of these institutions. I’m not sure they feel any connection to their advisors either, quite frankly.

Michael: And so, the LPL structure, the hybrid appeal, it sounds like was specifically like the BD side of the hybrid, they could still handle and transition accounts or investments that were on the BD side, while also still giving you the openness you wanted on the RIA side to be able to work with the custodians, or multiple custodians as you wanted.

Andy: Exactly, because remember, too, since we’re coming out of this insurance company BD, a lot of people had 529 plans, or they might have had legacy brokerage assets. And for some people, it was enough money to matter. So, we had to have the BD that we could continue to let the advisors collect those revenues. For me, personally, I don’t have any brokerage revenue. All my 529’s are with Schwab. No fee, I don’t charge a fee. But we have to be attractive enough to join, and we had to be able to take care of the people that we already had. And so, it gave us a flexibility where we could sort of be RIA only, or you could have that BD hybrid. And so, that was really the decision, and it was good. It’s a good position to be in. It’s nice to have the flexibility. So, we’re not what they call a corporate LPL group. We’re on the RIA side.

Michael: And so, what are the custodial platforms that you’re using now?

Andy: Yep. So, Schwab manages quite a bit of money for us on their platform. We have Pershing, Fidelity TD is on our platform. And LPL. Those are our…the platforms, those are the custodians that we’re working with currently.

Michael: And then you said you’re looking at adding a sixth?

Andy: Yeah, we’re looking at adding another custodian that might give us more capacity on the alternative side. And we’ll probably add more of it ultimately, because the bigger we are, we bring people in from other places, it makes it easier for them to move businesses. And if there’s something that another custodian can offer us that our current custodians don’t, then we’re interested in having the conversation.

Michael: I guess, I’m curious, what makes alternatives, like a new platform play or institution play that makes you interested in looking at…I was going to say a switch, I guess not a switch, but an addition?

Andy: Yeah, it would be an addition. I mean, it’s really client demand. So, as clients demand certain things, higher net worth clients have expectations about certain things, you just want to make sure that you can continue to move up the ladder, as far as who your average client is. And some institutions are going to be better suited to offer solutions to those ultra high net, let’s say, clients opposed to just high net worth clients.

How Bleakley Financial Was Restructured Into The Firm It Is Today [53:31]

Michael: So, tell us a little bit more about just this transition. I think the words you used earlier were “scary” and “painful.”

Andy: Yeah. Because we were always a high activity, kind of roll up your sleeves, working class group of people, we had lots of clients. It wasn’t like I had 100 clients with average file was 2 million bucks. That wasn’t what my practice looked like. And so, we had hundreds and hundreds and hundreds, thousands of clients that we had to move. Now, Northwestern was very gracious when we made our move. So, we had some time. It wasn’t like we made the call on Monday, and the doors were locked on Tuesday. We controlled our space, and we actually negotiated a deal on the way out. So, they were great.

Michael: Really?

Andy: Yes. We sure did. Again…

Michael: So, can I ask like, how does that work? What do you negotiate? Or what do they not negotiate?

Andy: I mean, look, there were certain things that they would rather have seen not happen. And there were certain…

Michael: Presumably, Northwestern Insurance, I’m sure they were hoping to see the insurance policies not be moved and replaced.

Andy: Yeah. I mean, they wanted everybody to be respectful of quality products that were sold of clients. And we just needed some flexibility. And so, they were great. And we honored our commitments as well. And look, I still have a few friends there. Not a lot, because when you’re not there, it’s…the weirdest thing was, I was gone a year, and it was my whole adult life, and it was like I was never there. It was kind of the strange…that was the one thing, and I don’t know, maybe other people would say the same. And maybe that’s just life. But you had said before, “How did you come to this decision?” And remember, there’s four partners. One of my partners, my brother would have gone 10 years earlier. I mean, he was out of there 10 years before I agreed to go out. So, there were all these conversations.

But one of the things that was so hard for me was, culturally, I just felt it was such a part of my…just my cultural life. These are people that I’ve been associated with, and that I know so well, and I’ve spent so much time on the training side. But it was kind of weird. And I guess that’s just the way life is. Your life kind of moves on. And a year later, it’s like, “Wow,” it’s almost like a very, very distant memory. But no regrets. Great institution, great culture, learned from some wonderful people. And I would do it all the same. I wouldn’t have changed anything.

Michael: And I guess just, what was it like when you had to break the news to Northwestern?

Andy: Yeah. I mean, it was hard, because there were certain things that we needed. And I think they honestly tried to make it happen. And we didn’t ask for money. It wasn’t like, “Hey, we want money.” It was just flexibility. And ultimately, they made a decision. And I don’t know who made them, but they made a decision that it just wasn’t in their best interest. And again, most likely, everything that we wanted to do has probably been done, because the business evolves. I mean, they have to evolve. So, once we got to that point, we had sort of agreed that if we can’t come to an agreement, that let’s just…let’s be nice about it. We’ll be nice, you guys be nice, let’s not hurt anybody. It’s been a great relationship. You guys were awesome. We’re awesome. And let’s be friends. And they were great. They really were. They honored every commitment they made. They did not make it difficult. The process was hard just because it’s an onerous process.

And again, I’ve always been lucky. I say I know how lucky I am. And I told myself 800 times a day how lucky I am. But we were very lucky. Because the people that were in charge at the time were very reasonable, professional people. And I think everybody honestly tried to make it work, and it just didn’t, and it was fine. It was a little bit of a round, I guess, peg in a square hole. And that’s fine. That’s nobody’s fault. And so, we were able to kind of work our way out in a really nice way, from a timeframe standpoint. So, we didn’t have the problem that most advisors have, where you tell your manager on Friday, and you’re locked out, and people start calling your clients on Monday. We did not have that experience. So, that was very fortunate for us.

Michael: So, help me understand just the journey since. You said it was about $3 billion that you were transitioning out with in 2015. I know you’re coming up on, or just past $9 billion now, which is extraordinary leap in relatively few years. So, just how is this played out in the roughly seven years since?

Andy: We were 30 advisors, and now we’re probably 54. So, we’ve added some advisors. Good markets, right? So, the markets have been really good. I mean, it’s been seven years. And we caught probably four great years in the market. Everybody here really grows their business. This is not a place where people are just…they have their $100 million, they hold on, they add a few clients a year. That is not the kind of operation that we have here. Everybody knows what their collection goals are, everybody tracks their numbers. And the numbers really grow here substantially. Our expectation is we’ll add a billion dollars of assets a year on the advisory side as far as acquisition or bringing on new advisors. and that we should probably grow half of that just in client collection. and then if the markets are good, we’ll do better. But my personal goal, I’m $100 million of fresh net assets a year, my number’s probably the biggest in the firm, but there’s lots of people at $20 million, and $40 million, and $50 million a year of fresh collected assets. So, everybody wants to grow their business. No one’s just hanging around, everybody’s got really good growth targets.

Michael: Interesting. So, help us understand the way the structure works today. How does it work if an advisor wants to affiliate with the firm between what they get, what the firm gets, you’ve got cost to cover, LPL presumably needs to get a little bit of piece of things for what they do? How does the structure work?

Andy: So, we have a grid like any, I guess, institution would. But the numbers are high. Again, because we don’t run this thing as a profit motive, I would say that the average advisors that we bring in that’s $150 million, $250 million or more in assets, they’re looking at a pad of run 90%. They cover their own staff costs, we give them an opportunity to plug into our think tanks. So, there’s real leverage on the employee side. We handle HR, and benefits, and lots of other services. And then my people take everything for them, all the software purchasing. We negotiate all the deals with all the vendors, including the custodians. So, we have great pricing with all these institutions. And my people are there to help them with any problem they have, so that they’re not spending time worrying about the logistics of their business. They’re just out there looking for money. So, my advisors don’t spend any time operationally. They pick up a phone and say, “Hey, this isn’t working. Would somebody come down and take care of this?” So, again, it’s really plug and play. And all the things that they think they want to build, we probably have already built it. Because I think the problem that most advisors make when they go independent is they let it be an ego decision, where they want it to be about their name. The Bleakley Financial Group, my name used to be in the name of the firm. When we left the Northwestern, we were, I want to say, Bleakley, Schwartz, Cooney, and Finney, which are the names of the partners. One of the things we decided, because some of the other advisors, “What about my name?” I said, “We’re going to make this really easy. Gary Bleakley left us 25 years ago. We’re just going to call it the Bleakley Financial Group. And then that way…”

Michael: So, you deliberately went with the one partner who’s not there, that’s the name on the door.

Andy: Exactly. Hasn’t been here for decades. And the reality is, because it isn’t about ego. I don’t care if my name’s on the door, it’s not about that. It’s silly. That’s really not the point. So, I try to tell these advisors when I’m trying to recruit them, “Just try to be careful about that. Don’t make this about your ego, because it’s not about ego. Your golf handicap can be about your ego. This is business. So, make smart business decisions. Spend your time and energy on the things you’re really good at, and spend your time and energy on the things that are important, which is taking care of your clients, buttoning down your clients, and collecting money, growing that business. And let professionals that understand…” and that’s not me, that’s the people that work for us. “Let them handle those tasks. Much, much smarter. Leverage.”

Michael: So, help me understand just, how you explain this affiliation structure to an advisor? I’m kind of hearing this as like, you’ve got to cover your own staffing costs, but Bleakley gets 10%. But then there is all this stuff that we actually do do for you, separate from your staff costs. So, just help us understand further, how do you position, I guess, for the end advisor who’s thinking about affiliating with the firm? What are you guys doing for the 10% that I’m contributing in?

Andy: Well, the first thing we do is we get their financial information, and we just match it up. So, almost never are they not net better with us than they are where they are, almost never. So, that’s not really ever an issue. And then we just go through our deck, and we show them all the services.

Michael: Just where do the cost savings usually come from? You go through their P&L and find the savings?

Andy: Yeah. So, if they have insurance practices, they might have their own insurance underwriter. Well, we have an underwriting team, so they plug in. So, for a third of what they were spending or less, they have underwriting. I have a woman who runs our 401(k) qualified plans department. Now, I don’t know what people do. I’m guessing, unfortunately, people just don’t do this at all, because it’s so complicated with compliance. But we have somebody that makes sure that every plan is compliant. She handles all trustee reviews, she bids out all plans, she makes sure that all of these updates and everything needs to be done is done. And you don’t even have to be on the trustee call. All you’ve got to do is make sure the education has been handled at the client level, which you should do anyway, because that’s an opportunity probably to pick up some clients. And that costs…it’s de minimis. We’re not even taking a percentage of the cases. We don’t work that way.

If you’re making $50,000 a year on a case, and she services for you, it costs you 3,500 bucks. If you’re only making $10,000, it’ll cost you like $1,500, and you don’t have to worry about it. So, if somebody has a robust 401(k) practice, I assume they’re paying…this is $150,000/year person, so I assume that that’s kind of what they have to pay. On the investment side and on the planning side, we have what we call think tanks. So, they’re like pods. And say for $75– 100,000/year, you plug into a pod, they take over all your takeover proposals, all your review proposals, and all your trading. So again, depending on… And by the way, the work is probably much, much better than most of the people that we bring on. And so, it’s discounted, there’s leverage, and the work is better.

And then my guys are always out there, trying to find better solutions, whether it be cheaper solutions, or… We don’t index the S&P. We separately manage account with tax-loss harvest in the S&P. And the alpha is in tax-loss harvesting. And so, that’s something we didn’t do, obviously, at our old institution, but something we do today, because the guys that run my investment committee, and the guys that are our investment leaders, they’re the guys that are responsible to find those things. And so, that I don’t have 50 advisors or 54 advisors running around, looking for 54 different solutions. Those solutions are all created for them. I mean, it’s not really a problem. Once we get in front of people, it isn’t really a problem to sell that. And I’m always perplexed when they told join us, I just shake my head, like, “I’m not sure what they’re thinking.” And we lay it out. It’s very simple. The numbers are right there. So, it’s not hard to do the math.

Michael: And then just as an advisor, how does the client base and ownership structure work? Are you an outsourced or a sub-advisor for me? Am I actually being an IAR in your RIA? What happens if I want to leave? How does that work?

Andy: So, they’re under our umbrella. If they want to leave, they can leave, they’re not contractually obligated, we’re not buying their practices. So, they are running their own P&L. We are in the process of creating a capital formation currently, where every advisor will have an opportunity to roll in for equity in the firm. Because we really want everybody to have equity, so that if someday something happens, we want everybody to benefit from that. And that’s one of our goals for 2022. But yeah, look, I don’t think I own anybody’s clients, and no one owns mine. So, the idea that somebody leaves the firm, and the manager has everybody in the office calling that individual’s clients, to me, I just find that to be disgraceful, because maybe you didn’t work out, maybe that advisor doesn’t want to be with you anymore, but I don’t think you should be trying to take their clients. We don’t believe that those are clients that are our clients. Those are my advisor’s clients. And we’re advisors, so maybe that’s why we look at it that way.

So, I respect that. And so it’s my job as a partner here, and it’s my partner’s job, to make them want to be here. And if they don’t want to be here, they shouldn’t be here, and it shouldn’t cost you anything to leave, I don’t think. So, that’s sort of how we look at it. And maybe a private equity firm might say, “We don’t like that. You got to lock these people up tighter.” But that’s not sort of our focus. Our focus is, create a place where everybody wants to be here. And if somebody doesn’t want to be here, I don’t want them here, because it’s just not…it’s not good energy, it’s not good for the firm, it’s not good for the culture. And I get phone calls…I’ve got awesome advisor in Denver. And for the first year or so, about every other Friday, he would call me to say thank you. And maybe for the first three years. And I would say, “I love you, and I’m so happy to hear for you, but you don’t have to do that. It’s my pleasure, that’s our job.” We want to help these people grow their businesses, and we want them to want to be here. And if we can’t do that, then shame on us, and they shouldn’t be here.

Michael: So, I was struck as well that you kind of made the point of you eat your own cooking as it were, you’re still an advisor, you still have your own clients. In fact, I think you said your new asset goals are actually higher than anyone else’s in the firm. So, I guess I’m just trying to understand or visualize, how do you balance managing the firm, and $9 billion, and a whole lot of people, and a non-trivial sized client base, oh, and business development to go get new clients? Just, what does this look like from a manage-mix perspective to run the firm?

Andy: So, it is, one, I have four awesome partners. So, it’s not my firm. That’s really important. But I have a fantastic management team. So, we have 15 or 16 professionals now that all run their group, their lane. And not only are they smart and hard working, but they are really committed to what we’re doing. I mean, we are so fortunate to have hired the people that we’ve hired over the last four or five years, it’s been really a blessing. So, what we have to do is we have to give direction. So, we were onboarding an advisor last week, and there was a bit of a wrinkle, and the guys were working on solution. And I was off, but I’m never off. Last Friday, I was in Florida. So, I get a text message from the advisory on board, because I’m really hands-on with these people. And he’s having some anxiety. Get on the phone with my team. Because the great thing about not understanding how anything works is you can think outside the box, right? So, if you don’t understand…

Michael: I don’t know how all this system stuff works. I’m just going to ask for the thing that seems like it would be a good idea. And you all can tell me why that won’t work.

Andy: Exactly. So, I’m like the five-year-old that just asked the most obvious question. So, I just said, “Why don’t we just do this?” And the guy said, “Yeah, I think we can do that. And I said, “Great. So, you guys make your phone calls to whoever you have to make your phone calls to. I’m going to call this guy back. And let’s get this done.” And then they get it done. So, we do have to be plugged in and connected, and they need our help sometimes. But they’re great. So, it’s not as though…I’m not the brains behind this, because it’s not my skillset. And so, what I try to do is lead. I try to lead by example. I help. My advisors call all the time, “I’ve got this situation with this client. I’m having this problem. What would you do?” And because I’ve done this for 38 years, and thank goodness I wasn’t smart enough to be a doctor, or a lawyer, or an engineer, this is, I guess, what I was really built to do. So, I’m pretty good at that. And so, I spend a fair amount of time with that with these people.

And we have partners’ meetings every week. My individual sort of responsibility, if you will, in the firm, is I am responsible for recruiting with our full-time recruiter. And so, he’s really the recruiter, but I get really involved. So, I have lots of conversations and meetings. And my brother Scott’s in charge of human resource. And one of my partner’s in charge of technology, the other partner’s in charge of the investment services. So, everybody has the person that runs that group reporting to them. So, we’re not creating anything, but we’re just sort of supervising, if you will. So, it’s a big organization, there’s a lot going on, sometimes I want to pull my hair out. Sometimes it’s a little frustrating, for sure. I don’t have a lot of time that I don’t have anything to do. If I don’t even know what I would do…if I only had to run my $2 billion of assets, and that’s all I had to do now, I don’t know what I would do with myself.

I mean, I think I’d be bored. Because I just don’t know, because if I have an hour in the middle of day, I’m doing a video, I try to put out a video every week into the market. So, there’s lots of things I’m doing. And I don’t know what I would do with myself if I wasn’t sort of what my brother likes to make fun of me, because only he can, you know, I’m the face of the firm. And every time I walk into a meeting, and I was five minutes late yesterday, he goes, “Oh, now can we get started because the face of the firm just got here.” I’m like, “I’m going to kill you.” But anyway, so a lot of help, big organization, great team, and we’re growing it, and we’re going to continue to grow this great team that we have.

Michael: So, I guess, can you paint the picture for me? What does this org chart look like?

Andy: Yep. At the top of the chart, I’ve got my COO. So, he’s really… And then I have my Chief Compliance Officer, he’s a lawyer, and he ran a BD. So, very smart. So, I would say that Paul, at the top, sort of is managing the business. And then below him, you’ve got somebody that runs HR, somebody that runs marketing, somebody, obviously, compliance. We have somebody that runs the technology. We have onboarding, and the person that deals with all the custodians, all the transactional stuff. Not the trading, but the actual contracting, and all of that. So, we have somebody that runs that department. I’ve got a great guy that runs our trading. I have a wonderful young lady who is in charge of all the commission…or the fees, rather. So, she deals with all the custodians. I have a CFO in house who deals with all the finances, and all the money. We have, obviously, outside accounting as well. I’ve got my life coach who tucks in under HR.

And so, all of these people… I’ve got my guy that runs recruiting. And all these people basically try to stay in their lanes. We have a management meeting. I want to say they have two management meetings a week. I try to be at as many of those I can, but I can’t be at all of them, certainly. But I think, for them, it’s important that somebody is in there, that they know that we’re interested, and that we’re trying to help. But yes, so it’s a group effort. We pay everybody well. And we really feel like these guys are building this thing with us. And if there’s ever a pot of gold at the end of the rainbow, then they will be well provided for because they’ve earned it, and everybody knows that.

Michael: So, sort of structurally, everybody kind of feeds up to the one…all these different departments of HR, and marketing, and tech, and recruiting, and onboarding, and the custodian relationships. All of that funnels up to the COO as the one person that handles the day-to-day management of the organization, and the CEO reports to you, or you and your fellow partners?

Andy: Exactly, yeah. He’ll report to us in a partners’ meeting. Every department head comes in for a partners’ meeting to report. Sometimes there’s nothing going on, sometimes there’s a lot going on. And then each partner is sort of responsible for their lane as well. And so, they should be aware of anything that we’re working through in that area. So, if we’re negotiating some kind of a contract, or if we’re having a problem with technology, that partner should be aware, well-versed in handling that with those people.

Michael: And so, how do you divvy up the lanes amongst the partners?

Andy: Yeah. So, what we did is we just kind of divided up what we thought the things that had to be, and then we just tried to pick the best partner to be best suited for. And the recruiting was a natural for me, so that was something that it’s probably the busiest, but…and for our growth, it’s probably the most important, but it’s just something that probably made the most sense for me to do. So, that’s how I got that.

Michael: And then what are the other lanes?

Andy: So, someone’s in charge of investments. So, we have investment committee. So, Jack’s job is to…he’s in charge of sort of the investment structures if we’re bringing on new investment ideas, making sure investment committee runs properly, are there any problems with any assets on the platforms that we have. Again, he has people that will vet all that out, but he’s ultimately responsible for that. Somebody else is responsible for technology. Somebody else is responsible for what we…I guess client services would be the best word for that, which is the people that are making sure that everything is operating properly between the clients, the accountants, the custodians. And again, my responsibility, I spend a lot of time with Vince Nauheimer, who is our recruiter. Constantly, where are we, who are we talking to, what are our issues, what do we need to do, schedule, who are we onboarding next month? We always want our onboarding to be really well done, because it’s stressful enough for people. And so, we want to make sure we spread everything out properly. So, that’s something I spent a lot of time with.

Michael: So, these sort of partner lanes, the people in those areas don’t report up to the partner because they report to the COO, but the partner’s kind of in there helping to make calls, or make decisions, or it’s kind of just set vision and strategy of what’s going on in that area?

Andy: Yeah. And then what happens is we invite these people to partners’ meetings to do report. So, again, if there’s nothing on their agenda, they might not even come to the meeting. But if we’ve got something going on with our trading, Kyle’s going to be in the meeting, and he’s going to report on that. If we’re having an issue as far as compliance, or documents, or whatever we’re doing, then Richard Zack, who would always be in the meeting anyway, but he has to report within that meeting. So, there’s a brief report for each department, assuming they have something to share. And that’s in every partner meeting.

Michael: And how often do those partner meetings happen?

Andy: There’s an official two-hour partner meeting every other week. And then I typically will meet with my recruiter, my COO, and my Chief Compliance Officer, we try to get together every Monday for an hour at 4:00, just to, “What’s going on this week? Is there anything that’s happening?” Just so I feel like I’ve got a good sense of what’s happening. Because the thing about great people is they don’t like to bother us. And I really respect and appreciate that. But at the same time, I don’t like surprises. So, I tell them, “Look, guys, if you’re having a problem, just come tell me. I want to know early. I don’t want to find out late,” because that’s just too stressful for me. And so, I figure if I can have an hour-long conversation, ask a bunch of questions, they’ll tell me what’s going on, then I feel comfortable that I’ve got a good handle of what’s going on.

The Surprises Andy Encountered On His Journey [1:17:50]

Michael: So, what surprised you the most about this journey of building an advisor business?

Andy: Boy, it’s a great question. I think the success that we’ve had…look, again, I think of myself, I grew up so differently, went to a very modest state school in New Jersey, have lived a relatively simple life. I mean, I’ve always had big expectations, but to have a business that has a value that we think that this business has collectively. And like you say to somebody, “Yo, we have $9 billion of assets.” And they’re like, “Oh, my God, how’s that possible?” I guess I’m just surprised where we’ve landed. So, that’s probably… We’ve earned it, I’m proud of it. We didn’t buy it. We don’t buy clients, we haven’t bought businesses. I mean, everything has been basically built one brick at a time. And again, I’m not sure if that makes us smart, or not smart, but that’s the way we’ve done it.

And I guess, sometimes I’m a little surprised at some of the pushback that we get. When you run a business, particularly from advisors, it’s sometimes I’m a little surprised, sometimes a little disappointing, but I guess it’s like children. I don’t know, Michael, I assume you have children. I have three children. And it seems like the people that we love the most, and that we take the most care of, sometimes give us the most trouble. Not that they’re children, and they might listen to this, but sometimes when you have 54 children, sometimes every now and then you’re a little surprised at some of the pushback you get when you’re trying to help people. But really, it’s been just a great, great journey. I mean, the surprise of the life that I lead, the life that this business has afforded me, the people that I get to work for, my clients. It’s just been incredible. So, I would say, I never imagined that life could be like this, that you could be in a business where you actually can help people be paid as well as we’re paid, have the flexibility that we have. It’s just amazing.

And I guess the one thing, though, that I’ve always believed, and I’m a big believer…and again, I work with a coach who’s been really helpful for me the last three years, because making the transition from just producing to really trying to build a business bigger than your own has been a challenge. And he’s been really, really helpful. A lot of stuff I read, one of my favorite books that I’ve read recently…and I don’t know whether you have ever read Dispenza or not. Could be a great guy to have on a podcast, Joe Dispenza. But he wrote a book called “You Are the Placebo.” And it’s just this whole idea of our thought processes. And that if we really believe that we can do something, and if we really focus on that, we can actually change, physically change our makeup, our brain makeup. And what we can accomplish is really anything we really think we can accomplish. And Chuck is a big believer in all of this science. The neuroscience that they’re doing today, and as it relates to success in our business, and it’s just incredible. And so, as I’ve worked with him, he’s turned me on to all this.

Michael: So tell me more about the coaching relationship. Who did you hire? Why did you find them?

Andy: This is kind of an interesting story. We don’t tell people this before they’re on board. So, the coach is…I’m actually married to the coach. And it’s my second marriage. And she wasn’t our coach before I married her, before I met her. So, she went back to school several years ago when she got certified as a coach. And she was in a private practice. And I convinced my partners to let her kind of hang out a couple days a week and do work, and I would pay her, so she wasn’t on the firm’s payroll. And a year later, she’s in every partners’ meeting, nobody wants to make a decision without her in the room. And I’m looking around like it’s kind of annoying, because when you live with her, it’s like, “Come on, really? I say something and they look at her and say, ‘What do you think?’ I’m going to…”

Michael: “I’m going to hear about this later.”

Andy: Yeah. “I don’t think I can tolerate this.” Right? And then she’s really created this whole program. And it’s great because she loves it, everyone loves her. I just have so much better understanding of even what’s going on in my organization. Not that she’ll share confidential, but she’ll just point things out to me that the way we’re operating, or things we need to pay attention to. So, she’s a little bit like Wendy on “Billions,” I would say is probably a pretty good description. Only she’ll actually talk to clients as well. And so, the guys have farmed her out to lots and lots of clients. And that’s been really helpful. Now, she’s not my coach, because, naturally, since I’m married to her, I don’t listen to her. At least I don’t let her know I listen to her. But anyway. Although I do listen, I just don’t let her know that.

Michael: So, does that mean you also have a separate coach you’ve hired for you individually?

Andy: I do. Yeah. The way the world is so circular, and how nothing is by accident, and the universe provides. So, I’ve done a tremendous amount of teaching training within the system I was in for 30 years. I probably did 100 meetings. I was probably at half the offices in the country, at least once. I mean, it was amazing. And so, I would get phone calls from young advisors, “Hey, my name is Chuck Downs,” and Chuck is my coach. And he’d say…he was like 22 years old, 23 years old. He saw me do a talk at the annual meeting. And could he come and ride with me for two days? So, I would go to my wife at the time, and I would say, “Hey, we got this kid Chuck something. He’s going to be staying with us for a couple of days,” because these kids have no money, I’m not going to put them up in a hotel. And he would ride with me…they would ride with me for two days. And we go out to appointments. They just wanted to learn, they wanted to see how you did it, what you said, whatever. And I did that all the time.

And so, 28 years later, and Chuck grew up in the system, ended up leaving the system to go into MassMutual. And then he ended up creating a coaching business. And he is really amazing. And he probably had the greatest impact on me from my life standpoint, just from managing my life with my business, my piece. I mean, it’s been really a blessing. And the idea that this guy kind of came into my life by accident 20 years ago, and now he’s my coach. And we started about a year ago, actually, we started a coaching program, which I’m excited about. I don’t know where we’re going to find the time, but it’ll be fun.

Michael: So, what’s the coaching program called?

Andy: Yes, so the program is Epic Success. And so, the website is epicsuccess.com. And what we do is, it’s a one-year program. And so, what happens is, we do a two-day sort of kickoff, and then what we do is we do a monthly coaching call. And Chuck and I do both. I sort of handle the growth side, the practical side of building the business. And then chuck handles the life side. But what I would say, though, is, they are so intertwined. What I find is that the biggest obstacle for people to be really massively successful, it’s a confidence thing. And the confidence comes from capacity. And I think it’s this consistency thing. That they can sprint for some periods of time, and then they stop. And so, we’re inconsistent. And so, what we really try to do is we try to work on those things along with all kinds of…the technical workings of the business, and all the things that we’ve done to build a successful practice. And so, we’ll have…our next session will be September…we’ll be in Dallas. We find Dallas as kind of a pretty convenient location.

Michael: Yeah, central, pretty accessible, lots of place.

Andy: Yeah, exactly. It’s cheap to get there. And we’ll be late September. And if anyone’s interested, epicsuccess.com. On the website, there’ll be information, if anybody wanted details, or dates, or whatever.

The Low Point On Andy’s Journey [1:25:50]

Michael: We’ll include links for it as well. So, for those who are listening, this is episode 284. So, if you go to kitces.com/284, we’ll have links out for Epic Success, and “You Are the Placebo” book if you want to check that out as well. So, what was the low point for you on this journey?

Andy: I would say that when we were transitioning, it was very stressful and difficult. But I would say that when you have something that happens, if something really bad happens, you lose a client, for example, or you don’t make the sale, or you get really, really disappointed. And look, if you’re on the insurance side, anyone that’s listening on that side, low points are when you work a year on a case, and it’s a big premium, and the insurance company declines the case. I mean, that can be really frustrating. But sometimes, out of the blue, someone will call you for whatever reason, sometimes it’s your fault, sometimes it’s not. But what I realize is that every time something really bad happens, something that really makes me feel bad, it’s really a growth opportunity if I learn from it. And I never learn from my successes. I learn when I embarrass myself, when I do something that…when I say…somebody ask me a question, and I’m too proud to not know the answer. And so, I try to pretend I know the answer, and then I was wrong, and you embarrass yourself, or you just don’t do a good job with something.

And so, I would say that, look, it’s been stressful the first 10 years in the business. Like many people listening, we didn’t have any money. I was probably really in the hole. I always joke, I mean, I was probably 10 years to zero net worth, that I actually was on time with my taxes, had no credit card debt, didn’t owe anyone any money other than a mortgage. And I was making well into seven figures at that point. So, it’s a process, it’s a journey. But I would say that it’s what makes us better. And every time I get that phone call, I kind of look at it as I just made room for something better, because typically, when you get that phone call, it’s probably someone you don’t want to be working with anyway. Because if anyone would fire you, that means they don’t appreciate you. And that means they couldn’t have been much fun to work with.

And so, when I get that occasional call, and yeah, I get them too, so it’s not just happening to you guys, it happens to me too, but I kind of look at it as I just kind of cleared out. It’s like cleaning out your closet a little bit. I just made a little bit of room for a brand new suit, or a sweater that I’ll actually be able to see. Not in a big pile that I can’t see. But we’ve been really fortunate. Our life has been a blessing. We’ve been associated with great people. We’ve always managed to find the right people when we needed them. So, not a lot of things that I would say that I have any regrets about.

The Advice Andy Would Give To His Former Self [1:28:27]

Michael: So, what do you know now you wish you could go back and tell you 20, 30 years ago when you’re just still on that ramp-up phase?

Andy: And that’s a great…that’s the question everybody always ask, and they should ask. I would say that I would call on much more successful, older, wealthier people early, earlier than I did. I would have invested, even though I invested everything I could, I would have borrowed money earlier to invest in the business, to be able to bring on the capacity so I could do that.

Michael: Can you talk a little bit more about that? Even just the point you made earlier, “It took me 10 years to get to a net worth of zero, even though I was making seven figures,” where was the money going?

Andy: I mean, we probably weren’t being as financially responsible as we should. We lived in a big house, we lived in Northern New Jersey. Taxes are 45%. And we started in a deep hole, because I started right at a college, I had no money. So, I was basically borrowing money. I had to buy into the firm. So, there was just lots of things going on. And when you’re in the insurance business, even though you’re making money, but it’s so inconsistent, it’s not like the businesses today. And again, I don’t know, I’m going to sound…if you’re listening to me from Iowa, you’re going to be like, “This guy’s an idiot” But $30,000, $40,000 a month, you have 3 kids, you’re in Northern New Jersey, it’s not like it’s a huge amount of money. It’s not hard to spend that kind of money. And catching up.

People are always paying their taxes, because what you don’t realize when you’re 22 years old, and somebody gives you a check for $10,000, that only about 60% of that’s yours, right? That somebody else owns the other 40%. Well, you get a year into the business, and you’re already behind $50,000, $60,000 in taxes. So, it’s kind of the normal stuff. I mean, I hope that’s normal stuff. Maybe I was just terribly responsible. So, it definitely took a while before I felt comfortable that financially I had some liquidity, I didn’t owe anybody any money, I was in good shape. Took me a while. Yeah. So, if you’re out there, and you’re having that, it’s not a problem. We used to always say that poor is the state of mind, being broke is just a temporary situation. So, nobody’s poor, we’re not poor. We were just temporarily broke with a solution to get out of that situation. And so, anybody feeling that way, just keep that in mind that if you work hard, you’re in the right space. You’re in a space where this is an unlimited opportunity for everyone that really wants to do what they need to do, for sure. And I believe that for everybody, it’s just amazing. We’re all very fortunate to be where we are.

The Advice Andy Would Give To Younger, Newer Advisors [1:31:05]

Michael: What advice would you give for younger, newer advisors getting started today in the business?

Andy: I would say, look, it’s always safer to build a practice via volume. So, I think that the mistake a lot of young people make is they’re elephant hunting. And I think that the one really smart thing I did is I built a really big base. So, I think if I’m 23 years old, or 24 years old, that I’m better served going out and getting clients that are professionals, good futures, good people, smart people, responsible people that I can grow with, opposed to trying to chase the big sexy, because my odds of getting those are going to be very small based on my experience and my circumstances. And I don’t want to beholden to a few clients, it’s very stressful. So, for me, I can’t lose a file that really matters. I mean, I would hate it. I’m competitive, I don’t like to lose the file. But I can’t lose a file that would ever matter. And I don’t want to be in a situation.

So, I think that the bigger you can build that base…and also, when you think about it, if you have hundreds of people that they think that you’re their advisor, then that means there’s hundreds of people running around the world that can refer you, that would say, “Oh, yeah, I need somebody.” “Oh, my advisor’s Andy Schwartz, you should give him a call.” I had two of those today. And so, the bigger our base, the more people we have, I think the safer we are. I would just be a little bit more particular about the people I brought on, I think. But I would still do it in a big numbers way, in a broad activity, lots of clients. I like the idea of lots of clients, because then I can just hire advisors to work with me to take care of those clients. And that’s what I do today, I have a couple of advisors that help me with those clients. I think the mistake that some advisors make, especially if they’re really smart, sophisticated, and talented, they only want to work with certain people, they want to be with the movers and the shakers. And I just think that I would just be careful with that.

Michael: So, given that you would still build a bigger, broader client base, but you said you do wish you were a little more particular on who you brought on. Who would you be screening out in the early days if you were still generally pushing towards volume?

Andy: Yeah, I think what you want to do is definitely screen out older clients with small accounts. Because you have to care for those accounts. And the problem is that you wake up one day… We have a great young guy here, and he’s really doing well now, but he would bring on lots and lots and lots and lots of small accounts. And I kept saying, “Don’t do that, because they’re going to overwhelm you. It’s not profitable, and you’re creating a problem.” And then he finally figured that out.

Michael: And they’re not necessarily going to grow with you, because there’s a big difference between a smaller accounts of someone in their 30s who is going to be saving for 30 years, and someone with a smaller account in their 70s who is just going to be drawing that down over the next 20 years.

Andy: Exactly. You’re 30-year-old partner associated on a big law firm or the big future, it’s fine that it’s a small account, because lots of things can happen there. They can refer you, they’re going to grow, you’re going to do lots of things with them. But a 65 year old with $200,000 in an IRA rollover, I mean, I love them, and I hope they find somebody to work with them, but it can’t be me. Because that is not going to be a good file to have on my system, because someone’s got to care for that, and we have to pay to do that. So, it’s just not…we can’t charge them enough to make that profitable. Just be mindful of what you bring on. And also, our personalities are, we always want to win, right? We want to win, it makes us feel good. We got a win, we got a sale, we got a client. Just be smart about it. Ask yourself, “Is that a client that will be a profitable client, and a client that I’ll be glad to have in the future?” And if it is, then great. And it doesn’t mean you have to make a lot of money today. But if they’re not making money today, they’ve got to have the prospects going forward, they have to have good potential. And so, just bring on as many people as you can that have really good potential. And if you can mix in a couple of big accounts along the way, that obviously is helpful.

What Success Means To Andy [1:35:01]

Michael: So, as we wrap up, this is a podcast about success, and just one of the themes that always comes up is the word success means very different things to different people. And so, as someone who’s built a very sizable $9 billion business from the advisory perspective, how do you define success for yourself at this point?

Andy: I mean, for me, one, being happy. I have a very happy life, peaceful. Having people that you can help. The greatest thing about making money… And if the firm ever…if there’s ever a transaction, and someday there probably will be, although it’ll be a long time from now, and the default position is just build the greatest firm in Northern New Jersey, with the most resources, and the best services. But someday being able to really reward the people that work with me. Being able to pay the people that are on my team what I pay them, which we pay them really well, that to me is…that’s the best part of success, is sharing it. Being able to help my family and other people. And also just having advisors that are out there in the world that call you from time to time, and just say, “Hey, I really appreciate everything you’ve done for me.” And I’m like, “Well, I didn’t do anything. We’ve had a few conversations. Maybe I helped you with a couple of thoughts.” But being able to have an impact, because there’s just leverage in that.

It’s not so hard to be able to figure out a way to make yourself money, and have a couple of houses, and live a nice life. But if you can translate that, and you can have other people out there that can also improve their lives, then that, to me, is really a blessing. And for me, that’s been a lot of fun. And the thing about success is you have to be materially successful or financially successful before people will listen to you. And maybe that’s unfortunate, but that’s just the way things are. And so, the greatest thing about posting your numbers and people saying, “Wow, aren’t you a big advisor,” it’s not about the numbers, it’s not even so much about the money, although I wouldn’t do it for free, but it’s really more about that you have the credibility that you can actually make an impact. And so, I think that’s probably to me the most important thing about being successful, is that you can really do something with that, because when you’re perceived to be successful, people will then listen to you, and then you can actually help people because they’re actually listening. So, I think that’s the part that I enjoy the most, is that I do have an opportunity to have an impact, and that’s great.

Michael: That’s awesome. Well, thank you so much, Andy, for joining us on the “Financial Advisor Success Podcast.”

Andy: My pleasure. Glad to finally have a chance to talk with you.

Michael: Likewise. Thank you.

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