EPISODE 17

TRANSCRIPT

 Matt Sonnen    00:25    Welcome back everyone to Episode 17 of the COO Roundtable. This is our second episode recorded from home. So I apologize for the audio quality not being perfect, but I think we’ve all grown accustomed to calls with crying babies and barking dogs and lawnmowers, et cetera going off in the background. So welcome. Welcome to the new normal, everyone. The day we’re recording this is, it’s Tuesday, April 28th, and it was exactly six years – six years – (laughter), it feels like six years…It was six weeks ago today that we shut the PFI Advisors offices down, and we’ve been working from home ever since. There’s a lot of confusion around when and how we’ll lift the stay at home restrictions.  The latest guidance from the federal government — and it’s obviously subject to change — but the latest guidance as of April 28th is if your state has 14 consecutive days of dropping coronavirus cases, you can begin to lift the restrictions. Some states, however, have started lifting restrictions with or without those 14 consecutive days. So it’s, it’s definitely a moving target. So whatever your specific state is doing at the moment, please stay safe, stay healthy and do whatever you can to keep these numbers as low as possible, both obviously from a health perspective but from an economic one as well. For today’s episode, we have two fantastic operations professionals joining us. We have Brandon McKerney, who is a Partner and Director of Operations at Columbia Pacific Wealth Management in Seattle. And he is joined by Vib Arya, who was the Head of Operations and Information Technology at Shufro Rose in New York City. He recently took on the title of COO. So Vib, congratulations on the promotion and welcome to both of you.

 

Brandon McKerney 02:06 Thanks for having us, Matt. 

 

Vib Arya    02:09    Thank you Matt. 

 

Matt Sonnen    02:10    So Vib let’s start with you. Your, website says “Wealth management since 1938.” So, there’s definitely a long history there. Can you tell us a little bit about the firm?

 

Vib Arya    02:19    Sure. Thanks. Shufro Rose was founded in 1938. So obviously we’ll be celebrating the firm’s 82nd birthday this coming May – actually.  So that’s right around the corner. And really what we have been, both in terms of how we’ve operated and who we have served is, one of the key characteristics, it’s just been multigenerational. So we’ve had generations of advisors and portfolio managers and investment professionals at the firm and we also have serviced multiple generations of clients and families. And again, just that longevity, you think about 1938 obviously there’s a lot of reference to Great Depression times, relative to what’s going on. You think about a firm like Shufro Rose that’s sort of been there, throughout these various economic cycles, and so I think that’s been a big source of confidence both internally as well as with our clients that we’ve seen numerous types of economic cycles and obviously we’re entering an interesting one now. But that’s the firm, and again, we’re also priding ourselves in continuing to modernize, continuing to focus on Next Gen. So really almost an “82 years and getting younger” kind of mantra is sort of evolving at the firm. Just in terms of some key metrics about the firm, again, like you said, we’re based in New York City. We’re currently managing approximately $1.5 billion in AUM, servicing approximately 1,200 clients. And we’re really doing this with four core advisory teams.  In terms of number of employees, we currently have 22 employees, in fact, we actually onboarded an employee through this pandemic while working remotely. So that was certainly an interesting experience, but definitely a productive one and one that was actually, something we’re very proud of. As we’ve been working with multiple generations of clients, that’s really been the vision and the plan all along is how do we continue to service multiple generations of clients. Again, through this evolving wealth management paradigm, obviously everything that’s going on today in the world, but continuing to sort of be that, that advisor, that trusted advisor for multiple generations and now starting to think about a next generation. So that’s the firm in a nutshell. 

 

Matt Sonnen    04:10    That’s great. So Brandon, Vib has you with 1938, but Columbia Pacific’s website says “We’ve been delivering qualified investment opportunities since 1989,” so that’s impressive in its own right. So, tell us a little bit about you guys.

 

Brandon McKerney 04:25 Yeah, so we’re just slightly younger than Vib’s firm, but the 1989 number actually is relating to the family office that was opened up back in 1989. The wealth management group actually spun out of that and in a different alternative arm back in 2010. So we’re actually even younger than that. Today, we have about a little under $4.5 billion in AUM and 33 employees. And really Columbia Pacific, whether it’s the family office or the wealth management group, I think first and foremost, what we’re looking at is: our clients that we look to serve are good people. I think that’s where we really come down to, we want to find people that are really dedicated to the process, that really understand all facets that come with a relationship working with an advisor and want to be engaged in the process of their financial success. I think educated clients really can take full advantage of all the services we provide. So I think at Columbia Pacific, we really take that relationship mentality with every single client that we have. That’s a big tenet for us here at Columbia Pacific.

 

Matt Sonnen 05:35 Perfect. So Brandon, this is the part of the podcast that I always say “No one grows up hoping to be a chief operating officer of an RIA.” And then I tell everyone that when I was a kid, I was hoping to be the third baseman of the California Angels. But you got a lot closer to that goal than I ever did. I could barely start for my high school team, but you were actually, I saw on your website, you were actually drafted by the Seattle Mariners as a pitcher. I would love to hear your story and how you ended up in your current role at Columbia Pacific.

 

Brandon McKerney 06:04 Yeah, yeah, for sure. So I always jokingly tell people I went to college to play baseball. That was basically it. And I ended up with a sociology degree coming out of it. And nothing could have been more aligned with the way I view the world than that. But yeah, the baseball thing was, was a fascinating, just an amazing experience. I was drafted as a junior out of college. I had an opportunity to work through my senior year kind of remotely and ended up with a sociology degree. And when I was done with baseball, I turned that page in my life and I really wasn’t sure what to do. I had some connections in the industry just via family and whatnot. So I ended up in a finance gig here in Seattle. I fell backwards into it in 2009 of all times. I was lucky enough to even get the job back then and I started putting some dots together that my background is sociology and with finance, they’re really just relationships, the study of people, relationships, helping people, finance. And it all just made so much sense to me and that’s how this ride began. And then you sort of fast forward a few years and through a few really good firms I had a chance to work with, I just realized that I love helping individuals. I love being around people and helping them fulfill their dreams and goals, but my real passion, oddly enough, was running the business and starting to see the day-to-day and how that really works. So I had a really good opportunity coming over to Columbia Pacific to have an impact on that. I really realized that where my passions lie, where I can have the greatest impact, was with our people. The clients were great, I loved working with them. I still love working with them, but my greatest impact I think is on our people and our culture and our vision. So being able to use all those skills that kind of came from collegiate baseball, professional baseball, teamwork and all those, some of those clichés that kind of get mixed in with sports. They really kind of rang true and then add a little sociology study on top of that. I really found a fit kind of in the operations world, both from a systems and technology – being very orderly and process driven, but also the human side that, the people, is really a driver for me. And I ended up where I ended up.

 

Matt Sonnen 08:04 I love it. People, culture, and vision. We talk about it a lot, that the COO role is so much more than just the “tech guy” or “tech girl.” So I love that. People, culture, and vision. Vib, I talked about it at the opening –your recent promotion to COO. Can you tell us the story of how you got where you are today?

 

Vib Arya    08:23    Sure. And obviously, you know, I’d be remiss if I didn’t mention that PFI Advisors has played an integral role in sort of, some of that aspect, which I’ll highlight, but for me, kind of 20 years all in within the investment management industry actually started off my career in consulting at a firm called Deloitte. And obviously, the first client and really the primary industry that I got introduced to through consulting was within asset management. And I really just kind of fell in love with the industry. I was working at a relatively mid-sized asset management firm at the time of my engagement. Really got to see the soup to nuts operational aspects of the firm and how they operate within investment management.  I really enjoyed it and just kind of transitioned into the industry. And I’ve worked my way through various firms, mostly on the large side within the institutional asset management space. So Deutsche Asset Management, I was actually at Lehman Brothers through the bankruptcy and you know, kind of supporting the Neuberger Berman evolution prior to coming to Shufro Rose. And about seven years at Bank of America on the Merrill Lynch side. So obviously had some exposure to the wirehouse side and really just playing all kinds of roles operationally, technology, business management. And so when the opportunity at Shufro presented itself, it was sort of the opportunity to take all my experience that I had done in various places on a bigger scale, to come to a place like Shufro in the RIA world, a bit smaller, but really have more involvement and more impact…multiple levels across all of those aspects that I had previously. And it’s been wonderful. And again, as you think about the operational technology stuff, obviously Brandon just talked about vision, people, culture, a lot of what CEOs do in terms of workflows and process and people that you, Matt, have really articulated through your podcast, your white papers, you know, I think was a resonating point for our firm in terms of the work that I’ve been able to do. And you know, how the firm is sort of relying on us, on the operational side to execute. And that played a big role in sort of crystallizing that COO title for me. So I’m really appreciative of that, that you were able to do through all through all of your work, Matt. 

 

Matt Sonnen    10:14    Well thank you. As I’ve said before, it’s a passion project of mine. So that’s fantastic that it played out for you. That’s great. So the topic of the day, of course we’ve all settled into these Work From Home environments. I’d love to hear how your firms have both executed your business continuity plans and how you’ve maintained the morale and the culture at your respective organizations. And we’re still so early in this whole process, so have you even begun conversations internally of how to return to work and what the office will look like? You’re both in kind of epicenters, New York and Seattle. So I don’t know if you’ve even begun those conversations yet, but we’d love to touch on that as well. I’ll start with Vib, how has Shufro Rose transitioned to working remotely?

 

Vib Arya    11:04    So it’s an interesting question. As I’ve thought about BCP mode, you know, for us, I mean again this goes back to one of the key functions of the role that a COO plays, right? You think about your technology platform, you think about your infrastructure, you think about your process. And really what we’ve been trying to do over the last few years is really think about operating as a virtual firm. We’ve got technology in place, everything is moving more to cloud based solutions, right? You’ve got VPN technology, the more you can automate the process. I’ve always thought about it as, you know, if advisors are on the road meeting clients, they still need to operate. They still need the technology at their fingertips to do what they need to do. And so that’s what we built out over the last couple of years. Think about tangible things like migrating and upgrading to Office365; we can rely on Microsoft teams for chatting or comparable technology like that. So we had all that in place. Certainly, we do our BCP testing once a year. So we had just done that in Q4 of 2019 which was obviously timely. That really for us, Matt, it was really just the flip of a switch just in terms of decision making. Obviously we saw it was evolving in New York and obviously the rest of the country and obviously the world in terms of the coronavirus and the numbers we were seeing day by day. And then you know when you start to see the NBA start to cancel seasons and just you to see that this is becoming a pervasive impact, that it’s creating a lot of anxiety. On March 12th we gave our employees the option to start working from home, no questions asked. Obviously we gauged, and we’re very mindful of just employee anxiety around this, everyone has different thoughts. We’re in New York where everyone’s taking mass transit, subways, and buses—so crowded situations. We basically gave everyone the option, start working from home as long as you need to. And then obviously with everything going on around the following weekend, March 16th we officially closed the office. And again, when I say closed, we just all started working virtually. For us it’s been relatively seamless. We basically took, you know, everyone’s got a laptop at work, you know it’s a docking station at the office. We’ve also tried to promote more collaboration, take your laptops, collaborate in the office. We’ve got wifi everywhere, right? So obviously a lot of that happens. So just matter of just taking their equipment home or using our virtual remote desktop solution. It can be taken great care to focus on cybersecurity. Which again, another key aspect of the COO role, making sure everything’s secure. For us it was thankfully relatively seamless and so we’ve been operating now…we’ll be starting week number eight actually on Monday of just really just working virtually. And I can’t tell you how pleased we are. I mean it’s been pretty efficient. You think about the time people spend commuting that they have more time either for themselves or you know, to spend more time talking to clients or better usage of the time. And I think what we’re actually seeing is people are feeling more and more comfortable with the technology. We’re having more Zoom calls now than we ever had before. We’re talking to more clients now than we had before, probably. And again, all through the facilitation of technology and I think it’s sort of rewarding that way, which then to answer your question about when we’re planning on going back, I think it’s all TBD. You know, obviously we’re sort of probably behind the curve in terms of reopening in New York as you’ve all seen with the data, but then you also again mentioned the aspect of how people get back to work in New York. You know, getting back on a subway or taking a bus. And so I think our stance is that we’re starting to think about it, we’re obviously starting to get some guidance around it, but I think given how well things have been working, I think we’re going to sort of see how things go and then sort of take some there and just continue to operate as we have been, at least in this sort of virtual world. 

 

Matt Sonnen    14:06    Yeah it’s very confusing. The federal government says one thing, the state says another, and your city says something else. So it’s very tough to navigate. Brandon, like we said, Seattle was one of the first cities hit. How long have you guys been working from home and what challenges have you encountered along the way? 

 

Brandon McKerney    14:23    Yeah, so we took this pretty seriously right away and we made the call to shut the office down March 6th so just about a week or week and a half or so prior to most areas around the country if not longer. But it’s been, and Vib makes a really great point, I think as far as the part of being in the operations space, I mean I think our job is to have all these systems kind of in place and making sure that things are working well so that when an advisor does go on the road, he can access or she can access everything that they need to access. But what we’re seeing now is all that little pre-planning is playing out now. Like Vib was saying we had laptops in people’s hands for a long time now. VPNs set up, we’ve got cybersecurity analysis ongoing over the course of the year, so we really felt like the flip of a switch, we were able to really implement some really good seamless transitions over the course of this six, seven, eight weeks now, which has felt really nice. It’s really validating for all the hard work that the teams put into this, which has been nice. I think the challenge, and I think it’s something we probably knew and we’ve been really cognizant of upfront was, it was just “How do we take care of our people?” It’s the mental aspect of all this. Not just working from home.  I mean, I think that’s the easy part, (but) it’s the isolation. If you’re just with your family, just kind of at your own spots. How do you make sure that the team still feels connected? How do you make sure that everyone’s still not just like, “Oh, you know, I’m doing fine,” but that they really are fine and that they have all the resources that they need. I think that has been, it’s not a, it hasn’t been a challenge, I would say, but it’s been a challenge for us to tackle. Something to consider, but it’s just doing all these little small things and sometimes they’re kooky, sometimes they’re fun. It’s just finding ways to get that interaction back with the team that we’re kind of missing and craving so much. And the technology has been such a huge part of that for us, which has been nice. And I think, one of the things that we’ve done, I’ll throw a couple of examples out. Early on we realized, okay, we’re going to be home for a long time. We thought we were the epicenter and we were going to be the epicenter forever. And that’s obviously transitioning and Vib knows that obviously more than most. But we said, okay, we’re going to be in this work environment for so long. We’ve got to do stuff. So our director of marketing has been awesome, Stacy Schwaegler has been great at implementing some really fun team-focused activities like morning stretches and, weekly happy hours, all those fun things. Just to keep the team together to make sure that it’s not just business. It’s not just like, ”Hey, you’re at home, you better be working.” We want to do stuff that has the goal of “Take a breath, step away from the noise, find some semblance of that human connection.” I think we’ve all worked for, for years. If there’s a challenge. I think that’s been, that’s been the one, I think the technology side has taken care of itself. And you haven’t, Vib made a good point. I think some of this has made others think, “Oh, we can work from home. This is okay.” There’s been some people in the past that said, you know, “It’s just not really feasible.” Well we’ve been forced into a situation and I think we’ve done pretty well by it, which has been a positive, the positive coming out of it for sure. And then going to the last part of your question, it’s really early. Like you said, not to start to figure out when we’re going to go back, we’re having this discussion, we’re trying to figure out what that looks like. We’re trying to make our own estimation of, “Okay, if we get the go ahead order, are we going to go ahead or are we going to take a couple more weeks to really see what happens?” I think the wellbeing of our employees is, is second to none and so we are probably going to be a slower returner into the, the kind of more work in the office environment. It’s just to us, we’ve had such a good, successful run as it is working with clients and working with each other. The rush…there really is no rush to get back into that.  And maybe we end up in a worse off position. So yeah, the conversation is definitely happening. But we’re a ways out. I think unfortunately, or well fortunately.

 

Matt Sonnen    18:01    Yeah. I think in Los Angeles, we’re in the same boat. It doesn’t seem like, okay. Which is that anytime soon. So one of the recurring themes that I always bring up on this podcast is I’ve got this huge chip on my shoulder about…I want to drive the value of the COO. It’s such a sales-driven industry. I often have lamented the fact that COO’s are looked down upon oftentimes because we’re not necessarily holding a “revenue generating” position. But I will say, based on your last two answers for both of you, I think given what’s going on in the world right now, the COO is probably the most valued it’s ever going to be, but Brandon, I’m going to go to you first. In your experience, despite global pandemics, holding that one aside, what can COOs do to bring the most value to their firms?

 

Brandon McKerney    18:55    I think we are seeing the greatest value of the COO and the operations role playing out right now and I think what we see playing out now leads to kind of the broader question that you’re asking is “What’s the value that we bring day in and day out?” It’s really not super fun or really all that interesting to most to talk about systems and integration. EBITDA, or whatever it might be. It’s all those small kind constant decisions and some of those large decisions, but it’s the continuous decision making, thought process, leadership, I think the COO brings that builds that infrastructure that supports the sales and advisory teams.  That, I’m sure they are aware of it, they’re using it, but it’s the constant vigilance in making sure that it is continuously working in efficient, not only systems, but people building out all of that throughout the years. I think that’s where the value really is seen and I think we’re seeing that more so today than ever, but even just in normal environments, it’s the constant leadership and decision making that’s being made and efficiencies that are created that people…the COO really kind of shines their value. But I think that’s one aspect for me. To me it even goes further and I think probably even more importantly, at least in my opinion, it’s when COOs can get out of and the people I really look up to and then the leaders I look at when we can get out of the spreadsheet and they can get away from the budgets and the numbers and really start to focus on the employees and the culture of building that support network that the firm can thrive in.  I think the COO’s job is to empower the employees, make sure that they have all the resources that they need and all the support and be the best professionals that they can be, but also make sure they can live their best lives outside of work. How do we empower them to do that and how do we weave that back into their role at the firm? And, I’ll touch on this a little later, I think the success starts with the people and I think it’s our job to be their support structure, whatever our people need to be successful. That’s where we show our value, which some can make the argument that that is part of the revenue stream, right? If we’re helping them become efficient and keep revenue part of our gig as well. That’s kind of where I see the value-add there.

 

Matt Sonnen    20:54    I love it. That was great. Vib, in your opinion, in what areas can us Ops folks, in what areas can, we all shine? 

 

Vib Arya    21:03    I agree with everything Brandon said there.  What I say, kind of on a more macro level, even outside of this sort of current pandemic world is I think about the COO’s and again, I don’t even think about it as operationally. I think about it as organizationally. Sometimes operationally has this connotation “Oh, it’s just focused on the back office or the custodial type stuff that’s not client facing stuff.” But really, for any firm to do well, you’ve got to think about it organizationally and again, Brandon also used the word “vision” before. It’s taking the firm’s evolving vision, value proposition and then making it tangible in terms of execution, right? There’s a client experience we’re trying to deliver it. It’s always evolving. There’s going to be a corresponding advisor or client service experience that goes with it.  That’s always going to be evolving. So what’s the process that needs to continuously evolve and be in place? What’s the technology solution that you need in place? As Brandon said, the people. I mean, which is your absolutely most critical asset. Are the people empowered, as Brandon said, are they trained? Do they have the skillsets, do they have the tools that they need? Are we maximizing everyone’s time effectively? So you think about value, right? This happens in a lot of places. You know, if you have client facing folks doing sort of operational, non-client facing work, the opportunity cost at that time is huge and it’s expensive, right? So making sure you’ve got the right roles and responsibilities in place to ensure that your advisors, your client facing folks are maximizing their time with the clients. And then you know, for non-client facing folks you’ve got the resources in place that can handle that, right? So again, I think about opportunity cost of time. So yeah, I think the COO plays that sort of imperative role of just as things are continuously evolving, creating that culture of adoption, of embracing change, of embracing new ways of doing things in lock step with where the firm wants to go, where the firm leadership wants to go, and really having that critical seat at the table and sort of driving the tangible day to day execution, long term execution, of all of that. 

 

Matt Sonnen    22:43    Great. One of the more popular articles that we’ve written on our blog was called ‘Integratable’ Does Not Necessarily Mean ‘Integrated.’ And we’ve discussed how hard it can be to get an RIA’s back office systems working well with one another. To create a streamlined, both an advisor experience and a client experience. So Vib, what have you done at Shufro Rose, not only to drive the integration, but also to gain user adoption of your various back office systems? 

 

Vib Arya    23:09    I think it goes back to my previous point.  Just taking that step back and thinking about how we want to operate, how do we want to make doing business with us and within our walls as simple as possible. And I think it goes back to some of those fundamental aspects that sometimes gets lost in just looking at technology. You go to these trade shows or conferences, which you know, hopefully we’ll all get back to one day as travel and all that stuff presumes right? But it’s very easy to fall in love with a piece of technology and a demo and say, “Oh my God, that’s what we need, this is going to be so great.” But when, when in reality it goes back to the process. How are we trying to make it easy for clients to open accounts with us and the client needs money wired to them?  How do we do it in a simple, secure, efficient, and obviously compliant way, right? How do we make things easy for us to operate? You know, Brandon made the point about trying to get out of Excel spreadsheets. Do we make it easy for advisors to manage their assets? Their client’s assets and their books of businesses and then make informed decisions.  So to me, it also goes back to just thinking through the various processes, making sure that they’re efficient. You think about data integrity, again, you know, the CRM is only as good as the quality of the data that you have. You’ve got phone numbers that are five years old, they may not be sort of a relevant tool to use. So you start thinking about sort of the discipline around all that stuff. And then when you think about, okay, well here’s the processes, here’s the data that we need to sort of transfer from point A to point B, from this person to that person, then you start to look at the technology. And in today’s sort of technology world with open API architecture, that almost becomes a little bit easier. I think where we sort of see challenges happen is people are trying to pass data back and forth without thinking about data integrity, without thinking about process, without thinking about, okay, well what’s going to be the golden source of data for this piece of information?  And I think just the time and discipline that’s spent upfront makes the integration conversation that much more successful and that much easier. I mean I think that’s what we spent at least the last few years at Shufro Rose thinking about integration in that light and then you have the technology sort of do the heavy lifting of what you want to do, but it’s really well thought out, well planned, well designed up front before even thinking about the technology piece. 

 

Matt Sonnen    25:04    I think you’re exactly right. It’s much more the process than it is the actual technology solution. We’ve worked with several RIAs that are going through a merger, they’ve just purchased another firm and they say, “Well this is going to be easy because, we just got lucky. They’re using the same systems that we are…We’re using whatever it may be. We’re using this reporting system, they’re using the same reporting system; we’re using this CRM and they’re using the same CRM. This is going to be super easy!” The tech piece is the easy part, but both of those firms are using that technology in very different ways and so it can still be difficult. So I love that, Vib . It is much more of the process than it is the technology. So, Brandon, how have you tackled this with integration and adoption at Columbia Pacific?

 

Brandon McKerney    25:41    I think honestly with varying degrees of success at times.  We’ve gotten caught at times, really overly optimistic with some of the rollouts that we’ve done. And we’ve seen a piece of technology that we really loved and we wanted to squeeze it in, cause it on its own it was really cool. But to Vib’s point, we learned really quickly, “Okay, take a step back. Where does this really fit? How does the whole plan and process work together? Why are we utilizing this? How do we want to utilize it? What’s the end result?” Is it a cool piece of technology or is it a cool system that does something or is it really for the benefit of the team to make their life easier? So we’ve been, I think as of recently, really taking that step back to say, “Okay, so too many situations on how we rolled out something…Let’s be more methodical, let’s be more inclusive. I think that the key here is I think we’re taking a more educational approach to the whole integration and adoption piece. We want to get feedback, you know? I mean, you can’t please everybody. You can’t satisfy every single need and customization with every technology.  But getting that feedback, feeling more inclusive and having the team on board with this roll out of something has increased adoption, will continue to increase option when they feel part of the plan, part of the process. At one point you can say, “Hey, here’s the technology, just use it because I tell you it’s the best.”  But that’s not really going to work and it hasn’t worked in the past for us and I think no matter how good or great something is, if the team, this is my kind of experience, isn’t it fully on board with the Why behind it, they’re going to be a little hesitant, resistant and it might be super simple but, “Eh, I just don’t really want to utilize it. It’s not my way of doing it.”  So really focusing on making sure that we present, “OK, here’s the big value add for you, for the company, for everything.  It’s bigger than just you.” How is this for the company as well? Doing group training sessions, education sessions, open kind of Q & A on why we’re doing stuff and then we can hit the ground running with the full rollout and like I said before, you can’t solve for everyone’s individual preference but we find some common business concerns and solve for those and really make that adoption piece more seamless, I think in the future. Yeah. So then you go back to your article you guys had, it really hit home that when you’re looking at all of these different systems, each in their own right are great. But how do you make the whole ecosystem work together? And just to again reiterate what Vib said, it’s looking top level, what that process really is and how you’re making decisions around these, these technologies and then educating the group on the Why behind why you’re doing it and how to do it. 

 

Matt Sonnen    28:05    So Brandon, you’ve, you’ve had a very common theme in all of your answers: people and culture, people and culture, which is  fantastic. Another area that we know COO’s add value is in that HR component and the specifically designing and implementing career path at their firms. So how have you implemented career paths and laid out for employees what their career progression is that at Columbia Pacific?

 

Brandon McKerney    28:33    Yeah. I actually love this question and this topic. I think early on in my career it was, pretty straight forward what your career path was going to be in the world of wealth management or finance.  Start at one place, you kind of move up and you get into the advisor world and you kind of move on. I never really bought into that. So I don’t think of career paths linear and then I don’t really think that you have to stick to a path, you have to have a five year plan in order to be successful.   That’s not how I think I measure success or how it really should be. And what I really look for and when we’re talking about career paths, what makes people tick? I think there’s a way that you’re going to have a main function or a main role in the organization, whatever that is. I think there’s always ways that we can integrate people’s passions into their current roles that can, and if it’s a firm that can benefit them, grow their professional maturity over time, grow their personal side of life over time. And that’s all kind of woven into how do you look at their own individualized career. So I opened it up to every single person in our firm. We have open conversations about where they are today, where they want to be, what it looks like this year, next year and so on.  And just keep that evolving conversation going. I mean a prime example, I’ll bring her back up. Our director of marketing, she was a client service associate for years and said, “I’m never going be an advisor. I don’t want to do this specific role all the time, you know, forever. I’m really into marketing, event planning, and so on.” And it’s like, “Well, we don’t have that…go fill it.  Write me a pitch, let’s figure out how we can make that happen.”  So we have evolved into, we created a new role for her because she was willing to take that step and lead her own career charge. And I’m there, and the executive team is there to help foster that. And I think when you’re hiring people, for me it’s really important to be up front about this, that some people love the box.  Some people love saying, “Okay, here’s my box I need to play in. Then after 18 months I get to go to this one and move on” and that’s just not the way that we are going to develop people or the culture we’re going to have. I look for people who are really, I don’t know if “entrepreneurial” is the right term, but just people are driven to strive for their own success and I think Steve Jobs had this really cool quote and I’m probably gonna butcher it. I’ll try to remember off the top my head, but it’s one where he said, “It doesn’t make any sense to hire really smart people and just tell them what to do.” We want to hire really smart people and hire them for the culture and then have them tell us what to do.” That’s the feedback loop that has to happen.  I really encourage everyone at our firm, and they’re developing their own career paths and what makes them happy. Let me know what can we do better? How can we foster your career throughout your time here at Columbia Pacific? Hire for culture, you can teach people the functions later on in life. I mean, I think that’s, to me maybe a little over-simplistic but about the first layer that I look for when I’m talking to people through their career path..

 

Matt Sonnen    31:11    I love it. That’s great. Vib, what have you done at Shufro Rose in this area around career paths? 

 

Vib Arya    31:15   It’s an important topic for us as well and one that’s frankly kind of continuously evolving for us.  I talked about earlier ,really starting to establish roles and responsibilities, so we’ve taken more time to be more disciplined around job descriptions now in job specs for each of the various roles within our organization. I think what we’re trying to do first and foremost is establish the baseline in a more formal way. Here are the roles, here are the responsibilities, so at least there’s no more ambiguity. There’s transparency and it also provides transparency in terms of, okay, well for the next role, whether it’s an advancement or  a shift to a different part of the business, what would I need, what credentials do I need? You know, if we want to be an advisor that’s financial planning centric will you need to go get my CFP. So starting to create transparency and manage expectations that way, here are the skillsets you probably need, here is the experience you need in this role for this length of time. So we’re certainly evolving that and formalizing that more. But again, I think some of the points that Brandon made are just as important. It’s again, that culture. You know, I harken back to my initial outset, working as a consultant at a small asset management firm, I got to see everything. And so I look at our firm, I look at Brandon’s firm. We’re small enough that you have the ability to see absolutely every aspect of how the firm operates just by nature of our size as opposed to some of the bigger places where I’ve, where we’ve all worked. It’s just harder to see. You almost feel like a spoke in a wheel, and so what we’re trying to present, just that opportunity, opportunity for exposure, opportunity to get involved with projects.  Brandon talked about his marketing resource, we’re in the same boat as we’re evolving our website and we’re thinking about more client outreach. Help us with these types of projects. I know that one thing I specifically say in the interview process as we’re thinking about hiring at any level within the organization, “Challenge what we do. If something seems counterintuitive or it seems silly, bring it up.” Everyone’s kind of an important voice and let’s talk it out. Sometimes we’re so embedded in our own processes and the way we do things that we lose that objective perspective. Please come in. Let’s talk about it. And if you have ideas to make things better, let’s hear those ideas and then that’s how we evolve. So I think there’s formalizing the HR talent planning, career pathing aspect of it, which we’re working on and we’re continuing to strive.  But again, it’s creating that culture that everyone has a voice, everyone has an opportunity. And just the chance to have that sort of fulfilling experience that you come to a place where your voice is heard. It’s important. You have ability to influence and really learn about yourself to, you know, maybe I don’t like operational work and I really want to be client facing. Or on the flip side, you know, I’m kind of done talking to clients. I’d really like to help run an organization, right? And so we can present opportunities to get involved and see what you like, what you don’t like, and help people kind of find their way and sort of guide and mentor them through the process.

 

Matt Sonnen    33:49    I don’t know if I’ve told this story on the podcast before, but when I first joined Focus Financial, Rudy Adolf sat me down and he said, “You’re valuable to us for about 90 days.”  And I panicked. “What are you talking about?”  “You’re valuable to us for about 90 days because on that 91st day you just sort of fall in line and say, ‘Well, this is how we do things here.’” And he says, “I need you for the next 90 days to be very critical of us and just ask a lot of questions to us, about us of, ‘Why are we doing this? Why do you do things this way?’” But that always stuck with me, everybody’s sort of had that, whether it’s 91 days or whatever, but it is very important for employers to encourage employees to be constantly asking those questions. I love that though. So lastly, I wanted to address a high level evolution that we’ve witnessed for many years in the RA industry. And I have talked about this on the podcast before.  When I got into this industry in the late nineties the typical advisor pitch to a prospect was, “Hey, I have a proprietary 27 stock portfolio that has performed very well across all kinds of business cycles. You should hire me because I’m going to make you rich.” That was basically the pitch in the nineties but now that presentation no longer discusses investment performance per se, but it goes something like, “We want to be your holistic financial planner. We want to be the quarterback of your entire financial life. And in order to do that, first we need to start with your goals. How do you want to spend your money? And then once we’ve all agreed on that, we will work with you not only to devise an investment plan, but let’s look at your spending and your budget as well. And we’ll start with your end goal and then work backwards to ensure that you are set up properly.” So Vib, tell us in your words how you’ve kind of seen this, this evolution. You and I have talked about it. I know you’ve seen sort of similar things. 

 

Vib Arya   35:43    Yeah, I mean, this is, what is it, the $64,000 question, the million dollar question, how do we want to phrase it? This is it, right? And I think it’s like this consistent paradigm shift. We talked about our firm being around for 80 years for working with multiple generations of clients that even within our own client base and client segments, we’ve got varying experiences. We’ve got our legacy clients who’ve been with us for multiple decades who have done well and their M.O is, “Hey, just keep doing what you’re doing. Keep managing my assets. Where I need income, please generate income, continue to find opportunities in the stock market for me.” And it’s sort of business as usual. And then you’ve got the flip side, especially as we start thinking about in all the metrics we hear about trillions of dollars transferring hands from one generation to the next.  And the evolution of expectations from clients. They’re not thinking about the absolute value of performance. You know, “Why’d Netflix (stock) only go up this percent or why did my portfolio only go up that percentage, relative to the benchmark or the market?” It’s “I just had two, two kids, can I send them to college in 20 years?”  Or “Can I pay for my daughter’s wedding?” Or “Can I retire at this age?” Or “Could I travel the world?” Or “Should I take that trip?” Or “Should I not take that trip?” And so you start thinking about how people start to think about their money. And that’s what’s evolving. They’re thinking about their money as we’ve heard in this goals-based mindset. How does it impact my life decisions where the finances, the money, it comes into play. And then, we’re taking sort of the heart and we’re recognizing, who’s at the discussion table when it comes to finances.  How do we engage the non-CFO spouse, as you call it, right in into the conversation? How do we engage the next generation into the conversation now as opposed to after the fact? God forbid, when the parents pass away or something happens to them.  So you start thinking about making it a family conversation, a household conversation, and then, oh, by the way, the expectations from the clients are changing too, right? Everyone now wants that Netflix, Uber, Amazon experience from a technology perspective, from an experience perspective to have information at their fingertips in that sort of engaging way. And so these are all of the challenges that I think we as COOs and just all of us in the industry are working towards solving.  And then just when you think you’ve solved it, it shifts. So again, you think about the pandemic we’re dealing with and I’ve been checking in with all the various teams, how have the conversations been going with clients Obviously in late February, early March when the market was really volatile, obviously it still is. And I said, “Well, are our clients freaking out?” And the feedback I kept getting over and over again was “No Vib, surprisingly no”. Actually the questions we’re getting more often than not is “Hey, could you take my IRA, kind of make sure I’ve got my beneficiaries up to date?” So you think about just the pure tangible topics at top of minds of clients at various points in time. And so, I think that’s the whole premise. I think here and the takeaway, I think here and again you start thinking about the value of a COO and organizations that are really doing well is just being adaptive, being nimble. Recognizing that it’s a continuous evolution, it’s a continuous paradigm shift. And so how do you continuously have the technology in place?  How do you continuously have the processes in place? How do you continuously have the people in place to just keep the shift and the changes that are happening cause it is changing and, and that’s what makes it exciting, I think. And so kind of a long winded way of answering your question, but I just think it’s a continuously evolving paradigm shift when it comes to this question.

 

Matt Sonnen    38:54    And Brandon, you and I have talked about this as well. So what do you think of this progression that our industry is taking towards goals based investing?

 

Brandon McKerney    39:01    I think from my perspective this is the only way that it should be going. It’s the only way that makes sense.  The old model, in my opinion, just kind of goes against everything that I feel our main job focus in this industry is. That’s to serve those who have trusted us with their wellbeing,  both financially or, oftentimes now, especially psychologically to do right by them and to remove all that burden of worrying and life’s major decisions. I think I said this in my first kind of intro is our ideal clients are educated. They’re becoming more and more educated to the differences between these two models and do I want someone who’s just managing assets and telling me they can perform really well, or do I want somebody who is, or a firm, not even just someone, but a firm that is really focused on me, my family, my goals, my life, and I think more and more clients to not only to the benefit to all of us fiduciaries and RIAs are understanding that and becoming less and less concerned with the portfolio or kind of that tangible aspect. I think what we do is we sell trust, which has been tough. That’s earned and that’s, that’s, that takes time. But clients are becoming more understanding of that and really excited to say, “Hey, 5% of our meetings should be about what the portfolio did, and the other 95 should be, Hey, I have these five questions… Some of them are financially driven, some of them are not. I need you as a sounding board. I need your support here. And that’ shift to goals-based planning and investing is really leading to these, these more deep, deep conversations or complex conversations, which I think it’s where we show our value. And as a COO we are continuing to build that. Like they’ve said this, this Netflix experience with technology, but it’s kind of all integrating into these more complex conversations, which is pretty cool. I think clients really at the end of the day, want to feel supported and valued just like our employees just like everyone else and the investment world, that’s going to take care of itself, value that firms like ours can really have for these families and individuals is to provide that experience. And I think you only get there when your focus is not on the investments, but it’s truly on their goals and achieving their success.

 

Matt Sonnen    41:11    Well, once again, we’ve had a great conversation here on the COO Roundtable. I can’t thank Vib and Brandon enough for sharing their thoughts and their wisdom today. All of us from home. We’ve received really great feedback from not only operations professionals, but I’ve been hearing from advisors as well that have been listening. They’re all touting the information we’ve been sharing on this podcast, and the two of you have definitely added to this vast trove of information. So thank you both for being here today.

 

Brandon McKerney    41:38    Thanks for having us, Matt. Honored to be here.

 

Vib Arya    41:40    Thank you. Same.  Really enjoyed it.

 

Matt Sonnen   41:43    Awesome. Thanks. Well, that’s a wrap, everyone! Stay safe. Stay healthy. And we will talk to you soon!