EP 3 – Transcript

Matt Sonnen: [00:00:25] Welcome back to the COO Roundtable. This is episode 3. We’ve had a really great reaction throughout the RIA Industry, and we’ve had many COOs reach out to us to volunteer their time to be interviewed on this podcast. So, I couldn’t be more excited for where this is headed. New podcasts are available on our website: pfiadvisors.com. We have a podcast section on the website, or you can subscribe on iTunes or Google Play. Today we have two guests from the same firm Sequoia Financial Group headquartered in Akron, Ohio. Joining us are Trevor Chuna, the Chief Technology Officer, and Shaun Kapusinski, Director of Technology and Operations. So, let’s jump in, Shaun why don’t you give us a little bit of background on the firm.

 

Shaun Kapusinski: [00:01:14] Sure. So Sequoia Financial Group is a comprehensive wealth management firm. We’ve been in business for about 28 years and we manage just over $4.1 billion of assets. We do have six office locations and we’ve got 81 employees. You mentioned our headquarters here in Akron, Ohio. This is where most of our shared services live. And then we’ve got five other offices. So a total of three here in Ohio, two up in Michigan, and one down in Florida. And we’re partnered with a regional accounting firm called Cohen and Company. So, we share office space and some of the offices we utilize some of the base technology together. And then we often go to market together with clients and that kind of depends on the client segment. So with three primary segments of clients those that are: net worth below $1 million we call financial advisory clients. We have our core wealth management clients that typically has a wealth between $2 and 20 million of net worth. Those are more of your private business owners other professionals. And then a little bit unique space is the family wealth area and that’s where you see the net worth above $25 million. And those tend to be much more customized engagements. So we’ve seen a lot of success when we’re able to work with Cohen in those wealth management and family wealth opportunities because we’re able to go together to market to include different types of planning, multigenerational state and tax planning, asset Management and comprehensive reporting that we can provide which has been very successful.

 

Matt Sonnen: [00:02:48] That’s great with six locations, three different states. I mean for everybody scalability is the name of the game, but you guys have some unique challenges so this this is going to be a great discussion. Shaun, why don’t you, so that’s the firm, why don’t we dig deeper for you personally, why don’t we talk about how you joined Sequoia and how your position has evolved over time to where it is today.

 

Shaun Kapusinski: [00:03:12] Sure. So, joined Sequoia back in 2003. I had spent a year out of school working for Mass Mutual, being an insurance agent I realized quickly wasn’t the career path for me. So thankfully Sequoia had a position in the operations that was a starting point for me. And we had conversations over the first couple of years about whether or not I wanted to be an advisor or get into the planning side. And I realized pretty quickly that I enjoyed, essentially, the back-office work. You know, it’s a small office. There were only 10 of us at the time. Maybe a $100M of assets we’re managing so the firm has grown a lot over the years, but I knew pretty quickly that I wasn’t interested in going the adviser route and I really liked kind of focusing on the support side from an operational standpoint – all the logistics involved, all the organizations involved that really fit my set. So, over time as the firm grew more clients, more business, we did start hiring more individuals to work in this operations area and I was given an opportunity to manage that team. So for the better part of 10 years, that was kind of my focus, the client service side of operations as the firm grew the need for operations also grew beyond just the client service side and it was more about firm operations. So as the firm grew I had the chance myself to kind of grow out of that area and get involved in really operational aspects of running the whole firm. You’d think about maybe the practice management topic and all the different aspects that you would encounter things like HR, your administration, even your finance and accounting, the compliance side and then certainly technology. So, my role has evolved in the past couple of years to be really focused on technology mainly because we’ve had such a need to grow in that area and that lined up real well with my skill set and the experience that I kind of built up over the years with that client service team. So, essentially left kind of that client service group and have been spending the past couple years working real close with Trevor building out Sequoia’s technology platform.

 

Matt Sonnen: [00:05:18] That’s fantastic and Trevor, let’s hear your story. How did you join the firm and how is your position evolved over time?

 

Trevor Chuna: [00:05:27] Yeah absolutely. So, I actually joined the firm back in back in 2007 and prior to joining Sequoia I actually worked as an advisor, client facing advisor with Merrill Lynch, and I was responsible for bringing new business, managing ongoing client relationships, and I found that wasn’t exactly what I enjoyed doing. It was actually a small subset of what I did as a whole that I really enjoyed. Which was really developing financial plans for the clients and prospects that I was working with. So, I came across Sequoia. They actually had the opportunity to focus 100% of my time on doing those things and so I made the transition over and in 2007. And at the time, you know, I’m a few years after Shaun in terms of joining Sequoia, we were around 20 employees at the time, and I think we were around $400 million in assets under management. And we’ve obviously grown a lot since then which was great from an opportunity standpoint, it allowed me to come in and kind of, from, be the only person who was in our – what we coined, the wealth planning department – to grow to be a team of a team of 6. And so now it’s actually becoming a team of five because as I’ve transitioned in my career and worked within the wealth planning department, they a couple of years ago came to me and said, you know, we you are, as part of a client segmentation project effectively, which Shaun did a nice job of outlining what those segments look like. We were really honing in on the advisory space and saying what technology lives out there that’s going to help us better service these clients but do it in a way where we have the high level of service without doing a lot of the manual work that traditionally client relationships require. So, kind of started as a project – “hey go find some technology that that will meet these needs” – and kind of came back and said there’s a lot of incredible kind of white label, robo advisor platforms out there but the downside is that none of them integrate with our existing systems. And all the things that these platforms do, we’re gonna need to be able to do it for all of our clients no matter what their wealth size was, you know, the next handful of years and so my recommendation was that we go bigger, you know, our leadership completely agreed with that. And so then we went back out to market and said what’s going to, what can actually fulfill that need. And, you know, we end up starting with kind of our CRM system and making a switch there and did that research, you know, we had in our instance, we ended up landing on Salesforce as that solution. And so since I did all the research and came up with the solution they said great you want to go ahead implement it and said yeah that’s great – let’s do that. And that’s when Shaun and I began to work together on this project and work through the project and they said this is even bigger than we anticipated, us as an organization said we want to go even  bigger we want to kind of take it to the next level as it relates to just creating an entire technology platform to run our business on. So at that point, they asked me to kind of switch gears from leading our wealth planning department to actually serving in Chief Technology Officer role. So, that’s where I am today.

 

Matt Sonnen: [00:08:56] That’s fantastic. It’s interesting that both of you have had client experience roles in the past and you can tell that you’re using your current roles, in focused on technology, to really drive that client experience. We’ve talked about it a lot, either on this podcast or in a lot of the white papers we do or blog posts, the high-level goal of any RIA is to provide that high touch service to an ever-increasing client base. You want to always have the client feel that they’re getting very hands on experience, but the goal of the RIA is to be able to provide that to more and more clients over time. I mean I know that you guys definitely are priding yourself on best of breed technology. So, Trevor, what else is Sequoia doing to leverage technology, for specifically around that client experience?

 

Trevor Chuna: [00:09:50] Two questions so, you know, there’s a few different ways that, you know, we’re kind of tackling this and, you kind of mentioned that deep client service, you know, I think one of the things, you know, the majority of the people in this industry are in it because they want to help people. And as you see more technology solutions coming out it’s starting to force us to change our mindset from, great client service, kind of white glove service, doing meaning that we do everything for the client. And it’s not that we do everything the client, that’s not great client service that’s not white glove service, it’s actually how do we empower the client to work with us the way that they want to work with us. So that’s where different technology tools, I think your client portal come into play. But then even internally, how do we do things like facilitate our client meetings? You know, are we printing off reports or are we delivering things digitally and providing them a copy of that afterword through their client portal or even attaching it to email if they prefer not to engage with us that way so they can continue to reference it and have it in a more secure location, you know, it’s us following up after those ongoing client meetings whether they’re in-person or digitally, you know, having an automated process behind that that says, you know, we met with the client, here are the things we identified, here the next best actions that we need to take, and here’s we execute on it and having a more defined standard as to how we execute on it. What is the internal process behind delivering that client service, following up with them, but the right timing, and making sure that they’re getting the things that they need in a timely manner and in an accurate way so that they can continue to focus on the things that are important to them, running their business, you know, spending time with their family. And we can work on the logistics of executing on the things that make those other items possible.

 

Matt Sonnen: [00:11:47] That’s fantastic. So, in our in our white paper, our COO White Paper, Trevor you were kind enough to be interviewed for that. We identified three high-level responsibilities of a Chief Operating Officer: the day to day administration to the firm, that’s really around executing the company’s business plan and upholding the firm’s culture; two is workflow improvements, managing vendor relationships, overseeing the firm’s technology stack; and then three, a lot of COOs are taking on the HR role as well, they’re responsible for recruiting developing and retaining employees as the firm continues to grow. So, Trevor, during the interview we discussed how your role may be more of a traditional Chief Technology Officer role. Can you offer more color on how those two, the COO and the CTO, how they overlap?

 

Trevor Chuna: [00:12:46] Yeah absolutely. So, if we kind of go through your bullet point list there as it relates to day to day administration or kind of executing on the firm’s business plan, you know, every year around this time we release kind of to the firm, you know, our COO will identify what know our goals for the year – what are we looking to accomplish. And when you look at all of those goals, you know, we have five that are identified, every single one of them overlays with technology in some fashion. Whether it be the client experience, whether it be, you know, just efficiencies and how do we drive them internally, or even kind of our growth plan. How do we grow organically and how are we equipping individuals to do that? Whether It be through marketing automation, driving more activity to our website so we have more inbound activity as it relates to new business or creating a platform that allows us to be the acquirer of choice as we look to do new M&A deals. So, it kind of has a broad reach, you know, every goal that we have includes technology as some component. So, having somebody that’s devoted to that is going to yield the best result. So, when you kind of get into your hit list number two of the workflow improvement, you know, it’s not only creating a place where, you know, new firms or firms to be acquired want to move to because of the platform itself. It’s saying, you know, for the folks who are already here and all the different business units that we have, you know, how do they operate each day? What are the tools that they are using to execute on client service or to execute on compliance and all the internal operations that we have? You know, there’s this kind of the old way of doing things which, you know, through Excel checklists and Word documents and facilitating, you know, through those means. Or there’s specific technology out there that continues to be built that has specific components that allow us to work better work faster and be more accurate in the work that we do. So to actually go and get that technology, get the best in breed that’s going to help us deliver the best client service, have the best operations, you know, we felt that it was important to centralize that role. So, to make those good decisions about what technology is going to help us work better, you know, having a CTO in place needs to understand every business unit, all the operations that they have going on, and working with those business leaders to say, “Kind of, what takes the most time in your day?” What are the things you’re doing the most of and where’s their opportunity to either add technology to make it easier or eliminate or automate what you’re already doing or potentially replace? And say, “Hey, you know, you’ve been doing things this way for the past 10 years…do we need to reconsider this? Do we need to completely rethink the way that we work and kind of ditch the old way of doing it and find out entirely new solution?” Which is, you know, kind of leave the history behind and say all right, if you were if you were building this thing from scratch, how would you really want to do it? What would you envision some sort of technology that’s going to help me execute on these things? So, that seems to be the big overlap as it relates to, you know, the operational functions and kind of the business goals that we have today and ongoing. And then when you think of the human resources component of it, while this role does not go out and find the talent. What this role and the team, as part of our technology team, is doing is creating the platform where we want to be the employer of choice, you know, there’s less and less advisors entering the industry and, you know, we need young talented advisors to join Sequoia. And, you know, firms outside of Sequoia may already have these talented individuals and if they’re not keeping pace with technology, you know, that those employees can become very frustrated with the firms that they are residing at if the leadership there is not willing to make the investment that makes their lives better and helps them make their clients lives better. So, well again, we’re not directly hiring we do feel we are creating a platform that allows us to be kind of the employer of choice and attract the best talent along with it.

 

Matt Sonnen: [00:17:11] I love it. There’s so much talk, it usually starts with “oh the robots are going to replace all advisors” and then that conversation usually turns into “well how are human advisors leveraging technology to enhance the client experience let’s put technology in the hands of the client.” And that’s usually where the conversation ends. You’ve taken it one step deeper. I love your focus on getting the right tech tools in the hands of the employees so that they can do their job and they can service the clients. I think that’s fantastic. Shaun how do you help work through the inevitable growing pains from a new technology standpoint?

 

Shaun Kapusinski: [00:17:48] Yeah. So, our goal is really to minimize disruption. Certainly, the idea with any new technology is to enhance the experience that we’re giving as Trevor was describing. So, we really try to do that three main ways. The first is preparation. The second is through training. And the third is through ongoing support. So, our preparation is where Trevor was talking about the fact that the two of us will spend a lot of time on the front end really going in-depth with any new provider system. We want to not only fully understand what it’s going to do or what it currently can do but we also want to know what its roadmap is what those companies are thinking in terms of where they’re going. This helps us kind of plan for the next phases of what we’re trying to do with our employees or with our clients. So, an example would be: we currently have a client portal and we’re talking to any new kind of major provider. We’re looking to see do they provide a client portal or are they thinking of providing a client portal or is there a way that we could utilize something that they offer, Salesforce is the main example, that we could ultimately go towards that someday in the future. So, we may not implement something right out of the gate, but we do want to understand what those capabilities are and that helps us make decisions in terms of preparing our firm for where we might be going. Second item I mentioned was training and we place a high value, as a lot of firms do, on adequately training everyone in the firm. Making sure that the major areas where they need to utilize technology that they learn those areas really well because that’s going to help them succeed. It’s going to help them do their job well. It’s going to help them serve their clients as best they can. We’re big into repetition so we’ve gotten in the habit of preparing a self-study where people could essentially go through an outline, very little of it is written. There’s actually a lot more of it that is in video format so it walks user’s kind of through the new changes, walks in through steps of how to do their daily job, and to use the system in a way that might be different than what they were used to before. And so that we can then follow up with usually a go live training. So, when we roll out a new program or a new enhancement feature, we’ll often do a, kind of the bigger the project or the bigger the rollout. Like we just had a new document management system that was a, you know, we’ll have an hour training session that will offer multiple times so that people can either attend one that works in their schedule or some folks were coming back in a second, third time because they really want to make sure they understand in depth and then ongoing will offer would call office hours and that’s a chance for Trevor and myself to make ourselves available on a regular basis to the firm that effectively operates as training. It’s extra time folks can come in ask their questions or if we’ve got a lot of questions we might put together kind of a FQ, you know, here are some of the questions that others had. We want our 80 other people to be able to learn from that experience and so that has been part of that kind of repetition that we’ve seen work for our team. And then last item I mentioned was support. So, you know, growing pains are usually when, you know, something is different right it’s just change. And so how do you get used to that? Well a lot of times we don’t want to just jump to the next new thing and roll out something else when people aren’t either used to or comfortable with or they’ve stopped having errors that they might be experiencing on the front end. So, for us having some kind of ongoing maintenance to support our systems that’s been really important. It’s been a big part of building trust with our team and that’s hard to build that trust without having a good experience on their end. We’re always kind of eager to go to the next big thing but we know that if we can’t get them through those painful initial moments, we’ve got to be able to provide resources for them to get ready for the next phases. So, we might reference back to some of the videos we might we actually use our Salesforce system for people to put in their requests for items that they’re having issues with. So, they’re actually using the system to learn it a little bit better. So, those are those are really the three main areas I thought of when it comes to kind of how do you get through those times when the disruption is definitely there. So, it feels like you might be taking an initial step back but ultimately the goal is to push forward and take a big leap.

 

Matt Sonnen: [00:22:22] I love the video idea. I mean a lot of firms have the checklists, but people learn in different ways. Are the videos, is that Sequoia employees in the videos or are you getting those videos from the various technology vendors that kind of make up your stack and it’s sort of a how to coming from them or are you guys recording those internally?

 

Shaun Kapusinski: [00:22:42] So, we’ve had a little bit of both. Most of them, I’d say the majority of them, are actually coming from us here internally. So, we’re not necessarily videoing us standing up giving a presentation. We’re actually recording our screens and doing the audio and walking through kind of click by click. So, I think the earliest phase is when we were looking at some of the outside vendors consultants that they would help us put this together as we were building it now that we kind of follow the best practice as it relates to maybe what they built or even what companies might have on their own websites. It gave us a feel for some of the basics like make it short, right. Couple of minutes, maybe five, six minutes max. We want to put these into bite sized chunks. That way it’s easier to go through their training outline. Second thing would be, you know, talk slow and move the mouse slow, you know, don’t jump around super quick because that’s a way people aren’t going to see where that mouse was where you click. So, there’s just little tips like that that we’ve picked up along the way. And so far, we’ve gotten good feedback on them so we’re going to continue to work that way.

 

Matt Sonnen: [00:23:45] That’s….I love it. So, Trevor during the white paper interview that we did together you said something to the effect that you feel the RIA industry is behind on a technology and automation perspective, when you compare it to other large industries. Can you explain how you think the RIA space could learn from others?

 

Trevor Chuna: [00:24:05] Yeah absolutely. So, you know, I feel like part of the learning has been forced I mean, you know, several years ago now it’s becoming as, you know, robo advisors started to be introduced and kind of, you know, at first as like this initial shock like uh oh, you know, the robo is they’re gonna replace us as advisors they’re just gonna take over and, you know, all the things that we do and pride ourselves on, investment management, you know, regular reviews with the client and giving them a level of security as to, you know, here’s my risk tolerance and here’s my here’s how my objective flushes into, you know, my ultimate investment strategy, you know, that was all automated and I think it kind of kicked us all. And said, you know, look at look at all those things that that technology can do what are we going to do to keep pace. And it’s not that we didn’t use technology prior to that, you know, there are great technology platforms out there even before that. But I think it does raise the awareness and forced us all to think about just the way that we engage with our clients our clients directly. So, you know, that’s somewhat industry specific, right. We’re still talking financial services, but it does raise to light, you know, what’s possible. And so if you think of really any service industry now at this point, you know, you go to their website and, you know, that’s going to pop up a chat bot and you’ve got the ability to communicate with that institution right there and chances are it’s a computer on the other end half the time and it’s going to be able to respond to a majority of the questions that you have or it’s going to ultimately direct you to the, you know, a human advisor. And so, us in the RIA industry, you know, once you get past that initial shock of, you know, the robos are coming you can only take a step back and think about the tools themselves and then how can I ultimately leverage these tools for better client service. And kind of going back to the statement I made earlier, white glove service isn’t necessarily doing everything for the client. It’s changing with the world around you and allowing them to do it on on their terms whatever that might look like. You know, you’re going to have always have older clients who, you know, are kind of technology averse and then you’re going to have the younger clients where they want to engage 90% of the way through tech technology. There’s certain things that humans do real well like empathize and, you know, help ease the fears of a client during a recession or a family crisis. You’re going to have things that technology does really well like automate processes and look at large amounts of data and report it back to you. And then there’s kind of this, you know, this whole idea of this missing middle where the two kind of collide they kind of come together. And I think, you know, kind of the core of that, I even think of, you know, the wealth planning department and when we were part of that, and we move to eMoney back in 2007. And planning software has existed for a long time, don’t get me wrong but, you know, the whole idea that planning became more possible and became more scalable and you could do it for more clients because you had a piece of technology that allowed you to put in a handful of data inputs and then analyze those results immediately. And then it took it to the next level where you could apply Monte Carlo iterations to everything that you were doing in that system. No human could run a thousand Monte Carlo iterations on a financial plan, you know, 30 years ago. So, the fact that there’s this missing middle where they know now, we’re starting to collide, you know, we’ve got machines you’ve got humans and now there’s this part where we start working together really well. So, this whole digital augmentation of, you know, creating superpowers for effectively superpowers for the advisors of, you know, I can stop worrying about receiving inbound telephone calls and random emails with all these different client service requests. Why can’t we create a portal where they can go do self-serve? They can they can not only see the information that they want they might be able to interact with us to a certain extent through a chat bot or make direct requests of different workflows that we may otherwise had to kick off manually. I want to move money. I want to open a new account so other industries have I think more than anything gave us the ability to think outside the box. Helped us and forced us to rethink the way that we ultimately work. And so the question we always have internally is, you know, what is our benchmark? Do we need to be better than the RIA down the street who, you know, only has a CRM system and they otherwise do everything else kind of manually? Or is our benchmark, you know, Amazon? And, you know, obviously they have an incredible ability to create a seamless interface and they’re prompting based on the last thing you selected – here’s the thing that you might want to buy to go with it, you know, all of that takes a large investment. And I think the answer is probably somewhere in the middle some and it’s probably changes, you know, depending on where you’re looking at your organization, you know, your standard for your client portal maybe Amazon when it comes to your internal processes it may be, you know, the small RIA down the street or even a large bank institution. So, I think it all kind of depends on ultimately what the client that you’re looking to serve, what’s the services you provide to that client, and based on the types of clients you work with what is the experience they’re looking for. And I think if you focus your energy and effort on that you’re going to go a lot farther and a lot faster. And I guess kind of last thing I would throw in there. I think another reason the RIA industry has been behind in a way is that, you know, by our very nature we’re independent. You know, we want to do what’s in the best interests of our clients. That’s the number one priority. So, when we apply that same core value that’s in our hearts to the business decisions that we make, especially as it relates to technology, we want to go find best in breed, best in class to meet whatever that specific need is for the client. So, there’s been all these different technologies that have been created whether it be investment management or planning or contact management, you know, we’ve gone out there and we’ve gone oh this is the best one. This one it has the best features for my clients here. This one has the best features over here and because of that it all became partial. And so we’re just now getting to the point and these providers are not just now getting to the point where they’re opening up their architecture and allowing each other to talk. Where before, that didn’t happen. You had to you had to either have homegrown systems or, you know, go to a large provider where, you know, you were in essence bucketed and limited what the features and functionality were that you were doing. And, you know, a lot of people in our space just aren’t thrilled with the idea of limitations in how they can service their clients. So, a lot of advances have been made again, and the providers out there and the willingness to talk to each other and I think it’s a great opportunity right now to get ahead of the game in the RIA space and make those initial investments that are gonna allow you to create the right client service experience that you’re looking for and also the right platform for the people who are on your team to work better and ultimately live better.

 

Matt Sonnen: [00:31:36] I said it earlier and it just keeps coming up. It’s very interesting that both of you started your careers in client service roles and you’re not, you can you can tell the way it keeps coming up throughout this conversation. You’re not just living in a technology ivory tower somewhere. You’re both you’re both leading with what is the client experience what does the client experience. Everyone talks about it, but I don’t know if people are executing it to the level that you guys are. This is really fascinating. Shaun let’s talk about Salesforce because I know you and Trevor have both done extensive work there. So, can you talk about how Sequoia’s leveraging Salesforce.

 

Shaun Kapusinski: [00:32:17] Sure. So, as Trevor mentioned we wanted to end up with the best in breed product essentially. And I should say experience. You know, we were working with Microsoft and over 10 years of that client service side of my role I had seen a lot of that interaction both on the client side and on the advisor or team side here at Sequoia. And over that time you kind of learn about what’s missing or what you’d want or where you’d like to go and you get a lot of suggestions as the firm grows and you have new people come in, you know, they give you suggestions or they bring from the outside, you know, we had this at the firm I was at. And so there were a lot of different things that would come into us and some of them we could do it was little slow in terms of how we were able to build it. I’m not the coding programmer developer type so we always had to rely upon others to help us with that. And so, you know, really for us to make the final decision about going with Salesforce we really felt they were best in breed. They had industry knowledge, you know, being an RIA and knowing that some of these larger programs that would allow us to do the things that we wanted to do. We wanted to be with a company that had solutions that were specific to what we not only did but where we wanted to go. As Trevor mentioned, we didn’t necessarily just want to benchmark against others in the RIA space but against experiences outside. So, we did feel like Salesforce provided a platform for us where it would take us into the future would allow us to build that better client experience. A big piece of it was also having integration capabilities. So, whether it’s our portfolio management system or different custodians, the document management program that we have now. We wanted that all to be in one spot. And so we have the capability some of those are in place already. Some of those integrations we’re still building, and we know that there are some that are going to come hopefully in the future so that for us was also a huge win. Something as simple as being mobile and we didn’t have really a mobile solution for our team. So, getting information into the kind of the palm of the hands of all of our advisors was something that we were lacking before. So, that ability to have a system where we could implement the let’s say the process and some procedures that we already had while enhancing them and putting it in the palm and getting the advisors to that information faster allows them to service their clients better. So, for us we feel that that kind of 360-degree view of the client that’s really the goal we’re shooting for – is put on the information at their fingertips, you know, get them to it quickly. We’ve had a great experience, you know, we really liked also that we could outsource different types of support so whether it’s the initial implementation that we did or whether it’s the ongoing kind of one-off consultants. You know, like I said Trevor myself, we’re not the coder developer, you know, real technical guys that are gonna do the true what Salesforce calls their admin roles. So, for us it was important that we could actually kind of quickly get to people that had that skill set could understand our org and then could continue to support us over time. So, we’ve utilized different folks that we’ve been able to get to. And that was something that, you know, from what we found most the other options that we were looking at didn’t have kind of that kind of a network. So, the fact that it is a large system, the whole Salesforce ecosystem, you know, there’s a lot of folks out there that are willing to support it and really have kind of taken their expertise and they’re able to plug it in to what we want to do. So, we’ve had great experiences we’re really happy with the different vendors that we worked with and for us we’re not just helping Sequoia, but we actually think through our custodians and even Salesforce and some of the consultants we’re actually pushing the industry forward. We’re pushing the RIA space forward in terms of what people could do. So, our hope is that that can be kind of spread and it benefits others down the line.

 

Matt Sonnen: [00:36:16] Fantastic and Trevor you talked about earlier in your career you were very involved in the financial planning, actually doing the financial plans. But now in your technology role you, both of you, have been involved in developing Sequoia’s financial planning platforms so Trevor I’ll throw to you. Can you tell us a little bit more about your work there?

 

Trevor Chuna: [00:36:40] Absolutely, yes. So, the kind of historical involvement that I had within our financial planning was effectively building what is today our wealth planning department along with everyone else on the team. And, you know, what that team ultimately does is draft the financial plans for all of our advisors to leverage in their client relationships update those plans as well as kind of house all the intellectual capital behind the technical planning that we do. So, we create what we call kind of turn keys which is kind of a mix of modular planning tools that the advisors can leverage with their clients as well as white papers, you know, kind of one to two page snapshot documents that say, you know, here’s everything the client would need to know about this topic and it can be a marketing piece it can be a leave behind it can also be a great way for us internally with younger advisors to get up to speed on a topic. So, we’re walking into, you know, I’m a younger adviser, I’m walking into this meeting with a more senior advisor and we’re going to be talking with the client the attorney about intentionally defective grantor trust, you know, this one to two pager is technical enough that, you know, that junior adviser can kind of read through it and be up to speed before that meeting and basically know everything they really need to know right before that meeting and actually contribute to it because of it. So, that’s kind of the historical piece. Kind of a next phase of all that, and I think if you talk to any advisor, any RIA, in the industry, you know, one of the most difficult challenges that we have is capturing client data. You know, it’s the whole premise of garbage in garbage out when you’re developing a plan and that’s probably my biggest beef when it comes to, you know, thinking a robo advisors are going to be a full solution for really any client out there. And I know there’s a lot of do it yourselfers who want that control. They don’t think it’s worth paying somebody for additional help but you can’t, yet anyway, a machine can’t take away the intuition that comes from a human. Right, you know, being able to put data into a system as a client doesn’t mean you’re going to yield the right result. It’s got to be put in a certain way. It’s got to be understood a certain way and you need you need that adviser to disseminate what that ultimately means and how it’s actionable the result without action is kind of worthless. So, you know, that’s really our next phase of all of this is how do we take our planning process and digitize it and not that it’s not digital currently. It’s how do we make it simpler for the client to communicate things to us so that we can be more real time in delivering results back. So, that’s the level of client portal interaction, that’s a level of data gathering by digital means and actually incorporating it as part of our client review process. How do we proactively reach out to that client in the meeting or before the meeting or after the meeting and capture what we define as the client’s vital signs? So that we can determine do they need an MR? You know, what’s the next phase of their treatment? So, that’s kind of where we’re at now is continuing to rethink the way that we work. Like I said we’ve, you know, we’ve done it a certain way for the past 15 years. In essence we’ve made modifications, we’ve digitized certain components of the old process but now we’re saying lets throw out the old process. If we were going to start Sequoia today, what would we want this to look like, what would the tools be, and how are we going to achieve that? So, it’s kind of fun to work through that with our private client and wealth planning group. And we’re excited to see where it goes over the coming months and how we transform that.

 

Matt Sonnen: [00:40:38] It’s fantastic once again leading with the client experience. I love it. It’s great. So, Shaun as, you know, one of the goals for this podcast is to just provide a reference point to COOs to turn to, to learn from best practices from others. But way before we launch this podcast, this is whopping episode 3, way before we launch this podcast, you launched HIFON. HIFON stands for High Impact Financial Operations Network. And the website for HIFON states: I love this, most operations leaders are alone at their firm, but you don’t have to be alone in your career. I think that’s so true. So, can you tell us a little bit about the group, how old it is, how many members, etc.?

 

Shaun Kapusinski: [00:41:27] Sure. Kind of give you the quick story. I mean you kind of summed it up briefly there real well. That, you know, we exist to help anybody who’s working in an RIA in an operational capacity. It’s COOs, it’s directors, it’s managers, you know, it’s folks that basically like this conversation. They like to learn, they like to absorb information, and they want to get with the right people that can help them. So, effectively about 10 years ago I had this interest, as our firm was growing and as I felt like I was kind of alone and I didn’t know if I was doing things right. I really just didn’t have a good gauge of that. When I started going to conferences here and there, which again is maybe once a year, you find people and that was great for me. I was able to connect with folks but I realized I’d leave there and it was kind of this let down, this disappointment, you have a stack of business cards but you don’t necessarily follow up with those people. And even if you do, it might be one person here or there one of the times. And so, I thought, well I’ve heard of advisors having study groups, I’ll just join one of the nation’s, you know, industry leading study groups for the operation side of the RIA industry. And I was searching around for maybe six, eight months, talking to anybody I could asking and everywhere I looked and everyone I asked that just came up with nothing. So, I decided I was going to reach out to five other folks that I had met over the past couple of years from other firms. Kind of spread out among, I think it was more regional at that point, just because of my reach and I asked them I said do you want to have a monthly conference call and talk about best practices. Share with each other what we’re going through, ask each other questions, see if we can help each other out? So, that for me was really the start of HIFON kind of getting off the ground. It snowballed from there. They started telling other people that they worked with. I started telling other people at other conferences I’d go to and essentially before you knew it, you know, we had 30, 40 members after a few years. So, from there I ended up getting involved with Bob Veres’ Insiders Forum Conference. And he really gave us a bit of a platform to start having sessions and get involved in the just kind of the conference scene as it related to bringing more to operations professionals within our industry. So, from there, you know, Bob’s attention to it and even members starting to use just word of mouth and share with each other. You know, we set up a discussion board and really gave people more of a one stop shop to be able to network with folks kind of any day of the year because of the discussion board and then we keep going with the monthly conference calls. And there’s been interest in other areas of firms, so we have a regular marketing call, we have a compliance call. We’ve done it with particular programs, so there’s a Salesforce group that meets, there’s a Tamarac group that meets. And it’s really just kind of blossomed into what people want. I never really intended for it to be, you know, a couple hundred firms which is what we have today but simply the demand seems to be there and we’re ready to grow, you know, we’re ready for the next 200 firms to join us. So, it’s an exciting spot to be in and I’m just thankful for everyone who’s made it a priority to attend.

 

Matt Sonnen: [00:44:40] It’s amazing what you’ve been able to do. We’ll put a link to the HIFON website in the notes for this episode as well. So, let’s switch gears to M&A it’s such a big story in the RIA space today. Sequoia had a lot of headlines, there was even another one this week, a couple of days ago in InvestmentNews. Your largest acquisition to date was last year. Sequoia purchased LJPR Financial Advisors. $776 million to RIA in Michigan. And we’ve talked a lot, PFI talked a lot about technology and operations and workflows et cetera the role of that in the M&A game. So, Trevor can you speak to how Sequoia’s technology infrastructure is helping you with your M&A strategy?

 

Trevor Chuna: [00:45:31] Yeah absolutely. So, you know, when you when you look at, you know, the some of the RIA firms out there and there’s, you know, there can be two primary ones come to mind, you know, it’s kind of the retiring or transitioning advisor. Who’s looking for a landing spot for their clients to be and their team to be longer term. Or it’s kind of that younger advisor who’s kind of in growth mode and they’re looking to go farther, faster. Technology helps with that in a lot of ways. And I’d say the biggest highlight is it’s becoming a requirement right. You know, to create that client experience, to have the automation that allows you to create scale and remain profitable while there’s kind of margin pressure in our industry to, you know, through delivering more advice to the clients outside of an investment management. There’s heavier lifting to do there, so you’ve got to create a level of scale to accomplish that. Additionally, the investments that need to be made in technology, you know, they cost. They do cost money. So, you’ve got to have economies of scale to actually pay for those things that you’re building and executing on. So, you know, LJPR was just another opportunity for us to create more scale and allow us to have additional investments in an infrastructure and technology is a huge part of that. So, you know, it’s again that landing space from a kind of a human resources standpoint where does the team want to be especially when you have younger individuals who, you know, want to be at a place that’s kind of cutting edge in and how they equip their employees to do the work that they do each day. And then now what’s the best landing place for my clients. What’s going to be the best experience for them so that when I do transition and I have these discussions about me as an advisor transitioning away, you know, somebody who had may have worked with, you know, their entire lifetime to date with it as an advisor. You know, they want to have comfort that where they’re going is at least as good as what they’re moving away from. And when you can layer in technology and our incredible wealth planning team to support those transitions, you know, it goes a long way in highlighting us as the acquirer of choice.

 

Matt Sonnen: [00:47:45] Fantastic I just got introduced to Never Split the Difference. A book written by Chris Voss. He was a FBI hostage negotiator and he wrote this book on negotiating and in the book he says, you know, you get to the yes and everybody high fives and says wow the deal is done. But his quote that just resonates with me so much is “yes is nothing without how.” So, once you’re at that negotiating table and the buyer and seller agree. Now the seller is saying, ok how are we going to do this? How exactly are my clients going to be onboarded and how are my employees going to be onboarded? And until the buyer can show that in that dating process, I just think that firms are going to continue to fail especially with the how competitive it is right now with multiple buyers per seller. I just think that sellers are looking for that how just as much as well how big is the check. They want to know how is the onboarding going to go. Do you have a plan? I think so many buyers, they think well I’m just gonna throw my arm around the seller and give him a big hug, give him or her a big hug, and say hey buddy we’ll figure this out together. And I just think it’s just the wrong attitude. And you guys are doing so much on that laying out the framework and making the seller feel comfortable. I think you guys are gonna have success for years to come in that area. So, we can’t talk about M&A without, we have to talk about Shaun’s new book. Shaun just put out a new book. Partnered with Greg Friedman of Private Ocean. Called The Financial Advisor M&A Guidebook. So, in addition to the HIFON website, we’ll also have a link to this. You’re a busy guy Shaun. Can you tell us about the book and the motivation behind writing it?

 

Shaun Kapusinski: [00:49:34] Yeah absolutely. So, I’m a big believer in taking advantage of opportunities that come your way. So, through Bob Veres and his conference, Greg Freedman attended there on a regular basis. So, Greg and I both have a passion for technology and as we met and started having conversations we also started just kind of comparing what our firms were doing and conversation about M&A just kept coming up and really he felt that the industry didn’t have a lot from the, kind of you mentioned, when firms decide to come together and then it’s time to execute on what’s been decided, you know, that’s where operations gets involved. And technology is a really big part of that. So, as we’ve been talking about a lot of technology here in this conversation today, you can really see that every aspect that your firm decides to do imagine, you know, marrying that up with somebody else and certainly there are a lot of firms that are probably going to listen to this that have gone through it and they know that it’s not a perfect science. There’s very much experience to learn as you go and experience that you get as you talked to other firms and as you experience it yourself. So, you know, the two of us really liked the idea of sharing things on a broader scale. Certainly, HIFON has that as a part of its kind of core foundation being able to share in a broad way. So, for us, for him I’d say it maybe it was the natural conclusion that we needed to put a book out on this topic that hit technology and how two firms can integrate. So, in terms of the contents, you know, we wanted to share not only our experiences, but I ended up interviewing a lot of HIFON members. So, Greg comes at it from the angle of an owner-advisor and certainly what tech strategy is and how that should be considered early in the process. And obviously I come at it from the operations side, you know, executing on what those decisions are. So, we go through everything from that strategy to when you have to assess both sides into the different technology that each firm might be bringing to the table. And then what it looks like to bring those together and kind of how you deal with that and some of the discussion we had earlier really fits in to that topic. So, we excited to be able to do this together and you’re right it’s out. We’re thankful to have it published here and hopefully it’s gonna help a lot of firms as they go through their experiences in their M&A world.

 

Matt Sonnen: [00:51:47] Fantastic. I have really enjoyed this conversation. You guys have tremendous insights, a very unique backstory for both of you. I can’t thank you both enough for sharing your insights today.

 

Trevor Chuna: [00:52:02] Likewise. Thank you for having us. It has been great.

 

Shaun Kapusinski: [00:52:06] Thanks Matt, it’s been really fun.

 

Matt Sonnen: [00:52:07] Of course. So, and then obviously for those of you that are listening. Thank you. Please let other RIA professionals know about this podcast and the content that we’re covering in each episode. Please subscribe as I said at the beginning either iTunes or Google Play or you can just keep a lookout on our on our website. We’ve got a podcast section there. And PFI Advisors, we’re going to continue to work towards our mission which is to further evolve the RIA industry from a collection of practices to businesses and to be a continued voice in validating the industry as a legitimate landing spot for billion-dollar teams and their clients. So, thanks again for listening and we will speak to you all soon.