EP 31 – Transcript

[00:00:11] Luke Sonnen: Hi, I’m Luke Sonnen. Welcome to The COO Roundtable powered by PFI Advisors. Here’s your host, Matt Sonnen.

[00:00:24] Matt Sonnen: Welcome back everyone to Episode 31. We have two fantastic guests today who are both making a huge impact at their organizations and they both happen to be fantastic people as well. We’ve come up with a great pairing so I’m very excited about today’s conversation. First up, we have Natalie Wheeler of Berkshire Money Management. Natalie has been recently promoted to the Chief Operating Officer role after being with the firm for about a year and a half.

BMM is in Dalton, Massachusetts, which is in Berkshire County. I’m assuming that’s where the name of the firm came from. Being the Southern California snob that I am, I don’t really know the map east of about Phoenix. This was all news to me. I’ve always just said Natalie is in Boston but I looked it up as part of our research for this and Natalie, you probably know this but you are 130 miles due west of Boston. Like I said, this was news to me. Welcome, Natalie, and thank you for being here.

[00:01:20] Natalie Wheeler: Thank you so much for having me. I’m happy to be here.

[00:01:22] Matt Sonnen: Cool. Joining Natalie is Eric Stephenson from Align Impact. Align is headquartered in Los Angeles but also has an office in New York City and that is where Eric lives. I do know where both Los Angeles and New York are. Eric is the Director of Client Service and Operations and he’s also just been named to InvestmentNews’ “40 Under 40 list”. We have our first celebrity joining us here on the podcast! In all seriousness, Eric, congrats on that recognition. That’s amazing and welcome to The COO Roundtable.

[00:01:55] Eric Stephenson: I appreciate it, Matt. Thanks to you and the team for having me.

[00:01:57] Matt Sonnen: Cool. We’ll start with you, Natalie. Other than my silly geography lesson that I just gave, why don’t you tell us a little bit about Berkshire Money Management?

[00:02:04] Natalie Wheeler: Sure, Matt. You’re not the first one, of course, to think while you’re in Massachusetts, you must be in Boston. Berkshire Money Management is located in Dalton, Massachusetts, founded in 2001, celebrating 20 years this year, which is really exciting. We have $775 million in AUM and we have 15 talented employees.

Our ideal client is interested in long-term investing and planning. We want to help people achieve their life goals. We began the firm from a newsletter growing very quickly. Subscribers began to ask for money management and things grew from there. In 2004, our founder and CEO, Allen Harris, sold the newsletter business and in 2008, he came to realize that there was a need for investment managers. More people were hired and new clients were onboarded.

We are primarily organic growth oriented, and we can see that increasing with the referrals that are currently rolling in. Berkshire Money Management was voted “Best of the Berkshire’s” in wealth management last year. We strive to meet that goal again this year. We are currently in the process of opening up an additional office in Great Barrington, Massachusetts, and we’re excited to see what the future holds.

[00:03:14] Matt Sonnen: I didn’t know the newsletter history. That’s awesome. Eric, you were very patient with me when we first started working together because Align Impact’s model is a little bit different than the traditional RIA. It took me a while to wrap my head around how you work with clients. It goes beyond just traditional asset allocation and investment management work. Please tell us a little bit about the firm.

[00:03:35] Eric Stephenson: Absolutely. In 2014, our co-founder, Jennifer Kenning, she founded us to really be an impact specialist where our focus was co-creating and implementing impact investing strategies with individuals and families, alongside their advisors as well as other RIAs. 100% of what we do is impacting investing. Today, we have approximately 20 folks on our team who are fantastic. AUA is about $1.6 billion of assets. Most of them are private market mandates, which I’ll talk about a little bit later. The ideal client for us is somebody who’s looking to align their assets with their values and it could really come in two forms.

It could be the client and their advisor, and we’re working alongside them almost like a sub-advisor to create a portfolio that’s aligned with that client’s values, or we could be hired to work with a traditional investment advisor as an extension of their CIO’s office. In that role, what we’re doing is helping create products that are aligned with their clients’ values as well as training their advisors on how to think about placement of those assets into their client portfolios.

[00:04:38] Matt Sonnen: Great. I’ve never actually asked this question on the podcast, so I’m not 100% sure but I’m guessing, Eric, that you are the first pole vaulter to be a guest on the podcast. I read this in your “40 Under 40” bio that you earned a scholarship, this is amazing, to Temple University as a pole vaulter. I don’t know if you’re planning to talk about pole vaulting today but walk us through your career path and how you wound up at Align Impact.

[00:05:02] Eric Stephenson: Hey, absolutely. The funny story about pole vaulting is that I threw out my arm in baseball, which is the only reason I got into track and field, and they didn’t have any pole vaulters. That’s the beginning of my journey there but right after college, I knew I wanted to get into finance. My first job out of college was at Xerox in a global leasing group, great experience, moved over to a private equity firm called Hamilton Lane, first the fund investments team, and then ultimately found myself with a family foundation where my role was to source, do due diligence, and make investment recommendations for the corpus to become 100% aligned with the family’s values.

In that role, that’s where I came across Align Impact. We actually hired them as a third-party consultant to help with one of our impact investing mandates. When that foundation was 100%, aligned with the family’s values, it was just a serendipitous conversation with Jen Kenning about potentially joining Align Impact to do that with multiple families. In 2018, I joined the team.

What I like to say is I joined and looked for plants that maybe weren’t being watered as much as they should. That started with the Chief Compliance Officer role. I know we’re going to talk about compliance and the intersection with operations but that’s where I find myself today. Not just on the client advisory side, which is really how I came into Align Impact but then, as well as playing roles within the operations and compliance teams.

[00:06:26] Matt Sonnen: When you joined Align, you did the same thing you did with track and field. You said, “What are you missing?”

[00:06:31] Eric Stephenson: Exactly, that’s a great analogy.

[00:06:34] Matt Sonnen: “We don’t have a pole vaulter.” You said, “I’ll do that.” Align said, “We don’t have a compliance officer.” You said, “I’ll do that.”

[00:06:41] Eric Stephenson: That’s right. That’s great.

[00:06:42] Matt Sonnen: That’s fantastic. All right. Natalie, I didn’t see any pole vaulting on your LinkedIn bio but please give us your career story and how you wound up in your position today.

[00:06:51] Natalie Wheeler: No pole vaulting. No part of that to brag about, sorry. I began my RA career at Dion Money Management in 2010. Soon after that, Dion was purchased by Focus Financial and is now known as Atlas Private Wealth Management. I began in the newsletter division pitching portfolio views. From there, I was the assistant CCO. Soon after that, I moved to the Director of Client Services and then finally to Director of Operations and HR. You can definitely say I climbed the ladder. I was kind of a jack of all trades.

I built handbooks, I hired, I fired, I developed policies, streamlined procedures, I ensured that all general office and personal operations ran smoothly across the board. I was part of two acquisitions and was extremely hands-on with all the moving pieces. During my nine years with Atlas, I was constantly seeing Berkshire Money Management pop up in the news for the amazing things they do in the community, and of course, for their employees. I would occasionally chat with two BMM team members that I previously worked with at Atlas. We’d catch up and they would rave about the culture and just rave about Allen and what he does for the community.

One lucky day, I was contacted by Allen, and beginning January 2020, I came on as the Operations Manager to work closely with our CO at the time and to take on some compliance responsibilities. Thankfully, I was not starting from scratch. I was starting from experience. I knew I wanted to hit the ground running. As we all know, a few months into 2020, we were in a pandemic. Our then COO decided to venture out and explore other opportunities and my operations role became a lot more “all hands on deck”. I continue to wear many, many hats, and honestly enjoy every minute.

[00:08:32] Matt Sonnen: In addition to my, all the listeners know this, obsession with Eddie Van Halen, I have my obsession with Mark Tibergien. I follow and I think many of our listeners do, Gary Vaynerchuk, a big social media guy and his post this morning on LinkedIn said he met with one of his employees, she’s 32, and she said, “I’m just now starting to think about what I want to be when I grow up.” His host was saying, “That’s exactly right. You shouldn’t know what you want to do at 18 or at 22 or coming right out of college, you’re not supposed to know.”

I loved the story for both of you was just, I just got to a company and just asked what do you need? You just zigged and zagged. Everybody thinks everybody has these grand plans, but it really isn’t like that. Natalie, like you said, that’s the way you climbed the ladder, whatever is not getting done, as Eric said, whatever plants aren’t being watered, especially on the operations side, that’s how all of us have grown our career. I think it’s fantastic. You both touched on it in your stories there.

As I said in the intro, you’re both making a huge impact at your firms and you’re really standardizing and institutionalizing many of the processes and the procedures at your organizations. Eric, can you talk to some of the work you’re doing around professionalizing the firm?

[00:09:43] Eric Stephenson: Sure. Absolutely. I am an avid listener to The COO podcast, and you have a topic about the “evolving ideal client”. I think that that is how we built our infrastructure is that we might have had one client who needed a specific service and for the most part, it’s like in the beginning, you can probably run things through Excel or from your memory because you just don’t have a ton of clients. As you get more clients asking for similar things, you need to build things to provide that service at scale.

Our portfolio reporting became super important because the next thing you know, we went from doing five private investments in the first half of the year to this past year doing over a hundred. Not only do we run into issues with bandwidth around completing sub docs and servicing those, but we had to find some type of technology solution that enabled us to do it quicker so we can focus our time elsewhere. I’d say that that’s how our infrastructure was built. Where are we spending time today and where should we be spending time? How do you get there?

It’s you build the right infrastructure that’s tech-enabled and ultimately allows you and the team to spend more time with clients rather than reconciling data and making sure that numbers are correct. We went from building our portfolio management system to then saying, “Hey, we’re now being called to do some public market trading.” We need to be able to do that effectively. Our sub docs, which I recently talked about, and then all the monitoring and managing that goes on with private investments posts.

That’s how we built our infrastructure. Engaging the team like PFI to help us think through all the different vendors that were out there, I think ended up being super impactful for us in terms of making the right decision on the vendors that were appropriate for our business.

[00:11:29] Matt Sonnen: I’ve talked about my, and I always put air quotes around it, my “claim to fame” was starting Luminous Capital in 2008. I’ve always said in many ways it was easier in 2008 because the tech ecosystem supporting the RIA industry wasn’t where it is today. There weren’t that many choices. There are just so many choices now of who to work with. You’re exactly right. People are probably sick of hearing me say it, but I’ll say it again. I get the phone call all the time. “Hi, what tech stack should we be using?” I say, “I know you’re going to think I’m just trying to be a consultant here and try to talk you into this long, complicated engagement, but there is no best technology out there for RIAs because I have to know who you’re working with, what products and services you’re offering.”

You guys, Align Impact are much more. You needed a lot of help around alternative investments, private investments, way more than Berkshire Money Management would need, for example, or another firm. There isn’t just a “What’s the best thing out there in the RIA space?” I get the question all the time and it really does go back to who are you serving and how are you serving them?

[00:12:28] Eric Stephenson: Absolutely. Now, if I would add one comment there, it’s that we’re looking at across three different verticals, it’s private markets, public, and philanthropy. There’s really not just one system out there that can serve all three of those verticals. I think we went through a process of expanding the vendors we worked with and then consolidating overtime to those key vendors. I think that was super impactful to growing the right tech stack.

[00:12:52] Matt Sonnen: Yes. I think that’s exactly right. Natalie, I know you’re tackling everything from technology to HR, to marketing. You mentioned you’re even working on building out new office right now. Talk to us about some of the things you’ve done since joining BMM.

[00:13:07] Natalie Wheeler: Sure. I definitely have been working from the ground up. The first thing I did was learn our clients. What is working, what may need improvement. I started with our segmentation. That was already started when I began, but I definitely wanted to dive in and figure out our demographics. What we’re doing currently, what we could be doing better. I started on our CRM, which, of course, went along with our workflows. There’s a bunch of very useful workflows, but we need more streamlining.

With the team’s help, we dove into adjusting some things, and just made sure everything was super effective and great for our team. We did our CRM cleanup of classifications. I researched and implemented BombBomb. BombBomb is a site that provides video email marketing. It puts a face to everything. This was super helpful during the pandemic, it helps us build relationships through video, also archives things for compliance purposes, which was great. We sent birthday messages, we responded to emails with videos, and we sent follow-up videos. It was just putting that personalization, that face out there to our clients. Even though you can’t come in and visit us, we’re still here. We’re still your person.

Next, I wanted to learn everything about our employees. I met with each team member. I asked them what their current job looks like, what are you doing? What do you love? What don’t you like? What are you doing perhaps someone else should be doing? We developed job descriptions. We aligned tasks with the appropriate team members and our relationship grew from there.

Next was developing our employee handbook. I developed a 32-page handbook describing expectations and adding structure. Honestly, I expected a lot of pushback, but everybody was really, really great and really appreciative. Next, in the midst of it all, was, of course, taking on compliance tasks and learning exactly what tests need to be done, and drawing up instructions and the how-tos.

Thankfully, I have the help of NRS, which is the National Regulatory Services who do a lot of the compliance heavy lifting. That freed up some of my time and also my sanity to focus on other things. Most recently I’ve been working with our Community Development Director, narrowing down what in our marketing efforts are working along with reviewing our monthly marketing metrics.

As I mentioned, we have an additional office opening and it’s currently still in the construction design phase. Behind the scenes, the insurance is being prepared, items are being ordered and the team is getting excited to have a presence in Great Barrington. As I’ve learned over the years, no day is ever the same in the operations role. I continue to pick apart different things. What can I work on today? How can I improve? How can I streamline? How can I make the best experience for our clients, and of course, our employees as well?

[00:15:48] Matt Sonnen: Yes. Once again, it’s do everything around here that’s not getting done. Yes, you have a long to-do list. You introduced me to Bombomb, I’d never heard of it. It’s like when someone buys a new car, “Oh geez. I’ve never seen this car before.” Then every car you see on the road is that car. I’m now running into BombBomb with several clients and just seeing it over and over again. I don’t know it in great detail, but I know you guys have enjoyed it. Listeners, you might want to check that one out BombBomb videos. A lot of firms are definitely using it these days.

[00:16:18] Natalie Wheeler: Yes, our clients absolutely rave about it.

[00:16:20] Matt Sonnen: That’s awesome. You mentioned compliance, Natalie. In talking about all the impact you’re making, I wanted to also talk about time management. You’re juggling that huge list, you also have compliance on top of operations. Natalie, tell us just how you tackle each day so that you don’t get overwhelmed?

[00:16:37] Natalie Wheeler: Sure. How do I juggle it all? Man, I work with you. I’m thankful for my PFI team that I call my soundboard and my support, for sure. I have calls with you weekly to discuss all the moving pieces which we track. We chat about what I’m working on, what I’ve completed, what is new to my plate, and what do I want to be working on. As you know, Matt, there’s always a bunch of irons in the fire. To keep myself further organized, I use our Junxture CRM. It helps track HR, compliance, and operation tasks. I, of course, also use my Outlook calendar. Thankfully, as I mentioned earlier, I have NRS that does a lot of the compliance heavy lifting.

Honestly, it’s PFI and it’s also a lot of deep breaths, a little side yoga. Of course, I have a very great supportive team here that’s always lending a hand and being very helpful.

[00:17:24] Matt Sonnen: I asked that question, not hoping or asking for a PFI plug, but I do appreciate it. We love working with you, but you do a fantastic job juggling all of this stuff. I don’t want to take the credit. You’re doing an amazing job.

[00:17:40] Natalie Wheeler: Thank you.

[00:17:41] Matt Sonnen: Eric, how do you keep your sanity in your role?

[00:17:44] Eric Stephenson: I have a mug that says “You only have as many hours in a day as Beyoncé”. She gets everything done. She gets everything done because she has a rockstar team that works alongside her. Similar to Natalie, we really lean on a lot of our third-party vendors. I got to give a shout-out to Caitlin at Gordian Compliance. She is on standby on a monthly retainer and she’s worked alongside myself and others on our team to build out our compliance infrastructure, right from our business continuity plan to our code of ethics and our compliance manual.

It’s something that gets refreshed, but not only does it get refreshed, we have a calendar set up for the entire year that gives us reminders of when things need to happen. Both from a back-office compliance perspective, as well as when we need to loop employees in and give them that annual training. Gordian helps us do to keep our compliance and checking up to date, especially with the evolving rules. You really got to stay on top of that. Not just update your materials accordingly, but then be able to communicate that back to your team.

We also use MyRIACompliance, which is a tech-enabled tool that allows us to streamline a lot of the things internally, like when employees need to submit their quarterly transactions, where if they need to attest to using social media or ask for approval for certain types of advertising. We’re saying, “Hey, I received a gift, is this okay?” Being able to use a technology-based software that automates a ton of that has allowed us to free up our time to focus on other things while also feeling confident that we’re still abiding by the rules that the SEC imposes on us.

We effectively have recorded the activities from a compliance perspective if an audit were ever to come up. I think that’s the most important thing that I think about with my compliance role.

[00:19:30] Matt Sonnen: Yes, that’s great. The buck still stops with you. You can’t fully outsource compliance but I always recommend having that sounding board and just extra bodies that can save you a lot of time in that complicated compliance arena. I think it’s great. We’ve done compliance, we’ve done operations. Now I want to tackle HR. This is another area that I say all of our listeners are usually in charge of is HR as well.

Eric and Natalie, in your role is you’re both very much involved with attracting and hiring new talent. I’ll go to Natalie first on this one. Natalie, what are you doing to bring in talent at BMM?

[00:20:05] Natalie Wheeler: Our CEO, Allen Harris, just has a knack for finding great talent. I definitely have to say that but because we’re so active in the community it has not been difficult thus far to find amazing staff. We have someone that’s been here for 19 years. We have another person that’s been here for 13 years. Longevity is definitely here. One person on our team was an intern and is now an advisor. We have a few folks that were referred and some of our team members, Allen knew such as our Community Development Director, who he met through jiu jitsu. Allen has developed such an amazing, smart, hardworking team that puts our clients first. It’s a really great team to have.

As far as hiring, I am working on an internship program to launch next year to give local students the opportunity to shadow our talent and fall in love with the investing world. Also, since I’ve been here, I’ve added a structured onboarding plan and developed a training schedule to utilize for our future hires. But honestly, every person that’s here, people whom we look for, we don’t need to place ads, we don’t need to do anything like that. It’s usually a referral or someone knows someone, I think as we grow, we may need to utilize another platform, but right now, just being out there in the community is really what does it for us.

[00:21:16] Matt Sonnen: Yes, it’s a double whammy. Obviously, everybody’s focused on getting clients but just all that community outreach and being visible, obviously you’re visible to the employee pool as well, so it does work both ways. Eric, what are your thoughts on attracting new employees to Align Impact?

[00:21:33] Eric Stephenson: That’s a good question. Because we’re in this niche of impact investing and it is very popular with young talent who are not just saying, “Hey, I want to not only align my assets with my values, but my time and my talent.  I want to invest that in a company that has a mission beyond just itself.” I think we have a ton of great inbound applications for folks to work with us and we have three verticals on our team, investment research, operations, and then we have the client advisory. We do get folks coming to us for all three of those.

I think what we’re trying to figure out is, one, how do we make sure that employees are happy in what is just an evolving workplace post-pandemic? Whether it’s the flexibility to work from home or be in the office and I think what we’ve found is there’s just tremendous collaboration that happens when you’re in the office together, as well as trust that’s built but work-life balance looks still much different today than it did two years ago. Similar to Gordian, we rely on an outsourced HR team to help us figure those things out, as well as what are the rules and regulations of having a virtual team being in different states? How do you make sure that we’re abiding by those local and state laws?

I think my focus when it comes to folks joining our team is just every person has such a tremendous impact on our company culture. One thing that we thought we do is interview each person that comes on whether it’s for the investments team or operations team but as a family, they will spend time face-to-face or I guess, virtually with folks from each of those teams to make sure that we feel comfortable bringing that person into the Align Impact family because we are a team of 20. Everybody that comes in just has such a big impact.

[00:23:23] Matt Sonnen: Yes. We always say “Oh, a billion-dollar RIA, that’s a big, big firm” but in the grand scheme of things compared to JP Morgan, Microsoft, or whatever, it really is you go from 20 to 21 employees or from 15 to 16 employees that really does have a big impact on culture. It is always very important to get the hiring process right. I think that’s great.

[00:23:45] Eric Stephenson: Another comment I’d say there is just when you’re going from 20 to maybe 50 employees, each employee that comes in will impact that culture. I think if you get to that scale, like you had mentioned around JP Morgan, call it, 75, 100-plus, then I think your mindset’s a bit different because every employee that you bring in you’re almost saying, can they adapt to the culture, whereas in a smaller size you’re saying, what are they going to contribute to the culture?

[00:24:09] Matt Sonnen: Yes. I love it. That’s a great point. On previous episodes of the podcast, we’ve discussed the fact that many RIAs have the mentality of, “If you aren’t bringing in clients, you aren’t valuable to the organization.” It’s always about organic growth, always about client, client, client but I know that both of you have found a way in your roles to directly impact organic growth at your firms. Eric, I’ll start with you on this one. Personally in your role, how are you working to attract clients to the firm?

[00:24:37] Eric Stephenson: Yes, thanks. Like I mentioned, coming into Align Impact, I was the Director of Client Advisory. My job was to directly service the clients that we have, interfacing with investment research and operations to do that. As I moved over to the Director of Operations role, I continued to serve a lot of the larger, maybe more complex clients that we had and ones that I’ve built the deep relationship on since I joined the team.

I’m not sure if this is good or bad but if any of my clients are listening, I think as we built the operations. Being in the operations role and client advisory, it was cool and unique where I could ask a client, “Hey, can we beta-test this?” “Hey, we’re going to bring in a new, a third party or we’re going to use a new system can I use it with you and you provide feedback?”

To my surprise, as well as, just to the benefit of our company, a lot of them were excited to do it. They love the fact that we were looking to build something that was really meant to be customized to meet their specific needs, not build a platform and we say, “Hey, we’re going to fit you in this model.” I think is as we brought in more clients and as they’ve had unique needs, I think I’m the one that gets excited and gets put on those accounts and we say, “Hey, how do we build what you need?” I think that’s been great.

[00:25:55] Matt Sonnen: Perfect. Natalie, talk to us about the work you’re doing with advisors around their business development efforts.

[00:26:03] Natalie Wheeler: I’m definitely thankful that, of course, I worked for a firm that doesn’t believe that operations isn’t valuable towards organic growth. Advisors need to maintain a level of service that continues to impress clients and that means they need my hands-on support along with the rest of the operations team. As mentioned, most recently, I’ve been working closely with our Community Development Director and our advisors to review our marketing strategy. We’ve been tracking our current CRM. We’ve been focusing on “What is driving clients to us is?”

What could help, what maybe isn’t working? Monthly reports including the source field and the stories that go with it. This is not only to give us more clarity. This will also help in our marketing efforts. On top of this, I handle the day-to-day question, whether it’s about software we’re using or a compliance question, or why don’t we use a certain field in our CRM?

Just yesterday myself and one of our CSRs were discussing workflow improvements and streamlining to allow for advisors to work as effectively as possible with our clients. I think without myself and the operations team here, how would we grow? How would we best service our clients? Definitely, that’s the role I play and in the organic growth.

[00:27:11] Matt Sonnen: That’s great. I love that you say your firm doesn’t struggle with that. I know many do for our last question. I wanted to throw something out there that all businesses struggle with, whether it’s RIAs or dairy farms or toy manufacturers, whatever it is, and we’ve talked about it on other episodes of the podcast as well. I’ve referred to it as “profit versus growth” in the past but as the three of us have been preparing for this interview, we’ve been referring to it as “the chicken and egg conundrum”.

The chicken and egg conundrum is the question that all business owners have to answer, which is, do we invest in the infrastructure now early in our evolution when money is tight, or do we put our efforts into winning a few new clients first, and then that’s going to give us the revenue that will then go pay for the infrastructure? As operations folks, we tend to say, “Well, you’re never going to go out and win those clients unless to invest in the infrastructure to serve them.” Natalie, that I’m going to go to you first on this one, how do you think about this chicken and egg situation?

[00:28:09] Natalie Wheeler: This was a tough question. I’d like to start by saying both. This is definitely a tough one because growth in a profitable way, for sure. We have to focus on both. I think in regards to growth, I help more in indirect ways and the servicing infrastructure that I oversee to support the growth from a profit standpoint, it’s more direct responsibility. I can’t help people develop without growing. In order to strive, we need to challenge ourselves, make decisions that will pull our income back a bit in order to create a capacity to grow a bigger more valuable business that will create more income and that’s through reinvestment, by looking into communication platforms, such as BombBomb which I mentioned and by hiring and promoting within.

Of course in the early it’s grabbed the revenue in the later years, it’s what’s the bottom line, what is our actual profit? We did not want to take on business that cost us money. We’re currently in a position where we’re analyzing just this by reviewing our marketing metrics and what is working and what is not working currently, we’re staying focused on what we do now versus what we’ve done in the past. What our strategic initiatives are, we’re reviewing software or weighing what’s best for the firm, what is best for our clients.

In order to continue to grow, we need to make sure our team’s talent is utilized and in its best capacity while making sure we’re not overspending on things that we can either do in-house or in a much more effective way. I guess my answer really is both over the long-term.

[00:29:38] Matt Sonnen: Yes. Both is a good answer and I love growth. How did you say it? Growth in a profitable way. I think that’s perfect.

[00:29:44] Natalie Wheeler: Yes.

[00:29:45] Matt Sonnen: That’s right. Eric, how do you tackle this conundrum?

[00:29:47] Eric Stephenson: After Natalie’s thoughts, I think my original response just got a little discombobulated. I think it’s our business pretty organically with an eye on profits and I think in some years, we’ve treaded the line of that profit. What can we do to make sure we’re breaking even? You can say we did it the old-fashioned way. You make revenue, you hire somebody else. You make revenue, you buy another piece of software that’s going to enable you to work a little bit faster, and ultimately our eye is on what enables us to spend more time with the client.

If it’s a question about, “Hey, can we purchase this piece of infrastructure today, or do we wait?” I think ultimately our minds go to something that was said in a previous COO Podcast episode. Where they said that the operations or infrastructure should be the performance-enhancing drug of your company. Whether that’s a good analogy or not, I think it makes sense because our job is to enable the rest of the team to do things faster and to be stronger and to focus on what’s important and that’s the client.

I think we always look at it from that framework. Will this allow us to spend more time on what’s important? There question becomes, in the grand scheme of the budget, do we have to focus on the growth now and potentially keep an eye on profit? Then I think the third door that maybe we don’t talk about too much, is this so important that maybe we need to go out and raise the potential outside capital to fuel the growth that’s needed today for the sustainable business of tomorrow?

I think we look at those three things, not just the profit and the growth, but also if at any point, we need to build something ASAP, do we need to go out and raise outside capital? We haven’t had to today, but I think it’s certainly a discussion today, as we think about the future of our business.

[00:31:32] Matt Sonnen: I’m going to do you a favor. I’m going to make a big point here that you said to go raise outside capital. You guys will handle that yourselves. All the vultures circling all the investors in RIAs right now. I don’t want your phone ringing off the hook, Eric. Eric will take care of that when he’s ready.

[00:31:51] Eric Stephenson: Do you want me to switch up my answer then because that’s a –


[00:31:55] Matt Sonnen: I just wanted to point that out [laughs] that I don’t mind. I struggled with it. I’ve had opportunities. People have said, “Hey, let us give you some money to invest in growth”, and I’ve kept it slow growth, growth in a profitable fashion. I’ve said, “No, I’ll just go out and get a few more clients, so thank you very much.” We may hit that inflection point at some point, but for now, six years in, we’ve just started one client at a time as well, nothing wrong with that.

Well, that is great. You both have been fantastic. Natalie and Eric, thank you both for being here today and sharing your thoughts on these tough topics that I know all of our listeners are dealing with. I think everyone learned a lot from both of you today, so thank you both.

[00:32:34] Natalie Wheeler: Thank you.

[00:32:35] Eric Stephenson: Thank you so much.

[00:32:36] Matt Sonnen: Well, that is a wrap on episode 31. We will talk to everyone soon.