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EP 50 – 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 everyone to our milestone episode of number 50. 50 months of highlighting the COO role and the need for professional management in the RIA space. I will say that in investment news’s most recent compensation report, they had a small tidbit in there that caught my eye. Under trends in compensation, they called out the COO position specifically, and they said, “The position has experienced a consistent rise in its recognition and value over the past four years. Since 2019–” which coincidentally 2019 was the year we started the COO Roundtable Podcast.

They said, “Since 2019, it has had the largest gains in compensation, perhaps reflecting the increase in the responsibilities and recognition of COOs across the industry.” Now, I don’t know if we are allowed to take full credit for that or not, but I can’t help but think that our podcast has had some effect on the recognition the COO role has had in our industry. I’m very proud of that acknowledgment in the investment news report. That’s enough of me patting myself on the back. Let’s get into today’s-

[00:01:37] Scott Brown: That was good.

[00:01:37] Matt Sonnen: Joining us from Cassaday & Company is Allison Felix. She’s the managing partner and Chief Operating Officer. I first learned of Allison when she did Michael Kitces podcast last year. The title of her episode, obviously, caught my eye. It was From Executive Assistant to COO, Scaling a $4 Billion Advisory Firm. I thoroughly enjoyed her conversation with Michael.

One quote that stuck with me, and I actually shared it on social media when the episode first came out. She said, “If you aren’t interested in all facets of the business, then you really shouldn’t be a COO because you’re responsible for so many different elements of the organization.” Right then and there, based on that one quote, I thought, “Okay, we’ve got to have her on our podcast.” I’m glad we finally have made it happen. Welcome to the COO Roundtable, Allison.

[00:02:32] Allison Felix: Thank you, Matt. What a great introduction. I’m so happy to be here.

[00:02:35] Matt Sonnen: Great. Thank you. Then, joining Allison from Pinnacle Associates in New York City is Scott Brown. Scott currently holds the title of President, but during his eight years at Pinnacle, he’s held the titles of Chief Operating Officer, General Counsel, and Chief Compliance Officer. He can definitely speak to all of the topics that we like to discuss here. Scott, I was thinking about it the other day in preparation of this interview, other than Bill Williams in Fidelity’s family office division, I think you’re my oldest friend in the RIA industry.

I don’t mean you personally are old, I mean I think I’ve known you longer than probably anyone else in this industry. For those of you that don’t know, Scott was my compliance consultant when I was the COO and CCO at Luminus Capital. Just like our Fidelity relationship, I’m sure I started speaking with you, Scott, several months before we launched the firm. I would guess I have been speaking with you extensively over the years since probably 2007.

[00:03:38] Scott Brown: Yes. That is a big compliment to know that I’m one of your oldest friends in the industry. I was thinking about the same thing when I was prepping is, man, we’ve known each other for a lot of years. I appreciate you having me on the podcast. I’m looking forward to it.

[00:03:53] Matt Sonnen: Great. Allison, I’m going to let you kick things off. Why don’t you tell us about Cassaday & Company?

[00:04:00] Allison Felix: All right. Happy to do that. We have been around since 1993. We have our own milestone this year, which is our 30th anniversary. We’ve been an independent, comprehensive wealth management firm. We’re hybrid RIAs. We do have a broker-dealer affiliation. In 2021, we also entered into a partnership with Focus Financial. Currently, we have about 85 employees depending on the market activity. We manage about 4.5 billion in assets.

Primarily we’ve grown through organic growth, targeted mailings to seminars that we try to stay away from focusing on product or strategy and make them more an educational opportunity, the basics of investing type of thing. Over the past few years, we’ve seen shifts in how that growth has come about, referral dollars, clients who have money elsewhere. It’s been a healthy three-way split. Because we’re right outside of Washington, DC, we actually attract a lot of former military and government employees. A lot of clients who are on their second careers, consulting roles are pretty prominent in this space. We’ve really been blessed to be in a great area for the type of business that we’re in.

[00:05:20] Matt Sonnen: Great. Scott, tell us a little bit about Pinnacle.

[00:05:24] Scott Brown: Pinnacle, we’re founded in 1984. We’re about 65 employees and a little over 7 billion in AUM. There are really two sides of our business. We have the traditional wealth management, and that’s clients are John and Jane Smith. We manage their trusts and individual accounts and all the things you can think of a typical wealth manager. Then we also have an institutional side. Our main strategies are, there’s a small mid-cap strategy and international and some global strategies.

Then, typically, your client might be an endowment, a foundation, a pension plan, a corporate plan. We use mostly equities and fixed income. We do all that in-house, which is pretty cool, and I think is helpful. Most importantly, when I think about our business, and I was thinking about prepping for this, who are we? I know Pinnacle’s made up of good people, and the firm’s got really good bones, and we’ve been around for, again, almost 40 years, and internally, we call ourselves the Pinnacle family.

We have really low employee turnover. People have been here for 15, 20, some people have been here for 30 years. I remember about a decade ago, I was sitting in this big conference room and I was interviewing for the job, and I was getting pelted with questions by the board. One of the questions I got to ask was, “Is there turnover–” like, “How long do people stay?” It’s one of those questions you want to ask, “What am I getting myself into?” Even though I knew about their reputation.

They said, “No, people have been here for a long time.” They gave examples and I talked to a few people. Long and short, almost a decade later, it’s really proven out. In fact, at our holiday party this year, we were given the speech and celebrating about six or seven 20-year anniversaries, so that’s pretty cool. When a new person starts here, I like to joke in my– and remember we’re in New Jersey, but I like to joke in my Don Corleone voice about the family. I said, “You know, once you come to Pinnacle, in the Pinnacle family, you can never leave the family.”

Matt, you didn’t know what you were getting into, so I’m sorry to kick off this podcast with cheesy impressions, but now you got me. It’s going to be a crazy podcast. Also, a few of our offices are in New Jersey, so that joke goes over much better. In all seriousness, it’s probably the biggest thing I’m most proud of when we talk about who Pinnacle is and what we do is people stay here. I think that’s a testament to what was built long before I started. Ultimately, I think it translates into a really positive client experience. Anyway, Matt, the guardrails are off. We’re doing impressions this early, so let’s get this thing kicked off, but that’s–

[00:08:18] Matt Sonnen: Yes. I’m going to stick with you, Scott. I’ve given away some of your background. I mentioned Market Council, I mentioned all the different roles you’ve had, including impressionist at Pinnacle, but walk us through your career path to where you are today.

[00:08:35] Scott Brown: Happy to do so. I actually started my career as a litigator at one of these large law firms in the New York City, New Jersey area. A few years in, I was working on this case and the client we were representing was suing for, I think, around $600,000. I was a young attorney and I was able to negotiate this settlement to get him, I don’t know, $585,000 or $590,000, basically everything he was asking for.

I was excited. I went back to the client, and I’m this young attorney, and I’m waving the victory flag, and I’m patting myself on the back. I’m like, “We did it. We did it.” I get on the phone and he starts yelling at me. “I’m paying you to be a paid pit bull, and I want every penny, now go back, get me my money,” and this and that, and blah, blah. This was a legitimate large law firm. It wasn’t the shop. It was a legitimate law firm.

It wasn’t the only reason, but that was definitely one of the moments when I said, “I don’t want to be a paid pit bull. I’d rather be a mentor, an advisor, a creator, a builder.” I looked around and I ended up getting a job at a law firm and a consulting firm that specialized in helping people, among other things, leave that wirehouse model and build and create their own RIAs, and everything that’s involved in doing that. Actually, that’s how, Matt, you and I met years ago.

For about a decade, I lived, I breathed, I ate everything RIA for nearly a decade at that firm, compliance and operations and practice management and corporate and employment. I just tried to eat it all up, and then, ultimately, I was presented with an opportunity to go in-house with Pinnacle. As you said, I started as the GC/CCO, and I really tried to take every project I could get my hands into everything, just insert myself anywhere I could. A few years later, they asked me to take on the COO role which I enjoyed.

Then a few years after that, they asked me to take on the president role, which was a great honor, of course. That’s where I got where I am. I think it all started with the recognition that I knew what I didn’t want to do at that law firm. I needed to do something else that fit my skillsets better. I was always interested in securities and securities law, and I ended up getting interested. If I’m getting long-winded, you can stop me, but we’re in a podcast. We want to tell stories. We want people to be engaged.

Before all of that, and not to get too depressing or somber, but it’s interesting is– this was before I went back to law school. It was about 1999 maybe, or 2000 I think. I applied to be a paralegal at a law firm at the World Trade Center. I got turned down. Who knows what would’ve happened a year later? No one knows, but it is amazing how the little things, these little failures can have such a great impact on the trajectory of your life. That’s where I am. Matt, not only impressions, but this is going to be a philosophical conversation today, obviously, too. I’ll keep going, but that’s me, and that’s how I got to where I am.

[00:12:06] Matt Sonnen: I’m a big fan of Gary Vaynerchuck. He’s on YouTube and he does a podcast and everything else.

[00:12:12] Scott Brown: He’s great.

[00:12:14] Matt Sonnen: He talks about that a lot. People always stress about the decisions they’ve made in their life, and they look back, and they go, “God, I probably should have made that decision instead of this decision.” He says, “You have no idea.” You hear the stories of meeting your wife or whatever. You could have gone to some other party and you wouldn’t have met your wife that night, or you could have gotten the dream job, but it would’ve resulted in too much travel and a plane crash or whatever, but he talks about that exact thing quite a bit.

[00:12:40] Scott Brown: He’s good too. I know him. He’s excellent. I listen to him a lot.

[00:12:44] Matt Sonnen: Absolutely. Allison, I mentioned your path from executive assistant to managing partner and COO, but talk to us in your own words about your progression.

[00:12:55] Allison Felix: I didn’t know what I was getting myself into like with Scott and his impression. I feel somewhat ill-prepared to battle for best entertainment on the podcast. I better step it up here.

[00:13:09] Scott Brown: We’re working as a team.

[00:13:11] Allison Felix: We are. We are as a team. Not that this is the comparison of the Kitces podcast, but I had heard your story when you were talking to Michael, and it just resonated so much with me about falling into this career. In particular, for me, it was the industry. I had studied communications in college, specifically public relations, thought that was a path that I was just determined to go down. I really didn’t feel that I resonated with most subject matters in school until I got to that point of my course of study, and then things just took off.

However, I was one of those kids who just decided, “I’m not going to move home after graduating,” and so I stayed in Virginia, which is where I had gone to college, had a new place in a new city. I had an internship that was wrapping up, and I thought, “God, I really need a real job.” My parents aren’t here. I’m not living at home. I need to make some actual money. I went to the career center at the university that I had just graduated from. Through that, I found a job posting for Cassaday.

I had no idea what was going to come of that. I just thought I just need to not starve at this point. I’ll take not anything but close to it. Came in, had an interview with a very lovely woman, and then the firm’s president came in and he introduced himself, and I said, “I know you.” It ended up that he had also been a graduate of my alma mater and had spoken on campus the prior year, and he made such an impact that I remembered him. We hit it off. His opening line was, “You have freckles, you’re hired.” We both have some Irish blood–

[00:15:09] Scott Brown: That’s correct.

[00:15:10] Allison Felix: The jokes ensued after that. I just started a few weeks later, and we’ll be celebrating my 22nd anniversary in July.

[00:15:19] Scott Brown: Wow.

[00:15:20] Allison Felix: Who knew? Coming out of college, didn’t even know what a financial planning or investment management firm really was. I knew Wall Street in New York as an idea, a concept. Had no idea that that would be somewhere that I would spend over two decades later. At the time that I started, we were a small firm. Probably resonates with a lot of your audience. We had 12 or 13 people at that point. You just wear a lot of hats. Though I was hired to be an administrative assistant, I was also the office manager. I’m paying the bills, running the payroll, charging clients.

I was, and still am, a horrible waitress, and so I dreaded bringing my boss his cup of coffee in the morning. It was panic-inducing because I just was so fearful of dropping it, spilling it. There may or may not have been a long trail of coffee stains on the light blue carpet from the kitchen to the office. Years later, as I was in charge of renovations and expansions for the office, I 100% made sure to get a coffee-colored carpet to alleviate that pain for anyone who came after me.

As we grew, I think a lot like firms that are becoming aware that, A, an Ops manager, an Ops director, a COO, is necessary. It just became clear that we needed to start segmenting roles at the firm as we grew. We hired him a new executive assistant. For a while, we shared that resource for administrative support. One of those is still with us today. She ended up taking over the CFO functions for the firm. Later we hiredstaffto take on client billing, things like maintenance and facilities, marketing, and just so on and so on.

At some point, I feel like I fell into oversight and strategy, managing staff, facilitating client board meetings, leadership team strategy. Other than just being the sole doer of those things, I was now put in a position because of tenure and experience, learning on the job, to take on this role as COO. It’s been a crazy ride, but I’ve loved every minute of it because my favorite part is walking in and not knowing what’s going to be on your plate that day.

There are people who are so well suited for trading, for instance. They know where they’re going. Outside of market activity, they know what their day’s going to entail. I don’t know if I’m coming into a client concern, staff excitement. Scott talked about celebrating milestone anniversaries. We have three employees coming up who are celebrating 15-year anniversaries. That’s the stuff that just gives you something to be proud of, having watched those people succeed. Again, didn’t know where I was going to go, didn’t know that this was the path I would take, but I’ve really just been loving every minute of it.

[00:18:28] Scott Brown: Matt, if I could jump in just quickly. Coincidentally and anecdotally, before I knew I was going to be doing this podcast with Allison, I was at a conference, which I’ll talk about in a little bit. I was listening to the COO of Cassaday & Company, and he did a great job, but coincidentally, he was telling his story, and he gave this incredible testimonial to Allison, telling a little bit of your story from where you started to where you are, and said how integral you were to the firm.

I say that one because I want to give you that testimonial, but the other reason, it’s just funny that literally two days later, Matt says, “Hey, I think I found a partner for this podcast.” I said, “Wah, I just heard her name at a conference.” He was telling that story as well, which is really pretty cool.

[00:19:17] Matt Sonnen: It is cool. Allison, you talk about you walk in every day and don’t know what you’re hitting. One thing we talk about a lot on this podcast is the fact that there’s no owner’s manual or well-defined roadmap for the COO position. Each firm is run very differently. Each COO is going to have a unique relationship with their CEO. Many times, it’s up to you to just figure things out while you’re on the job. I’ll go to you on this one first. As you’ve climbed the ladder within Cassaday & Company, you obviously have taken it upon yourself to grow your skillset and advance your career. What resources or strategies have you employed to pull all of that off?

[00:20:00] Allison Felix: I’ve been lucky that I didn’t always have to take it upon myself. I’ve had really supportive leadership at the firm, and so growing my skillset has never been something that I had to ask to do. It was about 15 years ago, our CEO approached me about going back to school and getting an MBA. I talked about not always being the best student until I found the coursework within my major where I really got excited about the material. When he came up with this idea that I would go back and get my MBA, I’m thinking, “Gosh, I feel like I barely made it out of algebra. I’m going to go get a master’s in business.”

Panic, I would say, was my initial reaction. However, I have a super competitive no give up nature. As soon as we talked about the idea, I was immediately researching programs, applying, and just the interest level in the business didn’t subside after that. Honestly, that’s only the formal strategies for growing my skillset. I think that there is so much to be said about surrounding yourself with people who can help through experiential learning, seeking out people who are in similar roles to mine, and learning through that, I still do that. There’s no point in time where you’ve been a CEO or a COO for a certain length of time where you can’t learn something.

In 2016, I had started meeting several women COOs in various industries that were local to me, and I just felt like I was gaining so much from them that I wanted to take that and expand it out further. I developed the Northern Virginia Women’s COO Forum and got these women together in the same room. I felt like regardless of industry, they could cross-share and really just talk in a low-pressure, low-commitment way, and share across themselves.

I think the best part about an operations role is that 90% of the job crosses industry boundaries. There’s nothing that says HR for investment managers is going to be drastically different than HR for a marketing firm. There are learnings that can be shared across those. For me, the growing, the continuing to seek out people who are in roles similar to mine was probably where I did take it upon myself and sought out other opportunities for learning.

I know that, Matt, we’ve spoken about your practice, and I am such a proponent of business coaches. We believe in using coaches, and I’ve been working with the same business and leadership coach for my 22 years at Cassaday. She’s been invaluable to my own personal and professional learning. Again, someone who inspires you to be better and can share with you based on their experience is just the type of people you should be surrounding yourself with because the other stuff, the transactional, the tactical skill set stuff, that can be learned.

This other more interpersonal learning is something that really you have to be open to and seeking out. For me, I find that that’s what gives me energy, introvert, extrovert, whatever you may be. It’s the personal stories, the connection which I think you’re bringing to your audience with us being able to share our experiences and our stories. For me, that’s really how I look at growing my skillset.

[00:23:46] Matt Sonnen: I love it. That’s a fantastic answer. Scott, I know running operations for an RIA can sometimes feel like you’re on an island all by yourself. What have you done to continually learn?

[00:23:58] Scott Brown: Education, education, education. I try and read books on management skills and running an advisory business. Is it all right if I drop a couple book names on this? [crosstalk]

[00:24:10] Matt Sonnen: We love book recommendations, absolutely.

[00:24:12] Scott Brown: Good. Some of these are cliche and people might have read them already, but Traction by Gino Wickman I thought was a really good one on goal setting in a variety of different things. Mastering the Rockefeller Habits, an old one. The Enduring Advisory Firm, I think, by your buddy Mark Tibergien, who I know as well. I think he’s been on the podcast before. He’s written a lot of stuff that I’ve read which is good. The Ensemble Practice maybe for smaller advisory firms but books like that which are a combination of leadership, organization, time management, and then things very specific to the advisory industry have been invaluable to me.

Then I try to set aside about 15 minutes each morning to read something, and maybe it is 20 pages of a book. Maybe it is an article in the Wall Street Journal, but something to kickstart the day and to learn something new. Then I try and carve out time, more time, a larger block of time on Thursdays, which is my me day, to read and to focus on bigger projects. I think self-education is huge and learning again from people who’ve gone through it before and gone through it successfully is big.

Joining organizations with peers, I love what Allison said. She actually founded an organization for her peers and this think tank of COOs. I think that’s wonderful. I agree. Joining organizations with peers. There’s a variety, and one of them– and, Matt, I promise listeners, Matt did not pay me to say this, but I joined the COO Society when I saw it come up, and I knew Matt’s reputation, and it came out when I was a COO run by PFI. There’s just a lot of great content and networking and materials and videos and practice and stuff. Matt knows everything about the RIA, so that was really helpful.

[00:26:13] Matt Sonnen: Check in the mail, Scott.

[00:26:15] Scott Brown: Thank you for that. I appreciate it. I’ll give you my address afterwards. Seriously, it really was helpful. Then I tried to go to conferences. One of my own professional goals this year was to do a conference a quarter, either speaking or attending, or whatever it was going to be. The way it worked out just by invitation and timing, I’ve had the opportunity to go to three already this year, and I try to obviously get value from the listeners every time I go, but I also try to make one new contact each time I go.

Maybe that contact is a potential M&A target. Maybe it’s someone that we could bring on in a certain role, an employee. Maybe it’s someone in a peer group. As Allison said, surrounding yourself with peers and people in the industry and networking and talking to them, and learning from them– At these conferences, you get so much time to just be a sponge and absorb what people are talking about.

Lastly, along the lines of the business coach idea that Allison referenced, I try to talk regularly with people at Pinnacle here at our own firm that doing this longer than I have and been doing it successfully and learn from them and set up time and carve out time and prioritize that so that I can learn and absorb. Those are probably the key ways in which I try and invest in myself and continue to learn.

[00:27:40] Matt Sonnen: Great. Thank you again for the kind words about COO Society. I do appreciate it. Our listeners have heard me say many times, I believe 75% of a COO’s job is HR, meaning it’s about leading people. It’s about removing roadblocks for your employees, being a steward of the culture of the organization. Allison, how do you go about tackling that side of your job?

[00:28:06] Allison Felix: Are we sure it’s only 75%? I think that’s a tangible number depending on the week. Matt, I’m just going to reiterate a comment that you made already which is no two firms are the same. Growth and management challenges vary. The stages that I speak about are really only from my own experience. The COOs in your audience know that HR-like marketing is so multifaceted. You’ve got policy, recruitment, compensation, labor laws, personnel management. Those were some of the responsibilities I feel like I held onto the longest.

As we grew, I felt that there had already been a trust established there, both with my boss but also with our employees. It’s been hard for me to let some of those go. Now maybe it’s because I gravitate more to that interpersonal connection, but I think as we grew, staff were really clamoring for additional resources there. My boss often likes to say, outside of complimenting me, Scott, he also tells me I don’t know how to cry uncle. It’s one of my best and worst qualities because delegation can often be a challenge.

I would say that with HR that’s one topic area where I somewhat begrudgingly came to a point to recognize that we just needed more support there. It was in 2019 that we brought on our first additional HR hire. Honestly, she’s been a godsend. She manages the entire load of HR with some guidance and oversight from me. Again, I talked about the pride in seeing people thrive in a role that they can really commit themselves to. I equate it to the joy that a parent feels when their kid takes off on a two-wheeler for the first time.

You feel like, “Oh, it’s only something I can do. I have to hang on to this.” Yet, when you see what someone else can do, with a role like that, I just feel like it’s been amazing. It just allows me the freedom then to step into further strategic planning, provide experiential benefit, especially to those younger staff. At this point, we’re ready to hire even more within the HR space. As firms grow, they uncover a lot of different challenges associated with HR. There’s that inevitable benchmark when you get to over 50 people and suddenly there are different rules and things that apply and suddenly you’re dealing with a lot more personality types and needs.

It’s been very much a learning part for me. I get to stay in the sections that I like. Personnel management, certainly jump in if there’s legal considerations or just to, frankly, a situation that’s never come up before. I think that’s one of the things I like about HR. You just never know what’s going to come up and what is your role as an employer legally, but also, frankly, just person to person with a heart. You want to treat your people like people but make things fair. I find that there’s so much that’s exciting about HR. Kristen Woodson is the person that I was referencing before who has come in and I definitely feel like I waited too long to let go of some of those HR functions.

Learn from me who didn’t learn soon enough that no matter what the subject matter is that you love and you hang onto and you feel like you can’t delegate because simply no one else could do it like you. There’s such good things that can come from doing that. You’re right, 75% or more is probably HR but that can ebb and flow and you can really get support, again, from a network of other people as your firm grows. I definitely understand the days of one person wearing all those hats, it’s a real challenge to try to recruit and also deal with benefits administration. Those are two very different things, but it’s just such a multifaceted component of the business. I still really love it.

[00:32:24] Matt Sonnen: Scott, in your role, how have you impacted the culture at Pinnacle?

[00:32:30] Scott Brown: You’ll definitely have to ask the rest of our team here how I’m doing it. I hope it’s had an impact. There’s a few things. There’s fun stuff we do. We’ll do a little team event, especially during COVID. We did game nights on Zoom. We’ll do raffles on the intranet, we’ll raffle off an iPad, we’ll get social get-togethers, we’ll do stuff like that. A lot of firms do this, and I think all of the really good firms do this really well culturally, it’s almost table stakes. They have to ante up to do this to be competitive culturally.

I think another important way a person can, or I’ve tried to impact culture and maybe it’s more of some of the intangible things is, for example, I try to in my interactions with people, listen first and talk second. My father was in a different profession, but he held a leadership role. I asked him, as I started taking on more leadership roles, what’s the best piece of advice that you can give me? How can I be a good leader?

He said, “listen first and talk second.” It’s a simple concept but if you think about it, how many people in your personal and professional life interrupt you while you’re talking? They’re not bad people. Usually, they’re just eager to get a thought out. They don’t want to forget it. That’s what it is. It’s a killer when you’re trying to be a productive manager, especially being a manager from a cultural perspective, listening first and talking second really serves at least two key purposes. One, it allows you to gather all the information before you formulate a response.

What better way to do it than actually have all the facts? Then you can give maybe more comprehensive and thoughtful response to the people you’re working with and especially staff that you manage. Two, I think more importantly, you let your employee contribute and feel valued. Making people feel valued is one of the main things I think you can do to address culture. You actually hear them and not just listen, but you hear them.

That’s one way that I think hopefully I’ve helped impact culture. Also, I try not to have any meetings without agendas. We’ll designate a person to create an agenda, send it out in advance so people can prepare, and then we try to stick to time limits for each agenda item. Why does this help culturally? I just think it helps to make meetings more efficient and enjoyable. You don’t have a person going off for an hour on a topic and the rest of the people are rolling their eyes and no one’s prepared.

Listen, we’ve all been victims of this, I’ve been victims of this. You sit there and you said, “What the heck did we accomplish in that meeting?” I wanted this to be better for people. That’s one of the things we’ve done here is we basically said no meetings without agendas in advance. Another way is hiring for culture. You guys have talked about this a little bit about surrounding yourself with good people but one of the things we’ve tried to do is remove the cultural cancers that were here. Give them a chance, but if it’s not going to work, you go to rip that band aid off if you know it’s a slippery slope and they poison the rest of the group.

Not that we’ve had a lot of it, thank God but every firm has at least one. Equally important, we’ve tried to hire based on culture. Of course, do your due diligence, ask the right questions, ask cultural questions, but also try to get to know someone before you hire them at whatever level they come in. If it’s not me, then their department head should take them out. Take them out to lunch. Don’t do it all in a boardroom but get to know them. Get to them. See how they treat a waiter; see how they interact with people.

I think hiring for culture is something we’ve tried to do here. I think that’s helped. Finally, another way, and I did not invent this idea. This is not a Scott Brown original; I assure you, but I love it. I think it’s really important that people in management roles recognize they don’t drive performance of an organization. Leaders are supposed to drive the people who drive the performance of the organization. What we try to do, instead of always asking, “What can you do for me? What haven’t you done for me?” I’m not JFK here, but instead of asking that question, “What tools can I surround you with to be successful?”

If you’re hiring the right people and you’re surrounding them with the right tools, then that helps cultural measurably, and I tried to do it, I’m not perfect but I’ve tried to do it, as I really want to show our family, our team that we care about their professional development. Get them training, listen to them, do all of those things. Whether they stay at Pinnacle forever or whether they leave, we say, I want to support that growth. Those are perhaps some more intangible ways in which we try and build a strong culture here at Pinnacle.

[00:37:33] Matt Sonnen: Some great tips in there. Really good. Let’s switch now. That’s how you’ve affected the firm inwardly. Now let’s talk about how you’ve affected the firm outwardly. Scott, I’ll stick with you. How have you shaped the client experience in the services that you offer to clients?

[00:37:51] Scott Brown: I’ve tried, and we’ve tried to do a variety of things. We’ve talked about– we have two sides of our business. On the wealth management side of our business, I think like many firms, we’ve tried to build a more holistic wealth management offering. To do that, you need the right mix of service and staff and technology and all of those things that you throw into the bag of that. In my role, I’ve been involved in working with our different portfolio management teams to hire CFPs. Talk to them about what the needs are.

Some CFPs may have more experience with estate planning and others may have more experience in a different area. Again, getting back to hiring, it’s a big theme of the podcast today. That’s one thing we’ve done. I’ve worked with our existing staff, existing employees who may not have a designation of CFPs, CFA to try and encourage them and promote a program that has them taken. Professional development and the firm will pay for it and celebrate it when it’s over.

Again, taking people who are all-stars or potential all-stars and giving them those tools to succeed. Then general stuff, I think a lot of people in our role do this but working with our staff to determine what services should we offer? Financial planning, charitable planning, tax management. What does that service look like, what are we missing, and what do we need? That’s a bit on the service side. We’ve been able, since I’ve been here, to bring in a CRM system to the firm which, as everyone listening likely knows, is just really key to managing client relationships.

We have upgraded our client portal in quarterly reporting. We looked at what we had; it wasn’t where it needed to be. We went out and purchased a more user-friendly interface for clients and came up with prettier quarterly reporting, and all the things that we should be doing. I think that’s really made the client experience better. Then on the institutional side of our business, a lot of that is related, but we have tried to always hire good and seasoned sales and client relationship people on that side of the business and bring in the technology that they need. It’s very performance-driven and brings in other staff that supported that. Performance analysts and things like that.

Then a final way would be content. Try to work with our teams and encourage them to develop fresh and meaningful content to send to clients. Something that people need. Those are some of the ways that I can think of how we’ve tried to shape the client experience and make it a little better.

[00:40:37] Matt Sonnen: Great. Alison, how have you impacted the services that clients receive and how they receive them?

[00:40:45] Alison Felix: Our founder is really the visionary for our firm. I consider it my mission to then make his visions come to fruition, but I also know that I can’t do that alone. I mentioned earlier that the firm has developed a leadership team. To bring in the power of your experts, your top leaders, and then talk about how they all approach service, whether it’s new service that’s being brought to the firm for the first time, but also improving upon current services.

I think that one of the best things we ever did as a group established a client advisory board. It’s not something that would fall within the traditional definition of client services, but it’s the number one way that I think we’ve been able to find out what’s on the minds of our clients and what they would hope to get from us as an advisory firm. I know I’ve mentioned that in the past and there are a lot of firms that have questions about how we do that. How do we decide which clients might be on the board? How long do they stay on it? How are we facilitating these conversations?

It’s definitely something that, much like a COO position, there’s no manual to do it. There’s no roadmap. We have found that meeting with 10 to 20 clients, depending on how big your firm is, because we’ve been doing this since probably 2002, is the best way to get various perspectives around the table who are essentially giving you free advice about how to better service them and people like them. Again, I don’t think that falls within a traditional definition of service, but that was a vision that our CEO had.

We’ve worked to improve it over the last 20-plus years. Additionally, we try to think what clients need that we can provide even in a portion of their world. We brought in an estate planning attorney a few years back and wanted to simply review and provide recommendations to clients with their estate planning needs. From there, they obviously would have to go to a law firm to get the documentation for that done.

We’re not a legal firm, we are not able to perform the functions of attorneys, but that estate planning attorney was able to spin up a law firm that services nearly exclusively only Cassaday clients. We brought her in just prior to the pandemic. We are now up to four attorneys and another four or five staff people just in that area alone.

Again, that was just a vision that our CEO had. I would say that several of us didn’t know how that was going to turn out.

Clients love it. They love thinking that they’ve got a one-stop shop. They can come and have their meetings in one central location. They know that their estate planning attorney truly is talking to their wealth advisor. We really highlight the fact that we want to be comprehensive. The important people in your world, your financial world should be sitting around the table talking about you. It shouldn’t be you as the client in the middle trying to facilitate what’s going on with each of those players. We’ve also added life and transition coaching services to our offering.

I know that for some people that’s a head-scratcher, but the truth of the matter is, we have so many clients who experience job changes, loss of a loved one, severe medical diagnosis, not to mention retirement. The fact that many clients get to a point where they are financially ready and prepared for retirement, but emotionally they’re not there. I mentioned because of our location outside DC. We have several retired military government employees who go onto another career. Whether you’re on your first career, your second, your third, there’s an emotional component to retiring.

We provide a coach, who is then able to talk about the challenges associated. That’s very much a couple’s conversation when there are two clients. If you’ve been a stay-at-home person and your spouse is about to retire, what is that going to look like for you? Are you asking each other the right questions? Finally, we provide educational opportunities, as much as we can for clients. I consider that just as much of a service.

Before COVID, we would host an annual full-day-long symposium. We would bring in 20 or more speakers, subject matter experts, and they would talk to clients about a range of topics of which the clients got to choose. Maybe you want to go to a social security session, but your husband wants to go to the Medicare session, maybe your child is attending with you, and they want to hear about cybersecurity. We’ve brought in medical experts, and we’ve even had panels of clients not talking about portfolios, not talking about how we do, but what did they go through to decide to retire?

What did they go through to decide to downsize? How do they go about those decisions? It’s so impactful to hear from other people who have done it, not your advisor who’s just giving you advice that they’ve learned in their career. There’s just something different about talking to someone who’s perceived as a peer. One of my all-time favorite panels that I actually facilitated for our symposium just prior to COVID, was we had a panel of three couples’ clients who had taken on RV lifestyles.

One couple used it for occasional vacations, others took it on extended trips, and we had one couple who completely gave up having a home base and downsized full-time to an RV. There was standing room only in that session. The more you can service your clients in all sorts of ways, the more they are attracted to you as the firm that has their best interest at heart.

I know we are here primarily to look at their financial situation, their investment situation, but just as we approach our employees like a whole person, we also want to do that with our clientele. I think that continuing to just look at what will serve all the needs of our clients, that’s the vision that we want to keep moving towards, and like I said I’m lucky to have a leadership team who really helps in how we’re approaching our service to clients.

[00:47:27] Matt Sonnen: Well, as you can imagine, during the fourth quarter last year and even running into the first quarter of this year, we’ve spent a lot of time working with our RA clients on strategic planning and goal setting for 2023. I’m just curious how your firm approach goal setting. Scott, I’ll go to you first on this one.

[00:47:45] Scott Brown: Listen, goal setting’s critical. Every firm should start, at a minimum, with identifying your ideal client, think about what that client needs, and then methodically building a service offering and technology and staff and everything around that client or client types. Again, I know a lot of the listeners, are doing this and work with coaches who help them with this, but I think that’s critical.

Then what we try to do is we goal set it both the firm level and department level. For example, get the leadership together, decide on your three to five-year goals, and as it being a leading advisor to airline pilots by 2025. Then we try to finalize a 12-month action plan to move toward this goal. As part of the 12-month plan, we’ll try and set three to seven impactful goals per year.

We’re actually going through this exercise as we speak at Pinnacle and getting finished up this quarter. Three to seven impactful goals. I think for us, setting more than that leads to frustration and often failure. It’s the old adage when everything’s important, nothing’s important. We really try not to overwhelm ourselves, but to look at and say, “What are going to be the most impactful goals? What can we achieve? Let’s go for that without setting 30 goals.”

We also try to set tangible goals. For example, increasing client retention rates in my mind is not tangible, it’s vague, but increasing client retention rates from 90% to 95% by December 31st, 2023, that’s more tangible, still not perfect, but when you set a goal, make sure it’s measurable and achievable and it’s something that everyone can do. Then from there, you can let your teams develop their own shorter-term goals on how to get there.

Then at the department level, I’ll try and meet with the department heads and I ask them to do the same thing for their teams. We’ll ask department heads, “Hey, can you put together your quarterly goal, your annual goal, and an annual budget that’s tied to that and go through the exercise. To help with that, a one year, I think it might have been last year or the year before, but I sent all of the department heads that book I was speaking about called Traction to help them with goal setting.

I think it was pretty well received I had people unsolicited come up and say, ”Hey, I appreciated that book and I’m using it with my team.” Again, it gets back to that whole theme of providing people with tools to succeed. I thought that helped with the goal-setting process and then you got to meet with those people on some sort of regular basis to monitor the goals. That’s pretty much it in a nutshell, I think one of the most important things is you got to have buy-in from leadership, especially at the firm level.

When you’re doing strategic planning, in my opinion, you got to choose to work with people who are committed to it, understand it, and buy into it. I don’t know if you’ve ever been involved, but if you’ve ever tried to do some strategic planning or goal setting and people just don’t believe in it. They’re like, ”Ah, I don’t need that, I’ve done this for 20 years and I don’t need goals, they’re not right for the group.” Hopefully, that’s not at the leadership level, but you really should, in my opinion, surround yourself with people who buy into the process, who are committed to it, and then it can work. That’s it from a high level, how we address goal setting in Pinnacle.

[00:51:26] Matt Sonnen: Great. Alison, how do you approach the goal-setting process?

[00:51:30] Alison Felix: Not to be redundant, but I could just say ditto and leave it there. Scott’s approach is exactly the same model that we follow. You’ve got to have it start at the leadership level. We look at firm goals, then it goes down to the department level and then the employee level and so much– to reiterate Scott’s point, we use a coach. We use a coach to help not only facilitate the discussions, but then she’s also someone who’s holding us accountable throughout the year, and also project managing, depending on the goal.

We found that that’s a huge differentiator in ensuring that the goals don’t really just end up in a drawer somewhere.

In October or November, you’re thinking, oh God, we set these goals, we didn’t really revisit them. Scott’s point about people who don’t set goals. That’s the difference between growing firms and static firms. If you’re not setting and we call them big scary goals. You want to reach for the next thing. Inevitably every year, if we set, for instance, an asset goal or a new money goal, there’s somebody who says, well, I don’t know, maybe we can’t make that one or maybe market impacts, blah, blah, blah, blah, blah.

It’s like, yes, we’re not going to make that goal every year. The point is, if you don’t set it and start stretching, you’re just going to stay where you are because you’re comfortable.

We did modify our goal-setting process for the employee level a few years back. I was just sensing some difficulty for some staff because they just felt so almost panic-stricken, like, ”What’s my goal? What should my goal be? I don’t know how to set goals.” We started calling them continuous improvement plans, as an alternative I just found that for some people, that resonated in a way that was like, “Well, I can think about continuously improving myself. What do I want to set, whether it be an educational goal, a designation got mentioned, going to conferences, achieving just outside of their own network expanding their reach?”

In addition to calling it continuous improvement plans, we had them add milestones. A lot of times they were wording a goal in such a way that was indicative of a milestone that got to a bigger goal. We were spending a lot of time talking them through how to properly create smart goals, the acronym smart, and tangible goals. I think Scott’s point there is absolutely valid as well.

You cannot have vague goals that at the end of the year, you’re like, “Well, did we reach that? Did we group client experience?” If you’re not measuring it, it’s not the right goal. Finally, just wording them as the end result, when you start out in January and you’re like, “Well, we want to do this, this, and this.” No, you word the goal as X, Y, Z has been accomplished, implemented, achieved. Use these end result words because that gives you the yes or no answer as to whether or not you actually met the goal.

[00:54:32] Matt Sonnen: Fantastic. Both of you those were great, great answers. We’ve covered a bunch of topics and a lot of responsibilities that you both manage at your firm. My last question is very open-ended. It’s simply, how do you keep your sanity in your position, [laughs] given all of the things that you’re doing? Scott, I’m going to go to you first on this one.

[00:54:53] Scott Brown: The short answer is you don’t. You don’t stay sane all the time, and that’s okay. Some days I feel like I’m doing everything right, and some days I feel like I’m doing everything wrong. The truth is that on the days you feel like you’re doing everything right, you’re probably not doing as great as you thought. On the days that you think you’re doing everything wrong; you’re probably doing better than you thought. Really, I think it’s your entire body of work at the end of a week or a month or a year or a career that tells that story about how you’re doing.

Again, tangible things that I try to do or that help me is one delegation, we’ve talked about this already. I am a micromanager by nature. You can ask my guys here. I have worked hard to avoid that and be more of an editor rather than a drafter, and really trust and let our talented people do their job. No question, delegation helps me stay sane. Less on a business end, I try and eat right and exercise regularly. I am not perfect at it, no one is. Especially as I get older, I try and make it a priority and I try and find the time, healthy body, healthy mind, all the cliche stuff but that’s really helped me stay sane.

Another one that I don’t know if it’s been talked about on your podcast before, but meditation. For no good reason other than pure ignorance, I really thought meditation was a joke most of my life. Then I was at this annual physical years ago, and I had this really good doctor it was hard to find a doctor– a really good doctor for a long time, but I found this really good doctor and my physical went fine, but he took the time to ask me what I did for work and my stress level. Once he found out what I did, he laughed and said, ”Listen, you’re never going to be able to remove stress from your job, so you have to learn how to accept it and manage it.”

He recommended, and this was years ago, the app Headspace. This was before it’s now it’s everywhere. It’s on Netflix and there’s a thousand different ones. I do try and do it regularly every day, maybe 10 minutes a day or every other day, even if I’m in the office. Listen, I don’t sit on a yoga mat and put my fingers in the air and close my eyes and do it, but it’s more like breathing exercises and just resetting. It may sound a little campy, but it helps. The last two things, I block off days. I mentioned this before, I try to block off Thursdays to read a little bit to focus on bigger projects.

Matt, you and I, I think we’re talking about this, and listen, Matt, it’s hard sometimes, especially as a COO or a president or anyone in a role like that, where your job is to triage. You don’t get to pick your schedule, but you work at blocking off time, you can do it. That really has helped me stay focused and stay sane. Lastly, I think you got to let things go. If something happens that bothers me, and again, in our role, it’s going to happen a lot. I do try and set a five-minute rule, sometimes 10 minutes if it’s a bigger one, but 5 to 10 minutes, and I’ll think about it for five minutes and move on and just say do better the next time.

This one is tough. I am a natural obsessor. Now you have me, I’m a natural micromanager and a natural obsessor. I think with practice, it really does work. If you really just try and let it go and appreciate that the people listening to this and us, we have really hard jobs, you just got to give yourself a break sometimes and move forward. That’s really helped me keep my sanity as we look through these jobs. Those are some thoughts.

[00:58:37] Matt Sonnen: And very good ones. Alison, I’ll give you the last word here. What do you do to take care of yourself and your role as COO?

[00:58:44] Alison Felix: Other than the support group, Scott and I are going to have to form for each other.

[00:58:49] Matt Sonnen: [laughs] You will.

[00:58:51] Alison Felix: Everything he just said resonated. I am a COO, but I’m a mom. I’m also a single mom. There are so many things that pull our attention and our direction [chuckles] in varying ways, and balancing all of that can be so hard. First off, give yourself grace. Scott’s points about scheduling time for things is critical. Then communicating the purpose of that time to those who work around you. If you have a specific time blocked off for no meetings, focus time, hold yourself to that.

Don’t let other people dictate every minute of your day, because otherwise you really will have stress through the roof, and you’ll be seeing your physician and you’ll be wondering why that’s happening. One of the things that we are implementing at our firm, and I will be taking my own shortly, is a short-term sabbatical. This is really not something that is prevalent in our industry. It is not something that we’ve even tried before, but we take the health and well-being of our employees seriously enough that we want to give them that break. Sometimes the vacation for a week while your kids are on vacation from school, is really not going to cut it.

Whether you use a meditation app, whether you see your doctor, whether you find a support group. All those things are just so critical to keeping going and energized. There are so many people in our roles who are looking up to us for guidance, leadership, and if we’re not taking care of ourselves, we can’t provide that to the best of our ability. Wholeheartedly agree with the take-a-break opportunity and looking forward to doing that myself.

[01:00:38] Matt Sonnen: Well, I said in the intro that both of you have been on my list for a long time to have on the podcast to share your experiences. I think our listeners can now see why I was so excited to have you both on. This has really been a fantastic conversation. We’ve learned a lot from both of you. Alison and Scott, thank you so much for being here today.

[01:00:56] Scott Brown: Thank you. It’s been a pleasure working with you, Alison, and Matt once again, thanks for the invitation, so hope to see you both again soon.

[01:01:05] Alison Felix: Thank you, both. Really appreciated the invitation, Matt and Scott, it was a pleasure to sit alongside you.

[01:00:11] Scott Brown: Awesome. Well, take care.

[01:01:13] Matt Sonnen: That is a wrap on Episode 50. We will talk to everybody soon.