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Dave Welling on What Financial Services Should Look Like · Masters in Business

• 0:02
  Speaker 1: This is Master's in Business with very Ridholts on Bloomberg Radio.
• 0:07
  Speaker 1: This weekend. On the podcast, I have a special guest.
• 0:10
  Speaker 1: His name is Dave Welling and he is the CEO
• 0:12
  Speaker 1: of Mercer Advisors. Dave is a fascinating guy who has
• 0:17
  Speaker 1: really a very interesting career path through everything from consulting
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  Speaker 1: to private equity to technology all the way into the
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  Speaker 1: financial services business. He brings a very different perspective to
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  Speaker 1: that industry. He never was an advisor, but he has
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  Speaker 1: worked in and around financial services his whole career, and
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  Speaker 1: and that really gives him a unique perspective. He has
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  Speaker 1: done quite an amazing job building Mercer from a seven
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  Speaker 1: or nine billion dollar shop to a twenty one plus
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  Speaker 1: billion dollar shop, one of the fastest growing firms in
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  Speaker 1: the industry. Um I forgot to mention and during our
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  Speaker 1: conversation that he was named CEO of the Year by
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  Speaker 1: one of the financial magazines. He comes to us with
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  Speaker 1: just a very straightforward, honest perspective about what the financial
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  Speaker 1: services should be doing to both take care of its
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  Speaker 1: clients and employees, but as well as being a force
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  Speaker 1: for good in the world. I found this to be
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  Speaker 1: a fascinating conversation, and I expect you will also with
• 1:30
  Speaker 1: no further ado. My conversation with Mercer Advisors Dave Wellen
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  Speaker 1: vis is Masters in Business with Barry Ridholts on Bloomberg Radio.
• 1:41
  Speaker 1: My special guest this week is Dave Welling. He is
• 1:45
  Speaker 1: the CEO of Mercer Advisors, a Denver based r i
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  Speaker 1: A with four hundred employees and over twenty one billion
• 1:52
  Speaker 1: dollars in assets under management. Dave Welling, Welcome to Bloomberg.
• 1:58
  Speaker 1: Barry is great to be here, looking forward to it.
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  Speaker 1: So you have a really interesting job history that I
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  Speaker 1: want to discuss before we start getting into the details
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  Speaker 1: of Welling. You were at Adventance, you were Black Diamond,
• 2:10
  Speaker 1: Charles Schwab Banning Company. Tell us a little bit about
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  Speaker 1: your career path. Sure, so, yeah, I think as you're
• 2:16
  Speaker 1: getting that very um maybe not the traditional head of
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  Speaker 1: an advisory firm because I didn't start as an advisor,
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  Speaker 1: but I spent close to the last thirty years of
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  Speaker 1: my life supporting, enabling, and as I call it, clearing
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  Speaker 1: the path for advisors. So I was very, very fortunate
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  Speaker 1: back in the mid nineties to join Charles Schwab in
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  Speaker 1: a really unique role and opportunity. I joined as a
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  Speaker 1: chief of staff, which was a completely made up job
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  Speaker 1: for one of the vice chairman running the advisor business
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  Speaker 1: and the Floral wind Cave business. Actually had a chance
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  Speaker 1: to review with Chuck as part of the job. So boy,
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  Speaker 1: you know, talk about lucky is a way to enter
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  Speaker 1: this industry and do it the right way and learn
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  Speaker 1: the right principles. You know, had a had a chance
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  Speaker 1: to work down the hall from Chuck and learned from him.
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  Speaker 1: But that was that. And prior to that, I had
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  Speaker 1: some experiences, but they were in management consulting, and like
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  Speaker 1: a lot of management consultants, I dabbled in a lot
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  Speaker 1: of industries. I worked in telco, I worked in consumer products,
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  Speaker 1: I worked in technology, I worked in across the board,
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  Speaker 1: actually worked in the private equity consulting practice of Baning Company,
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  Speaker 1: And well, that was an awesome experience and a great
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  Speaker 1: foundation for learning business and role. I found myself really
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  Speaker 1: longing to find an industry that had a real purpose
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  Speaker 1: and to find a company in a place in that
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  Speaker 1: industry where you could really innovate, and Schwab became that
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  Speaker 1: place for me at the beginning of my career. Obviously,
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  Speaker 1: US had some other stops along the way, and I'm
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  Speaker 1: sure we'll get to talk about those, But really lucky,
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  Speaker 1: I spent twelve years a SUAB through the growth and
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  Speaker 1: evolution of that business and to find the independent advisor industry,
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  Speaker 1: and I just fell in love with it. You know,
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  Speaker 1: there's there's challenges, there's market turbulences, but we we all
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  Speaker 1: have this compass, which is the client and doing the
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  Speaker 1: right thing for them. So it's been been very, very
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  Speaker 1: very good to me over the years. So you you
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  Speaker 1: had gone from Bain to Schwab, and after twelve years
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  Speaker 1: of Schwab you left to go to Black Diamond, which
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  Speaker 1: seems to be like a much more technologically focused, less
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  Speaker 1: straight up wealth management company than Schwab. What was that
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  Speaker 1: transition like? And did I mistake that it sounds like
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  Speaker 1: they're two very different companies in a similar field. Well, yeah,
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  Speaker 1: The Black Diamond, for those that don't know, is a
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  Speaker 1: technology provider, most notably in web based cloud based development,
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  Speaker 1: providing reporting two advisers to help them tell their stories,
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  Speaker 1: whether they were managing portfolios or providing a broader wealth
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  Speaker 1: management offering like Mercery Advisors does. And I gets similar
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  Speaker 1: to the story about financial services I wasn't an engineer either, right,
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  Speaker 1: I wasn't didn't grow up as a developer. I just
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  Speaker 1: really understood the space and understood what advisors did. And
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  Speaker 1: that was two thousand nine, so heels of the financial crisis,
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  Speaker 1: I decided it was the right time to leave SWAB,
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  Speaker 1: picked my family up from the San Francisco Bay Area
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  Speaker 1: and joined a technology company in northeastern Florida. All of
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  Speaker 1: my friends in the Bay area thought I was completely
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  Speaker 1: nuts for leaving the safety and security of a big company.
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  Speaker 1: Even despite the difficulties we were having, I was. I
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  Speaker 1: was doing very well there. I was continuing to grow
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  Speaker 1: and get be given more responsibilities. But I had this
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  Speaker 1: idea that I wanted to get involved in technology. I
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  Speaker 1: really felt like today, but especially at that time in
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  Speaker 1: two thousand nine, the technology was going to be part
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  Speaker 1: of solving the challenges that are industry based and the
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  Speaker 1: consumers were clamoring for. So I had this this meta
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  Speaker 1: investment pieces, if you will, that technology was going to
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  Speaker 1: move from the back office to the front office, as
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  Speaker 1: we talked about in advisory firms, and help advisors run
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  Speaker 1: their businesses more efficiently with more scale, ill and more consistency.
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  Speaker 1: But also give the consumer what they were demanding, which
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  Speaker 1: was more transparency. At that time, I think, as you
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  Speaker 1: know and might might even remember, it was very dynamic time.
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  Speaker 1: Consumers wanted to know how they were doing, where they were,
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  Speaker 1: and what Black Diamond did was on a daily basis
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  Speaker 1: cheap plus one or next day was able to tell
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  Speaker 1: clients at a very granular level how they were doing, uh,
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  Speaker 1: not just pulling up the last quarterly performance report which
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  Speaker 1: could have been two and a half or three months old,
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  Speaker 1: given timing of how those those report out, and be
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  Speaker 1: able to tell folks very dynamically. So it was a
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  Speaker 1: great opportunity and a risk, if you will, on on
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  Speaker 1: one level, but probably the best career decision I ever made.
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  Speaker 1: You know, we all faced these opportunities and these these
• 6:46
  Speaker 1: roads that we that we meet in our careers, and
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  Speaker 1: that was an opportunity for me to try my hand
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  Speaker 1: at something that was much much more entrepreneurial. It was
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  Speaker 1: very small when I joined. There's twenty employees, less than
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  Speaker 1: two million annual revenues, a good product, but certainly not
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  Speaker 1: a big business. So pretty big difference from from a
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  Speaker 1: big company with a lot of resources to drop into
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  Speaker 1: an environment that was still trying to break through, still
• 7:11
  Speaker 1: try to to get known and develop its footing. And yeah,
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  Speaker 1: well I've left that part of my career behind. It
• 7:17
  Speaker 1: was over three years ago when I left that team.
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  Speaker 1: There's now more than five people in Northeastern Florida. It's
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  Speaker 1: one of the best companies to work for Northeastern Florida.
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  Speaker 1: So you very proud of that part of my career heritage.
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  Speaker 1: It didn't start that way. Um, but nothing like being
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  Speaker 1: thrown into an entrepreneurial situation to figure out whether you've
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  Speaker 1: you've got the goods to be able to to bootstrap
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  Speaker 1: and do things yourself rather than rely on big, big
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  Speaker 1: teams to do things for you. So let's talk about
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  Speaker 1: the next entrepreneurial opportunity. Not too long ago, you end
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  Speaker 1: up at Mercer Advisors. What was the transition like becoming
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  Speaker 1: a CEO of a wealth management firm when you were
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  Speaker 1: previously working in what really is a technology company. The
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  Speaker 1: transition was was quick and it was a change. I
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  Speaker 1: finished work at Black Diamond. At Black Diamond had, over
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  Speaker 1: the years, had been acquired by Advent Software, which then
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  Speaker 1: in turn had been acquired by SS and C Technology.
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  Speaker 1: So I had gone from this small entrepreneurial company who
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  Speaker 1: actually was running Advent, which is a international company with
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  Speaker 1: offices all over the world as a division of S
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  Speaker 1: S and c UM. You know, we're four million annual revenues,
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  Speaker 1: you know, thousands of employees. Was with co leader of
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  Speaker 1: that business. But I was longing again to get back
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  Speaker 1: to something that was a little bit more entrepreneurial and
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  Speaker 1: a little bit closer to home in terms of focusing
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  Speaker 1: on the advisor business. But I finished work at six
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  Speaker 1: pm on a Friday, uh six am the next morning,
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  Speaker 1: I was on a plane, and then Sunday night I
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  Speaker 1: had dinner with Dave Barton, who was the CEO of
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  Speaker 1: Mercer for eight years prior to me joining. And the
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  Speaker 1: juncture where Mercer was at the time was growing very
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  Speaker 1: quickly organic way, but also had it had an opportunity
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  Speaker 1: and interest to to go through some acquisitions and acquire
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  Speaker 1: smaller practices of financial planners all over the country who
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  Speaker 1: were looking for that solution. Dave went left, meaning Dave
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  Speaker 1: jumped into a vice chairman role and started focusing on
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  Speaker 1: mergers and acquisitions, and that created an opportunity for me
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  Speaker 1: to join the organization and help lead the next chapter.
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  Speaker 1: So very different, very different business. Probably the biggest different
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  Speaker 1: structurally isn't what you'd think. Um, it's not technology versus
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  Speaker 1: wealth management. It's people largely all in one place with
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  Speaker 1: a sales teams right around the country, which is technology
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  Speaker 1: to Mercer. And we're about four dred and fifty employees
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  Speaker 1: today spread across forty five offices or so i'd like
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  Speaker 1: to say, forty five leases that we're paying for in
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  Speaker 1: different parts of the country. So it's very different to
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  Speaker 1: lead a culture that's spread as thin as we are
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  Speaker 1: and lead it as one team. So uh different, different
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  Speaker 1: transition in that respect to figure out how to land
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  Speaker 1: and earn the trust of the team and to leave
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  Speaker 1: the organization when we're so dispersed, at least at least
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  Speaker 1: physically dispersed. So I want to get to the issue
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  Speaker 1: of growing through mergers and acquisitions, but before we go there,
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  Speaker 1: I have to stick with two questions about your transition
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  Speaker 1: to being CEO. The first one is how does an
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  Speaker 1: outsider come into a relatively small, privately held company as
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  Speaker 1: a CEO. That sounds like it's a big challenge. Tell
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  Speaker 1: us a little bit about that transition. So the history
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  Speaker 1: of Mercer is actually pretty unique and you know, my
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  Speaker 1: position as CEO comes in after a long history of
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  Speaker 1: ownership transition, leadership transition. So Kendrick Mercer, the founder of
• 10:44
  Speaker 1: the business, founded Mercer in We were one of the first,
• 10:49
  Speaker 1: the only financial planning firms in the country. Kendrick, you're
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  Speaker 1: very unique guy, passionate about financial planning, but had a
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  Speaker 1: lot of other life interests. Made a decision to bring
• 10:58
  Speaker 1: in a partner group early early nineties, brought on five partners.
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  Speaker 1: Dave Barton, who I mentioned earlier, was one of those partners.
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  Speaker 1: In two thousand and three we brought in our first CEO.
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  Speaker 1: So I'm not the first CEO of the business, but
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  Speaker 1: for a kind of transition of CEO as if you will.
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  Speaker 1: And the interesting thing about Mercer when you look at
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  Speaker 1: what's happening in our industry is we made this transition
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  Speaker 1: from a single founder to a partnership, a partnership to
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  Speaker 1: a CEO mandate to outside capital investments in private private equity.
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  Speaker 1: So when we talk about mergers and acquisition, Mercer has
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  Speaker 1: been down a lot of these paths. Um We've evaluated
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  Speaker 1: the options and decisions at different junctures of our history.
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  Speaker 1: Because we've been around for so long we've made those
• 11:44
  Speaker 1: decisions over the years. So my entry is CEO. Came
• 11:47
  Speaker 1: into a business that was used to having a CEO,
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  Speaker 1: also had a lot of outside capital, and as I'm
• 11:53
  Speaker 1: sure you know, really important part of the CEO is
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  Speaker 1: not just leading the business, but managed the investor base
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  Speaker 1: as well of keeping them confident and comfortable and to
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  Speaker 1: be able to pass pass the business forward. What was
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  Speaker 1: tricky for me at the time of entering the business
• 12:08
  Speaker 1: and was to get the team to know me. So
• 12:13
  Speaker 1: the very first thing that I did was certainly not
• 12:16
  Speaker 1: sitting headquarters and try and do planning. I got on
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  Speaker 1: a plane. At that time, we certainly could do that,
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  Speaker 1: it's much unfortunately we can't do it now. And I
• 12:25
  Speaker 1: went to visit every single office. UM sat with the
• 12:28
  Speaker 1: team's talk to them about what was working, what was
• 12:31
  Speaker 1: not working, what they thought we should do to move forward.
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  Speaker 1: The best thing I ever did because it both connected
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  Speaker 1: me to the culture and team and inversely helped the
• 12:39
  Speaker 1: team understand who I was and where I was coming from.
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  Speaker 1: Very interesting. So in the firm was under ten billion dollars.
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  Speaker 1: Today you're over billion dollars. That's not that long a
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  Speaker 1: time to more than Dublin size. Was that your vision
• 12:58
  Speaker 1: from day one to begin acquiring other advisory shops. How
• 13:02
  Speaker 1: did this approach come about? Yeah, I guess it was
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  Speaker 1: certainly part of our most recent history. But the vision
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  Speaker 1: and purpose of the organization is to help clients and
• 13:12
  Speaker 1: help them on their path the economic freedom. So, as
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  Speaker 1: we talked about a little earlier, the firm has been
• 13:18
  Speaker 1: around thirty five years and we've only been doing acquisitions
• 13:22
  Speaker 1: over the last four. What what had happened over the
• 13:25
  Speaker 1: first thirty plus years is the business had grown to
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  Speaker 1: be a national firm. We had eighteen offices all around
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  Speaker 1: the country. We're about six billion at that time prior
• 13:35
  Speaker 1: to doing our first acquisition, and we had gone through
• 13:38
  Speaker 1: the work and figured out that working as eighteen different
• 13:42
  Speaker 1: teams wasn't going to work. We had a centralized investment team,
• 13:46
  Speaker 1: a common client experience. We had built our state planning
• 13:49
  Speaker 1: team and tax team. We had built the set of
• 13:53
  Speaker 1: services that we provide our clients, and had built a
• 13:56
  Speaker 1: culture of working together despite being because we separated across
• 14:01
  Speaker 1: those eighteen offices, and what we found was there was
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  Speaker 1: both interest in an opportunity for other firms who were
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  Speaker 1: like minded to join us. To get access to that
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  Speaker 1: set of services and capabilities. And you know, in this
• 14:15
  Speaker 1: this industry, there's a lot of great professionals out there,
• 14:18
  Speaker 1: a lot of great independent investment advisors out there who
• 14:21
  Speaker 1: work as true fiduciaries that they have small practices. It's
• 14:24
  Speaker 1: a very fragmented interest industry, and some of those principles
• 14:28
  Speaker 1: that were at one time entrepreneurs had evolved from entrepreneurs
• 14:32
  Speaker 1: to starting to think about their retirement and they were
• 14:35
  Speaker 1: looking for a place to put their practice, put their business,
• 14:39
  Speaker 1: put their clients in the hands of a firm that
• 14:44
  Speaker 1: had shared interests, shared beliefs, and the shared value system.
• 14:48
  Speaker 1: So it was this coming together of Mercer having an
• 14:51
  Speaker 1: appetite to grow and ability to grow, a desire to grow,
• 14:56
  Speaker 1: but also huge, huge demand from firms that were it's
• 15:00
  Speaker 1: like Mercer, We've acquired businesses that, while there are a
• 15:03
  Speaker 1: lot smaller, have also been around for thirty years and
• 15:06
  Speaker 1: some of the first the only financial planning firms in
• 15:09
  Speaker 1: the country. And what's different about acquisitions in in our
• 15:13
  Speaker 1: industry and our space and in this context is those
• 15:16
  Speaker 1: sellers are looking for much more than a transaction and
• 15:20
  Speaker 1: evaluation of their business. That's what I saw on technology.
• 15:23
  Speaker 1: You see it all the time when Amazon biased companies
• 15:26
  Speaker 1: or Google buas companies. You know they're buying the technology
• 15:29
  Speaker 1: they want the engineers. But it's very different than this industry. Uh.
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  Speaker 1: These are for people who set out on their own,
• 15:36
  Speaker 1: have been running their own business for twenty years. It's
• 15:38
  Speaker 1: it's their life's work, and they're not going to put
• 15:41
  Speaker 1: their clients into a bad investment. And they're not going
• 15:44
  Speaker 1: to put their clients into a situation where the firm
• 15:48
  Speaker 1: that's that's taking over the business and becoming their sucception
• 15:51
  Speaker 1: plan for them doesn't share the same values and beliefs
• 15:54
  Speaker 1: and systems. So I think what is really propelled our
• 15:58
  Speaker 1: our acquisitions strategy is a combination of two things. One,
• 16:03
  Speaker 1: we've done quite a few of them. By the time
• 16:05
  Speaker 1: we finished this year, we will have done over forty
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  Speaker 1: acquisitions in four years, so over ten a year on average.
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  Speaker 1: And the second is all those firms believing their clients
• 16:16
  Speaker 1: are going to be better served after easy example, and
• 16:19
  Speaker 1: I think we might talk about this later. We have
• 16:21
  Speaker 1: a dedicated a state planning team and a dedicated tax team.
• 16:24
  Speaker 1: Not just g p a s and lawyers who are
• 16:27
  Speaker 1: practicing advisors. You have dedicated teams that all they do
• 16:30
  Speaker 1: is put together a state plans for clients, and those
• 16:32
  Speaker 1: are often huge uptick services for for clients in this context,
• 16:36
  Speaker 1: so the sellers see, hey, this is not just good
• 16:39
  Speaker 1: for me, this is going to be a good solution
• 16:40
  Speaker 1: for my clients. So I want to discuss the various
• 16:43
  Speaker 1: wealth management services mercer offers in a few minutes. Let's
• 16:48
  Speaker 1: focus now on the merger and acquisition process. You guys
• 16:52
  Speaker 1: have completed forty in four years. That that's quite a
• 16:56
  Speaker 1: robust number. Tell us a little bit about your pro says,
• 17:00
  Speaker 1: how do you find companies to acquire? Are you looking
• 17:03
  Speaker 1: for them? Do they come to you? Give us a
• 17:05
  Speaker 1: little uh, behind the scenes explanation as to what this
• 17:09
  Speaker 1: process is like. Yeah, there's a there's obviously a courtship process. Right,
• 17:14
  Speaker 1: There's there's a do we like them and do they
• 17:17
  Speaker 1: like us? Process, which picks up on the common I
• 17:20
  Speaker 1: may before and maybe we can come back what happens after, Right,
• 17:23
  Speaker 1: it's the the consummation, the acquisition itself, the closing date.
• 17:29
  Speaker 1: That's just a mile post on the building of a
• 17:31
  Speaker 1: broader relationship. But focusing on on before that mile post,
• 17:36
  Speaker 1: the more acquisitions we've done, the more people find their
• 17:40
  Speaker 1: way to us because we have now become a known
• 17:44
  Speaker 1: option that has a certain value proposition. Right, so we
• 17:48
  Speaker 1: we are, as I call it, an integrator, not an aggregator.
• 17:52
  Speaker 1: We're going to become one business, one integrated client experience.
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  Speaker 1: That's very appealing not just to our shareholders and from
• 18:00
  Speaker 1: a business perspective, it's it's very relevant to the context
• 18:03
  Speaker 1: of some of the situations where we find sellers that
• 18:06
  Speaker 1: are looking for a succession plan or a place to
• 18:08
  Speaker 1: transition their practice or their business. We're very active in
• 18:12
  Speaker 1: the industry. My involvement in the industry for thirty plus years.
• 18:16
  Speaker 1: I've probably been in a thousand different advice for offices
• 18:20
  Speaker 1: around the country over the years, just physical offices. So
• 18:23
  Speaker 1: those relationships are really helpful because we're not starting from scratch.
• 18:28
  Speaker 1: There's some prior intersection. It may have been several years
• 18:32
  Speaker 1: where firms that I've known, principles that I've known over
• 18:34
  Speaker 1: the years, that I've had the fortune to build a
• 18:37
  Speaker 1: relationship with and helping them build that business or just
• 18:40
  Speaker 1: be on the be on the sidelines cheering for them.
• 18:43
  Speaker 1: UM is very relevant to the meeting and greeting part
• 18:46
  Speaker 1: of it. But once we kind of get the conversation going, UM,
• 18:50
  Speaker 1: we believe in a really rich interface of dialogue between
• 18:53
  Speaker 1: our firm and their firm. The best the best context
• 18:56
  Speaker 1: is there's several people deep in our our firm and
• 18:59
  Speaker 1: several people deep in theres who are talking to each other,
• 19:02
  Speaker 1: not about the valuation of the transaction. That's probably less
• 19:07
  Speaker 1: than five percent of the content. It's important, but it's
• 19:10
  Speaker 1: relatively straightforward, UM, and a place to land on whether
• 19:14
  Speaker 1: you're going to have a similar sense of what the
• 19:17
  Speaker 1: value the business is. The most important part is how
• 19:19
  Speaker 1: are we going to be better together than we were apart?
• 19:22
  Speaker 1: What is this going to be like for clients? UM?
• 19:24
  Speaker 1: What tools are in the tool chest both at mercer
• 19:28
  Speaker 1: or in the business that we're acquiring. We've acquired several
• 19:32
  Speaker 1: practices that have not just a wealth management firms that
• 19:35
  Speaker 1: had dedicated accounting teams themselves, right, So that's been really
• 19:39
  Speaker 1: appealing for us to build our tax business, build our
• 19:42
  Speaker 1: expertise in our tax business, and for them to know
• 19:45
  Speaker 1: the acquirer really believed in having that part of the business,
• 19:48
  Speaker 1: because not everybody in our industry really wants that to
• 19:51
  Speaker 1: be part of their core service. Offering, so uh that
• 19:54
  Speaker 1: that's you know, the rich interface. So by the time
• 19:57
  Speaker 1: we get to okay that we're going to do the
• 20:00
  Speaker 1: this acquisition and they closed a we have mutual clarity
• 20:04
  Speaker 1: on what we're trying to create together. We have a
• 20:07
  Speaker 1: vision of how things are to come together at a
• 20:10
  Speaker 1: pretty granular level. Um and you know, one of the
• 20:13
  Speaker 1: things that we didn't touch on earlier in my experience
• 20:15
  Speaker 1: when I was at Black Diamond. Black Diamond was bought
• 20:17
  Speaker 1: by by Advent. Advent was a public company, it was
• 20:20
  Speaker 1: bought by a se and given the scale of those transactions,
• 20:24
  Speaker 1: but mostly employees found out about it on a random Tuesday,
• 20:27
  Speaker 1: and then we were scrambling to figure out what the
• 20:29
  Speaker 1: strategy was and how the pieces were going to sit together.
• 20:31
  Speaker 1: We have an opportunity in the context of these acquisitions
• 20:34
  Speaker 1: to do a lot of work up front to make
• 20:38
  Speaker 1: sure that the uncertainty that that can be there in
• 20:42
  Speaker 1: these transitions is really limited to the uncertainty for clients
• 20:45
  Speaker 1: and uncertainty for employees, because we say, well, this is
• 20:47
  Speaker 1: going to look like and this is how it's going
• 20:49
  Speaker 1: to work. Huge opportunity and that that helps people feel
• 20:53
  Speaker 1: really confident when when they make these decisions. So under
• 20:56
  Speaker 1: normal circumstances, there's a lot of neat and great, there's
• 20:59
  Speaker 1: a lot back and forth. But obviously these are not
• 21:03
  Speaker 1: normal circumstances. How do you do these sorts of deals
• 21:07
  Speaker 1: that require a little bit of staring each other in
• 21:10
  Speaker 1: the eye and making sure everybody is comfortable with each
• 21:13
  Speaker 1: other during a pandemic where we're kind of limited to
• 21:17
  Speaker 1: zoom and not person in person meetings. What what's it
• 21:20
  Speaker 1: been like this year? Yeah, there's no question it's a
• 21:24
  Speaker 1: lot harder, right, Um, I think you know the the
• 21:27
  Speaker 1: uptick people look at the disadvantages, right, this is a
• 21:31
  Speaker 1: at its core, this is a kneecapped to kneecap business.
• 21:33
  Speaker 1: That's how advisors build their relationships with clients, particularly at
• 21:38
  Speaker 1: the beginning, and this bond of trust that needs to
• 21:41
  Speaker 1: form over an extended period of time of delivering value
• 21:45
  Speaker 1: is just as true in this context of acquisitions as
• 21:48
  Speaker 1: it is in the context of an advisor working with
• 21:51
  Speaker 1: our clients. And I'm sure many of your listeners that
• 21:53
  Speaker 1: will resonate with them. But what's been really interesting about
• 21:57
  Speaker 1: using zoom in the technology, It's actually enabled us to
• 22:01
  Speaker 1: have a much quicker cadence and to have more people
• 22:05
  Speaker 1: from the firms are requiring be engaged in the process,
• 22:08
  Speaker 1: and more people engaged on the Mercer team. We just
• 22:12
  Speaker 1: did a call yesterday morning that went three hours with
• 22:16
  Speaker 1: with the firm that's going to be joining us at
• 22:18
  Speaker 1: the end of the year, and we had eight people
• 22:21
  Speaker 1: from the Mercer team coming in in different time segments
• 22:24
  Speaker 1: talking about how they're the employee benefits are gonna work,
• 22:27
  Speaker 1: how the investment mapping is going to work, how our
• 22:29
  Speaker 1: state planning team is going to work. That would have
• 22:32
  Speaker 1: been hard for us to do in a different context
• 22:35
  Speaker 1: to fly eight people from Mercer across the country, get
• 22:38
  Speaker 1: all their employees in our one room and do that
• 22:41
  Speaker 1: um do that together. We we have a team and
• 22:43
  Speaker 1: have always done that, but it's interesting where we've been
• 22:47
  Speaker 1: able to engage multiple people and then there's some follow
• 22:49
  Speaker 1: up questions, so we we get back on the phone
• 22:52
  Speaker 1: right and get the zoom back from fired back up.
• 22:54
  Speaker 1: So I think our industry is wrestling with what is
• 22:57
  Speaker 1: life look like affort with all this technology. I think
• 22:59
  Speaker 1: we found that that it actually can be really enriching
• 23:03
  Speaker 1: and help pick up the cadence and avoid the scheduling
• 23:06
  Speaker 1: of where we're gonna fly across country to meet each other. UM.
• 23:09
  Speaker 1: I think we would love to add that back in.
• 23:11
  Speaker 1: But there's there's a real learning here for us as
• 23:15
  Speaker 1: an industry about how how the technology can help support
• 23:19
  Speaker 1: these relationships and conversations on a much quicker cadence UM
• 23:22
  Speaker 1: and involve more people where it's it's only an hour
• 23:25
  Speaker 1: investment of their time. You go right at the questions
• 23:27
  Speaker 1: that they have UM and address it. And if you're
• 23:30
  Speaker 1: you need somebody to come in because something comes up,
• 23:32
  Speaker 1: somebody can join join the session live rather than have
• 23:36
  Speaker 1: to jump on a plane and five clush country. So
• 23:39
  Speaker 1: I think a little bit surprised about how well it's gone,
• 23:41
  Speaker 1: a little bit of lemonade out of the pandemic, to
• 23:45
  Speaker 1: say the least. So in a previous conversation I discussed
• 23:50
  Speaker 1: the sort of multiples that that we've seen in the
• 23:52
  Speaker 1: industry with Peter Maluke of Creative Planning, and he pointed
• 23:57
  Speaker 1: out that things started out fairly and expensively, but there's
• 24:02
  Speaker 1: just such a wash of private equity money and with
• 24:06
  Speaker 1: yields as low as they are, well run advisory firms
• 24:09
  Speaker 1: are very similar to a bond and that they throw
• 24:12
  Speaker 1: off a pretty decent yield with a very modest amount
• 24:15
  Speaker 1: of risk. What are you seeing in terms of multiples?
• 24:19
  Speaker 1: Have prices for advisory firms gotten out of hand or
• 24:24
  Speaker 1: or things a little more reasonable this year? Given all
• 24:28
  Speaker 1: the experience we've had with remote work and the pandemic,
• 24:32
  Speaker 1: this is one of the things where it has it
• 24:34
  Speaker 1: tastes been around this industry for quite a while, right, So,
• 24:39
  Speaker 1: having seen acquisitions, having seen how outside capital thinks about
• 24:44
  Speaker 1: our industry, I think there's some things happening that are
• 24:47
  Speaker 1: actually quite fundamental, you know. I think I think Peter's right,
• 24:50
  Speaker 1: you know, valuations, you're going up the right your your question.
• 24:53
  Speaker 1: But I think what's happening is people are starting to
• 24:55
  Speaker 1: realize the value. Right, So, who an independent are a
• 24:59
  Speaker 1: a is is? And why that's different than a wirehouse broker.
• 25:02
  Speaker 1: What does it really mean to be a fiduciary? There's
• 25:05
  Speaker 1: obviously been a huge narrative in our industry about the
• 25:08
  Speaker 1: poduciary standards and the importance of that. Still shocking to
• 25:12
  Speaker 1: me that not every advisor working with clients isn't required
• 25:15
  Speaker 1: to be a fiduciary. We of course are your firm
• 25:18
  Speaker 1: and and are, but that's not the way the rest
• 25:22
  Speaker 1: of our industry is so people are learning that. From
• 25:24
  Speaker 1: a business perspective, I think the outside capital who's really
• 25:29
  Speaker 1: starting to learn that these are quality businesses, very high retention,
• 25:32
  Speaker 1: very high recurring cash flow. Why because the advisors do
• 25:36
  Speaker 1: good work and the clients like it and they tell
• 25:38
  Speaker 1: more people about it. Right, So in a cash flow
• 25:41
  Speaker 1: business and a service business, for an outside investor, that's
• 25:44
  Speaker 1: a little hard sometimes to wrap your head around until
• 25:47
  Speaker 1: you see the patterns of success over a sustained period
• 25:51
  Speaker 1: of time. So what's happening in our industry, I think
• 25:55
  Speaker 1: is is the outside capital in particular final starting to
• 26:00
  Speaker 1: recognize the value of this industry most fundamentally in terms
• 26:05
  Speaker 1: of the value it provides the consumer and how this
• 26:08
  Speaker 1: industry continues to grow and how these businesses continue to grow.
• 26:11
  Speaker 1: So that's a that's a big y, right when you
• 26:14
  Speaker 1: look at macro versus micro trends. Now you come into
• 26:17
  Speaker 1: micro trends, you're you get to a little bit more
• 26:19
  Speaker 1: about what Peter may have been talking about, which is
• 26:22
  Speaker 1: there's a lot of well financed, purposeful buyers like Mercer
• 26:26
  Speaker 1: and others that are interested in investing in the space.
• 26:30
  Speaker 1: You have sellers who are interested in a transition for
• 26:34
  Speaker 1: their clients, as I said earlier, a transition that feels
• 26:37
  Speaker 1: like they're putting them in a home that's similar or
• 26:41
  Speaker 1: the same in terms of values and offering that they've
• 26:44
  Speaker 1: built up over the years. Uh. And you get a
• 26:47
  Speaker 1: lot more interest in this space. But fundamentally, um, you know,
• 26:52
  Speaker 1: it's a good investment for us. You know, acquisitions we do,
• 26:56
  Speaker 1: we average retention for years after the fact, even in
• 27:02
  Speaker 1: years after principle may be retired. And I was on
• 27:05
  Speaker 1: the phone and I mentioned that stat too. You know
• 27:08
  Speaker 1: one of firms who recently sold the business that I
• 27:10
  Speaker 1: basically Mercer didn't screw things up right, and we added
• 27:14
  Speaker 1: some value, but fundamentally that's what the business was before
• 27:18
  Speaker 1: we BoNT it. So that's that's why these things are
• 27:21
  Speaker 1: interesting where Mercer really can add values in expanding the
• 27:25
  Speaker 1: services for those clients to the clients are experiencing more
• 27:28
  Speaker 1: value and we're often able to get growth turned back
• 27:32
  Speaker 1: on in a business that maybe grew at one time,
• 27:34
  Speaker 1: but over the last few years maybe had slowed significantly
• 27:37
  Speaker 1: on growth. Um from a market perspective, but I think, yes, yes,
• 27:42
  Speaker 1: valuations are going up, but that's because there's value and
• 27:45
  Speaker 1: people are starting to recognize it. So I have a
• 27:48
  Speaker 1: bunch of more questions about this space on culture and
• 27:51
  Speaker 1: lessons and the role of Barton as former CEO and
• 27:55
  Speaker 1: now your head of M and A. But before I
• 27:58
  Speaker 1: go there, I have to ask how important is private
• 28:01
  Speaker 1: equity to these deals? How are they usually structured? Is
• 28:05
  Speaker 1: it part cash, part turnout over time? What do these
• 28:09
  Speaker 1: look like? Sure? So you know, deal structures evolved in
• 28:13
  Speaker 1: the industry, and you know, people like to say the
• 28:15
  Speaker 1: market sex prices and the market set the deal structure too.
• 28:19
  Speaker 1: We talked about valuation, but but you know, structure is
• 28:23
  Speaker 1: just as important, um, I would say as the actual valuation.
• 28:27
  Speaker 1: So you know, I think the structures vary, but usually
• 28:31
  Speaker 1: there's a significant amount of cash or capital up front. Uh,
• 28:34
  Speaker 1: there's there's some in and turn out to make sure
• 28:38
  Speaker 1: the business transitions well on retention stays in place, so
• 28:42
  Speaker 1: that affilllates over time from maybe sixty percent up front
• 28:45
  Speaker 1: and in and turnout focused around focused around retention and
• 28:51
  Speaker 1: effective transition to the business. So that's that's from a
• 28:55
  Speaker 1: structural standpoint. We provide opportunity for people to to have
• 29:01
  Speaker 1: equity immerser. We have the opportunity actually for every employee
• 29:05
  Speaker 1: of the company to buy into the company. So that's
• 29:09
  Speaker 1: may sound strange given the fact that we have private
• 29:11
  Speaker 1: equity investors, but really important, you know, and I think,
• 29:16
  Speaker 1: you know, we maybe unpack the private equity piece a
• 29:18
  Speaker 1: little bit fundamentally what what private equity ownership does for
• 29:22
  Speaker 1: us and being a person that that is leading a
• 29:25
  Speaker 1: business that's had private equity involvement since since you know
• 29:29
  Speaker 1: the two thousand eight right was was our our first
• 29:32
  Speaker 1: private equity investment. It is made the CEO C in
• 29:37
  Speaker 1: the business accountable to become what we're capable of becoming. Right,
• 29:41
  Speaker 1: So I am accountable to the board. If I don't
• 29:44
  Speaker 1: do my job, well, um, I can be fired or
• 29:46
  Speaker 1: let go And and fundamentally I think that's good for
• 29:49
  Speaker 1: employees and good for the clients. Right, which is you know,
• 29:52
  Speaker 1: is this is this business delivering on its promise to
• 29:55
  Speaker 1: to its clients and if it's not, you know what
• 29:58
  Speaker 1: responsibility is the CEO? Who for that? So I think
• 30:00
  Speaker 1: I think people miss that they just talk about it
• 30:02
  Speaker 1: as as capital and actually think about it more as
• 30:05
  Speaker 1: accountability and and responsibility and something for the business to
• 30:11
  Speaker 1: to become what it's capable of coming. Quite quite interesting.
• 30:15
  Speaker 1: Let's stick with this space and discuss the corporate culture.
• 30:20
  Speaker 1: How do you, as CEO, maintain a corporate culture when
• 30:25
  Speaker 1: first everybody is in far flung locations and forty five
• 30:29
  Speaker 1: separate offices. We we do something similar on a smaller scale.
• 30:33
  Speaker 1: And second, you're adding new bodies, new organizations, and new
• 30:38
  Speaker 1: people to a company that might have had a somewhat
• 30:42
  Speaker 1: different prior culture. How do you integrate all of that? Yeah,
• 30:47
  Speaker 1: I think when we're we just talked about acquisition, the
• 30:50
  Speaker 1: first test is really culture. Right, So there's culture, there's strategy,
• 30:54
  Speaker 1: and then there's financials. So it needs to make cultural
• 30:57
  Speaker 1: sense and strategic sense before you even bother talking about
• 31:01
  Speaker 1: valuation of the business. So fortunately, we focused on buying
• 31:06
  Speaker 1: financial planning firms. We focused on buying firms who believe
• 31:10
  Speaker 1: and operate under the fiduciary standards UM, and we focused
• 31:13
  Speaker 1: on firms who have a similar but not maybe always
• 31:17
  Speaker 1: identical investment philosophy, but but investment philosophy that's rooted as
• 31:23
  Speaker 1: an outcome of the financial plan rather than in alpha
• 31:26
  Speaker 1: shop focusing on a particular sleeve or sector or or
• 31:30
  Speaker 1: investments type. So UM that's really important because you're starting
• 31:34
  Speaker 1: from a place where there's there's good cultural alignment in
• 31:37
  Speaker 1: terms of values, principles and a belief in how the
• 31:41
  Speaker 1: client could be served. So when we're spread all across
• 31:45
  Speaker 1: the country, the immersioner for years did a big annual event,
• 31:49
  Speaker 1: and you know, as we got bigger, the event got bigger.
• 31:52
  Speaker 1: We broke from that over two years ago and started
• 31:56
  Speaker 1: doing a lot of smaller events. We were just growing
• 31:58
  Speaker 1: so quickly that we could add fifty sixty employees in
• 32:03
  Speaker 1: three months after the event happened. I think the biggest
• 32:06
  Speaker 1: annual event happened. So we moved the corporate headquarters back
• 32:10
  Speaker 1: in the beginning of eighteen out at California to Denver, Colorado.
• 32:15
  Speaker 1: Part of the purpose of that was to be central Um.
• 32:17
  Speaker 1: We called it not headquarters, we call it Central Hub.
• 32:21
  Speaker 1: And in non COVID pandemic years, we would hold close
• 32:25
  Speaker 1: to thirty different pier sessions in the Hub where people
• 32:29
  Speaker 1: would come in meet their peers from other offices around
• 32:32
  Speaker 1: the country. So we wouldn't take the Santa Barbara team
• 32:35
  Speaker 1: and bring the Santa barbar team in. We'd take all
• 32:37
  Speaker 1: the financial planners and get them talking to their peers,
• 32:40
  Speaker 1: and that that helped foster the cultural cultural connection. Coincidentally,
• 32:45
  Speaker 1: this is a play from the Bin playbook. In a
• 32:49
  Speaker 1: Bin and a Company, where I work at offices all
• 32:51
  Speaker 1: over the world, they take consultants at each rank, and
• 32:54
  Speaker 1: they take new managers from all over the world, and
• 32:57
  Speaker 1: you'd build relationships with people working other parts of the
• 33:00
  Speaker 1: world who maybe could be helpful for you as you
• 33:03
  Speaker 1: got to a project later. So that was really helpful
• 33:06
  Speaker 1: in helping build a culture. We also have a number
• 33:09
  Speaker 1: of programs and initiatives, including our Investors Program, employee resource
• 33:14
  Speaker 1: groups that write different kinds that allow employees an opportunity
• 33:17
  Speaker 1: to engage with peers and individuals who who maybe not
• 33:23
  Speaker 1: only are in the same position, but care about the
• 33:24
  Speaker 1: same things that they care about. UM, that's been that's
• 33:27
  Speaker 1: been really productive in amportment. In the pandemic, we've had
• 33:31
  Speaker 1: to work a lot harder. All of us are trying
• 33:34
  Speaker 1: to figure out how to do those things virtually. UM,
• 33:37
  Speaker 1: it has to be much more purposeful. I think there
• 33:39
  Speaker 1: were things that in non vandemic time that could be
• 33:42
  Speaker 1: organic and a little bit free form. But we've we've
• 33:46
  Speaker 1: evolved to a state where we're doing virtual happy hours,
• 33:49
  Speaker 1: we're doing sessions where people are making Christmas cookies together
• 33:54
  Speaker 1: or holiday celebrations together, depending on their faith. So it's
• 33:57
  Speaker 1: it's been it's been purposeful, a little bit more centrally
• 34:01
  Speaker 1: coordinated to remind people that this is an important part
• 34:04
  Speaker 1: of building our culture. Um. So you know, as you
• 34:07
  Speaker 1: talk about acquisitions, you know, I can touch on that briefly.
• 34:10
  Speaker 1: You know, I think we have similar origin stories and beliefs,
• 34:13
  Speaker 1: but we it's important for us to recognize that we
• 34:17
  Speaker 1: are this tapestry of of different businesses that have different
• 34:22
  Speaker 1: origin stories. So people sometimes confuse culture with norms and
• 34:29
  Speaker 1: habits and traditions, right, So traditions are are important parts
• 34:35
  Speaker 1: of a culture, sure, but fundamentally we think about it
• 34:38
  Speaker 1: as principles and have people be willing to adapt and
• 34:42
  Speaker 1: not just adapt to the mercer way. We we adopt
• 34:45
  Speaker 1: practices at firms that we acquire, so you in some
• 34:48
  Speaker 1: ways preserve, recognize and celebrate the heritage that was the
• 34:52
  Speaker 1: way there some of the businesses that have joined us
• 34:55
  Speaker 1: as well. Very interesting and my final question on the
• 34:59
  Speaker 1: M and A practice, there had to be some interesting
• 35:02
  Speaker 1: lessons you've picked up along the way doing forty acquisitions
• 35:06
  Speaker 1: in just a few short years. What did you learn
• 35:09
  Speaker 1: what are some of the pitfalls to be avoided. Yeah,
• 35:13
  Speaker 1: So I'm an analogy guy and the one that I'll
• 35:15
  Speaker 1: use here and like to use his paddle boarding. Right.
• 35:17
  Speaker 1: So I used to live in Florida when I was
• 35:19
  Speaker 1: working at Black Diamond, and we lived on the ocean,
• 35:22
  Speaker 1: and I had a paddle board. Right. So if you've
• 35:24
  Speaker 1: even if you've done it on vacation, you know, you
• 35:27
  Speaker 1: get out on a paddle board and you get in
• 35:28
  Speaker 1: the shop, and you get in the waves, and you
• 35:30
  Speaker 1: see people kind of stand still and try and get
• 35:33
  Speaker 1: their balance. Um. And anybody who's been on a paddle board,
• 35:36
  Speaker 1: whether it's just you know, on a vacation or is
• 35:38
  Speaker 1: actually owned one like I did, you know, the best
• 35:41
  Speaker 1: way to keep your balance at a paddle board is
• 35:42
  Speaker 1: to get it moving, right, So momentum plus having the
• 35:46
  Speaker 1: paddle in the water are critical to keeping stability. So
• 35:50
  Speaker 1: I think you know, early on we tried to go
• 35:54
  Speaker 1: very slow. We had this phrase of quote, do no harm,
• 35:58
  Speaker 1: and unfortunately, do no harm maybe started to turn into
• 36:01
  Speaker 1: doing no good. We weren't on the same systems together.
• 36:05
  Speaker 1: We hadn't set up the umbilical cord to connect people
• 36:09
  Speaker 1: with our estate planning team and tax team which were
• 36:11
  Speaker 1: off and services that they haven't had, and well, the
• 36:15
  Speaker 1: paces is measured and cautious for all a whole bunch
• 36:19
  Speaker 1: of good reasons. I think the biggest lesson is you
• 36:22
  Speaker 1: have to have momentum, and the momentum needs to start
• 36:25
  Speaker 1: from the very beginning um. And that's that's been really
• 36:29
  Speaker 1: critical to to get a clear plan in place, the
• 36:33
  Speaker 1: clear destination um. I think the other key learning we have,
• 36:37
  Speaker 1: and this comes from me being a guy who is
• 36:39
  Speaker 1: part of the business that was acquired twice and and wishing,
• 36:43
  Speaker 1: you know, a couple of times I had to do
• 36:44
  Speaker 1: over is one of the things that we do just
• 36:47
  Speaker 1: before firm joins us. So we're gonna have a couple
• 36:50
  Speaker 1: of firms join us here. At the end of the year,
• 36:53
  Speaker 1: we do an internal call at Mercer with all the
• 36:56
  Speaker 1: heads of the departments, not just the executive team, but
• 36:58
  Speaker 1: there's maybe twenty bole on this call, and we walk
• 37:02
  Speaker 1: through who is this firm, Who are the people, what
• 37:06
  Speaker 1: are their hopes, dreams, fears and aspirations. What's the vision
• 37:09
  Speaker 1: of what we're trying to create together. Because this relationship
• 37:13
  Speaker 1: that was formed in the courtship process maybe didn't involve
• 37:17
  Speaker 1: all those people and it's important for them to understand
• 37:20
  Speaker 1: all that and to be walked through that. So it
• 37:23
  Speaker 1: gives the selling ento the a running start, if you will,
• 37:25
  Speaker 1: that the entire mercer team understands what we're trying to
• 37:29
  Speaker 1: create and understands what the discussions were. It understands what
• 37:32
  Speaker 1: their concerns were of how things are going to go,
• 37:36
  Speaker 1: or a certain piece of their client experience that needed
• 37:39
  Speaker 1: to stay in place, whatever the discussion was. That those
• 37:42
  Speaker 1: two things have been really important. What's interesting is there
• 37:46
  Speaker 1: kind of more vision oriented versus tactical planning, right, so
• 37:50
  Speaker 1: sort of an understanding in terms of how are we
• 37:53
  Speaker 1: going to come together and where are we going and
• 37:55
  Speaker 1: we're going to move together, right, and having the teams
• 37:58
  Speaker 1: understand that quite interesting. Let's talk a little bit about
• 38:03
  Speaker 1: the lack of diversity in the financial services industry. Your
• 38:08
  Speaker 1: firm puts on something called Investors, which is a woman's
• 38:12
  Speaker 1: initiative design to promote diversity in the advisor space. Tell
• 38:16
  Speaker 1: us a little bit about that. Yeah, So invest hers
• 38:20
  Speaker 1: a t R S Capitalized is a program that we
• 38:25
  Speaker 1: put in place a little over three years ago, and
• 38:29
  Speaker 1: I think you know, in our entire industry knows we
• 38:31
  Speaker 1: we really struggle with diversity. A lot of the industry
• 38:34
  Speaker 1: is still male, stale and pale as as folks like
• 38:39
  Speaker 1: to say, And and the question is how do you
• 38:43
  Speaker 1: affect change and something that feels at the outset very
• 38:48
  Speaker 1: difficult to change. So yeah, I'd like to go back
• 38:50
  Speaker 1: and talk about like where where that idea came from?
• 38:54
  Speaker 1: And when I joined the businesses CEO in I mentioned
• 38:59
  Speaker 1: a little bit earlier in the podcast that the first
• 39:01
  Speaker 1: thing I did was travel the country and visit our
• 39:03
  Speaker 1: then thirty offices were now closed to fifty offices, but
• 39:07
  Speaker 1: the thirty offices, and the first thing that I saw
• 39:10
  Speaker 1: was we had and we're very fortunate to have a
• 39:14
  Speaker 1: number of incredibly talented women who are already part of
• 39:17
  Speaker 1: our organization um as advisers, financial planners, the state planning team,
• 39:23
  Speaker 1: on and on and on, and and then about of
• 39:27
  Speaker 1: our client advisory staff where women today we're we're a
• 39:30
  Speaker 1: little over closer to um So we had a we
• 39:34
  Speaker 1: had a good starting point. Uh, those folks didn't happen
• 39:38
  Speaker 1: to be in leadership positions at the time, and we've
• 39:40
  Speaker 1: also changed that both through this program and through merit.
• 39:44
  Speaker 1: And these are talented people. We weren't doing it as
• 39:46
  Speaker 1: any sort of just like, hey, let's become more diverse.
• 39:49
  Speaker 1: These are talented people that we asked a step into
• 39:52
  Speaker 1: leadership roles all around the country. The second thing was
• 39:56
  Speaker 1: I attended an event, um, and there was a animal
• 40:00
  Speaker 1: of women leaders in our industry who were talking about
• 40:04
  Speaker 1: all the trends around women in wealth and now women
• 40:07
  Speaker 1: are going to live longer, and how many women are
• 40:10
  Speaker 1: head a household a bunch of things that being a
• 40:12
  Speaker 1: being a guy who loves data, we're all kind of
• 40:16
  Speaker 1: clear to me and intuitive to me. Um, what I
• 40:18
  Speaker 1: was stuck on was exactly what we should do next? Right,
• 40:21
  Speaker 1: So I understood the problem, I understood the metrics and
• 40:25
  Speaker 1: why it was important, but trying to figure out what
• 40:28
  Speaker 1: to do next was a real challenge. And uh, fortunately,
• 40:32
  Speaker 1: go back to this. We have these talented people in
• 40:34
  Speaker 1: the organization. I pad a couple of them on the
• 40:37
  Speaker 1: shoulder and I said, look, we I really want to
• 40:40
  Speaker 1: launch this thing. Um, I don't know what to call it.
• 40:43
  Speaker 1: You're gonna have to figure out what to call it,
• 40:44
  Speaker 1: because we don't need a male, stale and pale, middle
• 40:47
  Speaker 1: aged white dude decide what what we should call a
• 40:50
  Speaker 1: program like this, but I need your leadership and I
• 40:52
  Speaker 1: will give you unconditional support, but you need to tell
• 40:55
  Speaker 1: me what you're going to do. And what they landed
• 40:58
  Speaker 1: on was a charter that had both both a leg
• 41:01
  Speaker 1: of our strategy and purpose and charter that program to
• 41:04
  Speaker 1: drive more diversity in our business and in the industry.
• 41:08
  Speaker 1: The second was to make sure we were really relevant
• 41:11
  Speaker 1: and in tune with the needs of our female clients.
• 41:14
  Speaker 1: So it has an internal purpose and an external purpose
• 41:17
  Speaker 1: and at least for us, that's that's kind of the
• 41:20
  Speaker 1: biggest learning is having both UM has been really important
• 41:25
  Speaker 1: to get the flywheel on this turning and start to
• 41:30
  Speaker 1: start to help us make progress. The the elevation and
• 41:33
  Speaker 1: empowerment of the talented women in our organization has helped
• 41:37
  Speaker 1: us from recruiting, has helped us bring more talented the organization.
• 41:41
  Speaker 1: We do scholarships, we have relationships with universities UM that
• 41:44
  Speaker 1: that go to word this cause, but it's it's really
• 41:47
  Speaker 1: the engagement of the women professionals in our organization that
• 41:50
  Speaker 1: has been a draw for talent. And then our clients
• 41:53
  Speaker 1: see that, right, our clients see affirm that reflects them,
• 41:56
  Speaker 1: reflects their values and it's helped us externally. UM. All
• 42:00
  Speaker 1: those things work together to help propel it. It It. It
• 42:02
  Speaker 1: was it was hard to get started and hard to
• 42:05
  Speaker 1: know what exactly to do first, but you know, we
• 42:08
  Speaker 1: had we had this great starting point of having talented
• 42:11
  Speaker 1: women already in our organization who were passionate about this
• 42:14
  Speaker 1: and and you know, had the energy and had had
• 42:18
  Speaker 1: my support, um, whether it was funding or just verbal
• 42:22
  Speaker 1: support help get things going. So it's it's been a
• 42:25
  Speaker 1: big success for us and the steering committee and the
• 42:28
  Speaker 1: now hundreds of women that have been involved in that.
• 42:31
  Speaker 1: We just did our virtual We usually do an annual
• 42:34
  Speaker 1: event around investors at a nice retreat for a couple
• 42:38
  Speaker 1: of days. We did that virtually over a two week period.
• 42:40
  Speaker 1: We just wrapped that up and had more than half
• 42:43
  Speaker 1: of our company participate that. In concluding some men right
• 42:46
  Speaker 1: who participated in that, who want to be better advocates,
• 42:50
  Speaker 1: want to be better allies, UM, and and are just
• 42:53
  Speaker 1: as committed to the cause as our women professionals are.
• 42:55
  Speaker 1: You have a quote I really like tell us what
• 42:58
  Speaker 1: we can do to quote stand together and do the
• 43:01
  Speaker 1: next right thing. Yeah. So this came out of the
• 43:06
  Speaker 1: very challenging times that we have had in around more
• 43:11
  Speaker 1: broadly diversity in our country and the systemic inequalities that exist.
• 43:16
  Speaker 1: And yeah, I think, like a lot of leaders, I
• 43:19
  Speaker 1: tend to note to the team talking about what we
• 43:22
  Speaker 1: stood for and reminding them that in the air of diversity,
• 43:27
  Speaker 1: there is there is, you know, we really needed to
• 43:29
  Speaker 1: do the right thing. And then it became, with some
• 43:32
  Speaker 1: encouragement from some folks on my team, I posted it
• 43:35
  Speaker 1: to social media together and it was talking right on
• 43:38
  Speaker 1: the heels of the death of George Floyd and and
• 43:41
  Speaker 1: and others just just tragic, and the team was just
• 43:45
  Speaker 1: you know, had gut wrenched right and and I think
• 43:48
  Speaker 1: stuck in this place of we know this is wrong,
• 43:51
  Speaker 1: but we're not quite sure what to do next. And
• 43:55
  Speaker 1: I think, you know, as we have embarked on this,
• 43:57
  Speaker 1: and I you know, far less progress to to be
• 44:02
  Speaker 1: able to relay at this stage then we've made in
• 44:04
  Speaker 1: our women's program and women's initiative. You know, I got
• 44:08
  Speaker 1: to this point where it's we we've a needed to
• 44:12
  Speaker 1: say something, being more importantly needed to listen. Um so
• 44:15
  Speaker 1: that there was a huge desire and remains a huge
• 44:18
  Speaker 1: desire to quote do something. The first thing that I
• 44:21
  Speaker 1: felt like it was important was to listen. So we
• 44:24
  Speaker 1: held probably a dozen, maybe as many as twenty internal
• 44:28
  Speaker 1: forums for our employees to talk about UM the issues
• 44:31
  Speaker 1: around diversity and inequalities in our country. And that was
• 44:35
  Speaker 1: really powerful. There was this desire to do something, but
• 44:39
  Speaker 1: I think all of us are recognizing that we needed
• 44:42
  Speaker 1: to ground ourselves and in understanding and listening first. So
• 44:46
  Speaker 1: I think where we are today, We've we've taken a
• 44:48
  Speaker 1: number of actions. We've we've I've joined a group here
• 44:53
  Speaker 1: in Colorado called Inclusive Economy. It's a group of about
• 44:56
  Speaker 1: twenty five ceo s with some nonprofit UM nonprofit an
• 45:00
  Speaker 1: involvement as well around helping Colorado become a more diverse economy.
• 45:05
  Speaker 1: And I think what I've landed on them. I'm a
• 45:08
  Speaker 1: liberal arts undergrad guy, so this has got an alliteration
• 45:11
  Speaker 1: coming here. But it was about actions. You're taking actions.
• 45:15
  Speaker 1: It's also about creating allies. I've connected with a number
• 45:19
  Speaker 1: of advisors in our profession who care about the same things,
• 45:23
  Speaker 1: and we're trying to work together on these issues. And
• 45:26
  Speaker 1: the Inclusive Economy program in Colorado is about allies, about
• 45:30
  Speaker 1: twenty CEOs of companies in Colorado working together to try
• 45:34
  Speaker 1: and drive effect to change. And it's it's also about accountability, right.
• 45:38
  Speaker 1: Being being part of that male, pale and stale crowd,
• 45:42
  Speaker 1: I think part of part of my job, you know,
• 45:44
  Speaker 1: part of our job, is to hold my peers accountable, right.
• 45:48
  Speaker 1: And I think that's something that I've really learned this
• 45:52
  Speaker 1: year is is you need to do more than just
• 45:55
  Speaker 1: do the right thing yourself. You need to step up,
• 45:58
  Speaker 1: particularly those of us are fortunate enough to be in
• 46:01
  Speaker 1: leadership roles and hold others accountable. Um. And we need
• 46:05
  Speaker 1: to be emboldened that we need to make progress, but
• 46:08
  Speaker 1: not be discouraged that our starting point sucks. Right. We
• 46:12
  Speaker 1: don't like where we are, we don't like what we can,
• 46:14
  Speaker 1: but there's there's no option in my mind. The other
• 46:17
  Speaker 1: phrase that's in that that article that I put together
• 46:20
  Speaker 1: is about relentless forward progress. Um. I've got some good
• 46:24
  Speaker 1: friends who are who are ultramarrathonors, and when I have
• 46:28
  Speaker 1: the time, one of the things I do is going
• 46:30
  Speaker 1: I support them on these two mile runs and crazy
• 46:33
  Speaker 1: parts of the world. And you know their mantras, relentless
• 46:37
  Speaker 1: forward progress doesn't matter if you're tired, right, and doesn't
• 46:41
  Speaker 1: matter if you think you want to stop right, you
• 46:44
  Speaker 1: have to make progress right, and I think that's you
• 46:47
  Speaker 1: know what we're trying to do. Quite interesting, you signed
• 46:50
  Speaker 1: the u N Principles for Responsible Investing some years ago.
• 46:55
  Speaker 1: How has that affected the way Mercer is a steward
• 46:59
  Speaker 1: of capital? Yeah, so, our our TIEF investment officer, John Kelcagny,
• 47:05
  Speaker 1: brought that to me and was a real advocate advocate
• 47:08
  Speaker 1: for it um and it was one of those moments
• 47:10
  Speaker 1: where you know you have me at hello, which was
• 47:13
  Speaker 1: we we wanted to be part of change and um
• 47:17
  Speaker 1: we felt like it was an important change and a
• 47:19
  Speaker 1: number of our we worked all a number of separate
• 47:22
  Speaker 1: account managers who also have been co signatories to to
• 47:26
  Speaker 1: the UN Principles for Responsible Investing as well. What's interesting
• 47:31
  Speaker 1: is not only are we signatories, we we actually have
• 47:34
  Speaker 1: some pretty unique capabilities under the hood and Mercers Investment
• 47:38
  Speaker 1: Offering to provide s R I or E s T
• 47:42
  Speaker 1: investing capabilities that are very customized and come at no
• 47:48
  Speaker 1: additional expense to the investors, so very very cost advantage
• 47:52
  Speaker 1: and even even more cost advantage than some of the
• 47:55
  Speaker 1: funds and resources that are available through Vanguard and other
• 47:58
  Speaker 1: places that are known for being low expect us and
• 48:01
  Speaker 1: I think a lot of the industry, the internal narrative,
• 48:04
  Speaker 1: right has been well, this is something important, but it
• 48:07
  Speaker 1: it feels very small and it's certainly not as as
• 48:10
  Speaker 1: big as it has been in Europe. Um And but
• 48:14
  Speaker 1: I think you're starting to see uh interest from investors
• 48:18
  Speaker 1: and that interest turned into capital investments in so um
• 48:23
  Speaker 1: pocketed now regionally in different parts of the country where
• 48:27
  Speaker 1: investors really are interested in seeing their advisor have these capabilities,
• 48:33
  Speaker 1: um so that they can tail or tailor investment portfolios too,
• 48:37
  Speaker 1: things that they care about, right. So um. You know
• 48:40
  Speaker 1: this this extension of we need to act a certain
• 48:43
  Speaker 1: way in the world, but we we want our money
• 48:45
  Speaker 1: to act in the same way. Right. So um, it's
• 48:47
  Speaker 1: just been hard. It's been hard to access for for
• 48:50
  Speaker 1: the regular consumer. And you know, we're happy to be
• 48:53
  Speaker 1: playing a small part in helping democratize that access and
• 48:57
  Speaker 1: have people be able to do the right thing with
• 48:59
  Speaker 1: their money but not haven't have to cost them more
• 49:02
  Speaker 1: money or or come with inefficient portfolio. So um. So
• 49:06
  Speaker 1: it's been a it's been a good success for us.
• 49:09
  Speaker 1: Very interesting. So let's discuss the future of financial advice.
• 49:14
  Speaker 1: You're the perfect person to ask this question, how have
• 49:18
  Speaker 1: client expectations evolved over the past few years. Well, I
• 49:23
  Speaker 1: think investors now expect a lot more than an asset
• 49:27
  Speaker 1: allocation strategy and investment portfolio. Right. That is important. It's
• 49:32
  Speaker 1: an important part of somebody's financial plan. And obviously consumers
• 49:37
  Speaker 1: remains very interested in investments. It's just those those options
• 49:41
  Speaker 1: and the role of an advisor helping put things together.
• 49:45
  Speaker 1: In for an investor, there's a lot of places they
• 49:47
  Speaker 1: can get that now from you know what the industry
• 49:50
  Speaker 1: might call robo advisors, to large retail shops that used
• 49:55
  Speaker 1: to be known as discount brokera shops, but now are
• 49:57
  Speaker 1: making those things available and that's good for the consumer. UM.
• 50:00
  Speaker 1: For for us UM, we've been following the path of
• 50:03
  Speaker 1: the consumer to provide more services right beyond beyond asset
• 50:09
  Speaker 1: allocation and investments. So that has manifested itself in a
• 50:13
  Speaker 1: business that offers comprehensive financial planning, which has always been
• 50:17
  Speaker 1: part of our core offering, has manifested itself and us
• 50:20
  Speaker 1: having a dedicated a state planning team, we will draft
• 50:23
  Speaker 1: documents for the clients and not cookie cutter plans, customized plans.
• 50:28
  Speaker 1: We have a tax team that does individual and business
• 50:31
  Speaker 1: work together. But I think one of the other ingredients
• 50:34
  Speaker 1: that's really important about Mercer is the way that the
• 50:37
  Speaker 1: team is aligned is to work all as one team
• 50:40
  Speaker 1: together and not multiple different departments. Right. So, um, you know,
• 50:45
  Speaker 1: having been a guy who had the fortune to live
• 50:48
  Speaker 1: near one of the Mayo clinics, um when I was
• 50:50
  Speaker 1: living in Jacksonville, Florida, you know, Mayo Clinic does a
• 50:54
  Speaker 1: very nice job of this in medicine, where it's not
• 50:59
  Speaker 1: just your going in for heart surgery or cancer, it's
• 51:01
  Speaker 1: it's a place you want to go if if you
• 51:03
  Speaker 1: think something's wrong with you but you're not sure, because
• 51:06
  Speaker 1: all those professionals across those different disciplines are there to
• 51:10
  Speaker 1: help diagnose and figure out what's going on. So, fortunately,
• 51:13
  Speaker 1: when we need consumers, there's not a health crisis, but
• 51:16
  Speaker 1: there is a lot of uncertainty about their financial affairs,
• 51:20
  Speaker 1: and they're they're looking for somebody to help solve a
• 51:22
  Speaker 1: problem that maybe is becoming more complex. Right, they have
• 51:25
  Speaker 1: an investment problem, and they have some tax questions, they
• 51:28
  Speaker 1: have some issues around their estate, or there's a recommendation
• 51:32
  Speaker 1: that may need to involve all of those parties. Right,
• 51:35
  Speaker 1: if you want to set up a acid protection trust, right,
• 51:38
  Speaker 1: They they simply don't want to have to go talk
• 51:40
  Speaker 1: to three different professionals to to get that put together
• 51:44
  Speaker 1: and have the meter running at least two of those
• 51:46
  Speaker 1: three places to be able to put together that strategy.
• 51:49
  Speaker 1: So I think as investors and the consumers have both
• 51:53
  Speaker 1: aged and matured, there's an expectation for for those of
• 51:58
  Speaker 1: us that are in the seat at the professional advisor
• 52:01
  Speaker 1: to help them ease that complexity. And part of the
• 52:04
  Speaker 1: complexity the exist in our industry is that it's still
• 52:08
  Speaker 1: it's still split up in a lot of places, so
• 52:10
  Speaker 1: you know, mergers, vision and ideas, to bring those expertise
• 52:14
  Speaker 1: all under one roof um, and then to align those
• 52:17
  Speaker 1: professionals around one standard, which is, let's let's work together
• 52:23
  Speaker 1: to provide the best set of recommendations and the best
• 52:26
  Speaker 1: execution of those recommendations to get the plan in place
• 52:30
  Speaker 1: and to get it finished. UM. So that's certainly where
• 52:34
  Speaker 1: we're going. But I think there's part of a broader
• 52:37
  Speaker 1: secular shift of of the sophistication and evolution of our
• 52:41
  Speaker 1: entire industry. So let's stay with the concept of that evolution.
• 52:45
  Speaker 1: I'm intrigued by the idea of a state planning as
• 52:49
  Speaker 1: well as tax planning, not as discrete departments within a
• 52:55
  Speaker 1: big company, but as something that is integral to the
• 52:59
  Speaker 1: entire or financial planning process. How do you manage to
• 53:03
  Speaker 1: keep this part of the regular process and not have
• 53:07
  Speaker 1: these become their own little neighborhood separate from the rest
• 53:11
  Speaker 1: of the wealth planning process. Yeah, well, that goes to culture,
• 53:16
  Speaker 1: but it also goes to the mandate, right, it's going
• 53:19
  Speaker 1: to so we we don't charge for the state planning.
• 53:22
  Speaker 1: It's included as part of our advisory fee for clients. UM.
• 53:27
  Speaker 1: So it's complementary if you will. Two, And we don't
• 53:31
  Speaker 1: charge hourly rates in either a state planning group or
• 53:34
  Speaker 1: our tax group. Right, So we do charge an annual
• 53:38
  Speaker 1: fee for preparing the tax return or especially if there's
• 53:42
  Speaker 1: a business return, there would be a fee for that
• 53:45
  Speaker 1: as well, to get us to prepare their turns. That's
• 53:47
  Speaker 1: commensurate with what folks would experience in the industry. But
• 53:51
  Speaker 1: our lawyers and our accountants also thereby or not measure
• 53:58
  Speaker 1: the way it happens in other parts of the industry
• 54:00
  Speaker 1: around bill of all hours. UM. Our principle is serve
• 54:04
  Speaker 1: a client, follow through and deliver the estate plan that
• 54:07
  Speaker 1: was part of the recommendation in the financial plan. And oh,
• 54:11
  Speaker 1: by the way, if there's an outside of state planning
• 54:13
  Speaker 1: attorney that the client knows that they've worked within the past,
• 54:16
  Speaker 1: maybe they have existing documents in place that need to
• 54:19
  Speaker 1: be updated. Our lawyers will get on the phone with
• 54:22
  Speaker 1: their lawyers. Right, So we're we're not trying to to
• 54:26
  Speaker 1: earn a buck on on fulfilling the estate planning. We're
• 54:29
  Speaker 1: just trying to help the client finish the recommendations that
• 54:32
  Speaker 1: are in the financial plan. So to pull this off,
• 54:35
  Speaker 1: you need to have a little bit more scale, and
• 54:37
  Speaker 1: there's where still it's still it's twenty one billion dollars.
• 54:40
  Speaker 1: We're small in the landscape of of other firms out there,
• 54:45
  Speaker 1: but we're big enough to be able to have these
• 54:47
  Speaker 1: dedicated departments with individuals. So we we also keep every
• 54:51
  Speaker 1: client is assigned a point advisor who manages the relationship.
• 54:55
  Speaker 1: If you want to use the medical analogy, that's that's
• 54:58
  Speaker 1: the general practitioner, but the specialists are deployed into that
• 55:02
  Speaker 1: relationship based on either a client request or be more
• 55:07
  Speaker 1: more frequently, the point advisor's recommendation of let's get our
• 55:12
  Speaker 1: estate planning team involved, and then the estate planning team
• 55:15
  Speaker 1: is involved right being able to help take care of
• 55:17
  Speaker 1: the clients. So I think where this is broken down
• 55:20
  Speaker 1: in other parts of our industry. Um, there's some large
• 55:23
  Speaker 1: tax firms that have wealth management practices, and maybe that's
• 55:27
  Speaker 1: something that you're referencing. They are different departments and it
• 55:31
  Speaker 1: feels like that to the consumer, you might as well
• 55:33
  Speaker 1: be going to a separate accounting firm altogether, because you
• 55:37
  Speaker 1: are jumping into a different silo. So you have to
• 55:40
  Speaker 1: tear down the silos and not let them let them
• 55:42
  Speaker 1: get built, I think, and and make sure that that
• 55:46
  Speaker 1: everybody understands the same principle is that there's one goal
• 55:48
  Speaker 1: in mind at serving a client. That makes perfect sense
• 55:51
  Speaker 1: to me. You mentioned that a twenty one billion dollars,
• 55:55
  Speaker 1: you're relatively small. This is kind of the fascinating thing
• 55:59
  Speaker 1: about the r are industry. It's kind of weird in
• 56:02
  Speaker 1: that nobody really has meaningful market share. So how do
• 56:07
  Speaker 1: you think about the competition and do they even matter? Yeah?
• 56:11
  Speaker 1: I think I think it depends on how you frame it, right,
• 56:14
  Speaker 1: So I think I think Fidelity is probably the largest
• 56:18
  Speaker 1: financial services firm in our country yet it's still meant
• 56:21
  Speaker 1: that you measure it maybe has mid single digit market share,
• 56:25
  Speaker 1: So very very fragmented industry. So at twenty one billion UM.
• 56:31
  Speaker 1: From a financial advisory perspective, you have the wirehouses out
• 56:35
  Speaker 1: there Mortgage Stanley, Merrill, Lynch that are our trillions, right,
• 56:38
  Speaker 1: So they're much much larger than we are. To me,
• 56:42
  Speaker 1: that's the that's the competition or or the exact opposite
• 56:48
  Speaker 1: of what we are and what we want to become.
• 56:50
  Speaker 1: We operate under a fiduciary standard. We serve our clients
• 56:54
  Speaker 1: were purely an independent registered investment advisor. We don't have
• 56:57
  Speaker 1: an investment banking division, we don't have other things that
• 57:00
  Speaker 1: could introduce conflicts into the client relationships. So when you
• 57:04
  Speaker 1: talk about fragmented, then you get in the segment of
• 57:07
  Speaker 1: the industry that are registered investment advisors or produce series.
• 57:11
  Speaker 1: I think a lot of us leading these firms recognize
• 57:16
  Speaker 1: that there's more to be gained from us working together
• 57:19
  Speaker 1: UM than from us seeing or perceiving each other as competitors.
• 57:24
  Speaker 1: So I'm part of an industry study group. I've been
• 57:29
  Speaker 1: part of that group for over fifteen years. I'm very
• 57:31
  Speaker 1: active in events. We share information on around our initiatives
• 57:37
  Speaker 1: with each other because we believe that helping the entire
• 57:41
  Speaker 1: category grow UM firms that are adhering to that produciary
• 57:44
  Speaker 1: standard is in is in the best interest of the
• 57:47
  Speaker 1: consumer and ultimately helps us. Right, we can we can
• 57:50
  Speaker 1: help each other, UM punch above our weight class if
• 57:53
  Speaker 1: you will, from an industry perspective when we when we
• 57:55
  Speaker 1: work together. So I think that's uh, I think that's important.
• 57:59
  Speaker 1: I think you can look at you, look at look
• 58:01
  Speaker 1: look at competition as well. They provide similar service to
• 58:04
  Speaker 1: us at the margin. You know, I'm interested if the
• 58:08
  Speaker 1: client doesn't choose us, that they find another good home
• 58:11
  Speaker 1: that's going to serve them in the right way. UM.
• 58:14
  Speaker 1: So I don't think of that as competition. I look
• 58:16
  Speaker 1: at that as another consumer that was better served if
• 58:19
  Speaker 1: they made the right choice. So, UM, I think it's
• 58:21
  Speaker 1: interesting and it is a little weird, right. It's very
• 58:24
  Speaker 1: different than how it felt when I was in technology
• 58:28
  Speaker 1: and there in any category there are two or three
• 58:31
  Speaker 1: main players. That was that was competition. Um. Every everybody
• 58:36
  Speaker 1: looking at buying your piece of technology was looking at
• 58:38
  Speaker 1: the direct competitor and evaluating against each other. That's competition.
• 58:42
  Speaker 1: This is this is not right. This is this is
• 58:44
  Speaker 1: different and I think has been one of the things
• 58:47
  Speaker 1: that is really drawn and attracted me to this industry
• 58:49
  Speaker 1: is this collegiality. Uh that that mercer doesn't have all
• 58:54
  Speaker 1: the good ideas cornered and hasn't figured a lot of
• 58:56
  Speaker 1: things out as an industry. You know, all of us
• 59:00
  Speaker 1: are smarter than any any one of us, So it's
• 59:02
  Speaker 1: it's great that we have that culture to be able
• 59:05
  Speaker 1: to share best practices and share learnings and to help
• 59:07
  Speaker 1: each other. So let's stick with the industry as a whole.
• 59:11
  Speaker 1: We just had a giant merger announced earlier this year,
• 59:14
  Speaker 1: the Schwab TD merger. How do you think this is
• 59:18
  Speaker 1: gonna impact the industry at large? And is there going
• 59:21
  Speaker 1: to be more consolidation in the custodial space. Yeah, I'm
• 59:27
  Speaker 1: you know, short term bearish, long term bullish on this one.
• 59:30
  Speaker 1: And as we talked about earlier, I worked at SWAB
• 59:32
  Speaker 1: for twelve years, so I've I've got some insight, not
• 59:36
  Speaker 1: just a SWAB but from the other side of it.
• 59:39
  Speaker 1: I think, you know, ultimately it's it's good for our
• 59:42
  Speaker 1: industry and and you know, frankly, the writing was on
• 59:46
  Speaker 1: the wall when we go to zero dollar transaction piece.
• 59:51
  Speaker 1: I can't remember working at Schwab where we dropped price
• 59:54
  Speaker 1: in and it was a better company moment, right, and
• 59:58
  Speaker 1: that was back in the I think, you know, a
• 1:00:01
  Speaker 1: long time ago, and um, you know, it's a really
• 1:00:05
  Speaker 1: great transition that we're going through. But I think these
• 1:00:08
  Speaker 1: businesses are going to come together. Uh, they're going to
• 1:00:12
  Speaker 1: put the capabilities of the two organizations together. The short
• 1:00:15
  Speaker 1: term bearishes, it's going to take some time for that
• 1:00:18
  Speaker 1: to happen and maybe divert interest around operational issues in
• 1:00:22
  Speaker 1: the short term, but long term, I think it'll create
• 1:00:26
  Speaker 1: a healthy partner. And ultimately that's the most important outcome
• 1:00:29
  Speaker 1: of this is as an advisor, when you work with
• 1:00:33
  Speaker 1: a custodian, you really need that custodian to be healthy.
• 1:00:36
  Speaker 1: And for that custodian to be healthy, they need to
• 1:00:39
  Speaker 1: not only have a good business serving advisors, they need
• 1:00:41
  Speaker 1: to have a good retail business as well. And the
• 1:00:44
  Speaker 1: better those businesses are doing, the better it It results
• 1:00:48
  Speaker 1: in investment and in support for firms like US. So
• 1:00:53
  Speaker 1: I'm I'm bullish on sort of the opportunity and what
• 1:00:56
  Speaker 1: it might mean. I'm not concerned about consolidation of different custodians.
• 1:01:01
  Speaker 1: There's there's enough choices out there, and there's new ones
• 1:01:04
  Speaker 1: that could emerge top solve that issue. Quite interesting, I
• 1:01:08
  Speaker 1: want to throw you a little bit of a curveball.
• 1:01:11
  Speaker 1: In the nineties when you left Bain, you were deciding
• 1:01:15
  Speaker 1: on two companies. You ended up going to Schwab, but
• 1:01:19
  Speaker 1: the other one was a little startup in Seattle that
• 1:01:22
  Speaker 1: ended up growing into Amazon. When you look back on
• 1:01:26
  Speaker 1: that decision, what are your thoughts had had you been
• 1:01:29
  Speaker 1: employee number fifty, I gotta imagine those stock options would
• 1:01:33
  Speaker 1: have been pretty valuable. Yeah, who knows, right? Who knows?
• 1:01:38
  Speaker 1: Maybe maybe I would have sucked and gotten fired in
• 1:01:40
  Speaker 1: six months and it would have been a disaster, right,
• 1:01:42
  Speaker 1: You don't you don't, You don't know, right, And I think, yeah,
• 1:01:46
  Speaker 1: it was a great opportunity. I had the instincts that
• 1:01:49
  Speaker 1: it was a great opportunity um at the time. But
• 1:01:55
  Speaker 1: you know, as we talked about a little bit earlier,
• 1:01:57
  Speaker 1: my entry point to Schwab was pretty unique, and I
• 1:02:00
  Speaker 1: stepped into an interesting chair as the chief of staff
• 1:02:03
  Speaker 1: to the vice chairman, and I got to work down
• 1:02:06
  Speaker 1: the hall from Chuck Chua my office, the office directly
• 1:02:10
  Speaker 1: next to me was Chuck's driver, and and you know,
• 1:02:14
  Speaker 1: Chuck would walk by my office every morning, right and
• 1:02:17
  Speaker 1: he'd say hello, and he'd stopped and sometimes you'd have
• 1:02:19
  Speaker 1: a chat. And yeah, I think it was just a
• 1:02:22
  Speaker 1: unique opportunity to join a highly entrepreneurial organization to work
• 1:02:27
  Speaker 1: down the hall from you know, just somebody having an
• 1:02:30
  Speaker 1: immense respect for and was part of shape in the industry.
• 1:02:33
  Speaker 1: And it represented what I was really looking for at
• 1:02:36
  Speaker 1: the time, even if I couldn't have put words on
• 1:02:38
  Speaker 1: it in the moment, was to join an industry, join
• 1:02:41
  Speaker 1: a profession, join a business that had a real purpose,
• 1:02:45
  Speaker 1: and a purpose that was something other than yourself or
• 1:02:50
  Speaker 1: or the company itself. Was about serving clients and some
• 1:02:54
  Speaker 1: things that have become we're at the time and had
• 1:02:56
  Speaker 1: become a big part of why it's stuck around this
• 1:02:58
  Speaker 1: industry for so long. So yeah, maybe it would have
• 1:03:01
  Speaker 1: worked out great. Yeah, you know, maybe it wouldn't. I
• 1:03:04
  Speaker 1: wouldn't have stucked, and maybe I would have done well.
• 1:03:06
  Speaker 1: But you know, you can't make those kind of choices,
• 1:03:09
  Speaker 1: you know, or or kind of use that in hindsight, Well,
• 1:03:13
  Speaker 1: what if I chose this, I'm I kind of feel
• 1:03:15
  Speaker 1: like there's probably four or five decisions like that that
• 1:03:19
  Speaker 1: I've I've made in my career to go right and
• 1:03:22
  Speaker 1: set a left and in all the past would have
• 1:03:25
  Speaker 1: been would have been great. Right. So you just youve
• 1:03:27
  Speaker 1: got to enjoy the road you're on and enjoy the
• 1:03:30
  Speaker 1: journey and enjoy the opportunities that you have right now
• 1:03:32
  Speaker 1: and not not look back on anything like that with regret.
• 1:03:35
  Speaker 1: I certainly don't. I like that philosophy. I don't know
• 1:03:38
  Speaker 1: if you've had the same experience, but I've had to
• 1:03:41
  Speaker 1: convince people that Charles Schwab is a real guy and
• 1:03:45
  Speaker 1: the person you see on TV is not an actor.
• 1:03:48
  Speaker 1: Have you ever had people raise that question with you?
• 1:03:51
  Speaker 1: I actually haven't, But you know, he he is this
• 1:03:55
  Speaker 1: you know, larger than life figurehead, right, and this this
• 1:03:58
  Speaker 1: huge company that's his namesake, UM, which which is interesting.
• 1:04:02
  Speaker 1: You know. The interesting thing about Chuck and is uh,
• 1:04:06
  Speaker 1: he's quite shy, right, you know, So he's and I
• 1:04:09
  Speaker 1: don't mean that as a sperience. He's you listen to
• 1:04:12
  Speaker 1: every word that he says and meeting so it's I
• 1:04:14
  Speaker 1: just think I look back on that with so much fondness,
• 1:04:17
  Speaker 1: and that's something that I hope to represent in the
• 1:04:20
  Speaker 1: in a CEO chair. Now you got to look at
• 1:04:23
  Speaker 1: how he made decisions internally, and it was always about
• 1:04:28
  Speaker 1: the clients right and him mathematically. Some decisions were very
• 1:04:33
  Speaker 1: brave from from a financial perspective. That you be sitting
• 1:04:37
  Speaker 1: and meetings and there'd be an intense debate over a
• 1:04:39
  Speaker 1: particular issue, and Chuck could just be quiet for forty
• 1:04:42
  Speaker 1: five minutes of the beating and he finally just lean
• 1:04:45
  Speaker 1: in and very quietly say, look, there's only one choice here,
• 1:04:50
  Speaker 1: what what's right for the client? And um, you know,
• 1:04:54
  Speaker 1: it's such a great environment to have had the great
• 1:04:56
  Speaker 1: fortune and to to grow up in and those kind
• 1:05:00
  Speaker 1: of decisions made right. Business. Business is about a lot
• 1:05:04
  Speaker 1: of things, but at the core, it's hard to build
• 1:05:06
  Speaker 1: a great business if you're not doing the right thing
• 1:05:08
  Speaker 1: for clients, and clients don't like you, and your employees
• 1:05:11
  Speaker 1: don't like coming to work. So um, yeah, I think
• 1:05:15
  Speaker 1: those are those are really important things. So I take
• 1:05:17
  Speaker 1: away from now quite interesting. I know I only have
• 1:05:20
  Speaker 1: you for a few more minutes, So let's jump to
• 1:05:22
  Speaker 1: our speed round. These are our favorite questions we ask
• 1:05:26
  Speaker 1: all of our guests, and we run through them quickly.
• 1:05:29
  Speaker 1: Let's jump into them. We're all working from home these days.
• 1:05:33
  Speaker 1: What are you streaming? What do you doing to entertain yourself?
• 1:05:37
  Speaker 1: Give us your favorite Netflix or Amazon Prime shows you're watching. Well,
• 1:05:42
  Speaker 1: I think, like a lot of people, we've burned through
• 1:05:43
  Speaker 1: just about everything, right, so from from streaming or watching.
• 1:05:48
  Speaker 1: So I think the the podcast. I'm a big podcast listener.
• 1:05:53
  Speaker 1: I still like to get out and hike and run.
• 1:05:55
  Speaker 1: So you know, I love Cereal, both both the classic
• 1:05:59
  Speaker 1: episodes as well as some of the later series. Um,
• 1:06:02
  Speaker 1: you know, I love how stuff works. Um yeah, I
• 1:06:05
  Speaker 1: love sort of learning and getting something that's really out
• 1:06:08
  Speaker 1: of field and out of out of industry, right from
• 1:06:11
  Speaker 1: from a learning perspective. My son and I started rewatching
• 1:06:15
  Speaker 1: old old episodes in the office together, which is which
• 1:06:18
  Speaker 1: is I had a lot of fun. He's fifteen, and
• 1:06:20
  Speaker 1: it's fun to go back and sort of have that
• 1:06:22
  Speaker 1: moments of nostalgia and rewatch some things. Because again we've
• 1:06:26
  Speaker 1: we've burned through so many different different mini series. I'm
• 1:06:30
  Speaker 1: looking for some recommendations too. I'll shoot you a list
• 1:06:33
  Speaker 1: of my favorites. Uh. Let's let's jump over to mentors
• 1:06:36
  Speaker 1: who helped shape your career. Well, we talked about Uh,
• 1:06:41
  Speaker 1: you know career. We talked about some of the experiences
• 1:06:44
  Speaker 1: that I had a swab in other places. I think
• 1:06:46
  Speaker 1: the the thing that I think of a lot, and
• 1:06:48
  Speaker 1: particularly this year is my mom um uh and my mom.
• 1:06:52
  Speaker 1: My mom passed away earlier this year, not COVID related,
• 1:06:55
  Speaker 1: just from age and and wear and tear. So you know,
• 1:06:59
  Speaker 1: it's gave me a lot a chance to reflect on
• 1:07:01
  Speaker 1: the lessons that that she taught me that are more
• 1:07:05
  Speaker 1: important than than business and life. So she's a Kiwi.
• 1:07:08
  Speaker 1: She's a New Zealander. The first moved to London, then
• 1:07:12
  Speaker 1: moved to New York in her early twenties and you
• 1:07:15
  Speaker 1: met my dad and stayed. But but like a lot
• 1:07:16
  Speaker 1: of Kiwi's, she's this intrepid spirit. She was an adventurer
• 1:07:21
  Speaker 1: um did a lot of mountain climbing and skiing uh
• 1:07:24
  Speaker 1: in New Zealand that you became part of a family tradition.
• 1:07:27
  Speaker 1: But like a lot of Kiwi's into all my family
• 1:07:30
  Speaker 1: that are in that part of the world, they have
• 1:07:32
  Speaker 1: this this wonderful elegance to enjoy life, to live life
• 1:07:37
  Speaker 1: and not worry about sort of the little things and
• 1:07:41
  Speaker 1: the clear things true in an incredible sense of humor.
• 1:07:44
  Speaker 1: So I think as we've gotten into and you know,
• 1:07:47
  Speaker 1: not only the loss of her, but sort of all
• 1:07:51
  Speaker 1: the other challenges you were facing. So as this this
• 1:07:54
  Speaker 1: you know, disposition right to sort of enjoy, enjoy the
• 1:07:59
  Speaker 1: journey you're on other than you know, regrets or worries
• 1:08:02
  Speaker 1: or whatever where challenge you're facing, just to overcome it.
• 1:08:05
  Speaker 1: She was she tough cookie. Um, so you know she's been.
• 1:08:08
  Speaker 1: She's in my beacon throughout this year. Tell us about
• 1:08:10
  Speaker 1: some of your favorite books. What are you reading now
• 1:08:13
  Speaker 1: and what are your some of your old time favorites. Yeah,
• 1:08:16
  Speaker 1: I think you know. I'm a huge I was a
• 1:08:18
  Speaker 1: huge fan of the Gladwell books. Um, you know nothing Gladwell's.
• 1:08:22
  Speaker 1: Of course, there's sort of a lesser known for folks
• 1:08:25
  Speaker 1: that like those that I've I've reread this year because
• 1:08:28
  Speaker 1: I enjoyed it so much. Called The Talent Code and
• 1:08:32
  Speaker 1: the Culture Code by by Daniel Coyle. So a couple
• 1:08:35
  Speaker 1: of great books that that build on some of the
• 1:08:38
  Speaker 1: principles that Gladwell talks about. So the Talent Code short
• 1:08:42
  Speaker 1: version and everybody knows the ten thousand hours Gladwell talks about.
• 1:08:45
  Speaker 1: Daniel takes that a couple of steps further and talks
• 1:08:48
  Speaker 1: about actually how those ten thousand hours really should work UM,
• 1:08:52
  Speaker 1: and how the brain works when it's learning. It's not
• 1:08:55
  Speaker 1: just the hours, it's actually the kind of practice, purposeful practice,
• 1:09:01
  Speaker 1: and a key part of practice is actually making mistakes,
• 1:09:04
  Speaker 1: so we learn more when we're making mistakes, the way
• 1:09:07
  Speaker 1: the brain actually works to be able to learn. So
• 1:09:10
  Speaker 1: I think it's a really important principle to hold when
• 1:09:13
  Speaker 1: you're trying to build a growing enterprise. You're just just
• 1:09:15
  Speaker 1: navigating life. It's not about being perfect. It's actually about
• 1:09:19
  Speaker 1: the experimenting and learning from those experiments about what worked
• 1:09:23
  Speaker 1: and what didn't. The Culture Code builds that into the
• 1:09:27
  Speaker 1: power of small teams and how teams in general should
• 1:09:30
  Speaker 1: operate UM. Some of the key principles about keeping it
• 1:09:33
  Speaker 1: very flat, about creating safety and vulnerability and honesty UM
• 1:09:39
  Speaker 1: in that environment. So a lot of great vignettes throughout,
• 1:09:43
  Speaker 1: So highly recommend both of those and their good rereads.
• 1:09:47
  Speaker 1: In the environment we're in, Huh quite interesting. I'm in
• 1:09:50
  Speaker 1: the middle of a recent Gladwell book called Talking to Strangers,
• 1:09:55
  Speaker 1: which really makes sense, and Uh, this period of political discord,
• 1:10:01
  Speaker 1: I'm finding it quite quite intriguing. Every everything he writes,
• 1:10:05
  Speaker 1: is always a fascinating narrative. He tells really interesting stories.
• 1:10:10
  Speaker 1: What sort of advice would you give to a recent
• 1:10:12
  Speaker 1: college grad who was interested in a career in financial services? Yeah,
• 1:10:18
  Speaker 1: I think there's the general advice i'd give, and then
• 1:10:21
  Speaker 1: specific to this industry, it definitely applies, is join an
• 1:10:25
  Speaker 1: industry that's growing and interesting to you. Join a company
• 1:10:28
  Speaker 1: that's making a dent um and and growing um as well.
• 1:10:33
  Speaker 1: Worry a little bit less about the position, right, the
• 1:10:37
  Speaker 1: specific role right. So I've had the fortune to join
• 1:10:39
  Speaker 1: a great industry, to join great companies that were in
• 1:10:43
  Speaker 1: those industry. All those things created opportunities for me well
• 1:10:47
  Speaker 1: beyond the first job that I got as part of
• 1:10:50
  Speaker 1: those organizations. So um simplified version of all that is,
• 1:10:54
  Speaker 1: growth is really important. So a lot of great, very
• 1:10:57
  Speaker 1: talented millennials that work for us, The best thing I
• 1:11:00
  Speaker 1: can do for them is to have an enterprise that's
• 1:11:02
  Speaker 1: growing um and gives them opportunities to jump around in
• 1:11:06
  Speaker 1: a ladder or two, maybe even before they think they're ready. Right,
• 1:11:10
  Speaker 1: So those are that's really really critical. I think this
• 1:11:13
  Speaker 1: profession is changing, right, So this profession has become more
• 1:11:17
  Speaker 1: about client care in that bedside manner, if you will,
• 1:11:20
  Speaker 1: of working with clients, then it has become about the math. Right,
• 1:11:24
  Speaker 1: So I think the financial service industry the urgent. Yet
• 1:11:27
  Speaker 1: this is really ultimately about caring for clients and helping people,
• 1:11:30
  Speaker 1: and and that's where the industry is going. That's where
• 1:11:33
  Speaker 1: our professionals are going. That the math is still critically important,
• 1:11:38
  Speaker 1: but the mask can be done by machines, the mask
• 1:11:40
  Speaker 1: can be done by focus groups of people, whether that's
• 1:11:43
  Speaker 1: on our investment team or other or accounting team, um
• 1:11:46
  Speaker 1: in two areas. But I think that's where the industry
• 1:11:49
  Speaker 1: is changing, and I think in a very very positive way.
• 1:11:51
  Speaker 1: And our final question, what do you know about the
• 1:11:54
  Speaker 1: world of investing today that you wish you knew twenty
• 1:11:57
  Speaker 1: five years or so I ago? When you refer getting started, well,
• 1:12:01
  Speaker 1: I think it's just that just open up the account
• 1:12:04
  Speaker 1: and get started. I think as an industry, we there
• 1:12:09
  Speaker 1: is complexity, but you sometimes wonder whether it's created complexity
• 1:12:13
  Speaker 1: or whether the complexity is real. And and they're right.
• 1:12:17
  Speaker 1: I can remember sitting with my dad once. I had
• 1:12:20
  Speaker 1: some means and you know, had a couple of good
• 1:12:22
  Speaker 1: summer jobs painting houses, and you know, had some for
• 1:12:26
  Speaker 1: for college kids, some good income for that. And I'm like, well,
• 1:12:29
  Speaker 1: what should I do with this? And I remember it's
• 1:12:31
  Speaker 1: feeling very complicated and intimidating, and fortunately, you know, pushed
• 1:12:37
  Speaker 1: all the papers aside and all the different fund choices aside,
• 1:12:40
  Speaker 1: and he said, let's just do this, like, let's just
• 1:12:43
  Speaker 1: open the account and let's just make this one investment
• 1:12:46
  Speaker 1: and we'll see how it goes. I think, just just
• 1:12:48
  Speaker 1: get started. Um, it's not as scary as as you
• 1:12:52
  Speaker 1: think it is. And there's there's no substitute for best
• 1:12:55
  Speaker 1: investment strategy to start early and have patients right. So that's, um,
• 1:13:01
  Speaker 1: that's really key. And I think I think all of
• 1:13:03
  Speaker 1: us to take hard end right. The complexity that surrounds
• 1:13:06
  Speaker 1: this industry, how do we how do we simplify it
• 1:13:08
  Speaker 1: and get get our clients and others to make some
• 1:13:11
  Speaker 1: very fundamental, basic decisions that are to be really important
• 1:13:15
  Speaker 1: for them for the long term. Fascinating stuff. Dave, thank
• 1:13:17
  Speaker 1: you for being so generous with your time. That was
• 1:13:20
  Speaker 1: Dave Wellen. He is the CEO of Mercer Advisers, a
• 1:13:24
  Speaker 1: firm that runs about twenty one billion dollars in assets.
• 1:13:27
  Speaker 1: If you enjoy this conversation, Well, be sure and check
• 1:13:30
  Speaker 1: out any of the previous seventy five or so we've
• 1:13:34
  Speaker 1: had over the past six years. You can find that
• 1:13:37
  Speaker 1: at iTunes, Spotify, wherever you get your podcast fixed satisfied.
• 1:13:43
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