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Over dinner at a steakhouse in Portland, Ore., recently, nine advisors with Commonwealth Financial Network traded stories about clients, practice management challenges and their business models. By dessert, they had decided to form a study group.
“We all operate within a 30-mile radius but there aren’t a lot of opportunities to meet except at conferences or wholesaler meetings. This is just a great way to share ideas,” notes Pat Sturr, a partner in a retirement income planning practice in Lake Oswego. “Any time you can sit down with a small group and share ideas and see what’s working, I love that sort of thing. It’s energizing and you come away with a better way to serve your client, or maybe you give someone else an idea. Everybody wins.”
Peer counseling — in the form of study groups, conference calls, even online chat rooms — has grown deep roots in the advisory community. And no wonder. While there is no definitive research to suggest it helps push advisors to new heights, the anecdotal evidence that it does is convincing.
Brent Brodeski, managing director of Savant Capital Management in Rockford, Ill., co-founded Zero Alpha Group in 1995. At the time, Savant had $40 million in assets under management. Today? The firm manages $2 billion. “I suspect we’re all materially better off as a result of being in the group,” observes Brodeski. “I can’t prove it but we went from $40 million to $2 billion — and the other firms in ZAG have very similar stories. Sure, there’s a bit of competitive spirit but mostly we just want each other to succeed.”
The groups — with rock band names like The Blind Squirrels, Next Gen and Synergy — are bound, not surprisingly, by something in common: an investment philosophy, a business model, geography or, in the case of Next Generation Advisors, the fact that members are the sons and daughters of advisors associated with Raymond James.
Overall, the groups are somewhat structured — with a couple of onsite meetings each year and regularly scheduled conference calls. Next Gen, interestingly, got its start as an online chat room on Raymond James Financial Services’ Practice Intelligence website. That forum still plays an important role in the ongoing conversation of the 30 or so young advisors who are trying to brand themselves independent of the family footprint.
ZAG, with nine member firms in the U.S., Australia and New Zealand, even has an executive director, its own website and an accountability factor that can include fines of $2,000 when a participant fails to follow through on an action item.
One overarching theme that runs through all groups, no matter the structure, is a sharing culture that gets right to the bone with firm financials, compensation arrangements, hiring protocols and operational issues. Things also get personal.
Rebecca Pomering, CEO of Seattle-based Moss Adams Wealth Advisors, belongs to a study group comprised of the decision-makers who operate the RIAs of five large regional public accounting firms. Each advisory firm has roughly $1 billion in assets under management.
“In a peer group you can say: ‘This is something I’m struggling with. I know I can talk to you about it. You can give me ideas and you will hold me accountable.’ There is this ability to show your weaknesses without repercussions,” she says. “I have a great relationship with my performance coach at Moss Adams [her boss, the president of the Moss Adams accounting firm]. But I wouldn’t go in and whine and say this or that isn’t working and that I need ideas. It’s my job to come up with the ideas.”
There are two questions that drive Pomering in this particular arena: How can I do this better? How can I raise my game as a leader?
“This isn’t a deeply charted area. This is a group of firms leading the way on how to be in the wealth management business within a CPA firm. Putting our collective heads together is going to advance us faster than if we were operating in a vacuum,” she adds. “I definitely think I’ve been able to make better decisions faster because of the input I’ve gotten from my peers.”
When solo practitioner Shannon Pitner decided she wanted to purchase new financial planning software last year, her weekly study group took on the project. The four advisors in the group road-tested three different types of software with their clients, shared their findings and then argued the pros and cons.
“It would have been impossible for me to look at all of these. We ended up picking the software we thought was best,” says Pitner, a Raymond James Financial Services advisor in Indialantic, Fla., with roughly $90 million in assets under management. “It was huge. I couldn’t have done it by myself.”
Likewise, when Raymond James advisor Linda Zivney, who heads Zivney Financial Group in Bend, Ore., began thinking about purchasing a building, adding an advisor and another assistant, she turned to her three-person study group for input.
“We talked about how to interview, questions to ask and they brought up running credit checks. I hadn’t even thought of doing that,” notes Zivney, who oversees $75 million in assets. “When you’re a solo practitioner, something like this is an invaluable resource.”
To be sure, peer groups can be hugely advantageous for advisors who operate solo practices. Consider the members of Zero Alpha Group when it got its start in 1995. As Brodeski puts it: “The RIA industry was more cottage than it is today. It was kind of like being on an island alone. We didn’t have blueprints or people to bounce ideas off of. There were no benchmarking studies at the time to give us perspective as to how we compared.”
But, banded together, they were able to share resources, negotiate with investment providers to lower costs, hire consultants and gain access to the CEOs and chief investment officers of brand name firms.
The Blind Squirrels, a group of eight firms, formed 10 years ago when the group’s principals attended a Texas Rangers game during a conference.
“We grabbed a table inside this suite and started talking about CRM software. It was a free-flowing conversation from software to business practices to hiring to growth strategies. I didn’t see a pitch,” notes Christopher Cordaro, CEO of RegentAtlantic Capital in Morristown, N.J. “It was really valuable. We decided to meet on an ongoing basis.”
When the group started, RegentAtlantic had $400 million in assets under management. Today, it’s over $2 billion. Other member firms have experienced a similar trajectory — which Cordaro attributes in part to their participation in The Blind Squirrels. (The thinking behind the name: Even a blind squirrel gets lucky and finds a nut sometimes.) “Every firm in the group is highly successful,” he says. “It’s really astounding.”
Two principals from each of the firms meet twice a year, and there’s a monthly conference call. Participants also engage one another by email as one did recently when there was a question about who is paying what for E & O insurance.
Back in his office after their most recent meeting, Cordaro consulted his notes — an action item list involving potential marketing strategies. Among them: use Facebook to promote webinars; send gifts to administrative assistants of centers of influence on Administrative Assistant Day; send a bottle of wine a week before Thanksgiving to thank people who have provided referrals.
“I think the group has been absolutely terrific,” Cordaro says. “Without it, I don’t think we would have grown as quickly and successfully as we’ve grown. It’s had a big impact on me and my firm.”
It’s important to note, too, that the peer groups aren’t all-work and no-play. The Blind Squirrels, for example, met in Deer Valley, Utah, so that members could ski over the weekend in advance of meetings on Monday and Tuesday. Synergy, a group of women advisors formed 20 years ago, has convened in the Bahamas and Mexico. Shop talk among the 12 women does get trumped from time to time by other topics — including families, health issues, and, as they age, hormones.
“We’re not just peers, we’re friends,” notes Raymond James Financial Services advisor Sherri Stephens, who heads Flint, Mich.-based Stephens Wealth Management, which has $340 million in assets under management. “We open up with: How’s your family? How’s everybody? You’ve got to have one place where if you need to peel back the onion all the way, and say yes I’m really vulnerable, you can do that.”
Same Office Peers
Sometimes, your peer group is right in front of you.
Matthew Brock and Ara Abrahamian own Divergent Planning, a firm in Rockville, Md., with $40 million under management. They are both 31 and they primarily serve Gen X and Gen Y clients — largely by email. They are big believers in each other’s potential. And every Monday at 9:30 a.m., they hold one another accountable.
At that time, like clockwork, each partner presents two personal items they wish to achieve, and two that are business-related.
On the personal front, Brock wanted to finish The Thank You Economy, a book that had sat unread for a month. By Thursday of that same week, it was done. He also wanted to get his golf clubs re-gripped. (They’re in the shop.)
As for business, he wanted to buy a book on search engine optimization he could use to enhance the firm’s website. (Ordered.) He wanted, as well, to organize business data in advance of a deadline. (Not done yet.)
Brock tracks his action items on a spreadsheet on his computer. Items not achieved are uncolored. Ones knocked off the list are painted green.
“Just for him and for me for 30 minutes every week to get on each other for not completing a task or supporting each other for doing so — it’s been helpful,” says Brock. “It’s about holding yourself accountable. It’s too easy to brush things you don’t feel like doing aside, even things you like to do. With this, we know if we haven’t made strides by the end of the week, there will be a guilt trip come Monday.”