Speaker 1: M This is Mesters in Business with very renaults on
Speaker 1: Bluebird Radio. This week on the podcast, I have a
Speaker 1: special guest, Sheryl Penny. Uh comes from the most humble
Speaker 1: of all roots, and really we want to talk about
Speaker 1: a Horatio Alger story of a person who um essentially
Speaker 1: picked himself up by his bootstraps and and built a
Speaker 1: um career and turned that into a powerhouse business. He
Speaker 1: runs Dynasty Financial Partners, which has over sixty billion dollars
Speaker 1: on its platform. His story is really, i want to say,
Speaker 1: pretty unique in in Wall Street, very very humble origins
Speaker 1: UH and and very much a self educated person who
Speaker 1: was fascinated with finance from when he was younger and
Speaker 1: use that fascination really a motivation to uh self educate
Speaker 1: autodidact is the term for that, and really become one
Speaker 1: of the most impressive CEOs in the financial industry space.
Speaker 1: This is a little inside baseball. It talks about what
Speaker 1: happens when advisers and brokers at big firms like Morgan
Speaker 1: Stanley or Mari Lynch or Ubs decide they want to
Speaker 1: go independent and leave those big firms to set up
Speaker 1: their own shop. What Dynasty does is provides a pathway
Speaker 1: to do that, either so that the person can become
Speaker 1: independent or the person ends up on um Dynasty's platform. Uh,
Speaker 1: this is a pretty fast growing space. We've seen major
Speaker 1: changes in the financial services industry over the past twenty years.
Speaker 1: Most of that acceleration took place after the financial crisis,
Speaker 1: where I think the once mighty brands no longer carry
Speaker 1: the same cash because of their involvement in in what
Speaker 1: took place with subprime and CDOs and all that not
Speaker 1: so much fun stuff. Anyway, if you're at all interested
Speaker 1: in financial services, registered investment advisories, anything along those lines,
Speaker 1: I think you'll find this to be a fascinating conversation. So,
Speaker 1: with no further ado, here's my discussion with Dynasty Financials
Speaker 1: Ryl Penny. This is mesters in Business with very results
Speaker 1: on Bloomberg Radio. Ryl Penny, Welcome to Bloomberg and Barry's
Speaker 1: so great to be here. I am a huge fan
Speaker 1: of the show, so I'm thrilled to be a part
Speaker 1: of it. Thanks so much for the invite. Well, my pleasure.
Speaker 1: This is this is long overdue. We're gonna talk about
Speaker 1: Dynasty in a little while. I want to start discussing
Speaker 1: your background because in the world of finance, your story
Speaker 1: is kind of unique. Would you mind sharing a little
Speaker 1: bit about your background with us? Sure, I'm happy to look.
Speaker 1: We're we're all living our own unique version of the
Speaker 1: American dream. But I'll tell you a little bit about mine.
Speaker 1: So I'm from a little fishing village the easternmost point
Speaker 1: in the United States in Maine called Eastport, Maine, population four.
Speaker 1: I was raised there by my step grandfather. When I
Speaker 1: was eleven years old and my grandfather was in his
Speaker 1: early seventies, the house that we were living in was condemned,
Speaker 1: literally fell down around us, and for three years when
Speaker 1: I was eleven twelve thirteen, we were homeless, lived with
Speaker 1: various neighbors. Obviously very cold in winters in Maine, but
Speaker 1: a great motivator when you're cold and hungry at times.
Speaker 1: And always had great love and support of my my
Speaker 1: step grandfather, but was fascinated by by numbers, was always
Speaker 1: good and math. Convinced my high school teachers to have
Speaker 1: the stock market game added at the school. And I
Speaker 1: used to tell people, you know, someday I'm going to
Speaker 1: go to college and U and head off to Wall Street,
Speaker 1: and people kind of chuckled because not only had no
Speaker 1: one in my family ever gone to college, no one
Speaker 1: from that part of the state had ever gone off
Speaker 1: to New York to build a career in finance. I
Speaker 1: used to ask a lot of the tourists who would
Speaker 1: come visit to bring me copies of financial publications. And
Speaker 1: I was self taught, just always fascinated by finance and
Speaker 1: wealth management and was determined to somehow, some way find
Speaker 1: my way to building a career and in finance. And
Speaker 1: my grandfather always told me, look, you can do anything,
Speaker 1: even though he only had a fifth grade education. He
Speaker 1: always told me can do anything you want in life
Speaker 1: if you work hard enough towards it. And and I
Speaker 1: believed him. And it's been quite a journey. So you
Speaker 1: go to not the usual Wall Street feeder schools. You
Speaker 1: end up at Bates College, which is a small liberal
Speaker 1: arts school. How did you find your way into the
Speaker 1: financial services industry from that education? We are blessed in
Speaker 1: the state of Maine with three great lebo art schools,
Speaker 1: Bates and Bowden and Colby. Many people would know those schools.
Speaker 1: Part of going to Bates was I could stay in
Speaker 1: Maine and thankfully, very the day before I graduated from college.
Speaker 1: My step grandfather, who had raised me and meant so
Speaker 1: much to me, as you can imagine, he died in
Speaker 1: my arms, and I had the opportunity to give him
Speaker 1: my diploma before he did pass. I bought a suit
Speaker 1: for thirteen dollars at the Salvation Army UH and I
Speaker 1: wrote a bus a couple of days past my graduation
Speaker 1: to New York City and I interviewed at Smith Barney, which,
Speaker 1: as many of your listeners will know, is now part
Speaker 1: of Morgan Stanley. And I had interned my junior year
Speaker 1: at Dates at the branch location in Portland, Maine at
Speaker 1: Smith Barney, so I got to know some people there.
Speaker 1: Basically traded a summer's worth of work for an interview
Speaker 1: in New York. I rode the bus sixteen hours, and
Speaker 1: my biggest challenge that morning, Barry was making my way
Speaker 1: through a revolving door, which I had never seen at
Speaker 1: point in my life, getting up an escalator which I
Speaker 1: had also not seen again being from a very small town,
Speaker 1: you know, fishing village in Maine, making my way through
Speaker 1: multiple elevator banks, and arriving there at my interview, which
Speaker 1: I was a half hour early four uh, And I
Speaker 1: just said, look, you know, I'll here's my my main roots.
Speaker 1: And I had a job since I was ten years old,
Speaker 1: had to and just said, look, you know, I may
Speaker 1: not be the smartest person in the room, but out
Speaker 1: work everyone. I'm self taught, and I had studied a
Speaker 1: lot about you know, Sandy Wile and City Group and
Speaker 1: Smith Barney. And they said, look, come back next week
Speaker 1: for a second round interview. And I said, you understand
Speaker 1: what I had to go through to get here. I
Speaker 1: gotta go all the way back to Maine and come back.
Speaker 1: And the first time that I ever flew on an airplane,
Speaker 1: Barry was. They bought me a flight to come back
Speaker 1: the following week for the second round interview, which went well,
Speaker 1: and I was hired and and off I went to
Speaker 1: New York, not knowing anyone but to start my career
Speaker 1: in finance. So tell us a little bit about your
Speaker 1: experience at Smith Barty. What did you do, what roles
Speaker 1: did you hold, and and how long did you stay there.
Speaker 1: The punchline is I, before starting Dynasty Financial Partners, I
Speaker 1: spent a little over ten years at Smith Morning and
Speaker 1: it was a great place to learn the business. I'm
Speaker 1: a huge believer in mentorship by committee. I had some
Speaker 1: great mentors when I was there. I moved around the country,
Speaker 1: which was fantastic. I went to l A, I went
Speaker 1: to San Francisco. I helped open some private wealth offices there.
Speaker 1: And I tell a lot of people that are looking
Speaker 1: to build careers and finances stay close to the field.
Speaker 1: I think some of the challenges that some of the
Speaker 1: larger firms have right now is management has not ever
Speaker 1: really spent any significant time in the field to really
Speaker 1: understand where the rubbery hits the road in terms of,
Speaker 1: you know, the advisor client relationship. You know, I've had
Speaker 1: the good fortune very my whole career the lens through
Speaker 1: which I see the world as I work for advisors.
Speaker 1: And I've been fortunate enough that advisors have entrusted me
Speaker 1: over the course of my career to be their partner
Speaker 1: in their life's work, to help them get new clients,
Speaker 1: take care of their best clients, grow their business. Uh.
Speaker 1: And that mentality I've brought you to to this new
Speaker 1: business here. I was pushed a lot at Smith Warney
Speaker 1: and given a lot of responsibility again understanding, you know,
Speaker 1: I was homeless kid from from Maine who you know,
Speaker 1: was on welfare and food stamps and trying to work
Speaker 1: odd jobs and my granddad worked odd jobs to make
Speaker 1: ends meet. And now, at the age of twenty seven,
Speaker 1: I think five years into my career, I was actually
Speaker 1: put in charge of private management, which big responsibility of
Speaker 1: introducing the firm's top clients and prospects to Sandy while
Speaker 1: and the senior executives in the firm and showcasing, you know,
Speaker 1: all of the capability of the organization. Sitting there with
Speaker 1: these billionaires and advising them on what to do with
Speaker 1: their money. When you know, seven or eight years prior,
Speaker 1: I'm standing in line and the sticks of main berry
Speaker 1: waiting for a block of government cheese. So pretty profound, uh,
Speaker 1: in terms of you know, uh, you know where my
Speaker 1: life went in a short period of time. I was
Speaker 1: working very hard, you know, seventeen eighteen nineteen hour days
Speaker 1: sometimes because I'm reading all night, trying to come up
Speaker 1: the learning curve with all these various concepts. And what
Speaker 1: I realized early on is that we had remarkable experts
Speaker 1: in all the different disciplines of wealth management, whether it
Speaker 1: was a state planning, capital markets, investment, banking, asset management,
Speaker 1: traditional alternatives, cetera. But we didn't have a lot of
Speaker 1: people who understood how they all fit together in the
Speaker 1: support of an advisor and in the support of a
Speaker 1: large sophisticated client. And that was, you know, over twenty
Speaker 1: years ago, the early formation of these wealth management divisions
Speaker 1: and then private Wealth Management, and I said, I want
Speaker 1: to be the person who is more than conversationally competent
Speaker 1: and all of the disciplines and helped tie it together
Speaker 1: and that really helped me, you know, grow my career
Speaker 1: pretty quickly. So ran Private Wealth, ran the Executive Financial
Speaker 1: Services division, which focused on all the firm's top corporate
Speaker 1: executive clients. Uh, this is you know in the early
Speaker 1: nineties and early two thousands where executive compensation was really
Speaker 1: taking off with stock options and that was a big
Speaker 1: business for us. So had an opportunity to run that.
Speaker 1: And then what I realized is all the firm's top
Speaker 1: clients who sat across the table for me and and
Speaker 1: all these V I P meetings that we did with them,
Speaker 1: for the most part, they were entrepreneurs. And I began
Speaker 1: thinking about, how do I go from this side of
Speaker 1: the table to that side of the table? How do
Speaker 1: I take all of this knowledge and skill set that
Speaker 1: had built up around building platforms for leading advisors, UH,
Speaker 1: and do it in a way that allows me uh
Speaker 1: to be not an employee but an entrepreneur and start
Speaker 1: my own business. UH. And that was the realization of
Speaker 1: of Dynasty. And when I decided to launch, it was
Speaker 1: April of O eight, which in hindsight was both a
Speaker 1: very good and bad time UH to launch. We're headed
Speaker 1: into obviously, the financial crisis later that year, so it's
Speaker 1: very difficult to raise capital. But there was a lot
Speaker 1: of challenges that the large Wall Street brands would face
Speaker 1: over the next several years. So from a timing perspective,
Speaker 1: it worked out really well for this new business model
Speaker 1: that we created in launch, which was to provide an
Speaker 1: integrated platform service model for high end independent advisors. The
Speaker 1: timing was right to bring that on sept to market.
Speaker 1: Really interesting. So let's talk a little bit about what
Speaker 1: Dynasty does. UM. What are your core services? What's the
Speaker 1: short version of of the UM product solution that you offer? Okay, thanks, Barry.
Speaker 1: The short version of what Dynasty does. We're in four businesses.
Speaker 1: One is a consulting business that advises advisories based upon
Speaker 1: where they are in their life cycle. If they want
Speaker 1: to launch a business, we help them do that, you know,
Speaker 1: breaking away from a wire house, etcetera. If they are
Speaker 1: thinking about succession planning, if they're thinking about selling their business,
Speaker 1: will help them with those types of things as well.
Speaker 1: So that's our consulting business. Our second business is our
Speaker 1: core services running all of the middle and back office
Speaker 1: for an advisory practice. So technology, compliance, billing, reporting, all
Speaker 1: the things that most advisors don't like to do that
Speaker 1: freese up their time UH to take care of their
Speaker 1: clients and get new ones. They're outsourcing that middle and
Speaker 1: back office to us in what we call our core
Speaker 1: service package. Third business is our investment platform. Many people
Speaker 1: refer to that as you mentioned earlier, the TAMP turnkey. Yes,
Speaker 1: that management platform, separate managed account access u M as
Speaker 1: advisor as portfolio manager, trading tools, access to alternative managers,
Speaker 1: feeder funds, structure products, access and investment banking network that
Speaker 1: advisors can refer business to for the business owner, clients, etcetera.
Speaker 1: That is an ala carte business. UH. The advisors can
Speaker 1: choose to use it or not on behalf of their clients.
Speaker 1: And as you reference, we have about twenty seven billion
Speaker 1: UH now making us a top six UH tamp uh
Speaker 1: in the in the independent space. UH. And then the
Speaker 1: last business is our capital business, Dynasty UH Capital Services,
Speaker 1: which is both a debt and inequity UH offering to
Speaker 1: advisors and oftentimes that capital gets used by advisors looking
Speaker 1: to launch a business to fund succession. A lot of
Speaker 1: the capital gets deployed if somebody wants to do a
Speaker 1: recap kind of practice what they preach, take a few
Speaker 1: chips off the table, or if they want to grow
Speaker 1: inorganically UH and drive their business by acquiring other advisors.
Speaker 1: We have a whole m and a team in house
Speaker 1: that will go out source a deal, help get the
Speaker 1: deal done, do the transition, the onboarding, and finance that transactions.
Speaker 1: What will probably do twenty m and a deals across
Speaker 1: the fifty firms or so over the course of this year.
Speaker 1: And the last thing I think that's unique that that
Speaker 1: people UH sometimes don't understand about our business where that
Speaker 1: little intel sticker buries. So the advisors own the vast
Speaker 1: majority of the equity in their business, if not all
Speaker 1: of it, and Dynasty works for them. We are an
Speaker 1: integrated service provider that provides all the infash structure and
Speaker 1: capital consulting in support, but all of the enterprise value
Speaker 1: and growth of that which the advisors can monetize and
Speaker 1: a tax efficient way down the road is owned by
Speaker 1: the adviser themselves. Very interesting. So, so let's talk about
Speaker 1: when you launched, how did you find the first team
Speaker 1: that joined the platform. Tell us a little bit about
Speaker 1: what that process was like in the early days when
Speaker 1: when you're when you're taking that leap of faith and
Speaker 1: launching a brand new business. Who who comes along at
Speaker 1: the very beginning. Yes, so obviously when you're starting a business,
Speaker 1: you know, signing up those first few clients is a
Speaker 1: bit more difficult than it is today with you know,
Speaker 1: sixty billion and a longstanding track record that that we
Speaker 1: have our first r I a outside client. UH is
Speaker 1: a firm called Pact the Lists there in the DC
Speaker 1: market run by a gentleman name Alan Harder. I had
Speaker 1: known Alan because he was at Smith Barney, so we
Speaker 1: had had a previous relationship, you know, working together there UH,
Speaker 1: and he launched his firm a little over ten years ago.
Speaker 1: He's had remarkable success growing the business organically and adding
Speaker 1: new clients and and and new services. But it was
Speaker 1: a tremendous leap of faith. And it's not lost on us.
Speaker 1: We we love all our clients obviously, but in particular
Speaker 1: those those early clients when we were you know, an
Speaker 1: idea of like this new concept and we said, you know,
Speaker 1: trust us, we understand it's your life's work. Uh, and
Speaker 1: we're going to execute on your behalf. But we're going
Speaker 1: to jump out this window together and that handshoots gonna
Speaker 1: go up, and it's gonna work, and you're gonna have
Speaker 1: that safe and stoff landing. Uh. You know, it was
Speaker 1: you know, obviously very stressful times with the first five, six,
Speaker 1: seven transitions, but you know, knock on wood, those aul
Speaker 1: went well and they continue to go well since. But
Speaker 1: you know, our original you know, first handful of clients
Speaker 1: will always have a special place in my heart because
Speaker 1: all we were was a business plan, a new concept,
Speaker 1: and they trusted us that we'd make it work for him,
Speaker 1: and thankfully we did. So it's now twelve years later.
Speaker 1: How has the process changed? What have you learned over
Speaker 1: those dozen plus years? How different does that onboarding new
Speaker 1: advisor relationship look today versus when you were first starting out? Yeah, look,
Speaker 1: I'm biased when I say this very obviously, but if
Speaker 1: you talk to a lot of third party players, custodians,
Speaker 1: et cetera in our space, I think they would say
Speaker 1: that Dynasty, uh, you know, has the best transition process
Speaker 1: really of of anyone in the space. We've done it
Speaker 1: more than anyone. You know, We've onboard it and broke
Speaker 1: broken away. If you talk about Breakaway advisors over the
Speaker 1: past you know, just under a dozen years, over a
Speaker 1: hundred and fifty you know, significant teams, some of which
Speaker 1: we help them launch their own firm, some of which
Speaker 1: we helped tuck in or join or sub aggregate other
Speaker 1: firms that we that we had on our platform. We
Speaker 1: do an extensive debrief fund every single one, you know,
Speaker 1: thinking about how we can get better. And I would say,
Speaker 1: like a lot of businesses that are you know, north
Speaker 1: of ten years in uh. You know, there's a huge
Speaker 1: focus on the professionalization of the business. In the early days,
Speaker 1: you're in startup mode, everyone's kind of doing everything to
Speaker 1: get clients in and to actually get to a point
Speaker 1: where you have a business. Uh. And then once you
Speaker 1: have a business, then it's how do you make that
Speaker 1: business better? How do you professionalize it? How do you
Speaker 1: scale it UH, and we've really focused on the last
Speaker 1: five years, in particular the technology enabling of all aspects
Speaker 1: of our business. So if you know to your question,
Speaker 1: you know what's different today a an advisor who's joining
Speaker 1: up with us to do a transition. Today there's a
Speaker 1: lot more uh digital support, technology support, UH, a lot
Speaker 1: of practice management around a transition. We have our own
Speaker 1: proprietary app where we have the hundred and fifty steps
Speaker 1: that you'll go through in the transition, all laid out
Speaker 1: in detail, uh, in a password protected app that an
Speaker 1: advisor would have on his or her phone. And when
Speaker 1: everything goes from red to green across I mean and
Speaker 1: we were were the staples easy button. We find your
Speaker 1: real estate, negotiate the lead, design, your name, your logo,
Speaker 1: your branding, your marketing, your PR strategy, your launch strategy,
Speaker 1: helping you on the legal strategy around the move, setting
Speaker 1: up your client documentation, helping you select your custodian, doing
Speaker 1: all the paperwork in transition, training your staff on the
Speaker 1: new TEP like you name it, we do it, uh,
Speaker 1: and we've done a lot of it. So, like a
Speaker 1: lot of things in life, UH, there's no substitute, you know,
Speaker 1: for experience. We have at this point a lot of experience. UH.
Speaker 1: And we've tech enabled, We've invested, given the success of
Speaker 1: our business and people UH in the professional development of
Speaker 1: those people who support the advisors. UH. And perhaps our
Speaker 1: biggest competitive advantage UH is something that I mentioned earlier
Speaker 1: is that everyone who works at Dynasty, they're all an
Speaker 1: equity owner. UH. They either bought equity in the firm
Speaker 1: or we have a UH and options and equity program.
Speaker 1: Every single person an owner, So they act like an
Speaker 1: owner and they wake up every morning and understand that
Speaker 1: we have one fundamental job, which is to work for
Speaker 1: and support our advisors. UH. And if a transition doesn't
Speaker 1: go well, that will set that advisory firm way back,
Speaker 1: sets us back. We'll get fired, right. The philosophical alignment
Speaker 1: is the advice. You know, we work for the advisor
Speaker 1: and the advisor works for the end client. We're comfortable
Speaker 1: standing and deliver delivering on behalf of our client advisor,
Speaker 1: just like they have to do for for their client.
Speaker 1: And I think a lot of ways and this really started,
Speaker 1: you know, for years ago with some of the old
Speaker 1: partnerships you know Bury on Wall Street starting to go public.
Speaker 1: That alignment got misaligned right with shareholders and management and
Speaker 1: advisors and clients. But we've brought a lot of that
Speaker 1: purity of the alignment back, which I think, uh culturally
Speaker 1: is a huge competitive advantage for us. So so last
Speaker 1: year Investment took a minority share with you, guys. I
Speaker 1: assume that capital is going to give you some serious
Speaker 1: firepower to do some things with. What are the plans
Speaker 1: to to use that that capital um to fund your
Speaker 1: future growth? Yeah, thanks for that question. I am a
Speaker 1: very loyal person and maybe it's in part my my background,
Speaker 1: but you know a lot of the firms that backed
Speaker 1: us when I was in my garage with the business
Speaker 1: plan that says a lot. It means a lot to me.
Speaker 1: And one of those firms was Investment, UH. And you
Speaker 1: know Judd Bergman, who you know we we all lost
Speaker 1: too soon, was a very close personal friend of mine,
Speaker 1: as well as Ed Swinson. You know some of the
Speaker 1: other co founders here H and Bill Craigor uh longstanding
Speaker 1: you know, very close personal friend and you know we
Speaker 1: had talked over the years about finding more ways that
Speaker 1: we could work together. You know, we utilized some of
Speaker 1: their technology on on our camp and what we decided
Speaker 1: to do was to launch something that we're calling the
Speaker 1: Advisor Services Exchange, which is a joint venture. It's run
Speaker 1: by Ed Swinson, who's the president of that entity, is
Speaker 1: also the chief operating officer of Dynasty. Where we're bringing
Speaker 1: value ad business service is to r as that our
Speaker 1: current clients of investment, so helping them run more efficient businesses,
Speaker 1: more tech enabled businesses, helping them outsource things that are
Speaker 1: not core strategic to their firm, helping them manage their
Speaker 1: expenses to build more profitable p n l s, which
Speaker 1: ultimately result in more valuable businesses, etcetera. And we're off.
Speaker 1: You know, we've launched that about six months ago. We're
Speaker 1: off to a great start. There's been We built the
Speaker 1: whole technology interface around data, so the advisors can use
Speaker 1: the data around their business to make better decisions on
Speaker 1: how they want to run their business, to do business planning.
Speaker 1: They can leverage our capital programs, compliance marketing, UH, they
Speaker 1: can outsource aspects of their investments to us. Again, all
Speaker 1: designed to create scale and efficiency in the business. The
Speaker 1: other things that yeah, and and and it's great and
Speaker 1: it's a fast growing l of of our business because
Speaker 1: a lot of advisors are looking to outsource the non
Speaker 1: core things. I mean, the biggest difference very If we
Speaker 1: were to look at a billion our average r A
Speaker 1: is about a billion two. If you were to look
Speaker 1: at a billion to advisor, let's say that we've launched
Speaker 1: as a breakaway versus the average billion to r i
Speaker 1: A that's already independent coming to us to outsource on average,
Speaker 1: which I find fascinating. The advisors that we broke away
Speaker 1: and stood up on average over five hundred basis points
Speaker 1: more profitable, and they tend to grow faster. The biggest
Speaker 1: reason for that, when you really peel back the numbers
Speaker 1: and do the analysis, is because on average the billion
Speaker 1: two firm that we set up has three less people.
Speaker 1: The legacy are a because the custodians are really good
Speaker 1: in the back office, but don't really do you know,
Speaker 1: the work in the middle office have had to higher up.
Speaker 1: When you can get synthetic scale and outsource to a
Speaker 1: firm like Dynasty, you don't have to hire as many people.
Speaker 1: And yes, you know with the vendors and the resource
Speaker 1: partners with sixty billion, we get them a little bit cheaper.
Speaker 1: But the real delta comes from personnel savings. UH, and
Speaker 1: then not having to manage those people, which free up
Speaker 1: more time. And if you assume a multiple of seven
Speaker 1: or eight times and sometimes higher UH in terms of
Speaker 1: valuation times five basis points, you can extract late that
Speaker 1: out to say, the firms on our platform are almost
Speaker 1: the third more valuable because of the enhanced earnings that
Speaker 1: we're able to help to help to help drive. So
Speaker 1: that was a big part, yeah, and that was a
Speaker 1: big part very why they did the investment. The other piece,
Speaker 1: real quick is because a lot of the and this
Speaker 1: gets into our enterprise group, which is servicing institutional clients,
Speaker 1: a lot of the larger independent broker dealers that investment
Speaker 1: is servicing. UH. One of the biggest challenges they're facing
Speaker 1: is their largest advisors are starting to graduate off of
Speaker 1: their platform and go fully independent and a little bit
Speaker 1: back to the future here. What you know, I did
Speaker 1: fifteen years ago helping to build the private wealth division
Speaker 1: at Smith Barney for that same reason, the top advisors
Speaker 1: were looking to leave. We had to build a client
Speaker 1: segmentation strategy, a dedicated firm within a firm for the
Speaker 1: elite advisors covering the firm's top clients. That's what a
Speaker 1: private wealth division is You're going to start to see
Speaker 1: these high end private client or private wealth divisions popping
Speaker 1: up at the independent broker deal and some of those
Speaker 1: I believe will decide to outsource that to invest Net
Speaker 1: and Dynasty because we already have that integrated platform. We
Speaker 1: you know, we understand and have the DNA around how
Speaker 1: to develop a private wealth division. So I think you'll
Speaker 1: see some of that work coming into the market, which
Speaker 1: is great for us because it's groups of advisors and
Speaker 1: billions of assets at a time coming on our platform.
Speaker 1: It will be good for those firms to create a
Speaker 1: division that an advisor can graduate into as opposed to
Speaker 1: off of their firm. And it would be great for
Speaker 1: Investment because you know twenty rule to talk of the
Speaker 1: advisors at the ibd s have the bulk of the
Speaker 1: assets and create the revenue, which then obviously flows back
Speaker 1: to Investment as a technology and asset management partner to
Speaker 1: those independent broker dealers as well. So it was really
Speaker 1: those two reasons why they made the investment. We added
Speaker 1: Bill Cregor to the board, remarkable perspective that he brings
Speaker 1: from the industry, and it's just been a great partnership.
Speaker 1: So a number of firms have relocated out of the
Speaker 1: tri state region towards greener pastures. You moved from New
Speaker 1: York City to UH St. Petersburg, Florida. Tell us about
Speaker 1: the motivation for the move. What why exit New York?
Speaker 1: So we officially moved to St. Petersburg two years ago,
Speaker 1: but we started the journey on deciding if we were
Speaker 1: going to move and king at various cities about three
Speaker 1: years ago. So we spent a full year. I personally
Speaker 1: made very thirty five trips UH to various cities, primarily
Speaker 1: up and down the East Coast because it was and Marianne,
Speaker 1: my wife, went with me, other senior executives. Because when
Speaker 1: you're asking we have a very diverse leadership team by
Speaker 1: financial service standards. When you're asking people to make a
Speaker 1: move out of Manhattan UH and to dislocate, you know,
Speaker 1: their their family. You want to make sure that you
Speaker 1: have extreme conviction that it's the right thing for the
Speaker 1: business and the right thing for the for the team.
Speaker 1: So you can imagine we took that took that very
Speaker 1: very serious. UH and ultimately for us, you know, we're
Speaker 1: middle middle office, back office company. The closer you are
Speaker 1: to the impliant. Uh, the less large im pressure you have.
Speaker 1: I mean, advisors are feeling it a little bit, but
Speaker 1: we feel it more in the middle office. Obviously custodians
Speaker 1: in the back office feel it even more. But for us,
Speaker 1: you know, I find that the businesses that do the
Speaker 1: hard things when things are really good, uh, to put
Speaker 1: them in a position to win disproportionately when things are
Speaker 1: more challenging are the ones that win, you know, more
Speaker 1: disproportionately over the long term. So for us, things are great.
Speaker 1: This was several years ago. We obviously ended up you know,
Speaker 1: being a bit lucky in terms of being here when
Speaker 1: the pandemic hit. But the result is, you know, for
Speaker 1: us being here very uh seventy percent cheaper real estate,
Speaker 1: personnel costs or cheaper, which allows us you know, to
Speaker 1: take those savings build a more profitable business, also make
Speaker 1: more investments and technology and people uh to service our clients. Uh.
Speaker 1: The infrastructure that's here is fantastic, uh in terms of
Speaker 1: the ability to get anywhere with the St. Pede Airport,
Speaker 1: the Tampa Airport, the quality of life. We found a
Speaker 1: lot of our employees, you know, retired of commuting an
Speaker 1: hour and a half and having the ability to walk
Speaker 1: to work and in St. Pete most walkable city in America.
Speaker 1: Has great culture here, entertainment, arts, the pro sports team,
Speaker 1: they seem to win everything in a last a couple
Speaker 1: of years. I'll take a little credit because that wasn't
Speaker 1: the case when we first moved here. But it's happened
Speaker 1: that it's happened since. But I was gonna say it's
Speaker 1: funny you picked Yeah, I was gonna say it's funny
Speaker 1: you picked St. Petersburg. Um. I've been spending a week
Speaker 1: or two each winter down there, and but for the pandemic,
Speaker 1: we would have been down there for a month or
Speaker 1: so this year. Um. And and you know, everybody kind
Speaker 1: of got stuck in place. We weren't going to uh
Speaker 1: try and do it in the middle of the pandemic.
Speaker 1: But I find that whole area on the Gulf Coast
Speaker 1: to be absolutely charming. It's it's a very different headspace
Speaker 1: than the East coast of Florida, places like Miami or
Speaker 1: any of the other big cities along Fort Laradale, anything
Speaker 1: else that's along uh the Atlantic coast. We looked at
Speaker 1: some of those locations, and you're right, it is. It
Speaker 1: is charming. We found that the delta in terms of
Speaker 1: some of the cost savings could be a little bit
Speaker 1: higher here. But really what cinched it for us is
Speaker 1: every time I came here, Barry, it felt like I
Speaker 1: was getting a community bear hug every everyone from you know,
Speaker 1: the mayor Rick Christman and the economic development team that
Speaker 1: was here, to multiple ceo s to the owners of
Speaker 1: the sports teams that are here. Everyone really wanted to
Speaker 1: partner with us. And you know, Raymond James UH is
Speaker 1: here and I'm friendly with Paul Riley who runs Raymond
Speaker 1: James UH. They were very supportive. Uh. Even though we're
Speaker 1: in finance, we're not obviously directly in their space, which
Speaker 1: is primarily an employee wealth management business. But the last
Speaker 1: couple of years, what's interest thing, Raymond James has been
Speaker 1: one of the top asset gathers in the employee channel
Speaker 1: and we've been the top asset gather on the independent
Speaker 1: side in Both of those firms are located in headquartered
Speaker 1: in St. Petersburg, So that to me really highlights the
Speaker 1: you know where we are now as an industry with technology,
Speaker 1: availability of talent, product access, you know, you can really
Speaker 1: build a large scale, successful business in finance anywhere in
Speaker 1: the country. And I would say the last plug for St.
Speaker 1: Pete to your earlier point, I think over the next
Speaker 1: ten years, one of the hottest cities, fastest growing, where
Speaker 1: you're going to see remarkable uh, you know, economic development
Speaker 1: in technology, finance, UH, in other key industries is right
Speaker 1: here in St. Pete. So I would encouraging any business
Speaker 1: owner that is looking at this part of the country
Speaker 1: to look at St. Pete because there's some pretty remarkable
Speaker 1: things happening here. So so you're kind of pointing at
Speaker 1: at something that I think is the one of the
Speaker 1: takeaway lessons from the pandemic. But let me ask it
Speaker 1: to you this way. What what lessons have the pandemic
Speaker 1: taught you about running a firm remotely? And does this
Speaker 1: give wirehouse advisors an even greater incentive to depart? Well,
Speaker 1: great questions. So I would say, you know, to the
Speaker 1: first piece, UH, you know, we support advisors, and I
Speaker 1: think what our advisors learned is that being a proximate
Speaker 1: and over communicating uh and proactive. I mean, this was
Speaker 1: the over the past year, Barry, it's been the advisor
Speaker 1: super Bowl, UH. And and those that that have done
Speaker 1: those things are growing fast. I mean it's you know,
Speaker 1: one of the one of the rare times when literally
Speaker 1: everyone wants to talk to a financial advisor, UH, and
Speaker 1: those that took advantage of that opportunity, and we have
Speaker 1: just seen remarkable organic growth of the firms that we
Speaker 1: support in terms of our business and the home office
Speaker 1: that's supporting the the advisors means similarly, you know, the
Speaker 1: importance of over communication, being proximate with our clients has
Speaker 1: been critical. Some of the challenges that we've seen, UH
Speaker 1: is around hiring new people. Training. The onboarding is challenging
Speaker 1: in this environment. I mean, we have some employees that
Speaker 1: have gone six months that are new team members that
Speaker 1: haven't had the chance to meet you know, the broader
Speaker 1: team members. UH. Culture, which is so important within a business,
Speaker 1: is very difficult to to to drive I find remotely
Speaker 1: UH efficiency sometimes. I mean there's no substitute to walking
Speaker 1: around the corner and tapping a colleague, you know, on
Speaker 1: the shoulder and saying, hey, how do I do this?
Speaker 1: Or what do you think here? You know, now it's
Speaker 1: an email or you know, a zoom call and maybe
Speaker 1: the person is not immediately available. So some of those
Speaker 1: things are a little bit more challenging, but I think
Speaker 1: they'll get worked out as businesses get back into you know,
Speaker 1: maybe a hybrid or what I call sometimes the styborg
Speaker 1: ing of the business, which is leveraging technology with the
Speaker 1: with the human element. I think we'll end in a
Speaker 1: place where it's one plus one equin three. Uh to
Speaker 1: the question about advisors breaking away, without question, our business
Speaker 1: is springloaded right now. Uh, we're going to have uh,
Speaker 1: just a fantastic U two thousand twenty one, in large
Speaker 1: part because the breakaway advisor movement is accelerating, a lot
Speaker 1: of advisors historically in wire houses have thought that a
Speaker 1: big part of what they give up for the of
Speaker 1: the revenue that they give to the wirehouse, a big
Speaker 1: part of that value is real estate, which they're now
Speaker 1: not getting, and they've now realized that they don't need
Speaker 1: that real estate as part of the servicing infrastructure to
Speaker 1: their clients. Uh. They also have more free time because
Speaker 1: they're not in the office. They can explore independence, or
Speaker 1: explore move and get educated. So the combination of those things,
Speaker 1: having more time to stick their head up and look
Speaker 1: around and explore, and realizing that they don't need to
Speaker 1: give up their revenue, advisors that we support give up
Speaker 1: fifteen one five not five zero, and you know they've
Speaker 1: got something. If they want to have a small office,
Speaker 1: they can. But the average advisor on our platform is
Speaker 1: doing you know, mid sixties the high sixties in terms
Speaker 1: of gross income, which is almost more from an income
Speaker 1: standpoint on what they were receiving at a wirehouse. Uh.
Speaker 1: And you know, the path to independence has become more
Speaker 1: well warrant at this point. Uh. They want to look
Speaker 1: peer to peer and have those conversations. Success breeds more success.
Speaker 1: So what we're finding, you know, very in light of
Speaker 1: this environment, it's only accelerating the movement towards independence. Quite interesting.
Speaker 1: Let's talk a little bit about the growth of the industry.
Speaker 1: You're now over sixty billion dollars on your platform between
Speaker 1: Tampa and enterprise and advisor assets. How do you grow
Speaker 1: that to a hundred billion dollars in a u M.
Speaker 1: It's organic growth helping our advisors get new clients. Uh.
Speaker 1: And you know, maybe you've seen, uh, you know, in
Speaker 1: the past multiple months, over the past year, we've started
Speaker 1: to sponsor, in particular a lot of local trying to
Speaker 1: support some of the local athletes. UH in golf and
Speaker 1: IndyCar racing and tennis h to help get you know,
Speaker 1: the brand awareness out there more. We have a lot
Speaker 1: more of of of that activity become. That has led
Speaker 1: to referrals that we can make out to our advisors,
Speaker 1: and I think about us really becoming over the next
Speaker 1: five years in part the Good Housekeeper Seal of approval
Speaker 1: for independent advices. So if you're looking for an independent advisor,
Speaker 1: look for one that's word by Dynasty right, because here's
Speaker 1: all the buying power and support and technology that they have,
Speaker 1: and I think Dynasty can can become a much bigger
Speaker 1: part helping our advisors grow organically. Second part of our
Speaker 1: growth will come inorganically, meaning helping our advisors grow via
Speaker 1: M and A, whether it's retiring our A A principles
Speaker 1: that are looking to monetize their business, whether it's breakaway
Speaker 1: advisors who want all the benefits of independence, but maybe
Speaker 1: don't want to run their own business and they want
Speaker 1: to join an independent firm. UH. That will continue to
Speaker 1: become an even larger part of our business and our growth.
Speaker 1: Because of our fifty firms, I would say more than
Speaker 1: half of them now are M and A ready, and
Speaker 1: we've invested heavily in investment banking team in house. We've
Speaker 1: reserved a lot of our capital and balance sheet to
Speaker 1: help finance those transactions. So I think a lot of that,
Speaker 1: as I said, we'll accelerate. And then, obviously the third
Speaker 1: is new store sales. In thinking about adding a dozen
Speaker 1: or so new brands that are powered by Dynasty, whether
Speaker 1: they were already independent firms that are looking to outsource
Speaker 1: to us, or they're coming from you know, captivity or
Speaker 1: an employee model and looking you know, to to own
Speaker 1: and operate their own firm. Our flows are very strong
Speaker 1: in that regard, so those will be the primary drivers.
Speaker 1: And then the new business, as we've mentioned that's coming
Speaker 1: on is the enterprise business, and I think selectively, you know,
Speaker 1: you'll see a few firms. An example of that would
Speaker 1: would be a Mariner, which is a thirty five billion
Speaker 1: dollar r A run by Marty Bicknell, who I think
Speaker 1: is a great CEO in the r A A space,
Speaker 1: decided he wanted to have a platform affiliate model where
Speaker 1: advisors that didn't want to sell the Mariner could get
Speaker 1: all the benefits of the investment acumen and practice management
Speaker 1: UH coaching support of Mariner UH and then Dynasty's turnkey
Speaker 1: platform supports that. Uh. You know, we're getting hundreds of
Speaker 1: referrals on our website a month. A lot of these
Speaker 1: advisors are you know, fifty undred million. Uh. Many of
Speaker 1: them don't want to sell. So we have now a
Speaker 1: channel partnership with Mariner where the advisor can go get
Speaker 1: the benefit of our platform, get the benefit of the
Speaker 1: support of Mariner, and not have to sell their business today.
Speaker 1: So you'll see us selectively enter into those types of partnerships,
Speaker 1: maybe support some of the larger independent broker dealers, standing
Speaker 1: up a private wealth division, so selectively onboarding some of
Speaker 1: these institutional clients, and you add all that together. UM,
Speaker 1: I'll stick my neck out here a little bit, you know,
Speaker 1: bury here on the show to say I'd like to
Speaker 1: see us inside of twenty four months cross over the
Speaker 1: hundred billion dollar mark. Well, that's that's a big number.
Speaker 1: So so let me flip the question on you, Um,
Speaker 1: what are wire houses doing to try and retain their
Speaker 1: top talent? They have to be aware of it's not
Speaker 1: just you, it's places like Hi Tower and LPL that
Speaker 1: are attracting, um, a whole lot of talent from them.
Speaker 1: What can they do to staunch the bleeding. Well, look,
Speaker 1: our biggest competitor, frankly is inertia and complacency. And as
Speaker 1: you know in lots of walks of life, good is
Speaker 1: the enemy of great uh. And a lot of the advisors,
Speaker 1: you know, they've worked hard to build their book of business. UH,
Speaker 1: and they don't want, you know, to to go through
Speaker 1: the noth hole of a transition, you know, which is
Speaker 1: ninety days of of of of work uh to then
Speaker 1: get on you know, the other side and and have
Speaker 1: their business. So you know, for us, typically a loss
Speaker 1: would be that we spent six months educating somebody and
Speaker 1: they just made a decision not to move. It's rare
Speaker 1: that we would dig in with somebody and they would
Speaker 1: move and not do it with us in the R
Speaker 1: A A space because you know, most of the advisors
Speaker 1: want a supported independent model. They don't want to have
Speaker 1: to hire all the people, and they don't want to
Speaker 1: juggle sixty five different vendor balls. Uh. You know, so
Speaker 1: they decided to partner with us. What the wirehouses are
Speaker 1: trying to do, UH is you know, to put these
Speaker 1: retiring place programs in place, which takes advantage of inertia.
Speaker 1: Reality is if an advisor goes independent, Uh, they would
Speaker 1: make a lot more money both in terms of income,
Speaker 1: they could decide when they want to retire if they
Speaker 1: sell their business as long term capital gains tax and
Speaker 1: a higher valuation. But many advisors just you know, take
Speaker 1: the easier path, which is to stay. I'll stay here
Speaker 1: as a three month or now it's all W two income.
Speaker 1: But it's easier. Uh So why our houses again understand Uh,
Speaker 1: you know, the inertia and complacency is on their side,
Speaker 1: so they're putting those programs in place. I think what
Speaker 1: they're also doing smartly, and advisors are allowing it to happen,
Speaker 1: is to push forward their brand more directly to the client.
Speaker 1: You see this at you know, merrow with merrow Ledge.
Speaker 1: You see you know a lot of the smaller accounts
Speaker 1: solutions being rolled out at these firms, which is the
Speaker 1: institutionalizing of the client relationship, so the client has more
Speaker 1: relationship with the brand as opposed to the advisor. And
Speaker 1: I think grap accounts, checking accounts, loans, all those things.
Speaker 1: So you cross sell them with multiple products and then
Speaker 1: you put them into models that the firm is running,
Speaker 1: not the advisor. Uh. And then it becomes a deterrent
Speaker 1: for the advisors to leave because a lot of their clients.
Speaker 1: You see it at firms like Goldman and others where
Speaker 1: you have typically a lower uh acentage of client assets
Speaker 1: that follow when the advisor leaves, because the client tends
Speaker 1: to have more of a relationship with the brand as
Speaker 1: opposed to some of the firms where it's just the
Speaker 1: relationship with the advisor. I think the wire houses are
Speaker 1: are strategically trying to do more of that, whether it's
Speaker 1: tying them in with loan products, structure products, things that
Speaker 1: are proprietary to the firm. It's about driving the brand
Speaker 1: and creating stickiness. And I think ultimately, you know, over
Speaker 1: the next five years or so, you'll see the wire
Speaker 1: houses looking and feeling more like a private bank where
Speaker 1: the advisor is more of a clear employee uh and
Speaker 1: you know, they're helping to cross sell the relationship across
Speaker 1: the organization and it would become more difficult in that
Speaker 1: environment for an advisor to to to make a move.
Speaker 1: So I think I think that's really the strategy that
Speaker 1: you're seeing be be deployed. Longer term, perhaps you could
Speaker 1: see some of these firms open up product access us,
Speaker 1: maybe even eventually custody to independent advisors. But that business
Speaker 1: is such a scale business, and you have firms like
Speaker 1: Schwab that have you know, North the three trillion already
Speaker 1: clearly a big lead Fidelity, you know, you know, well
Speaker 1: north of a trillion. Pershing's a scale player in that space.
Speaker 1: It's very difficult to have an employee model supporting advisors
Speaker 1: and an independent model supporting advisors when your subscale in
Speaker 1: the ladder. So I think it will be a slow
Speaker 1: migration and probably more about product distribution to arias than
Speaker 1: it will be turn key custody for most of those platforms.
Speaker 1: Very interesting that there's a quote of yours I really
Speaker 1: enjoy and I want to have you put some color
Speaker 1: on it. Quote the amount of innovation in the last
Speaker 1: five years is greater than the fifty that proceeded that
Speaker 1: unquote give us a little more explanation, you know, are
Speaker 1: you talking generally technology, financial innovation. I don't disagree with
Speaker 1: any of that. I'm curious as to to your thoughts
Speaker 1: on it. Yeah, Look, the reality is the whole independent space,
Speaker 1: the independent movement. At this point, it's been discovered and
Speaker 1: you see it. If you're an r A you decided
Speaker 1: to sell, there's twenty potential buyers that show up on
Speaker 1: the other side. I mean, it's just a wonderful business
Speaker 1: that's anwitized essential to our country. It's not going away.
Speaker 1: Um So, so all roads are starting to lead towards
Speaker 1: the r A space. And what that means is the
Speaker 1: capital investment that's coming in, the attention that's being paid,
Speaker 1: is you're seeing tremendous innovation across the board. So yes,
Speaker 1: in technology, in reporting technology, in o CFO technology, in
Speaker 1: O c I O technology, and compliance technology basically all
Speaker 1: aspects of an advisory practice. And when you're in the
Speaker 1: independent space, Barry and you don't have to worry about uh,
Speaker 1: you know, having fifty years of legacy technology that you
Speaker 1: can only incrementally move the needle with. But when we
Speaker 1: launch an r A, we're building from scratch custom technology
Speaker 1: to specifically fit the need of the way they want
Speaker 1: to service the clients. That's a huge advantage for them.
Speaker 1: On the product side, you know, whether it's you know,
Speaker 1: partners now like I capital and the access to alternatives
Speaker 1: that really started in the independent space, or halo on
Speaker 1: the structured product front, or you know, what investment has
Speaker 1: done to bring scale, you know, into the into the
Speaker 1: tamp and reporting and financial planning space. So many of
Speaker 1: those firms started on the independent side, and now you
Speaker 1: have wirehouses and banks trying to leverage that technology that
Speaker 1: started here, right. So the space has kind of turned
Speaker 1: earned upside down and then you pour on top of it,
Speaker 1: you know, kind of the gas on the fire, which
Speaker 1: is tremendous capital investment. Uh. And the entrepreneurship. I mean,
Speaker 1: one of our biggest advantages is we are entrepreneurs servicing
Speaker 1: other entrepreneurs, right, so we're getting up every day and
Speaker 1: thinking about innovation and how do we make the advisor's
Speaker 1: life better. And the whole ecosystem that's evolved over the
Speaker 1: last ten years. Right, it's driven by entrepreneurs who have
Speaker 1: great access to technology and capital that are fundamentally changing
Speaker 1: the way that what wealth managements being delivered in this country.
Speaker 1: And I think, frankly, you know, it's just going to
Speaker 1: continue to accelerate. Really interesting you mentioned scale, uh I.
Speaker 1: It reminds me of the issue of market share. It's
Speaker 1: been pointed out a handful of the largest r I
Speaker 1: A s are hundred billion plus when the industry is
Speaker 1: measure in tens of trillions of dollars, meaning even the
Speaker 1: biggest firms barely have any sort of market share. Does
Speaker 1: that mean anything? Is there any significance to how widely
Speaker 1: diversified and distributed the industry itself is? Well, Look, I
Speaker 1: do think that there will be brands that evolved on
Speaker 1: the national level, regional level within the r A A
Speaker 1: space that will have real brand value. In Dynasty hopes
Speaker 1: to be again that intel sticker powering a number of
Speaker 1: those national scaled winners and helping to provide a lot
Speaker 1: of the scale and access that uh, that that supports them.
Speaker 1: But the reality is when you look at, you know,
Speaker 1: the economics of the wealth management business, A lot of
Speaker 1: people talk about, you know, the margin and margin pressure
Speaker 1: that's happened in the industry. But when you look at
Speaker 1: the last ten years, uh, that has occurred, but but
Speaker 1: in a different way than what most people describe it.
Speaker 1: What I mean by that is, we looked at the
Speaker 1: average and client on our platform is let's say about
Speaker 1: five million dollars. The average client is being advised by
Speaker 1: one of the advisors. Ten years ago, the r o
Speaker 1: A on average on our platform for that five million
Speaker 1: dollar client was around seventy eight basis points today, Uh,
Speaker 1: it's seventy So you've had three or four basis points
Speaker 1: of erosion in terms of margin pressure. But the big
Speaker 1: change is the cost the service. Ten years ago, the
Speaker 1: client expectation might have been very simplistic financial plan uh,
Speaker 1: and it's really an asset management relationship. Today it's more
Speaker 1: holistic wealth management. It's it's integrated financial planning. Uh. It's
Speaker 1: looking at the liability side of the balance sheet alongside
Speaker 1: of the asset side. Uh. You know, it's looking at
Speaker 1: overall risk management. It's incorporation of alternative investments, you know,
Speaker 1: alongside of traditional etcetera, etcetera. So the team investment, the
Speaker 1: technology investment, you know, what it costs to service that
Speaker 1: client has gone up. So the margin pressure actually is
Speaker 1: coming faster on the cost side than it is on
Speaker 1: the revenue side. And that's where scale matters. That's where
Speaker 1: these large, multibillion dollar independent firms have higher profitability because
Speaker 1: they're able to spread the cost infrastructure over more client.
Speaker 1: That's why outsourcing to firms like Dynasty is accelerating because
Speaker 1: you can get synthetic scale. And then the last part
Speaker 1: of the competitive advantage is marketing and dollars that you're
Speaker 1: able to spend on sales, whether it's adding a new
Speaker 1: client or adding a new advisor. The larger and more
Speaker 1: scale you have, the more free cash flow you have
Speaker 1: to make those investment and that's why the biggest firms
Speaker 1: are the ones that you tend to see growing the fastest.
Speaker 1: Right now. So so let's talk about some of the
Speaker 1: biggest firms. People have compared Dynasty to firms like High
Speaker 1: Tower or LPL. Who are do you think of as
Speaker 1: as your competitors, um and and what are the similarities
Speaker 1: and differences between them? Sure? Look you know this. Uh,
Speaker 1: it's lonely at the top sometimes. Uh. And the result is,
Speaker 1: you know, the space tends to be pretty small. So
Speaker 1: I know the CEO is the most all of these
Speaker 1: firms in the space, and we get together from time
Speaker 1: to time and we we share a laugh, whether it's
Speaker 1: about a certain reporter or you know where the industry
Speaker 1: is going. Uh. The reality is, you know, the people
Speaker 1: at the tops of the organization, you know, from a
Speaker 1: peer to peer practice management perspectives, spent some time together,
Speaker 1: and in particular, Barry, I have a lot of respect
Speaker 1: for the other entrepreneurs that have gone out there. Uh
Speaker 1: and you know, bet on themselves and you know, trying
Speaker 1: to execute a new model. Uh. In terms of competition, uh,
Speaker 1: there's a lot. I'm only forty four years old. I
Speaker 1: was thirty two when I decided to start the business.
Speaker 1: I'm gonna be doing this for a while. And it's
Speaker 1: a lot of fun for me to be a mentor to. Frankly,
Speaker 1: a lot of these players coming in space. You know,
Speaker 1: these are firms being started by people that are still
Speaker 1: older than me. Even though I'm seen as one of
Speaker 1: the original, you know, visionaries, and in the space, I'm
Speaker 1: still only forty four. So it's nice for me to
Speaker 1: be able to mentor so many people coming in. I
Speaker 1: don't see anyone today as a scaled integrated platform, Uh,
Speaker 1: competitor to the high end r a A. We invented that.
Speaker 1: We created that space sixty billion, as I said, a
Speaker 1: hundred billion here in the in the near term. Uh.
Speaker 1: When not complacent, only the paranoid survive. Uh. So we're
Speaker 1: constantly watching what others are doing. But in the space
Speaker 1: where we sit today, I think we sit alone. Now.
Speaker 1: You mentioned firms, Uh, you know some of these roll ups,
Speaker 1: some of them have come in and out of the
Speaker 1: platform business. But as I mentioned earlier, UM, I tell
Speaker 1: entrepreneurs you've got to be laser focused. It's very difficult
Speaker 1: to do one thing incredibly well. It's impossible to do
Speaker 1: several things well. So if you want to be a
Speaker 1: roll up in an acquire of businesses, do that. Don't
Speaker 1: try to be a platform service company as well, right,
Speaker 1: especially if you only have sub a hundred billions. I
Speaker 1: mean there are players out there with with with half
Speaker 1: a trillion that can't do it, that are trying to
Speaker 1: build different types of models and there's still subscale. So
Speaker 1: for us, we've been laser focused on just supporting advisors,
Speaker 1: being a platform company and staying in in that in
Speaker 1: that swim lane. Uh. And there's really no one else
Speaker 1: that's doing that inertia if tisor is not leaving big competitor. Uh.
Speaker 1: You mentioned LPL. There's a lot of independent broker dealers
Speaker 1: that are trying to figure out how they reinvent themselves
Speaker 1: as an advisory firm. How do they become an r
Speaker 1: A custodian, how do they attract more advisor assets, how
Speaker 1: do they build tamp capabilities? So a lot of if
Speaker 1: you think about where you know, we're in twenty different
Speaker 1: businesses that we just integrated into a platform. A lot
Speaker 1: of our individual businesses may have competition, but we're still
Speaker 1: the only fully integrated offering at the high end of
Speaker 1: the model. And the last thing I think that I
Speaker 1: would mention that they haven't mentioned yet that the competitive
Speaker 1: advantage is our community. And I would say, look, you know,
Speaker 1: winners want to surround themselves with other winners. Uh. There
Speaker 1: really isn't a community where the average CEO and principle
Speaker 1: is a billion dollar plus are a A Uh, they're geographical,
Speaker 1: disperse all of the countries, they don't really compete with
Speaker 1: each other where they can get together several times a
Speaker 1: year at our event and share a peer peer on
Speaker 1: what's working, best practices, what isn't working on various growth strategies,
Speaker 1: on brand development, on staffing. Uh. So, you know, our community,
Speaker 1: I think is a is a very powerful differentiator because
Speaker 1: I think you're defined not just by who you service,
Speaker 1: but also who you don't. And for Dynasty, you know,
Speaker 1: thinking about our clients, we're not trying to be something
Speaker 1: to everyone. We're trying to be everything to someone and
Speaker 1: that's the someone that really plays behind the market that
Speaker 1: wants a partner, is focused on building a great business,
Speaker 1: not just a great practice, really wants to drive enterprise
Speaker 1: value and wants to have a sustained business over time.
Speaker 1: That's our core focused client. Huh sounds sounds quite intriguing.
Speaker 1: I know we only have you for a couple of
Speaker 1: more minutes, So let me jump to my favorite questions
Speaker 1: that we ask all of our guests, starting with what's
Speaker 1: keeping you entertained during this work from home period? Tell
Speaker 1: us what your favorite Netflix or Amazon Prime shows are
Speaker 1: or what podcasts you're listening to. Yeah, so in terms
Speaker 1: of uh, the little bit of of time I have
Speaker 1: away from away from work as far as shows and podcasts, Um,
Speaker 1: you know, Barry, I've never been one to watch a
Speaker 1: lot of television, to be honest with you, Um, I
Speaker 1: do watch sports, uh you know, from from time to
Speaker 1: time and and follow my favorite teams. But I do
Speaker 1: listen to podcasts. I'll give you a nice compliment and
Speaker 1: plug Masters of Business is definitely one of my one
Speaker 1: of my favorite podcasts. I do listen to Jocko will
Speaker 1: It's uh podcast. My wife and I are big supporters
Speaker 1: of military. Jocko obviously is the former Navy skill. But
Speaker 1: some of his uh you know, shows around leadership and
Speaker 1: overcoming adversity. Uh. You know, I've really enjoyed those. I
Speaker 1: am a fellow at the Aspen Institute in their Finance
Speaker 1: Fellowship program. I really like, uh the Aspen Ideas to
Speaker 1: Go podcast. Uh. You know, there are some quick hits
Speaker 1: on various uh interesting ideas leadership, entrepreneurship, etcetera. Uh. And
Speaker 1: you know Ted talks uh from time to time or
Speaker 1: are things that I'll take in when I'm taking a
Speaker 1: long walk, you know here in St. Pete. But I'm
Speaker 1: more of a podcast person, honestly than somebody who is
Speaker 1: watching Netflix or Amazon Prime. Gotcha. So let's talk about
Speaker 1: some of your early mentors who helped to shape your career.
Speaker 1: In terms of my most early mentor without questions, my
Speaker 1: step grandfather who raised me. His name was Clarence Townsend.
Speaker 1: Both of my daughters are named after him. My older daughter,
Speaker 1: her name is Townsend, and our younger one is a Claire.
Speaker 1: The Claire is from Clarence. As they say, we're named
Speaker 1: after one of our angels. Uh. He taught me the
Speaker 1: importance of doing what you say, integrity, being honest. He
Speaker 1: never borrowed a dollar in his life, so disappointed around
Speaker 1: not spending more than you can afford. A lot of
Speaker 1: that obviously was very helpful to me, as I said,
Speaker 1: when I was starting a business and remembering a lot
Speaker 1: of those life lessons that I've learned from him. On
Speaker 1: the entrepreneur side, one of my best friends is a
Speaker 1: guy named Mike Rappoli. Uh. Your listeners will probably know
Speaker 1: the name. Mike was one of the founders of Vitamin Water. Uh.
Speaker 1: He helped build other brands like kind Bar and Pirate's Booty,
Speaker 1: which he didn't found, and then he went on to
Speaker 1: found now body Armor. Very few entrepreneurs have ever founded
Speaker 1: a billion dollar brand from the ground up, even fewer
Speaker 1: number have done it more than once, and Body Armor
Speaker 1: certainly a multibillion dollar brand at this point, as was
Speaker 1: Viamin Water. So early on when I was to launch
Speaker 1: this business, Mike was a remarkable sounding board. He and
Speaker 1: I actually named Dynasty together, which we thought about it.
Speaker 1: We both sports guys, so we thought about it meaning
Speaker 1: winning consistently over time. Multi Generational financial obviously describes the
Speaker 1: industry and partners in terms of how we work with
Speaker 1: our clients and our resource partners and relate to each
Speaker 1: other internally. So if you were to look at Barry
Speaker 1: the Dynasty logo, you will see some similarities to the
Speaker 1: Vitamin Water logo. Uh. And that's because when you have
Speaker 1: a brand building genius who's helping you early on, you
Speaker 1: want to listen. So I would. I would say Mike
Speaker 1: was was a great mentor to me early on and
Speaker 1: starting Dynasty. So let's talk about books. Tell us what
Speaker 1: some of your favorite reads are and what are you
Speaker 1: reading right now? Well, I just read uh and this
Speaker 1: is this is going to be a shameless plug for
Speaker 1: someone who's a friend of both of us. I actually
Speaker 1: just had the opportunity to finish reading uh, Josh Brown's
Speaker 1: book on How I Invest My Money. Joshua, Josh and
Speaker 1: Ivan personal friends for for quite some time. And what
Speaker 1: you know, you have remarkable talent and partner there who
Speaker 1: thinks the world of of you. Um. And let me
Speaker 1: let me just jump let me just jump in here
Speaker 1: and say, I remember when the two of you, I
Speaker 1: want to say it was we're both named to the
Speaker 1: forty under forty list? Is am I getting the dates right? Yeah?
Speaker 1: He's much older than me, but that's right. Yes, I
Speaker 1: think you guys are about the same age we are.
Speaker 1: We are all kidding us side we are, and we're
Speaker 1: kindred spirits and he's the best. So he invited. Isn't
Speaker 1: that a great idea for a book, by the way,
Speaker 1: the to to speak to a bunch of people in
Speaker 1: finance and say, don't tell us what you say on TV,
Speaker 1: tell us how you invest your own money. I love
Speaker 1: that idea. I do too. When he sent it to me,
Speaker 1: what the first thing I said to him is this
Speaker 1: is brilliant and I'm shocked that no one else has
Speaker 1: thought about it. I said, did you do your research?
Speaker 1: Has anyone else done this? And he said, I'm telling
Speaker 1: you they haven't. And I get people reaching out to
Speaker 1: me all over the world. I mean, it's it's it's
Speaker 1: it's it's pretty special saying hey, I just read your
Speaker 1: chapter of of of How I Invest My Money? Uh.
Speaker 1: And I love how you said, you know how you
Speaker 1: think about the family capital or I have a fun bucket,
Speaker 1: which for me is houses and my horses. We have
Speaker 1: a horse racing stable. Uh. And people from all walks
Speaker 1: of life have reached out. So it's been great and
Speaker 1: I'm glad that that Josh invited me to be a
Speaker 1: part of it. The other book I'll Mention, which I
Speaker 1: just started to read, I'm a big proponent. I talked
Speaker 1: about mentorship, both being a mentor and being mentored by
Speaker 1: a committee of people. I've just started reading in Professional
Speaker 1: Development in Yourself and Your Team a book called Tribe
Speaker 1: of Mentors, which was written by a guy named Tim Ferris,
Speaker 1: And it's a book that get introduced to me through
Speaker 1: the ASP Institute. Uh and uh again it's early you
Speaker 1: ask what I'm reading right now, But I love the
Speaker 1: concept of group mentoring. What sort of advice would you
Speaker 1: give to a recent college grad who was interested in
Speaker 1: a career either as an advisor or in the professional
Speaker 1: finance services industry. Yeah, Barry, I love that question. First
Speaker 1: and foremost, I would say, do it. We need you. Uh.
Speaker 1: You know, the financial health and wellness of our country
Speaker 1: is not where it should be, whether it's on a
Speaker 1: national or state level, whether it's the fact that over
Speaker 1: sevent Americans can't put their hand on a thousand dollars
Speaker 1: in an emergency. Um. You know, given my background and
Speaker 1: how I grew up, uh, financial literacy is something that's
Speaker 1: near and dear to me. It's fundamentally changed the life
Speaker 1: that I've been able to live. So we need more
Speaker 1: people to come into the industry. Please do it. It's critical, Uh,
Speaker 1: you know, to to to our country. In terms of
Speaker 1: specific advice to someone starting out, Uh, it's it's it's
Speaker 1: not about what you learn, it's about what you learn
Speaker 1: in the first let's call it three years. So finding
Speaker 1: a great mentor finding an organization, finding a team that
Speaker 1: cares about your development will push you, will let you fail,
Speaker 1: will let you learn from those mistakes. Uh. If you
Speaker 1: can find that environment and you're gonna get paid five
Speaker 1: to ten tho dollars less uh than an environment that
Speaker 1: you're not going to have that take the lower pay.
Speaker 1: It's all about you know, what you learn the tuition. Uh,
Speaker 1: you know, think about it that way early on, if
Speaker 1: it's a lower price job, and put yourself in that
Speaker 1: environment because it will pay massive dividends for you over
Speaker 1: the course of your career. And our final question, what
Speaker 1: do you know about the world of financial services and
Speaker 1: vesting advising today that you wish you knew years ago
Speaker 1: when you were first getting started. Yeah, well that's a
Speaker 1: good one, because again I'm forty four now, so you
Speaker 1: can subtract off twenty five. That was a nineteen year
Speaker 1: old kid. But look at what I like to tell
Speaker 1: a lot of young people, and certainly would would tell
Speaker 1: my nineteen year old self, is to have the discipline
Speaker 1: to pay yourself first from an investment perspective. And as
Speaker 1: we all know, it's not always about getting right whatever
Speaker 1: that means. Uh, you know, the the asset allocation because
Speaker 1: that will change over time, or security selection, et cetera.
Speaker 1: It's about actually being discipplinted to save and whether you're
Speaker 1: saving you know, five early on. Uh. And even if
Speaker 1: that number appears to you know, I hear a lot
Speaker 1: of people saying I can only save fifty dollars a month,
Speaker 1: Well that's great, that's a wonderful place to start. Save
Speaker 1: the fifty dollars, start to invested and let the miracle
Speaker 1: of compound interest start to work for you as early
Speaker 1: as possible in your life. Uh. And I love getting
Speaker 1: that message out to young investors, just to get them
Speaker 1: started and being disciplined. We all have a lot of priorities,
Speaker 1: but if we can say, look five percent early on
Speaker 1: of our check without exception, regardless of what seems to
Speaker 1: be you know a big priority in our life. We're
Speaker 1: gonna pay ourselves first and start investing it. Get a
Speaker 1: simple financial plan in place. You look back, you know,
Speaker 1: to your question twenty five years later, you'll be very
Speaker 1: glad that you did it. Great stuff. We've been speaking
Speaker 1: with Sheryl Penny. He is the founder and CEO of
Speaker 1: Dynasty Financial Partners. If you enjoy this conversation, we'll be
Speaker 1: sure and check out any of the previous four hundred
Speaker 1: such interviews we've conducted over the past seven years. You
Speaker 1: can find that at iTunes, Spotify, wherever you feed your
Speaker 1: podcast fixed. We love your comments, feedback and suggestions right
Speaker 1: to us at m IB podcast at Bloomberg dot net.
Speaker 1: Sign up for my daily reads at rid Halts dot com.
Speaker 1: Check out my weekly column on Bloomberg dot com slash Opinion.
Speaker 1: Follow me on Twitter at Rid Halts. I would be
Speaker 1: remiss if I did not thank the crack staff that
Speaker 1: helps put these conversations together each week. Reggie Brazil is
Speaker 1: my audio engineer, Michael Boyle is my producer atka. Val
Speaker 1: Brand is our project manager. Michael Batnick is my head
Speaker 1: of research. I'm Barry Ridholts. You've been listening to Master's
Speaker 1: in Business on Bloomberg Radio. You're listening to Master's in
Speaker 1: Business with Barry Ridholts on Bloomberg Radio.