Firm Growth & Culture: Competing as a Smaller Advisory Firm

[0:00] JD: To a workplace, you know, employer are going to crush all the little specialists? [0:05] Speaker B: I don't think so. I mean, it's a relationship business. Right. And if you take care of your clients, your clients are going to stay with you. Particularly in that. In the employee benefits arena, in the health insurance space, everybody gets the same products, the same price. If you're under 100 employees, increases every year, same thing. It's vanilla, and there's not much you can do about it. So, you know, I don't think anyone's going away. I just don't think anyone's going to make a material difference. And what's out there. What we're trying to do is figure out can we actually get big enough to create pricing leverage in the marketplace? Who knows? That's our goal, right? [0:39] JD: Yeah. How long do you have to get? [0:41] Speaker C: For sure you're there. [0:42] Speaker B: That's a good question. [0:43] JD: So. [0:44] Speaker B: And do you do it outside of a peo or inside of a peo? [0:49] JD: Oh, Jesus. That's two. [0:52] Speaker C: Okay, [0:55] JD: I'll do one. [0:56] Speaker B: You do one. [0:56] JD: He did too, so we can't put him through that. [0:59] Speaker B: I walked right into that one. [1:00] JD: Here, is there one for me? [1:02] Speaker B: This. This is what I will say. I think anyone can figure it out. I think we're farther ahead than anyone else trying to figure it out. [1:09] JD: And I believe I'm going to say a positive here. I love the idea of convergence. I even for guys who like a local advisor, because I want a retirement plan advisor to be able to offer more services and generate more revenue for themselves. So if you can kind of pave the path and show us all that it works and how to do it, there might be a lot of little firms that can kind of copy what you're doing and it'll be good for the whole industry. [1:36] Speaker B: But here's what I think is the. Not the dirty little secret, but I think the biggest challenge is for most firms. And again, where I think we've got a good thing going is the only way you're ever gonna sell converged story is have teammates that want to work together. You have to have a culture. You have to have a culture where it's sort of like we actually enjoy each other's company. We'll go have a beer after work. [1:58] JD: Because you can't be an expert in all those. [2:00] Speaker B: You can't be an expert. And I'll think, but corporate can't sit there and go, okay, now you guys are in the same market. Start working together. Your retirement, your employee benefits. If you don't actually Enjoy each other's company. You're not going to do anything together. [2:11] JD: You're kind of old school. [2:12] Speaker C: You have to know you can trust that person with your client too. If you're fearful of losing your line of business because you referred them to. [2:18] Speaker B: That's why most firms, you can have all these verticals. But if you actually ask who's where, do you have a client where you have five solutions in that client? It's rare, right? It's rare. But it has as much to do with the people dynamic inside a firm like ours. Then. Then what the client wants. [2:36] JD: What you're saying is there's no shortcuts like you, you. [2:39] Speaker B: And I'm also saying most firms that do acquisitions, they. They're not. We don't focus on culture. If you don't fit us, we're not doing that. Most firms will do it if the math works. [2:50] JD: Okay, let's. Let's hold on. But you do a certain size. I feel like a lot of that can be a good story, but it's hard to maintain that. Like how. [2:59] Speaker B: But when you get so big, Adam and I meet every single person that joins us. And believe it or not, I was just in a meeting today. We're not going to do that opportunity because we had a detailed conversation. Did not fit. [3:12] Speaker C: When you're acquiring, you can acquire the right culture you're seeing, build practice as you know. [3:17] Speaker B: And the great thing now is like, we're. We're successful enough now. Doesn't matter if we walk right. [3:23] JD: You're not. Yeah. You don't have to. You know, how do you make the deal? And you don't care. [3:27] Speaker B: I do. I do. I'm a co founder out there still on the road all the time trying to figure this out. Because I love it. Listen, love it. [3:36] JD: I have 35 employees. If I had 3,800, I wouldn't work a day in my. [3:46] Speaker B: You would if you love it. You would if you love it. [3:48] JD: Apparently I don't love it that much. Let's pivot. Let's pivot a little bit. Dimensional funds, to me, it's always been like almost like vanguard. Like there's a culture cult of advisors that follow them. And back in the day, I felt like you couldn't sell dimensional funds unless you're like on their list and part of their little secret group. It's expanded a little. They're on record keeping platforms and stuff, but they still kind of have that brand. You guys have something going on with them now, some type of strategic partnership or something. [4:21] Speaker B: So we just met. So Nate Pratt joined our company from Dimensional. [4:28] JD: Okay. [4:28] Speaker B: And so he said, you know, there's a lot of what I feel here at OneDigital that reminds me of what I felt at Dimensional. Why don't we just get leadership together and talk? And the more we started talking about it, it's sort of, it's sort of like they have solutions our clients need. We have a distribution strategy that is interesting to them and they have a lot of advisors who trust them in terms of how they see the marketplace. So we're simply, you know, when you talk about. It's just business folks that are coming at a problem from two different directions who have basically said, I think we could figure out some, some things together that's good for the client. [5:11] JD: What does that look like? So now does that mean that you're going to start acquiring like df? [5:25] Speaker B: There's going to be dimensional advisors that join us. We already have the first one joining us now and great guy he had. There's. Think about it this way. There's a bunch of firms out there that are oriented towards Dimensional. A lot of them need to find a home. They want to be part of a bigger entity. And we, we, we find there is a. They can find a phone, a home here very comfortably. But it's still going to be. We're going to fit each other as people or we move. [5:53] JD: Okay, so they're, they're scratching your back. How will you scratch their back? Just by being more aware of them as investment options for all your things. I mean, they're a good shop. [6:04] Speaker B: So we just, we make their funds available to all of our folks. [6:09] JD: We shake your head no. [6:12] Speaker C: Well, we heard Vince Talk about 20% growth in the managed account service or the portfolios you all are creating. I would imagine dfa, Damn. [6:21] Speaker B: Has a heavy sitting in those now. [6:24] Speaker C: They're excited about that distribution. [6:26] Speaker B: I think that they'll be a partner in Manage Accounts. [6:29] JD: By the way, this is totally okay. Sometimes we talk about this like conflict of interest. This is a free market capital like you're allowed to have. [6:40] Speaker B: My, my only trepidation is I'm not in the weeds on something to the detail enough of like what's going in Manage Accounts. But all we've basically said to our friends at Dimensional is you should be able to come in and tell your story to all of our people. And all they've asked us is we just want to compete. They're a reputable firm and, and they're great folks. They're just great Folks and they focus [7:01] JD: on low cost kind of stuff too. [7:03] Speaker B: So they've got an interesting, I think, to your point. And Dave Butler, their co. CEO, was on the stage today. [7:12] Speaker C: He did chief investor here, chief executive officer. [7:18] Speaker B: He basically, when he told the story about what you were saying, the cultish nature of that, this is what he. He basically said years ago, like 10, 12, 15 years ago, whenever it was, all they do is institutional work. Right. DB DC institutional again. And when folks came to them and said, we want to start, we want access to your funds, they were like, we don't want to get involved with hot money. So we figured, you need to come understand what we do. And it took on this culture's feel because they said no to a lot of people. [7:55] JD: Yeah, right, right. [7:56] Speaker B: So it was an interesting story. [7:58] JD: Yeah, yeah, yeah. Fair enough. [7:59] Speaker B: So you guys taking it easy? [8:00] JD: Okay. You got. Got a few more coming your way. Thank you. Thank you for spending time with us. [8:05] Speaker B: My pleasure. [8:05] JD: Thank you for having us here at the conference. We might need your help. Yeah, a little bit. You're high up the corporate ladder, like maybe at the top. We might have got in trouble here a few times, like rattled a few cages. I think some people might be mad at us. So if you can just put in a good word for. [8:23] Speaker B: For us here at One Digital or mat. Okay? [8:27] JD: We need to let them understand that. Look, if you're going to. If you're going to play with fire, you're going to get burned. So if you're going to invite us and pay us to come here, you need to understand some shit's going to get broken, okay? That's how things work. But if you could smooth that open, we'd really appreciate it. All right, thank you. Thank you tuning in and thank you to One Digital and the Evolve Conference for having us here in Kansas City. We are the retireaholics. We are changing the retirement plan industry one beer at a time. And Sully here is going to have a few more shots of a.