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Johanna has always been a people person with a passion for building relationships and helping others achieve their goals. She also thrives and sees abundant opportunities working in ever-evolving environments, making project management and marketing a natural fit for her. Johanna brings her gifts for client care and project organization to Out & About.
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Having moved halfway across the globe at a young age to attend college, Johanna is no stranger to adapting to the world around her, with her path eventually landing her in the field of marketing. While pursuing her bachelor’s degree in communication from San Diego State University, Johanna got her feet wet as an intern helping a local cosmetic company build its online storefront. Later, her passion was cemented working as a marketing assistant at a biotech firm, where she expanded her skills in event coordination, advertising, and market strategy.
In her role, Johanna helps organize the tasks and deadlines that contribute to bringing our ideas to life and producing tangible outcomes for our clients. We’re thrilled to share her talents and ability to find opportunities to be creative and learn with whatever the new day brings with our team.
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Get to Know Johanna, Brand Coordinator!
We talked with Ken about:
- The major hiring and retention trends affecting employers today
- How TurningPoint is working to weed out unconscious bias in recruiting
- Advice he gives to those who are concerned about losing key talent during this Great Resignation
About Ken Schmitt:
Ken Schmitt believes it's a really good time to be in the “people business” because there’s so much happening right now. As founder and CEO of TurningPoint Executive Search, he has the opportunity to work directly with people on a daily basis to help them build the best team for their company. Most recently, that means navigating the post-pandemic hiring landscape.
Featured Resources
- Ken Schmitt LinkedIn
- Ken Schmitt Twitter
- TurningPoint Executive Search
- TurningPoint Executive Search LinkedIn
- TurningPoint Executive Search YouTube
- TurningPoint Executive Search Facebook
- “5 Things We’ve Learned in this Tight Labor Market”
- “Turnover Trends - Who, How, & Why?”
- “How to Boost Hiring and Improve Retention: Tips from a Recruiter”
Full Audio Transcript
Lauren (00:00):
All right. Well, Ken, thank you so much for joining us.
Ken (00:03):
Thanks for having me. I appreciate it.
Lauren (00:04):
Of course. So excited to hear from you today; I've been looking forward to this conversation all week. You just bring so much to the executive recruiting space and we'll include a full bio and link to your LinkedIn in the notes below, so why don't we just start off? How did you get into the space that you're in and really starting? And I mean TurningPoint, how many years has it been, 10 years or so?
Ken (00:31):
We’ve been in business for 15 years.
Lauren (00:33):
Holy smokes.
Ken (00:34):
Yeah, it’s our anniversary. Time flies when you're having fun, right?
Lauren (00:38):
Yes. Congratulations. So share a little bit more about TurningPoint and how it got to where it is today. I'd love to hear a little bit more and what you all do.
Ken (00:51):
Sure, sure. Yeah. Thanks. And again, thanks for the invitation to chat today. I really appreciate it. So I've been in the recruiting business now for 25 years, but 15 as far as TurningPoint goes. I always wanted to have my own business. That was always my goal from when I was a teenager growing up in a very entrepreneurial household with a Jack-in-the-Box franchisee for a dad and an interior decorator for a mom. So entrepreneurism is kind of in my DNA, but we've kind of ebbed and flowed and expanded over the 15 years as TurningPoint. We started off doing mainly accounting and finance recruiting in the early days. And then I did a complete rebrand and pivot, something you're very familiar with as far as branding goes, changed back in 2011, 2012.
Ken (01:34):
So it's been 10 years since we actually made the move over to sales and marketing and operations recruiting, and we don't do as much accounting or finance these days. So, a bit of a pivot and a rebrand there, but it's been great. It's been a lot of fun. I get to meet a ton of really great people. This time in particular, I always say it's a really good time to be in the people business. Yeah. Because there's so much happening out there and so many trends that are going on, partly because of COVID and partly just because of the changing demographics. So, I really do enjoy it. It's very fulfilling and very engaging.
Lauren (02:06):
Yeah. So let's jump in. I'd love to hear a little bit more about the trends, especially with the Great Resignation going on and COVID. I mean, hiring is challenging. So what are you seeing out there?
Ken (02:17):
Yeah, it really is. There's so many moving parts. It's really difficult; I really feel for a lot of employers out there that are trying to get their arms around everything out there—whether it's in regard to DEI and building a more diversified workforce or it's trying to retain the people you already have because they can go somewhere else and get a 20 or 30% bump in salary, or then trying to bring in new talent as well. Even people who are doing the same job they already have somebody on board doing today, but it costs them again, 20% more to hire a new person as compared to their incumbent. So there's a lot that employers have to really grapple with right now. Work from home is a big part of that, to your point, no longer are people just willing to, without question, just work from the office five days a week.
Ken (03:05):
We tell clients on a regular basis that if you want us to recruit somebody for your position and you're requiring them to be in the office five days a week, we can do it, but it's gonna be much more difficult. It's gonna take a lot more time and they're gonna have a lot fewer candidates to look at in terms of their pool of candidates, because there are fewer people who are willing to consider that kind of scenario where they have to be in the office five days a week. So it's tough.
Lauren (03:31):
I bet those are conversations you were not having just a few years ago or were they? I mean, is this just kind of a mega trend of new work life?
Ken (03:43):
Well, it was a trend that was starting to take hold pre-pandemic, but mainly from the candidate side. There were candidates, especially in sales and marketing as you know, who were saying, Hey, I'd rather not have to go to the office every single day if I don't have to. Especially if you're in sales and you're traveling around to different clients anyway, there's not really a lot of value in being in the office, but it was really difficult pre-COVID to find companies—hiring managers, leaders, CEOs—that were willing to let their staff work remotely unless they already had a remote field sales team and they were already used to that. That's one thing, but most companies were not. And so that was the challenge. It was a little more on the demand side, but not as much on the supply side in terms of opportunities and jobs that would allow for that.
Ken (04:30):
But then COVID comes along and just changes everything completely, and accelerates that trend beyond anybody's wildest imagination. And now, the majority of companies have realized their people are just as if not more productive working from home. People are certainly happier about it. They're engaged. They don't have to spend and waste their time driving to an office every single day. But companies are also having to adjust how they manage. And there's definitely something to be said for the loss of collaboration and creativity if you're not together as often. So it's requiring a change in how we manage as leaders, and how we engage our team and how we create that collaborative space.
Lauren (05:12):
And how are you filtering for that? I mean, I assume a lot of this comes down to values of the company and trying to pull that out within the prospective candidates, but what sort of things are you filtering for with this new world that we're living in to see if that would be a good fit, that virtual environment, or even just a fit for the company?
Ken (05:37):
Yeah, that’s a good question. And it really kind of depends on the organization, but also on the position itself, the function. We have a lot of tech clients, but we also have a lot of manufacturing clients as well. And the manufacturing clients—while we don't recruit for warehouse positions or frontline workers, as far as being on the manufacturing floor—a lot of the folks we are recruiting are leading those kinds of teams, right? And so if the leader's not in the office, then why should the team be? So there's a little bit of a challenge there. And so to your question about filtering, we have to really kind of dig more deeply into why for the role you want us to recruit for you.
Ken (06:17):
Why does it have to be in the office? What's the dynamic around that? Is it a turnaround situation? Is it an early-stage company where they have to build up a team? And so having that physical presence with the rest of the executive leadership team is really important. That makes some sense if the answer is, well, it's always been this way; COVID was a goofy blip on the radar screen. We're all going back to being in the office five days a week, and that's a different story. And that's where you have a much harder time finding candidates who are willing to do that when there's no real compelling reason behind it.
Lauren (06:51):
That's fair. So it's really unique to each company's situation, right?
Ken (06:57):
Exactly. What's going on, and I think right now it's kind of this confluence of things. So you've got this work from home dynamic, which is brand new on top of that. You also have this very real war for talent, and there's a big shortage out there for qualified people, regardless of the function in the industry. And so companies that may have been more stringent about certain things pre-pandemic, or when the labor market wasn't so tight, now they're having to relax those kinds of things to get anybody to even be interested in the job because the supply of people is so short. Even things, for example, like drug screenings, right? Which was the norm across a variety of industries pre-pandemic, right? But with COVID and the labor shortage, and on top of that, more and more states legalizing marijuana, obviously companies are having to adjust to that. And so now you don't have to have a drug screen every single time, or maybe you don't have to have a college degree for a lot of the jobs. They realize a college degree is not a bad thing, but it's not really an absolute must to do the job. So companies are having to adjust their criteria a little bit with their own filters when they hire people.
Lauren (08:07):
Oh, that's so interesting. So as you were alluding to earlier, each company's so different, right? The leadership team, the culture, the values, all of that. As a partner with them and helping them to identify how to build their team, how are you pulling back layers of the onion to really get a pulse on the companies, just how they work, how they communicate their values, so you're able to create that best fit for them for longevity. What sort of steps do you all take to look under the hood?
Ken (08:40):
That’s a great question. I mean, we've done this for such a long time that we know certain cues when somebody is kind of BSing us and it's not exactly the true, complete truth, right? But you also look at what's the average tenure at this company. When we talk to a company, whether it's professional or financial services or manufacturing or anybody else, we ask what's the reason the job is open, what's compelling them to hire this role. If they say, well, we've had three sales managers in this role in the last 18 months, or the last two years, and none of them are good enough, well, that's a pretty big red flag, right? That's some insight into the culture out there.
Ken (09:20):
If the company's going through a changeover in leadership, that's some insight as well. If the hiring manager we're working with is giving us this laundry list of requirements for the position, and we push back and say, well, you can have six of those things, but not all 15, if they're not willing to be open to that conversation. If they're not coachable, as we call it, if they're not willing to accept our feedback as the experts in the marketplace, then it's probably not the best client for us to work with. It's gonna be very frustrating for us and for them, because we can't find this perfect person out there because they're being so restrictive.
Lauren (09:59):
That makes sense. And then it would probably be personality cues for the type of person you need to hire to be able to work with that type of team or what have you.
Ken (10:08):
Exactly. And it takes more time, to your question. It takes more time for us to peel back those layers and it's not just give us a job description. Okay. We're gonna go off and start recruiting. Now it's, let's have an hour-long, we call it kickoff call, usually over Zoom. It's a more in-depth conversation after we've already decided through my previous calls with them that they are the right fit. Then we dive even deeper into the actual position and the company culture with that kickoff call before we actually go out to market and start to recruit for that position.
Lauren (10:39):
Okay. And then can you share a little bit more about that out to market piece of it too? What are you doing to be able to solicit that talent? I know you talked earlier about how you're having those challenging conversations and also creating transparency around the trends of what's happening in the marketplace which might help to shake, like you said, to bend on expectations, if you will, folks may have put a line in the sand previously, once you've had that. And once you're at a point where you're actually going to find that talent, what are you doing and how are you screening for that talent with those criteria that have been laid down?
Ken (11:13):
Yeah, that's really kinda where the secret sauce is, so to speak. That's why clients hire us. Many of our clients actually have their own internal HR or what's called TA or talent acquisition teams. But when they have a situation where it's a very high impact, high sense of urgency position, or it's a role where they just don't have the bandwidth to do the search, they come to us. They come to us because of our ability to source candidates and then also screen the people we do find. So because we're a more specialized firm, we have a pretty sizable database, as you might expect. So we look at our database for people we know who could be the right fit or could be a referral point. But we also tell our clients that even though we've got a very deep database, the best person for that job may not be someone we already know.
Ken (11:58):
So we don't wanna limit the folks we're gonna consider for the job to just the folks we already know. Let's look at the full universe. So our database is one component of that searching. Then the other one is social media, being LinkedIn. And so we rely very heavily on LinkedIn to compare those people who are out there to the folks we already know. And so that's a big part of it—kind of knowing how to find these people. When I got into recruiting 25 years ago, there was no LinkedIn, right? It was all good old-fashioned phone calls. So back then, the secret sauce behind the value we bring to the table was trying to figure out who to go after, trying to figure out who are the key players. If a company is looking for someone in their competitive landscape, who are the right people in those competitors that you actually go after? These days, with LinkedIn and just the internet in general, it's easier.
Ken (12:49):
It's not easy, but it's easier to figure out who to go after, who to target, but now the secret sauce, the value add, is the messaging. How do I compel a high-performing VP of marketing to respond to my outreach when they're also getting kind of bombarded by 10, 15 other recruiters and companies that are hiring at the same time. So that messaging is really important for us. And so we have to really know what it is that's going to compel them to respond and kind of what their hot buttons are depending upon their function. So then once we find them, the next phase is obviously the screening process. And we go pretty deep. So we do a phone screen for about an hour. We have them complete a customized client questionnaire that asks even more in-depth questions about their fit for the role. And if we like that, then we do a virtual Zoom interview as well. So we've usually spent between three and four hours with every candidate before we present them to our client.
Lauren (13:46):
That's fair. And to go back to the point about the messaging, I think that can't be undervalued or under-appreciated. I think you see a lot of just mass see what works these days. Especially with email and being in the digital world, you can't take out that personalization and the human element. I think like you said, really being able to connect with people and be able to see if that might be a good candidate. I'm sure that's something that only takes years of experience, right?
Ken (14:18):
Right. And you just have to ask questions. I mean, your phrase, you just peel back the layers. That's what we use. We say the same thing internally when you ask somebody a question. You're trying to screen them for a certain job; you can't just take their first response at face value. You've gotta say, okay, so tell, tell me more: Why did it happen that way? Who else was involved? What were the challenges along the way? One of the big questions we ask is, tell me about your last three deals, whether you're in sales or marketing or operations, your last three initiatives. And then with that question, it's a pretty simple question, but you really glean a lot of insight about the individual. Are they taking credit for everything and blaming other people for the bad things? Is it more inclusive? Are they more of a we kind of person versus I? What do they attribute their success to? Those kinds of things. So you really get a good sense for who they are as an individual.
Lauren (15:07):
Yeah. That's fair. I would assume also it helps to color if the cultural fit would be a good fit as well, right?
Ken (15:13):
Right. And there's a lot of people—I mean, we work with a lot of mid-market companies, so a lot of our clients are on the low end 10 million, on the high end about a billion in revenue. And so people who come from very large organizations, from Microsoft or from Dell or from whoever, they many times say, yeah, I wanna work for a smaller company and we have to really explain to them, okay, when you say that, that means you're gonna have a company where there's 100 employees total, whereas at Microsoft, you have a team alone of 5,000 people or whatever the number is. So it's very, very different. You've gotta be truly understanding of what that means with how that dynamic's gonna change, and how hands-on you're gonna have to be to really survive in a smaller company.
Lauren (15:57):
Yeah. That's very fair. And then I'd love to hear a little bit more too, just about DEI and hiring. And if there's anything you have folded into your processes, if you're maybe interviewing folks or scanning resumes or that sort of thing, or if that's been a conversation that's come up.
Ken (16:16):
It has quite a bit actually. We spent about six months or so researching, trying to figure out what we can do to help with DEI hiring. It's obviously diversity, equity and inclusion, right? And we're in a pretty unique position as a recruiter because we can help impact that with our clients, obviously, and many of our clients, because they are mid-market, many of 'em don't have a formal strategy if you will. So as an example, one of the things we are now doing as the result of all the research we did over the last six months or so is that when we present our first batch of candidates to our client, we used to send them the full resume along with the link to the person's LinkedIn profile.
Ken (16:58):
And a lot of times it's not deliberate, but a lot of unconscious bias creeps in when any of us are doing any kind of hiring; you wanna hire somebody who came from a similar school, grew up in a similar part of the country, looks and sounds like you, and has a similar background. It's just very unconscious, right? But that ends up resulting in weeding out people who are different—different ethnicities, different gender, different backgrounds—whatever it might be, unconsciously. And so we are now changing that up so when we present our first batch of candidates to our client, we are not including the person's name. Or the location where they live or anything like that. They have the full resume, but just not the person's contact information, and we're not sending out the LinkedIn profile.
Ken (17:42):
We want our client to decide which of our candidates to interview based solely on the merit of their background. Then once they say, great, I wanna meet candidate one and candidate three and candidate four, then we'll obviously say, okay, here's the individual. We'll include the full information about the person. And at that point, then we can at least know they're interviewing people for that reason. We also then talk very candidly with our clients about how diversified is your workforce. Do you need to really do a better job of bringing in more people of color or how many women do you have in leadership positions? What does that career track look like? That upper mobility? So just being willing to have that conversation really goes a long way. And then doing thing like the resume screening is helping quite a bit also,
Lauren (18:31):
How has it been received? Do you have different reactions from before or pushback or any of that?
Ken (18:38):
Yeah, so of the several dozen folks I've talked to, 90% of them are very receptive to that. They like that idea. They appreciate it since they've been trying to figure out ways they can also improve their own diversity hiring. I would say 10% of the time they say, hmm, I'm not sure how that would work. And I'd be curious to see how that goes or let's try and see what happens. So they're a little bit more skeptical or uncertain about it, but the majority of folks have received it very, very well. For sure. And the other piece of it is that, I mean, there's three different pieces, right? There's how do you source your talent? Where do you get your talent from?
Ken (19:16):
So a lot of us tend to use, like I said, LinkedIn or our database. If our LinkedIn network is comprised of a lot of other similarly aged white males, then most likely the folks I'm going to be pulling from in my recruiting are similar, cuz that's the network I'm pulling from. And so I've gotta do a better job of diversifying my own network, my own ecosystem if you will. So I can pull from a broader class of people. We need to look at recruiting deliberately, recruiting from historically black colleges or Hispanic colleges or whatever that demographic might look like so we can bring a more diverse slate of candidates to our companies, to our clients as well. And that just takes some time.
Lauren (19:59):
Yeah. Well, thank you for sharing that insight too. Any other trends or challenges that would be helpful to share as we look ahead? It's a wild world we live in, especially the last few years with COVID and all of that. What would be smart for folks to be thinking about with hiring or just things to be aware of?
Ken (20:20):
Yeah, I think, I mean, we've talked a lot about hiring, and there's a lot of things that are out there. I think on the retention side, it's also really important with the Great Resignation and reshuffle, whatever term you want to use. There's a lot of people who are changing jobs, an awful lot of people at a record number. And I think a lot of employers feel like they don't have much control. That's kind of it is what it is. They're gonna leave, but you can do some very small things to really make a difference. Most importantly, just communicate, right? We have this mantra I've been using now where it's take notice before they give notice. In other words, take notice of your key players, your top performers, acknowledge them before they're sitting across the table from you handing you their letter of resignation.
Ken (21:04):
You don't have to have an hour-long discussion every single week, but once a month, identify your key players, the folks you really can't afford to lose. And once a month, once every six weeks, have some kind of a touchpoint, a phone call, a Zoom, a conversation, coffee if you're in the same city, whatever it is, just to kind of keep them engaged. And find out what's happening with them. How is their family? Take the time to learn about what's important to them. Don't apply a one-size-fits-all management style to all of your employees, right? That was maybe okay 20 or 30 years ago. Today, people wanna know that you know what's important to them. Some people value compensation and other people value no commute, while others want upper mobility.
Ken (21:48):
I just wanna learn different things and get a broader exposure. So you have to take the time as a leader, as a manager now, to really know your staff and then engage with them. And people are still gonna leave, right? That's inevitable. But you can really stem that tide quite a bit if you take extra time to communicate with them and stay in touch on a regular basis. So that's a trend, I think, that is certainly here to stay. It's not a COVID-related thing. It may have been accelerated by that or sparked by that, but that's just the new dynamic of the workforce today.
Lauren (22:19):
Yeah. That's so true. There's an article I read recently that talked about something like, what do employees want? You know, some sort of headline like that. And it talked about human connection. It's not always about being in the room with the senior leadership or this or that, but sometimes it's just about how are you doing, how's your family, it's building those relationships that create connectivity, right? And so just to your point earlier, it's like you said, I don't think that's COVID-specific. It's just probably more chatter right now with everything, right?
Ken (22:51):
Right. Well, the days of leading the way that Jack Welch led are gone—where you have A, B and C players and the Cs are already out, either you're up or you're out kind of thing, where you didn't bring your whole self to work as a leader, you weren't really allowed to be vulnerable. Everybody thought that was a weakness if you talked about your family or personal things, right? Said, gosh, I'm really struggling right now where things are difficult. That was the way it was 20, 30 years ago. Today, if you're not willing to be vulnerable and bring your whole self to work, and I'm not saying wear your emotion on your sleeve and air your dirty laundry, but you've gotta be willing to talk about you as an individual and your employees as individuals, as people, not just as numbers or a cog in a very large wheel.
Ken (23:37):
Those are the leaders that did a great job. There's a great book I just read by Hubert Joly, who was the CEO and really drove the turnaround at Best Buy. He was also at Gartner for a long time and at Carlson, a travel company. The book is called The Heart of Business. And it's literally around the heart, right? The people side of your people, and how important that really is and how the old mantra—that employees come last and your stakeholders, your shareholders are first, customers are second—that's all been turned on its head. You've gotta look at your employees first because if your employees are happy, then revenue, profit, happy customers will follow inevitably; it'll happen. So I'm a very big believer and follower of what he's talking about in that book.
Lauren (24:27):
Yeah. I think my husband says it's something like, it's not just about the people—it's all about the people, right?
Ken (24:34):
Exactly. Yeah. Appreciate them. It's a great way to put it.
Lauren (24:38):
Oh, that's great. Well, Ken, thank you so much. I just really appreciate your time today and sharing a little bit more behind the scenes about what you do, what's happening, what you're seeing in the market today. It's so timely with just so much disruption if you will, or just so many changes that are happening across industries. So thank you for taking the time and sharing a little bit more.
Ken (24:59):
Yeah, my pleasure. Thanks for the invitation and for the great conversation. I appreciate it.
Lauren (25:03):
Always good to see you.
Ken (25:05):
You too. Take care. Bye.
Tackling the Challenges of Hiring in the Post-COVID Market with Ken Schmitt
We talked with Bob about:
- The power of and potential issues in finding a niche as a financial planner
- How firms can use a “staff first” mentality to tackle the Great Resignation
- The issues with cryptocurrency in financial planning
About Bob Veres
Forty years ago, Bob Veres was hired as the editor of Financial Planning Magazine. Without prior knowledge of the industry, he fell in love with the idea of financial planning and started his own publication, Inside Information. As a well-respected thought leader in the industry, Bob strives to provide financial planners with the most relevant information, resources, and strategies.
Featured Resources
- Bob Veres LinkedIn
- Bob Veres’ Inside Information
- Bob Veres’ Inside Information LinkedIn
- Subscribe to Inside Information
- Attend Bob Veres’ Insiders Forum
- Bob Veres’ Blog
- Pulse of the Industry Survey 2022: Start of the Year Survey by The Ensemble Practice
- “The Problem with Bitcoin, the Soaring Cryptocurrency” by Bob Veres
- “The Great Adoption” by Bob Veres
Full Audio Transcript
Lauren (00:00):
Well, thank you so much for joining us today. I feel like you really don't even need an introduction. You're so well known in the industry and have written so many amazing articles and host a conference and are just such an incredible thought leader. So I'm really excited to hear from you today, but for those who are not as familiar with the financial planning space and some of your columns that you've written, I'd love just to hear a little bit more. Do you mind just sharing a little bit more about your background and how you got into where you are today?
Bob (00:31):
Yeah. I was hoping to get a 20-minute introduction so that we don't need be talking for 10 minutes, but obviously that's not gonna happen now. So my background really is that I was a writer in Atlanta and was hired to be the editor of a financial planning magazine. And I start out in this profession with no knowledge whatsoever, which is a scary place to start, but you get a chance to see everything with fresh eyes. The great thing about it was I could go to people and I could say, I'm a dumb journalist, I know nothing, speak slowly, use words I might understand and help me learn. And the funny thing is, this is 40 years later.
Bob (01:16):
Now I'm still saying that very same thing when I do my interviews, because you're never gonna learn all of it or even even a decent fraction of it. So that was back in the 1980s. And I fell in love with the idea of financial planning and was appalled at how it was being applied. Back then, software was being introduced in the financial planning profession. That is literally how far I go back, the age of rotary phones and the way that software is being used; you would input a whole bunch of different client numbers into the software and the software would reliably come out with a recommendation that people needed to buy limited partnerships and whole life insurance. And because the computer was recommending it instead of an advisor, it had this ring of truth to it.
Bob (02:06):
And that was really the origins of financial planning. And I spent a lot of my early time trying to bring a measure of idealism to basically a sales profession and here 40 years later, we're about halfway in. We've got a lot of people who are truly idealistic about financial planning, and we have a lot of people who see it as purely a business opportunity. So, and we can talk about that if you want, but that's how I got into the business. And then eventually I stopped being the editor of the financial planning magazine and started publishing my own newsletter. So I could basically write whatever I wanted.
Lauren (02:45):
Well, you've seen the industry change so much over the years. And I think right now is especially interesting, coming out of, well, hopefully we're all coming out of COVID, right? But there's so many changes between topics like recruiting, mergers and acquisitions, technology, cryptocurrency. What are some trends that you're seeing? I know you started to allude to that a little bit earlier, but are there any key things that we should be looking out for as we look ahead?
Bob (03:14):
Yeah. Well, there's more evolution going on right now than at any other time in my career. The profession is changing and some of it is COVID-driven, some of it's technology-driven, some of it's social media-driven. Then you mentioned cryptocurrencies, which we'll get into in a minute, but so we have all these different winds blowing around in the profession. And the thing that I talk to advisors about is you need to be riding those winds in interesting ways because they're blowing us toward the future. And the first thing I would say is a lot of people are resisting change. They don't want things, some things, to change; they're my age. And they're saying, I don't want anything to change until I've retired in 15 years, and that's not a really good way to manage a business.
Bob (04:05):
And it's not really a forward thinking way to handle things. And I might sometimes in my presentations, I'll say, raise your hand if you would like to go back to where you were 25 years ago. And very few hands go up. And I say what that means is that change has been your friend for the last 25 years. Embrace it, don't fight it. But to get to some specifics, I think the biggest and most important change has been the adoption of this technology we're using right now, this ability to meet with clients remotely. And what that means is basically that if you could meet with clients remotely, you can work with clients anywhere. You don't have to be confined to your 50-mile radius of your office area. But it also means that every advisor in the country is able to compete with you in your backyard.
Bob (05:03):
And so what does that mean? Well, it means if everybody's competing with everybody else, anywhere in the country, then there's really two strategies that could conceivably win under those circumstances. The first is you could be low cost, the low-cost producer, the low-cost provider of services. And you could be lower cost and somebody else could undercut you. And then somebody else could undercut that person. You could undercut somebody. And what we're doing is spiraling down to zero, where you offer your services for free for roughly as long as it takes for you to go bankrupt, which is not, I think, a great business strategy. So looking for an alternative to that not great business strategy, the only other way to manage that emerging competition, that emerging global competition, is to have a niche, to have a specialty, to have a specialty client.
Bob (06:01):
Niche was a pretty good idea. It was a good business idea for a while. Now it's a necessity. Now I don't say it's a necessity this very moment, because I think most advisors haven't really started marketing themselves globally yet. But those who have are really well off when they have a specialty, when they work with a particular type of client. At the last presentation I gave, I invited the audience to imagine somebody who's coming out of residency, a doctor coming outta residency, and they've got a whole bunch of questions and the questions are not confined to will I be able to retire? And do I have the right insurance coverage? Their questions are things like where should I affiliate? Should I start my own practice? What do I need in my practice? What kind of insurance will I need in specialized doctor-related insurance?
Bob (06:54):
So what's the word? Liability insurance. What should the office look like? How should it be staffed? How much money do I need to invest in it? And when can I expect to start turning a profit and what are the banking arrangements? Where can I get the loan for this? Those are very difficult questions for somebody coming out. And so I'm looking around for an advisor, right? And I find one; he's right next door, literally right next door to my apartment is this advisor. And he provides comprehensive financial planning on a fee-only basis. And he's a fiduciary, or she's a fiduciary. And somebody way over on the other side of the Mississippi specializes in doctors coming out of residency and has helped dozens of people answer all those questions this physician has. Who would you go with?
Bob (07:45):
Who would you work with? So geography means nothing anymore. And we're only now starting to figure that out, what I think is the biggest challenge for most advisory firms. There are two implications. First is that having a specialized clientele means that you are gonna be more efficient. When I've talked to business consultants—Tracy Beckes was the person who told me this years ago and she was right. She said the single most important thing that I notice for the most profitable firms in the business is that they have a specialty clientele. I said, well, wait, what if they work with not like poor people or what if they work with the homeless or something. She said it doesn't matter. She said the efficiency you get working with people who, when they walk in the door, you know their challenges, immediately trumps everything else in terms of profitability.
Bob (08:44):
And the second thing, and this I think might even be more important, is that when you have a specialty, you can deliver much more valuable advice than you ever could. When you were reinventing the wheel every time somebody walked in the office, when you offer generic financial planning and manage assets for a fee, there's a value to that. No question. But the other more specialized advice is much more valuable. And I think we're finally getting to the point. I remember, years ago, people would say nobody will pay for financial planning advice. And that was true when most of what you were offering could be done with a spreadsheet. It will not be true when you're offering that very specialized advice to specialized clientele. All of a sudden people will be willing to open up their checkbooks and pay for financial planning because it'll be that much more valuable to them in their lives.
Lauren (09:41):
So, Bob, we have some clients where we've been encouraging them to pick a niche, or even we talk a lot about firms’ structure, right? There might be that umbrella target. And then there's advisor groups, if you will, that have a specific vertical, but sometimes I see situations where leadership is afraid to be able to pick a target. What would you say to owners who just wanna kind of market to everyone?
Bob (10:09):
You know, I'm a big believer in saying, just get over it. But I don't think that's very valuable consulting advice, just get over it. Surprisingly, not everybody takes my advice when I just use those words, but you know, the danger is that you'll lose your existing clients and your existing business when you decide to specialize. I mean, the way to specialize is you find people you really enjoy working with, you find what they have in common, and then you try and replicate that client base and increasingly focus your services on those people. And, it's a tried and true method, but it does leave out the other 80% of your clients. But when you decide to specialize, they'll notice when you put in your website, we now call ourselves the doctor solution or something. You know, the people who are not doctors are gonna say, wait a minute, what was this? Your website? What are you doing again?
Bob (11:05):
And so what you do is you go back to them and say before you put that on your website, you say we're creating a specialized service for doctors, and we're hoping to do a really good job with this. But you've been really valuable to us. We really enjoyed working with you. And would it be possible for you to continue working with us as we go through this process forever. We don't ever wanna lose you as a client. We just want to be working more and more and more with this specialization. The danger really is when clients say they're gonna leave me behind. And so I'm gonna break up before they break up with me, and everybody who's ever been in a relationship understands that dynamic. What you wanna do is preempt that dynamic. You wanna say you are a special client. We want you to work with us before the suspicion grows that there's gonna be a breakup. Yeah. And then you maintain your client base.
Lauren (12:06):
Yeah. Honestly, in the firms that we've worked with where they've decided to specialize, and while it does not align with their current base, it hasn't necessarily turned away current clients because there's that trust that's already been built. But I think that you make a very valid point about that transparency upfront that helps to set the tone moving forward.
Bob (12:26):
Here you've noticed in your consulting that advisors never have as much confidence in the actual solidity of those client relationships. Clients always underestimate the power of their relationship with their clients.
Lauren (12:42):
Yes. That's fair. I think very accurate as well. Now we also have some firms we've worked with where you mentioned earlier, right? We're in this virtual world. And so I've had some firms we've worked with, especially those that work with more of an ultra-high-net-worth client. And they talk about the onboarding process and they've entertained buying iPads. They wonder if they should send those out with all of their firm information. We talk about the metaverse and how that could be changing the future and even potential engagements. I think we've all been surprised about Zoom, right? And how we've been able to have these kinds of conversations like we're having now. What do you think as we move forward will be that kind of dialogue if we are kind of flattening the field and it's not so geographic specific?
Bob (13:28):
I'm gonna give you an out-of-the-box answer. But my facetious answer is I really think this social media thing is gonna go away pretty soon. And, I said that about the internet and I think I was pretty much right about that, right? The internet was gonna go away and not be the out- of-the-box answer. I think the communication technology, if you will, the social aspects of the technology, are really more of a marketing thing than they are a client relationship thing. I mean, the Zoom meetings are a client relationship thing, but what I think that the big change right now is it's not how we'll meet with clients. I mean, we'll meet with clients on Zoom, we'll meet with clients in-person. They'll probably wanna meet in-person the first couple of times if they can, if they live in a proximity; if not, you know, we're communicating just fine at this very moment. The big change, I think, is that most advisory firms, they put on their website a picture of themselves. And it looked like a walk-in bank and they put pictures of their staff and their head shots, very professional. And the old paradigm was we wanna look professional and the paranoia of advisors was we're not professional enough. People don't think of us as a real profession. I think we've passed that hurdle. And now what I think the paradigm is we wanna be accessible.
Bob (15:03):
And accessibility is posting things on social media that show who you are and what you're about and where you live and what you're doing. And maybe some children, maybe some dogs; I’m not opposed to a picture with your family and a dog looking proudly into the horizon. So candid shots. The firms that seem to me to be the most effective marketing right now are using these candid pictures on their website. And they're also inviting people. Each one of their profiles invites people to follow them on Twitter or Facebook or something. And if I'm a client, or a prospect I should say, and I'm looking around at different firms, I find this one firm. And they look like walk-in banks, they have suits and ties. And they look a little bit smug and professional, and I'm thinking, wow, those guys look really impressive. They could steal my money and I'd never know it.
Bob (16:02):
And this other one, boy, that person looks like a lot of fun. You know, I'm gonna check 'em out. And then the first one that looks like a walk-in bank, they're not on social media. What are they hiding? They're out there. This is who they are. This is what they do. And that may turn off an occasional client. But if you've got everybody on your staff promoting themselves in their own way and being out there, there's gonna be a point of connection with just about everybody, I think.
Lauren (16:30):
Yeah, I agree. It comes down to trust, right? Because as you mentioned earlier, it can be the only fiduciary, comprehensive financial planning, all these kinds of things. And then if you've got a niche, your differentiator could be that particular target, but what it is at the end of the day, it's about that relationship and that trust and how you can build that authenticity through being you, right?
Bob (16:55):
Yeah. Authenticity is trust these days, I think.
Lauren (16:59):
Yes. I agree. And I think, especially in this digital world, where people are checking you out before they're gonna make that phone call. They're gonna review your website. They're gonna look at LinkedIn, these kinds of places. And that's a little bit of an indicator of who you are and what you'd be like to work with.
Bob (17:17):
Philip Palaveev of The Ensemble Practice just did a research study. And I talked to him on the phone about it. And the first thing they asked clients was where did you find your advisor? And many of them say through a referral of one sort or another, my accountant, or my friend or my family or whatever. And so you would think that it was all referral marketing, right? But then when you got deeper, there were follow-up questions. How many people did you consider? And the answer, I think the average answer was four. And they checked every one of them, and then another answer was they work with people like me or they couldn't find those things out without doing a web search. And so, maybe they did get a referral. Maybe they were told, go see my friend Joe, he's a great financial planner, here's his number. But there was a certain amount of checking out for every one of those referrals. And so people who ignore social media and say I do referral marketing, people who ignore the value of their website are probably not getting the value of those referrals. It’s probably much more hit and miss referrals they're getting.
Lauren (18:40):
That's fair. So I'm gonna shift gears a little bit here. So, we'd like to talk a little bit about the Great Resignation going on. There's also a huge trend. Well, I shouldn't necessarily say trend in this industry cause it's been a long-term challenge about recruiting and hiring, all of these types of things. And we've talked just recently about really positioning of the structure, the target market, if you will, and marketing terms and all these things, they basically tap up to the big picture business strategy, right? Are we gonna merge, what does our recruiting structure look like? Who do we wanna hire? And I'd love just to hear your thoughts about what's happening in the industry with those pieces that are a little bit louder now perhaps than they were even a few years ago.
Bob (19:29):
The big picture, your story of course, is that advisors who are on staff and operations people on staff have a lot more options now than they ever did before. And when you give them options, they can work remotely. They've been working remotely and had time to consider their current firm. And they got to see the character of their current firm: Are they trying to micromanage me at my kitchen table? Are they gonna force me to come back in the middle of the pandemic? And having those options and having more data and more concern about, I've got a life and this is part of my life, a big part of my life. What am I gonna do? So what everybody's calling the Great Resignation is really a great reassessment.
Bob (20:17):
There's a lot more reconsidering where I am right now and noticing that I have a lot more options. And so the obvious solution, once you frame it that way, the solution is obvious. You need to create an environment that people will enjoy working in where there's a commitment to the career development of your people, where everybody is treated like adults, like valued members of a team and where there's a certain willingness to let people do their jobs without being told what to do and how to do it, if that makes sense, a certain autonomy that needs to be. And don't forget the salary thing, the pay and compensation studies and the money; the salaries really haven't moved much in the last five years.
Bob (21:16):
And now that we have raging inflation and people have more options, there's probably gonna be a demand for higher salaries. And the firms that refuse to pay that are the ones that are gonna lose out on the best talent. So I've been writing about firms that have a staff-first mentality. And that sounds like heresy. The first time I wrote about that, people were saying, well, Bob, the clients come first; don't you understand that? And the truth is the clients don't always come first. If a client is an asshole to your staff, your staff comes first. So what the staff-first mentality really means is we are first and foremost committed to our staff, people being the best people they can be in the context of the profession, and when they are that, and when they're allowed to excel, they will deliver exceedingly good service.
Bob (22:12):
One of the firms I talk to, they take five hours a week of training and moving your firm forward, coaching, mentoring. Instead of a 40-hour week, it's a 35-hour week. And I said, well, that probably means production goes down, right? And he said they work harder in those 35 hours than they ever worked in the 40; they get more done in the 35 than they did before. And I tell people, I get more done by noon every day than most people by 12:15, 12:30 or so, maybe 12:45. So the point is, people respond to certain things that I think we all know about. The question is, are you willing to offer those things?
Lauren (23:00):
Yep, that's fair. If you can take good care of your people, they're gonna take good care of your clients and help everyone to flourish.
Bob (23:07):
And you will win the Great Resignation environment. People will leave other firms and come to you and they'll be good people.
Lauren (23:17):
Yeah. That's fair.
Bob (23:17):
Because you're only hiring good people, right?
Lauren (23:19):
Yeah. I think it comes down to values. You're upholding those firm values and that pulls through to your team and then that will pull through to your clients and all of that.
Bob (23:30):
I know that a lot of advisors are much better at technical stuff than they are at people stuff. And they sometimes fail as a manager. I tell people two things. One is, if you're a really good technician, you need to hire somebody who's a really good business manager. There needs to be the visionary and the implementer. And the implementer is the person who handles that staff environment. And the second is you need to turn over a lot of the decision-making to the next generation and let them create the firm that they ultimately want to inherit. Don't stand in their way. And guess how many people take my advice? There was that one guy in, I think he was in Iowa, and I'm not sure about that person in Rhode Island. You know, it tends to fall on deaf ears because a lot of people are just not willing to change.
Lauren (24:22):
That's easier said than done, right? I think that's right. And contextually, you don't always realize how intrinsic that can be into just the day-to-day and minute-to-minute decisions.
Bob (24:35):
It's change. And it sometimes goes against the mindset that brought somebody into the business to begin with. I wanted to be a technician. I didn't wanna be coddling all these damn people.
Lauren (24:46):
That's right. But it's important to recognize that. And then delegate or die if it's not the right fit. How I sort of like to describe it to people is, if you've got an orchestra, each person has their own specialty and it's the music that comes together where you see you've got something brilliant. But without the delegation, without building the team, it can fall flat.
Bob (25:11):
So that's a good way to do it. If you're in your consulting area, you're getting people to change. You're doing better than I am with my writing, I have to tell you.
Lauren (25:18):
Well, it's one of those things where I think you can all throw things out there, but it ultimately connects to the business strategy. And that decision-making and the buy-in from the team. So it's like I said, easier said than done. So, I can't let you off the hook without one more question. So cryptocurrency has been a trend. I feel like when we talk with firms, it's more of a shiny object for clients. And so they are having a lot of inbound requests around crypto in general. And, I’d just love to hear your thoughts on this. What does cryptocurrency mean for firms in the future and what are you hearing and seeing?
Bob (26:00):
I really think cryptocurrency is the most vexing issue facing financial planning right now. So of course I've been asked for my opinion and you really have to look at what cryptocurrency was intended to be. Let's start with Bitcoin, because I think that's kind of where clients are asking. Where in any of the manifestos written about Bitcoin, where in any of the intentions for what Bitcoin was supposed to be, did it say that it would be an investment? Or did it say that it would be a get-rich-quick investment? Bitcoin was created to be an alternative currency that could not be debased as a medium of exchange. And the idea behind it was to replace what is a very effective but very inefficient system of fiat currencies and nowhere in there was there any mention, and I don't think there was ever any intent, for Bitcoin to be a 15% allocation in an investment portfolio.
Bob (27:13):
Now, the reason Bitcoin and some of their cryptocurrencies are being discussed in that light was because Bitcoin unexpectedly became incredibly valuable for no reason anybody I know has ever explained. And so the first thing I would say is that I don't think we're talking about an investment. So we'll start with that. I think we're talking about something that could conceivably replace the global banking system, but isn't there yet. The second thing about it, though, is that I think we all know about investments where all the money that was going to be made has been made. So, a mutual fund takes off and it rockets and it gets great five-year returns, and it's got about 12 billion in it right now. And people pile in expecting it to go to the moon the next five years.
Bob (28:06):
And it's become an index fund. It's the same thing with Bitcoin. I think most of the money that is going to be made has been made. The Johnny-come-lately who comes in after there has been a huge windfall, never experiences anything remotely like the initial windfall ever; in all the time that I've been watching investments that has never happened. And I'm just guessing that it won't happen with Bitcoin. So then the third issue, and I think it's an important issue, is what is behind any of these cryptocurrencies? Who stands behind them? And of course the answer is nobody. And so you have a question of will these go down to zero. And I think that it's such a really interesting idea that I suspect that some cryptocurrencies will survive and will become some kind of a standard, but the question is, do we know which ones? I go back as far as Lotus 123, which was the standard in spreadsheets, and everybody assumed that would be the survivor.
Bob (29:14):
And it wasn't. There was Ashton-Tate that had its own database program that was the market leader for years. And the company disappeared. So if you own crypto as an allocation, you probably should diversify. So what does that mean when you diversify? Well, there's a non-trivial chance if you own nine or 10 different currencies that seven or eight of them will go to zero and disappear and no matter how much return you get from the other one, two or three, it's not gonna make up for the other investments going to zero. So I would suggest that if you wanna speculate, if you wanna go with it, the play money that advisors are allowing their clients to do, maybe that's all right. But if you're giving advice on something that probably shouldn't be considered an investment in the context of their overall financial plan, where does this fit? It's three times as volatile as any stock. It's not backed by anything. And so if you’re set with your financial needs now, we talk to you, then maybe this is something that you can consider, but if you're not, then a little more safety might be called for. That's the sum total of what I think about the cryptos.
Lauren (30:44):
Wow. Well, thank you so much for your time. I feel like we could, as I said before we started the call—we were chatting and discussed that we could probably be here for a very long time.
Bob (30:56):
I think it’s good that we finish this asking. I'm pretty sure they're ready to get on with their lives.
Lauren (31:01):
I could keep poking you with more questions, but, I appreciate your time today. Thank you so much for sharing a little bit more about not only your background, but insights on the future of the industry at large. I appreciate your time.
Bob (31:14):
All right. Well, thank you for having me.
Lauren (31:15):
Absolutely. Thank you, Bob.
The Trends Influencing Financial Planning Strategies for the Next Decade with Bob Veres
From a young age, Danica Castro knew she wanted to work directly with people. It’s what originally drew her to the hospitality industry and pursuing a degree in hotel and restaurant management. In her pursuit to live a purpose-driven life, she’s shifted her career and industry to be able to work in a role that values relationships.
Now, she’s able to use her passion for connecting with people in her position as the new brand coordinator at Out & About Communications.
Taking on a New Challenge
After obtaining her degree from Northern Arizona University, Danica quickly realized she could not work a desk job that requires little interaction with others. This is how she found herself in the chemical sales industry, working directly with clients to ensure their needs were met. After 14 years in this role, she decided it was time to change gears but knew she still needed a position that valued relationships. After her first interview, Danica knew Out & About was the place for her to be able to do just that.
As a lifelong learner, Danica was ready for a new challenge in an environment where every project and client is unique. As a relationship-driven person, she appreciated joining a team that provided her support to dive right in. With Danica, it all comes back to a foundation of trust and connection. She’s been able to build this not only with clients but with the rest of the Out & About team.
What You Can’t Tell Just From Looking at Her
Danica tries to embody the saying, “Do something today that your future self will thank you for.” In her life, this led her to embrace amazing, once-in-a-lifetime opportunities such as running with the bulls in Spain, while she was studying abroad. Despite the crowds, being alone, her mental and physical fatigue, and the paella she consumed the night before, she knew she was able to persevere and achieve her bucket list goal. To this day, she is grateful for taking risks and experiencing all that life has to offer.
We’re excited to have Danica join us! Learn more about her and the rest of our team on our team page.
Meet Danica, Our New Brand Coordinator!
From Consulting to Finding a Team
When he started his career in Singapore, Jimmy worked in public relations before eventually transitioning to the marketing world. From there, he was involved in several major brand launches. He decided it was time to take what he learned working with major corporations to instead help small businesses reach their goals. When he moved to the United States in 2018, he launched his own marketing consulting service.
Through his consulting work in the industry, Jimmy kept hearing about Out & About. In fact, he heard about the team and its positive energy before he knew much about the company. When the time came, he felt it was the best possible fit to make the transition from private consulting to working on a team. He’s excited to contribute his knowledge and skill set to develop strategies for clients and Out & About to reach new levels.
What You Can’t Tell Just From Looking at Him
Jimmy started his career in the fashion and beauty industry. That experience fueled one of his personal passions: fragrances. Now, he owns over 60 bottles of different perfumes and colognes. Jimmy enjoys exploring different scents and plans to keep growing his collection!
Meet Jimmy, Our New Marketing Director!
With a clear purpose and influential industry leaders behind him, Knut Rostad founded the Institute for the Fiduciary Standard in 2011. Now, as president, he provides insights into how the institute began and how it has evolved over the years in terms of community and message.
In the interview, we discuss with Knut:
- The mission-driven beginning of the institute
- The importance of creating a support network
- Why the institute now focuses on “plain language” in messaging
Featured Resources
- The Institute for the Fiduciary Standard
- The Institute for the Fiduciary Standard LinkedIn
- Fiduciary Law in the 21st Century by Tamar Frankel
- Jack Bogle’s Legacy
- Real Fiduciary
- Practices for advisors and planners
- Fiduciary Common Sense: Why consumers should hire a fee-only advisor or planner
To learn more about our On Purpose guest, please visit Knut’s LinkedIn page. If you enjoyed this interview, learn more about the programs the institute offers advisors on its website.
Full Audio Transcript
Lauren (00:00):
So let's go ahead and dive in. How did you start the Institute for the Fiduciary Standard? What sparked this idea, and how'd you get it going?
Knut (00:12):
Well, let me start with what sparked the idea, because it took a little while between the spark and the ignition, shall we say? I came to the world of investment advice sort of mid-career, this was over 20 years ago. And I came at it through a wonderful advisor in Northern Virginia by the name of Don Rembert, who's now 83, I think, and is somewhat retired, but he'll never retire. He was one of those fee-only planners from literally the mid-’70s who was out advocating for fiduciary advice and as a matter of course, he would walk around with a copy of the Uniform Prudent Investor Act, which was a pretty darn good sort of summary of what it meant to be a fiduciary. And so that's what he did. And I started working with him as a marketing advocate. Frankly, he would give it away to anybody who would take it. So that's what started it, literally in the late 1990s. And we did different things over the next several years before we actually formed, 10 years ago, but that was the spark.
Lauren (01:52):
Wonderful. And then now that you've got it going, how are you helping to live that out? You know, what sort of things have you put into place to enter that space?
Knut (02:03):
Well, I'll get to that in a second, but we are above and beyond public policy entrepreneurs, and you understand by definition what it means to be an entrepreneur, because that's what you do. And so as a part of that, timing is really important. And the institute, actually the beginnings of it, came two years before. Now we're in 2009 and in 2009, in June of 2009, the Obama administration Treasury Department said that all brokers should work at a level to meet a fiduciary standard. And that was the beginning of a group before that said that there should be a special interest group, a single interest group that did nothing else except to educate and advocate for fiduciary practices and principles for investors, to investors, to advisors and to policymakers.
Knut (03:20):
And so our beginning actually was in June 2009. And when several of us got together at a conference and just sort of said, you know, there should be a group that does this, and we formed it. And the point of that little bit of the story is that it is timing. And in 2009, with the new Obama administration, fiduciary was in the air and was much talked about in a sense, much more talked about then than it is now. So that was the real beginning of it then.
Lauren (04:01):
And how do you feel you've been able to keep that alive?
Knut (04:07):
You know, it’s a lot by luck and a lot by my background, an undergraduate degree in political science and then a graduate degree in business, an MBA, and part of marketing 101 that I recalled was about the importance of starting a venture with a purpose, with a clear purpose, which of course is very much in the air now, but also the significance of having individuals involved whose very stature in position and reputation spoke volumes and sent messages.
Knut (04:54):
And we were very fortunate that very early on, I literally made a cold call to the office of John C. Bogle, the former chair of Vanguard. And I said that we had started this group and I wanted to talk to him about it. And there's no other reason for him to take my call because I wasn't in his Princeton network or his school network, but he said I'm giving a speech in two months in Washington on fiduciary, come up to my office and let's talk. You know, it sounds happenstance and in a sense it was, because that conversation started a relationship that ended until he passed away two years ago, excuse me, three years ago. And he served on our advisory board, but the point is, we were able to attract real luminaries in the world of investing.
Knut (05:54):
And one of our first events was to put on a day-long program in New York City at the museum of finance on the legacy of Jack Bogle. And we had the most respected academic and former regulators there with us, including Paul Volcker, who was a giant in this world. And so the answer to your question, and probably a little bit more words than you wanted, was we were fortunate to get certain people involved that sent hugely important messages about who we are, why we existed, and what we wanted to do. And so that was extremely important. And when you start there, putting the pieces together becomes a whole lot simpler, frankly, because when you've got individuals like that involved, they have an understanding of what you are trying to do without necessarily knowing who you are—getting behind that mission.
Knut (07:18):
So anyway, that was the beginning. And Jack served on our board of advisors for years. He joined us at meetings at the SEC and it's hard to appreciate sort of how much he meant to the world of investors. I mean, there's no one like him in the industry today, frankly, and partly that's understandable because he was a product of his time. But anyway, that was extremely important in terms of getting introduced into the marketplace and people understanding who you were and what you were doing.
Lauren (08:17):
Well today, even, you look at your world of advisors and the folks that you have just on your website. The connections you've been able to make—you used the word luminaries earlier, right? These are names that carry weight in the industry, have influential voices. So it's been very impressive how you've been able to pull that group together and how you go about it.
Knut (08:40):
You know, I say it's luck and yes, it was, I mean, Jack Bogle didn't have to take my call 12 years ago. I don't know how things would have gone if he didn’t; things would've been very different, frankly, but he took my call. We met, we had the event, and it turned out by most people that were there as being a very good event. So that was the starting point. Now today, fast forward, of course, you know the field and the world has changed. And we're very fortunate to have individuals like Luis Aguilar, only the third SEC commissioner selected by both parties in this political world, but he genuinely is a fiduciary in terms of his advice.
Knut (09:47):
And so, we have Tamar Frankel. I know most people say, well, who's Tamar Frankel? Well, I call her the godmother of fiduciary law in the Western world. And she frowned at me when I said that, because of who she is, she truly is humble. Tamar Frankel was born in 1924,25 and grew up in Israel. She started out there, which was pretty tumultuous, and came over here, I think in the late ‘60s and started her academic career, her first job, and talk about humility, she was the first woman professor of law at Boston University.
Knut (10:40):
And she was put in the basement of the building because she was a woman. I've only known her for 12 years; I just feel fortunate to have known her for this long, but she's extraordinarily humble and does not have an iota of bad feelings because she was put in the basement. She said, Knut, this made me closer to the books and it made my research easier. She always saw the positive, no matter what. So I just feel so fortunate to have had a little piece of experience with her because she's on our board and she calls me about every other week if we don't speak and asks, Knut, what can I do to help you?
Knut (11:40):
She is the leader of fiduciary law in the Western world. And she's asking me what she can do to help me. And it just makes me feel just unbelievably fortunate. So we have had those individuals. Phyllis Borzi, different category, but the same thing. She was put on this earth to serve investors, after she was an English teacher. I said, Phyllis, that's one of the reasons I love you, because you know how to write plainly and clearly, and so many people in the world of finance don't or can't, or either of the two. So yes, we are very fortunate. And when you have leaders like that associated with you, it makes attracting other individuals, other firms, that much easier, because that's a screen of sorts.
Knut (12:49):
So anyway, this is at a strategic level in terms of communications. What does it mean to have Frankel and Dorseyi and Aguilar associated with your organization? Well, it means that you are extraordinarily fortunate and that's what I feel. And so that's what has been a huge part in attracting others, our advisor members who have become real fiduciary advisors and the others on the advisory board. And I haven't even mentioned Ron Rhoades. There is no other person today who has written more and understands better as both an academic scholar and as a practitioner, he also is a practicing advisor, than Ron Rhoades, on what fiduciary means and what its background is. Really, no one. And we've been fortunate to have lots of scholars involved in our programs. And so we just feel very, very, very fortunate.
Lauren (14:07):
It's a very impressive group. So I think one of the hardest things to do, right, is to build that center of influence, or that gravity, to have a board with talent that can help to challenge the organization and push it forward as it aligns with the mission. And so it's impressive to see what you've been able to build.
Knut (14:27):
Well, actually you hit on something that is probably another side to this. Notwithstanding the luminaries, there is still the basic organizational task, as you were referenced, as you allude to, of building an organization and building out programs and events and what we're going to deliver. Sometimes some people may think that we don't need any help because we've got all these luminaries involved. When in fact, we are representing a view of advice that only a minority of firms frankly adhere to. And so we are a minority and we understand that in this larger world of broker dealers and larger world of dual registrars, our message of fiduciary, I think, strikes some people as being too, shall we say, old fashioned? And in a certain respect, they are correct. Because you, by definition, are avidly paying attention to what is happening in the industry, you know traditional lessons on fiduciary are not the topic de jour. It's Robinhood, and what does Robinhood represent? It's the other end of the spectrum, frankly, but, uh, anyway,
Lauren (16:32):
Well, I've seen a little bit of the interaction when you had rolled out the fiduciary standard best practices, that code of conduct and partnering with RIAs, and was able to see, kind of be read into, or see a bit of behind the scenes about that rollout, right. And the messaging, you talked about that earlier, you all have that locked in, right. You have the press releases ready, you've got the communications ready, you've got people teed up. And I'm sure that probably those best practices also just come from knowing communications and messaging, having great people around you, but how do you ensure that messaging is uniform across the board? And that maybe it doesn't have that kind of older feel, but if there is something that's really invigorating and holding people to that higher standard and those best practices, I'd just love to hear a little bit more about how you all think about messaging and communicating as you talk to the broader audiences.
Knut (17:38):
That is a really good question. And, I guess it's easiest for me to think about it in a global perspective, as I have tried to become better at our messaging over time and what I mean by that is I have a much greater respect for sensitivity for what we learn from the plain language experts. And so, this is not per se messaging, but it is such a key piece of it in the world we work in that is dominated by regulatory speak. And which sometimes almost seems to be the opposite from plain language, frankly. And so it's sometimes not stated that our outreach to investors or advisors and regulators, those are our three main audiences, is driven by the idea that the ordinary investor on Main Street can understand what we're saying.
Knut (19:11):
So what that means to us is if you look at our real fiduciary practices, which are on our website, now they are written so that an investor could read them and actually understand what they mean without having to hire an attorney because they legal and this always made sense to me, but it makes more sense to me today than it did five years ago, because I realized how much out there, and you realize this in your role as a marketing expert, how much content out there in the world of investing is not made to be understood by the ordinary person on the street, frankly. I think it's not made for that. And so when we look at our real fiduciary practice, when we look at our common sense, fiduciary common sense on our website, again, we have tried to make it understandable.
Knut (20:21):
And so this may not be exactly what you were looking for, but that sort of drives our messaging all across the board in terms of what is the common denominator and it's making it understandable to the ordinary investor. So the whole issue from a regulatory point of view, and I don't know how much of this you interface with, the whole issue from a regulatory point of view, the big problem with regulation and retail investors is they're confused. That's sort of the operating premise. And I say, no, that's wrong. And we've written extensively on why this is wrong. What is true is that the messages they get are confusing and that's a different take on it. And so the problem is not that per se, investors don't understand, it is per se that the message they're getting is confusing.
Lauren (21:29):
You're right. Some of the hardest things to do is make things simple. Your thinking to make things simple can be very challenging. But that is, I think, where you actually get traction, and you can get going with that. So it's exciting. So there are some themes, really, around the essence of building an all star board, right. People that you trust that you can turn to that can help move things forward. And then in doing so, as you're moving forward, there's a unified front on the simplicity of the messaging. So that if someone were to pick a piece of paper off the ground and they were to read it, they would at least understand what was going on. And it wasn't totally out of context.
Knut (22:14):
Yes, that is exactly it. And as I say, I didn't appreciate when we started how important that piece is to what we are doing, what we're aiming to do, but it is, it absolutely is. As I said, I didn't appreciate how much I think investors are given a bum wrap in the industry by many people because they're just assumed to be confused about everything. And so almost why bother even to try to communicate with them. And I think that's a bum wrap, but I think more basically, it's a serious problem if our assumption is that our major audience of investors doesn't understand anything.
Lauren (23:11):
Yeah. Be able to digest it to make sense for decision-making.
Knut (23:14):
Exactly. Exactly.
Lauren (23:19):
Well, you're doing powerful work. And like I said, being able to see a little bit of behind the scenes of some of the rollout, and then also just publicly what you have on your website and the connections you have been able to build, and the work you're doing. So what is it like on a day to day? And what's next for the institute? What do you see on the horizon as key?
Knut (23:43):
Well, for focus areas, after just talking about how important it is to aim our messaging for the ordinary investor, I'll say that our strong point has not been frankly, to get out and reach the ordinary investor. It's not just because that's a massive audience, and again, this is your bailiwick now, not mine, frankly. There are lots of ways to get to smaller parts of this with the world of social media that are less daunting than they were before social media, frankly. But we think that we've done fairly well aiming and getting our message across to regulators and policymakers, those who are interested in our message. And we think to some degree that we've done the same with advisors. We need to find ways to do the same thing to consumers, because that's where the action is. And, again, this is your bailiwick. So I'll let you finish this point in terms of the importance of getting to the consumer audience.
Lauren (25:03):
Well, the masses are always hard, right? But I think you have to sort of start at the core. In those conversations and being aligned there, which is impressive to see the work that you all have been doing. So that's sort of the next path, opening up that channel sort of behind it, the folks that may be more familiar with it, the policymakers, the RIA firms, etc. And then exploring next steps to more of the public information of what it means to be a fiduciary.
Knut (25:36):
Right. We stand back and the way that I frame it is why should an investor or consumer, because my financial planning, friends remind me that in the world of financial planning they think of consumers more than they think of investors because of when you, and again, you know this extremely well, when you look at their array of services, the investment part of it is just one piece of it as opposed to everything else. So getting to the broader audience of consumers is the key challenge. And that's fair.
Lauren (26:15):
All in due time, right?
Knut (26:17):
Yes, all in due time, but I don't think I've responded to part of your question. We stand back and say, why should a consumer care? Why should the consumer think it matters that they hire an individual who is a real fiduciary that practices as a fiduciary, as opposed to those that don't. So that's where we start the process from, thinking about how it is that we can inform consumers of that answer, that question, why they should care. And then, what is it that makes a fiduciary advisor different from those that are not fiduciary advisors and that's what it comes down to. And so that sort of is the focal point of our thinking about messaging for consumers generally.
Lauren (27:13):
Yep, that's fair. And getting that education out into the world in a digestible way as we were talking about earlier, too, right? Where it's an engaging way and it sticks. So, very good. Well, I appreciate you sharing a little bit about how things got going, being able to build the board, and where they are today and where they're going. Any other thoughts that you would like to share?
Knut (27:42):
Well, I guess in terms of other segments or other places that we'd wanna get more involved in, is the area of students who are studying to become financial planners. We have had contacts with a number of the programs around the country, but we haven't done enough to formalize those relationships and to really see how we can help these programs in their educational process by sharing the content and the expertise and the individuals that we have involved in the institute. So that's another area that we want to pursue.
Lauren (28:33):
Mm, interesting. Well, I'm excited to hear a little bit more about it too, and I think you all have done an amazing job. You're talking about the kind of those guidelines that were released from the various RIA firms, but some of that messaging and arming them with the communication so that they can better educate their prospects and consumers in general. And then if you're thinking about the marketing hats on that funnel, they're a little deeper in the funnel, those prospects, because they're already having that conversation with the advisor, but how do you talk to kind of that top with the funnel, your general audience about this and what they should be looking for, if they're looking for an advisor to work with so that that's not off the radar and they can ask those questions or they know to ask those questions when they're finding the right match. So, very good. Well, again, thank you for your time. Really appreciate hearing a little bit more behind the scenes, and we'll make sure to include links to the website and the other resources as well below.
Knut (29:33):
Excellent. Well, listen, thank you, Lauren, for your interest in what we're doing. I really appreciate it. And I look forward to keeping in touch as we go forward.
Lauren (29:42):
Absolutely. I'm looking forward to it as well. Have a great night and we'll be in touch soon.
The Power of Community and Simple Messaging to Build the Institute for the Fiduciary Standard