Steve Seid:
Welcome to The Whole Truth. We are really excited because our guest today is Mary Mock. Mary is an executive at our firm. Prior to this, she was one of the most successful wholesalers we have had at Touchstone.
Kurt Dupuis:
And just a quick refresher on Supernova. If you listened to our series on Building a service model we focus on what we described as the “Standard case.” Whatever number of households you have now, whatever your book looks like: How can we build a minimum standard of care for those clients. Well, Supernova is different. It’s a way to really think about right-sizing your book. To be able to deliver a superior level of service to every household on the same level. You can’t do that with 250 households per financial professional. It just doesn’t work. And the underlying key is that it’s all about growth. Because a funny thing happens sometimes when you right sized: you’re in a much better position to grow. And do so with the right clients.
Steve Seid:
As always you can reach out to us at thewholetruth@touchstonefunds.com. Please also subscribe on Spotify, Stitcher, Apple Podcasts, or wherever else you get your podcasts. So without further ado, here’s our conversation on Supernova with Mary Mock.
Disclosure:
The views expressed herein are those of the participants and not those of Touchstone Investments.
Steve Seid:
And welcome everybody to The Whole Truth from the Bay Area California. I am Steve Seid and I'm joined as always, by my partner, my friend, the man Kurt Dupuis. How are you, Kurt?
Kurt Dupuis:
Seid, I am doing better than I deserve.
Steve Seid:
We're really, really excited to have Mary Mock on the show. She is a fireball of energy, ideas and positivity. She may be the most likeable person I know. A woman who makes everyone around her better. She's had and continues to have a monumental impact on the careers of Kurt and I and I am 95% positive that the movie Something About Mary was written about her. She is Mary Mock, welcome.
Mary Mock:
Oh, my Gosh.
Mary Mock:
Well, thank you both so much. I am both not deserving of that, but so very appreciative. You guys are the best.
Kurt Dupuis:
Well, so let me give some backstory on you two, since neither one of you are going to do it yourselves. And the backstory is that what we do as a firm around practice management has really been spearheaded by two of the three people that are on this podcast, and you could probably guess which two those are.
Kurt Dupuis:
So, if you go back a handful of years, and these are my words, not anybody else's. But it's taking a little bit of the mad scientist of Mary with some of the tech savvy and process oriented thinking of Seid and put them together, which is what we call the Practice Analysis Review today. So, something that has no parallel in the business was really the brainchild of you two guys and that has set our firm and definitely my career on a different path, which in some weird familial way is the birth of this podcast.
Mary Mock:
So, am I allowed to jump in now?
Steve Seid:
You can jump in whenever you'd like.
Mary Mock:
I'm going to, I think. So that's actually really interesting, and so my version of this particular story goes that when I was wholesaling, especially in 2008 and periods of times where advisors were really focused on their concerns over the market, they were reactive to clients, they were in a position where disruption was happening all around them, and they were open to new ideas. The traditional method of walking in, pitching a product, and hoping that something stuck really both wasn't advantageous to the advisor, but truly represented a really old school way of wholesaling that both didn't work, but really wasn't the right way to form and forge relationships going forward. And so, I will say that yes, there is some truth that working through Practice Analysis was something that was more innate to me because of my experience in training and development.
Mary Mock:
But what I was doing was really ad hoc, and it was just taking data that was available and making random observations that I thought could help advisors, really knowing enough to be dangerous, and where Steve was both so brilliant and very helpful was, he has this innate ability to take that and to organize it, and to extrapolate from that, something that's actionable that's process oriented, and that is able to be replicated. And so together, I think we were a really interesting and dynamic sort of starting point for something that's extremely valuable, very actionable, and is something that advisors today need now more than ever.
Steve Seid:
For the audience who doesn't have a huge background on what we're talking about. Practice Management at our firm - it's in a process and a value add called PAR, which is our Practice Analysis Review. So that's what they were referring to, and I agree with both of what you just said, and thank you for the kind words. For me, it's just stealing from Mary and I've been making a career out of that, and I will continue to do that going forward because it's...
Kurt Dupuis:
You and me both, brother.
Steve Seid:
Yeah, you just kind of let her throw stuff in the universe, and if you can kind of harness that and capture it, you're going to be okay. So transitioning, we want to talk about this idea of Supernova. So maybe we'll just start jumping into that, and hearing you comment. So, maybe give us a little bit of the background of Supernova. I'm talking about the base case, where did it come from?
Mary Mock:
Right. So it's actually an excellent segue. So, Rob Knapp was a divisional manager at Merrill Lynch for years in the Indiana market, top producer, really competitive. They’re coming off of a period of time where there were money markets that were yielding 22% at one point. These crazy high numbers and clients were lined up around the corner to become clients of Merrill Lynch, and what happened over time was that advisors found that clients who weren't having an exceptional experience were dissatisfied, were not staying with the firm, and when the environment changed, it became sort of an apparent need reactively, unfortunately for advisors to wake up and realize that clients needed more than good investments. They needed a strong experience, a deep relationship with their advisors, and they wanted more, and so Rob was really adept at helping to extrapolate, some information that ultimately became part of a tool and a process that's known as Supernova.
Kurt Dupuis:
My basic debrief of Supernova is kind of two ideas. One is you have to get smaller to get larger, because growth is the key. If you're not growing, you're dying. That's a critical point of all this. But also from a client service perspective, everyone gets a first class experience. There's no first class, business class coach, everyone is treated the same because your business is tight enough that you can do that, and if they're not, then you develop another team or another ecosystem by which those clients can be serviced. You don't just throw them off into the abyss. So it's growth is the key, and there is a flat surface structure, two really big elements of that, I think.
Steve Seid:
Yeah. So, you've got all these advisors that what they've done over the past few decades was just add more and more and more and more and more clients. So what you were left with was a situation where advisors had way too many households to give really exceptional service. Is that fair?
Mary Mock:
Absolutely, and what they were doing was spending time running the entire practice as opposed to being the expert on wealth management, and bringing in new clients. They were doing and touching every little piece.
Steve Seid:
So he's observing this situation. He's seeing an industry that's watching client service deteriorate. He's seeing a lot of households, and then what does he do?
Mary Mock:
They did these client surveys in the late 80s, early 90s, and clients said, meh, we're okay. It's not a great experience. It's okay. We don't dislike our advisor. We don't dislike the firm, but his advisors who were really top producers scored really low on client service, and overall happiness, and so he decided there's no way that he's going to end up at the bottom of the rankings, I mean he's a former Navy pilot, he's super competitive, and so he devised a way for advisors to give their clients exceptional service and it was 12, four, two. 12 contacts, so 12 monthly contacts, four quarterly reviews, and two of those are going to be in person 60-minute meetings, and so the advisors deployed that.
Mary Mock:
I mean, and to run financial plans for each client, and advisors worked really hard to deploy that. Their numbers skyrocketed, and then over time, the number started to decline again, and what they found was, it's because the advisors were exhausted, you can't give such an in depth experience to 400 clients. You can't give it to 200 clients. They didn't know what the right number was. But they knew it wasn't 400, they knew it wasn't 200, and they set out on a quest to determine what the right size of a practice might be, to be able to be manageable and to give clients an exceptional experience, and that's where it all started. It was about segmenting and servicing clients.
Steve Seid:
So, that's interesting. So, it started with the experience that they wanted to get to, and then figuring out how many clients they could actually do that for - that was rational?
Mary Mock:
Right and then there was an advisor named George Kemp, and this is all from the original Supernova book. And so this was maybe early 90s at this point. George Kemp went back and said, Look, I'm killing myself trying to do all of this, but I believe in it, and I want to do what's right by clients. And so he went back and he created, what were those 11 screeners that you've seen, and that at some point, you guys modified into, I think, an even more manageable list, right? And he screened his book of, I think 450 plus clients, and of those, let's say 400 plus clients, the number of clients who actually hit all 11 screens, and they were quantitative and qualitative, were 33.
Mary Mock:
So of his entire book of business, he looked at basically 33 clients who were these really amazing, optimal clients. Now, it's not fair to say to that a person should pare out 300 odd clients in order to net down to 33, and of course, Rob didn't suggest that he do that. But what began was a process by which, in rank order, George pared out those relationships that were both demanding, didn't take his advice, were unprofitable and created a liability to his practice and in this Reg BI fiduciary DOL world, that's something now more than ever that advisors need to pay attention to. And so that's where it started, and it's evolved into many different things, which I'm happy to go into with you. But the main impetus was how do you give clients an exceptional experience to help them reach their goals, who were enthusiastically enamoured with the work that you do, and who will lead you to other people who then will fill your book of business with that similar kind of person? And the approach is: do what's right by clients. Always. Do what's right by clients.
Mary Mock:
Don't be afraid to let go of people who aren't the right fit. The rest will right itself over time, and that's exactly what has happened. It's simple, but it's really not easy.
Steve Seid:
Well, when I was first understanding this concept, I'm thinking to myself, okay, trimming down the book, that's got to be hard for a lot of FAs. But when you see the results of what actually happened when they did it, it was pretty profound. So, it wasn't just okay, we're going to give better experience to our clients, and that's going to be great, and that's fun, and everyone's enjoyable, and I have a manageable life and I can go play golf. Some pretty profound results happened, right?
Mary Mock:
Right, and ultimately how it became Supernova is, it's that theory that in order to expand, you have to shrink and contract and so advisors grew up on this philosophy that you throw spaghetti on the wall and it sticks and that anybody who came into the practice, they couldn't afford not to asset gather, right? And so what ends up happening is you put together a book of clients, some of whom represent the ideal client and those with whom you can actually help the most, and some of those clients aren't that. They might not even be clients, they might be customers, they might be a liability, they might be someone who has a one off-stock position, et cetera.
Mary Mock:
So by doing right by the clients, and providing exceptional customer service, what they found was it helped advisors frame, really the way they should deliberately run their practice. And so, if you are brave enough to shrink, and it doesn't mean paring people that are relevant out of the book or taking a huge revenue hit, but being brave enough to know that getting rid of those clients that don't represent those who resonate with you or with whom you resonate, or who are as you define your true client minimum, potential. - all those good things, by paring those out of the book, one has a true opportunity to grow deliberately, and that's what happened.
Kurt Dupuis:
This stuff does work, if you have the stomach for it, if you have the vision for it, contracting and being intentional with your client experience, which is something I'm slowly becoming obsessed with, it will have impactful results in the not so long term.
Mary Mock:
We don't sit down and say okay, Mr. advisor, you’ve got to cut out 200 of your clients. We don't say that, but if you help and advisor structure their process, set true minimums and think about who the optimal client is, as an advisor brings in and acquires a client, that is the model person they'd like to work with two legged or otherwise, then it makes sense to potentially pare out or cull from the book, that bottom person who isn't the right fit.
Mary Mock:
So we run and we've talked about the Practice Analysis Review tool that we have. We run a program where we've analyzed more than 2000 books of businesses of financial advisors, both sole practitioners, and teams across the country, and what we relatively find is this on average, the retail advisor has a third of their book of business that comprises the bottom 4% of their revenue. So, in theory or said another way, not that we ever asked clients or advisors to do this, but an advisor could, in theory, cull the bottom third of their book and only impact their revenue by 4%.
Mary Mock:
So there is an innate fear of letting go of assets because as an industry, we've paid advisors and we've set it up such that assets under management are a really relevant component to revenue. When in reality, there are many advisors with a smaller book, who have higher revenue objectives that are doing right by clients, that run financial plans, that are holistic financial advisors who are much more profitable than advisors, who have a much larger book of business, who have a lower return on assets, who aren't modern wealth advisors, who manage that person's holistic financial well-being beyond the investment side of things and who A, is out of time during their day, who's frazzled, and who can't service, the 20% of their clients that comprise the majority of both their assets and revenue. It's a doom loop that advisors in my opinion are not in a position to be able to sustain for a long period of time.
Steve Seid:
Yeah.
Kurt Dupuis:
I really like Doom loop.
Steve Seid:
Doom loop.
Kurt Dupuis:
We've talked about it a lot here. How I think a few people know how many clients actually make up that that bottom portion. I think that's interesting. Rob makes an interesting point in his book talking about the difference between discipline and ritual, and just me from my personality, I know trying to implement something new and taking discipline, it's sometimes a struggle, but the idea of ritual and small incremental changes over time, is more manageable and leads to better results. Is that something that he talks about a lot in his coaching?
Mary Mock:
Yeah, so plan, process and ritual are things that are really important in every facet of our life. It's that theory that, listen, after like the fifth or sixth time I know how to work out at the gym but why does it matter that I have a trainer? A lot of that is the accountability that goes along with it, and so where coaching or where accountability plays an important role in the advisors execution is really because when you've got someone for whom you have to explain your results, or show output too, we tend to have better behavior and the more you have discipline, and the more you repeat things, the more likely it is, that it becomes a habit over time.
Mary Mock:
I have a friend who's a navy seal, and he's always like, look, people don't go to the gym, because of any reason other than it's the unfortunate desire for discipline, right?
Kurt Dupuis:
Yeah.
Mary Mock:
And why they continue to go, over time, is that it becomes a ritual to them. So if you have a plan, if you have a process, and if you have a ritual or the discipline by which you repeat that process, it sticks over time. And listen, I really am a huge fan of Supernova. I don't think it's the only way. I don't believe that all advisors fit into a box where they have to follow just one particular plan but what I really like about it is it's a process, it is actionable, it is surgical, in its approach, and it's repeatable.
Kurt Dupuis:
There's a quote from a show called Modern Family, which my wife and I used to really enjoy, and there's a whole episode around the idea that people can change, but only about 10%. So, right, we're all able to adapt and change and deploy new rituals but it's really tough because at the end of the day, we are who we are. We've been doing our thing for a long time.
Mary Mock:
And if you're an advisor, how have you been incentivized to change? Market action has buffered your returns, right? Your income's been as a mostly fee based advisor, pretty strong, right? I mean, what reason have we given advisors post 2008 to do anything any differently than they're doing now?
Steve Seid:
Yeah, that's a fair point. Let's bring it up to the summary because I want to make sure that I'm capturing that. So when I think of Supernova, what I think of is paring down the book and giving everybody universally the same experience. But you've talked about and brought it up a little bit wider in terms of process. So it's not just those things, it's also developing processes in your business to make things run consistently. Is that fair? Or did I miss characterize that?
Mary Mock:
No, that's very fair, and part of it is if you think of the practice as a triangle, right? Where the advisors at the top of that pyramid, and the CSA sits on the lower rung, it makes sense and part of the process of Supernova is inverting that and flipping it on its head, and let me tell you why.
Mary Mock:
So for example, let's use the dentist analogy. When you go to the dentist, who's the person that greets you? Is that the dentist?
Steve Seid:
I never see that dude, ever.
Kurt Dupuis:
Except when he drills.
Steve Seid:
I have a question for you. Do dentists really exist? Or do they just not exist at all?
Kurt Dupuis:
Not if you have perfect teeth like you, Steve.
Steve Seid:
Yeah, I guess. Thank you.
Mary Mock:
Dental unicorns?
Steve Seid:
Oh, they're dental unicorns, yeah.
Kurt Dupuis:
Dude, that's a sentence.
Steve Seid:
Yeah.
Mary Mock:
I think, yeah. That could be our next podcast. So you go to the dentist. It's the administrator who meets you, right? The person who checks you in, the one who potentially calls you and reminds you about the appointment. You meet with him or her. They call your name, you go back. The person you spend the lion's share of your time talking to while they are cleaning your teeth is the hygienist, right? The dentist comes in, they spend a few minutes with you, look in your mouth, what are they looking for?
Steve Seid:
Mine is always just trying to convince me to do Invisalign. I don't know what they look for.
Mary Mock:
They're looking for opportunity, right?
Steve Seid:
Yeah. Oh, there you go.
Mary Mock:
... You need a crown, you've got a filling that needs to be replaced, right? Think about it. They're running a business. They're looking for opportunity. Okay, so is the dentist the person who checks you out when you leave? Who sets up your next appointment?
Steve Seid:
No.
Mary Mock:
Who takes your cash? No. So of that entire experience who's the person you've likely spent the most time with? The hygienist first, the administrator second, the dentist last, right? Because the people who are not the top of the food chain are running the business. The dentist is the owner of the practice. Advisors need to do the same thing. The advisor is the person who comes in who makes sure your financial plan meets your needs, who manages the wealth relationship, who understands your long term goals, who forges a solid relationship with you. But it's the CSA who schedules the meetings that you have. It's the CSA, who's responsible for organizing and making sure that the advisor has the tools that he or she needs in order to deploy successfully.
Mary Mock:
It's the analysts, if it's a team who's double checking the performance for the modules, or for the models, rather, if you have a financial planner, it's the para planner, or the financial planner, who's running the plans. But my point is only that if the financial advisor is spending all of their time managing and running the practice versus empowering their employees to do the things that are right for the business, they're taking from themselves the only finite thing that they have in life and that is time.
Steve Seid:
That's interesting. So there's all these components you're sharing that makes Supernova kind of a bigger process. Not just like, hey, trim the book. There's all these things that go into it. It's kind of a full program, if you will. So let me ask you a couple questions about it.
Steve Seid:
Why are you intellectually drawn to it? There was something about this, you've been out coaching people and finding things and fixing problems for so long. What was it about it that made sense to you?
Mary Mock:
So, the first thing was the natural dovetail to growth. So when we look at Practice Analysis, and we use the data from firms to give the advisor a snapshot of information about their practice in terms of scalability, efficiency and profitability, and then defensibility, once we help the advisor sort of clean out their proverbial closets, right? Great, we get through that. Well, then what, right?
Mary Mock:
What are the next steps to help an advisor grow? And Supernova's approach to giving clients an unbelievably differentiated and exceptional experience is really the next step in that. And, so that was always really interesting to me. The other thing that I think I liked the most about it is, I attend so many industry seminars that, for me, geek out on it, it's really intellectually stimulating and it's really fun to experience those things. But, I found that on the main stage, there would be presenters who have exceptionally strong, esoteric ideas. Like, Steve, you should grow your practice and you should give your clients great service, and you should get some time back in your day so that you can grow professionally. So that you have-
Kurt Dupuis:
Sounds like Tony Robbins.
Mary Mock:
... It is. Very much.
Kurt Dupuis:
It's like a pep talk.
Mary Mock:
It is, right? So, you could have all of these things. But they never said how to do it, they never gave a process, they never assigned accountability, and they walked off the stage, and that was that. And so it's really motivating until I get back to my office, and I think, well, that's great. How do I do it? And so what I love about Supernova is, it is the amalgamation of the best ideas of every financial advisor that's ever participated in earnest and in practice management that either Rob or the coaches that work for Supernova or any advisor who's participated in Supernova has come up with and it's a really interesting collective idea share.
Steve Seid:
That's excellent and I will tell you I love the podcast format. But one of the things that you miss sometimes when you do podcasts which is audio is you don't get to see the visuals. So, Kurt brought up a comment just a second ago about it being like Tony Robbins and Mary laughed and said it is and then stared directly into his face and said it is in a very scary, monotone like yeah, this is no joke.
Kurt Dupuis:
That's because I crossed the train tracks. I was about to get run over.
Steve Seid:
This is no joke. Don't you joke about Tony Robbins, don't do it.
Mary Mock:
We're going to have financial advisors walking on coals before the end of this group branding.
Kurt Dupuis:
I've always wanted to be a part of a cult.
Steve Seid:
All right, so let me throw some things that I'm sure you've been asked before Mary. So this all sounds good, but I don't want get rid of clients. Can I just add someone to my team? Or, I mean, what if I don't want to cut?
Mary Mock:
Yeah, so you can, right? The only thing that's finite is time. So you have two choices. You can either right size your book with the clients who are deliberate, they fit your minimums, your true minimums, the type of client that takes your advice, however you define and segment the perfect client. Either, you can have only those people in your book, or you can add staff in order to accommodate the number of clients that you have.
Mary Mock:
But there's only two choices. You can work more hours, you can hire more people, or you can right size your practice.
Steve Seid:
Yeah, that's a good point. All right, so as with any of our topics, you can reach out to us at thewholetruth@touchstonefunds.com and we'll help you with this. If you want to go the route of Supernova, we will certainly talk about this more in a future podcast, but hopefully, we did a good job of introducing the topic, so I'll sum up. One is you're going from a starting case where there's probably not a lot of defined processes in your practice, you're probably managing too many relationships, your client service is reactive, to the exact opposite of that. You're trimming down, focusing on only the clients that make the most sense. You're giving them an exceptional experience, you're bringing processes to the practice that make everyone's life better, including making the CSA or CA, I should say, top of the pyramid, and with that you can run a business that's much more efficient and grows with the right clients.
Mary Mock:
Maybe one more thing I would want to touch on is that there's a really significant planning aspect to Supernova and the benefit to the financial plan. I mean, there are some really basic benefits that everyone is aware of but, when you are spending your time with the right clients and you're running a true financial plan, your ability to deepen the relationship with that client, meaning - asset aggregation, assets held away, really understanding holistically the needs of that client, both in this generation and the next, it makes the assets and the relationship stronger and stickier, and that's something that I think every financial advisor, as we look at our industry, and we think it might be coming, unfortunately, more commoditized, with all of the zero fee, Robo type of relationships out there, that's a key differentiator for advisors.
Steve Seid:
Excellent. That's a good point.
Mary Mock:
I believe in it, I do, 100%. But, I also think that there are other ways for advisors to have success. I'm just saying, here's a way to do it that has an action step to it. That yields results, and guess what, it's on the other side of fear because everything sits on the other side of fear, and there are a lot of advisors who are afraid to do that stuff, anything.
Steve Seid:
So Mary, thank you so much for being here today. We really appreciate it.
Mary Mock:
My pleasure. Hopefully, you'll have me back and I'm really impressed by the work you guys are doing, and the value that you bring to advisors every day. So keep on fighting the good fight.
Steve Seid:
Thank you Mary. What’s the takeaway from this episode? Objectively look at your business and think about whether a Supernova type approach is right for you. We can certainly help you do that - you can reach out to us - you can also read about it on your own through the book “The Supernova Advisor” by Rob Knapp. Costanza Corner is next, stick with us.
Kurt Dupuis:
And welcome back to The Whole Truth. It's now time for our segment called the Costanza Corner. And first I have a question for you Seid.
Steve Seid:
Go ahead.
Kurt Dupuis:
Do you know your trash guy?
Steve Seid:
Do I know my trash guy? No. I get annoyed with my trash guy because they come around with these trucks and they dump it out and it always leaves some trash at the bottom of my trash cans.
Kurt Dupuis:
This isn’t a “just stop it” episode Seid.
Steve Seid:
Is that - did I go down the wrong path?
Kurt Dupuis:
We’re trying to end on a high note.
Steve Seid:
This is uplifting. Not, ok I got it.
Kurt Dupuis:
This is George Costanza, not Frank Constanza. Let’s be clear.
Steve Seid:
Fair enough. Fair enough. I got that out of the way before. No, I do not know my trash guy. Why would you ask?
Kurt Dupuis:
I don't either. We do know our mail guy, but I don't know the guys that come in and pick up our trash, but there's a great story. I read this week about two guys in Miami named Saul and Kion, where they were such good trash guys for their neighborhoods, that they threw them a big block party. And apparently these guys are so good, they actually, one time spent 45 minutes helping dig through the trash to help find a ring that a lady lost. So, a very endeared duo there in the neighborhood. They had a whole big block party and the whole neighborhood, they even invited the mayor of Miami. The mayor of Miami went to the block party just to show their appreciation and say thanks to these guys. And I love messages that treat people less fortunate that do like menial, you know, think of Mike Rowe, dirty jobs, you know, just elevating those people in our society and giving them the gratitude that they deserve. So I just, I saw that story and I loved it.
Steve Seid:
I think that's great. And one of the positives, I always like to look at positives of the coronavirus is we're all starting to rethink, you know, how important certain essential personnel are and what that looks like.
Kurt Dupuis:
Who is essential, yes.
Steve Seid:
So for example, like the people at the grocery store and during the middle of a pandemic, they had to come in and they were like frontlines. So, stories like that are absolutely incredible. So thanks a lot, Kurt. We appreciate that. And thanks everyone for listening. We'll see you next time.
Kurt Dupuis:
You can find the whole truth and subscribe for free on Apple podcasts, Spotify, or your favorite podcast app. We’d love it if you took the time to rate and review the show on Apple podcasts, it helps others find the show. And for more episodes of the whole truth, go to www.touchstoneinvestments.com/thewholetruth. That’s touchstoneinvestments.com/thewholetruth, all one word.
