Steve Seid:
And welcome everybody to The Whole Truth from the Bay Area, California. I am Steve Seid.
Kurt Dupuis:
From the city in the forest, I'm Kurt Dupuis.
Steve Seid:
We've got a great show today. So our guest is going to be fantastic, Daxs Stadjuhar, I'll kind of give you an overview of him before we get into that segment. But you're definitely going to want to hang around for that interview. But we're going to start off with a little bit of a thank you to our audience who've checked out the show, who have listened to episodes. Kurt will tell you, I do not want to look at the numbers of who's listening. I don't want to get discouraged. And I told you this Kurt, what I view as success is.
Kurt Dupuis:
The engagement.
Steve Seid:
Yeah. Financial professional comes up, says I've been listening to the show. It made me think, and I've been getting that.
Kurt Dupuis:
We've both have, and it's been awesome.
Steve Seid:
Yeah. You know who you are who've reached out and we've spent on talk about episodes and your business. But I'll tell you Kurt, when you share the numbers with me, which I didn't want, it's been, I don't know. Is it fair to say it's been well.
Kurt Dupuis:
It's not bad, right?
Steve Seid:
Well above expectations and I mean, in 100s of every episode and that's not 100s of, we're listening to it 10 times a piece, that's different people that are listening in.
Kurt Dupuis:
Individual downloaders.
Steve Seid:
Yeah. So first of all, thank you to everyone. That's the first thing I want to say. It means a whole lot to both of us. And then the second thing I'd say is, okay, we're in the 100s now consistently let's get in the 1000s. So, if you could do us a favor, share it with someone else. If everyone does that to one person, the show will explode. And that'd be awesome, obviously.
Kurt Dupuis:
And the more voices that are represented in the content that we're throwing out there, the better. Because we're really emphasizing this community thing. We're really curating a place for people to share these types of ideas and that only gets better with more participation.
Disclosure:
The views expressed herein are those of the participants and not those of Touchstone Investments.
Steve Seid:
Not everything that we do is going to be business related. We're going to have some fun on the show. We know there are people listening regularly that get a kick when we do some fun things.
Kurt Dupuis:
Got to give the people what they want.
Steve Seid:
So what we're going to do for this, this initial segment is, we're just going to talk about music a little bit. And the nature of this segment is we're each going to share a couple of bands or musicians that were really influential and important to us with the caveat that they can't be too popular. And the example I give, because I grew up, I was born in 81' and 90s or when I started listen, obviously Nirvana was a really big deal to me. I shouldn't say obviously, but everyone knows Nirvana. So I'm not going to share Nirvana. Maybe you lead the way Kurt. First of all, set the scene for me. We know you grew up in Louisiana, but give us a little sense of how you came across music when you were younger.
Kurt Dupuis:
So my mom played piano in the church growing up. I led the youth bands when I was in middle school and high school.
Steve Seid:
Is that right?
Kurt Dupuis:
Yeah. I also had a fairly strong religious upbringing. So that highly influenced what I listened to really early on. So I can remember the first CD because I got a boombox and a CD. I don't remember the name of the album, but there's this Christian artist called Carman. So if anybody listened to Carman in the 90s, apparently he was a big deal. But I remember that probably being like 12 or 13 years old, getting that boombox that you could put in your room, it was a transformative experience.
Steve Seid:
So first of all you said you played music. What do you play?
Kurt Dupuis:
So my primary instrument is guitar to be specific, acoustic guitar. I'm not a lead guy, but growing up around music, I mean, I'd play the drums a little bit. I play piano by ear. Bass, if you have to, I can tinker with a lot of things.
Steve Seid:
Yeah. That's cool. I play some guitar now, but I didn't grow up playing it. I learned it later in life.
Kurt Dupuis:
Acoustic or electric?
Steve Seid:
Both actually.
Kurt Dupuis:
Oh, okay.
Steve Seid:
Yeah. And I'm a rhythm, I'm trying to get into the whole.
Kurt Dupuis:
You're not shredding?
Steve Seid:
Yeah. I need to figure out how to solo, but I know chords. And you know enough chords, you can play most of the songs to some degree.
Kurt Dupuis:
And then you get you a loop pedal and then you can start throwing in some shredding lead riffs in there.
Steve Seid:
There's definitely steps I need to take to like, I'm at a plateau where I play chords well, and then it's like, what now? But anyways, we digress. So then you're listening to the Christian band. What was the name of that?
Kurt Dupuis:
Carman is the name of the artist. It's the first CD I ever remember getting.
Steve Seid:
And what type of music is it? You said Christian but what kind?
Kurt Dupuis:
I mean, he was like Christian pop rock or whatever. But that doesn't answer your question. So I'm going to break your rules and I'll tell you, one influential album and one influential band. So the album, an album that means a lot to me even to this day. Because when you asked the question, even like a flood of emotions, start coming back is the album X&Y, I think it's a Coldplay album.
Steve Seid:
Oh, yeah sure.
Kurt Dupuis:
And I know you're going to make fun of me a ton for this.
Steve Seid:
No. Coldplay's great. I love Coldplay.
Kurt Dupuis:
Obviously well known, but this happened to come out at a time, I don't know if you know this, but I lived in Mexico kind of on and off for a year. And it came out towards the end of my time in Mexico, which could only be described as the best of times and the worst of times. So the worst of times was when I was leaving and didn't have a dollar to my name. And it was just a lot of bad things going on. And this album was the only one I had in my car that I listened to the entire way driving back from Monterey, Mexico back to South Louisiana. And so it means a lot to me because it was a pretty rough time in life. The band that you would never guess that I have been obsessed with is this band called The Used.
Steve Seid:
I love The Used, are you kidding me?
Kurt Dupuis:
Are you familiar with it?
Steve Seid:
Of course, I am. The Used is amazing.
Kurt Dupuis:
They're the only screamo kind of band that I've ever really been into. But when it's Friday afternoon work's done and you just want to rage, there's nothing better than The Used.
Steve Seid:
The Used is amazing. The lead singer, I don't know if you've heard their stuff lately. He can't scream anymore, his voice is shot, but it's still good music because the songs are that good that even without that element in it, it still sounds good.
Kurt Dupuis:
Yeah. I didn't even know they're still making music, but I remember hearing stories.
Steve Seid:
Yeah. They still are. I saw them last year. His warm up for vocals was to bust the filter off of a cigarette and then just inhale it real quick before the show.
Kurt Dupuis:
Oh, great.
Steve Seid:
They're great. Yeah. That's a great one. And by the way, we're going to have to get into that story of you and Mexico.
Kurt Dupuis:
Train wreck of a lifetime.
Steve Seid:
That's a really good one.
Kurt Dupuis:
So what about you? You're a big music buff. What are you an influential bands?
Steve Seid:
So I'll paint the picture. So I grew up in New Jersey and the early influences on me were guitar driven music, which is like Nirvana, Metallica. Those are really big influences.
Kurt Dupuis:
But not Springsteen to be clear.
Steve Seid:
Springsteen is from the town I'm from in Freehold, we're really both from Freehold, New Jersey. I like Springsteen, but I'm not a Springsteen guy. I need to spend some more time with it, but no, Springsteen was a little bit before my time because he was 80s, I'm born in 81. So really when I started to get into music, it was the 90s and it's not like he didn't put anything out, but he was less big then so, but basically, so we had a lot of that music and there was kind of two kinds of venues that you can go to see music. They had the super big venues like in Giants Stadium and where the Devils and Nets played, it was called Continental Airlines Arena back then. But then you had these small clubs, small little clubs that you'd go to see bands play. That's what I did for fun, mostly was go to see live music. And so you go to see a band and then you listen to this awesome opening band and all of a sudden you've got, and the trading of mixed tapes. Did you have that at all? Where they would hand out singles and mixtapes and stuff? Did you have any of that?
Kurt Dupuis:
No, I wasn't in that scene.
Steve Seid:
Anyways, it was a lot of heavy driven music. So I'll tell you that the one band that came out that kind of changed everything and they're still in this category for a lot of people, is a band called the Deftones. Have you heard of the Deftones at all?
Kurt Dupuis:
I've heard of Deftones. I don't know their music well.
Steve Seid:
So, if you don't like music that's heavy and screaming, there's a part of the Deftones out there that you're absolutely, probably not going to like their first album is very heavy. I kind of separate it from bands that would just constantly hard and that's what they did. More like a Corn or those kinds of bands because there's this incredible melodic element to them. So you've had this guitar driven, heavy driven music, but they had this singer that really can sing and sounds like a really good singer. When those albums started coming out, Adrenaline was the first one, which is really, really heavy. Then there's this album called Around the Fur came out. And then they released their third record, which is called White Pony, which is, I mean, people that were around and knew them. That album changed everything.
Kurt Dupuis:
Is it true that people that are in the Deftones, no one's ambivalent about them. It's either I'm in the cults. I think of Phish and Rage Against The Machine. They're not for everybody, but if you're into it, you're super into them. Is that the same thing for Deftones?
Steve Seid:
The reason that I say no is because I think that there's parts of Deftones music that would be accessible to anyone. And that's why I bring it up because if you're into heavier music, put on 7 Words on Adrenaline and just you'll be in heaven. But there are just some amazingly beautiful songs that I don't think, it's almost like I don't care who you are. And so I'll give you a couple of them. They're the more popular ones, but they're on the White Pony record, one's called Change In The House Of Flies. And the other one is called Digital Bath. Give those two songs a listen. I'd be surprised if most people that picked up and listened didn't think that they were.
Kurt Dupuis:
That they were amazing?
Steve Seid:
Incredible. Now listen, some people just don't like guitar driven music, they won't like that but give those a listen. So then the second one for me is I didn't realize that there is an incredible reggae scene that has reemerged.
Kurt Dupuis:
Really?
Steve Seid:
That whole scene, I just love, I'll give two bands. One is Rebolution, R-E-B, it's Rebolution. The other one is Stick Figure. Man, just pull those two bands up on Spotify. It doesn't even matter. Just click any track. That’s what's been really hard about the pandemic. Well, there's a lot, I don't want to be like so many people are going through stuff, but not being able to see concerts has been a real bummer for six months.
Kurt Dupuis:
Have you seen any of the virtual ones? I've tried a couple of artists, they're tough to watch. It's just not the same.
Steve Seid:
Yeah. You know, it's funny Metallica had like, did you hear they did a drive-in show?
Kurt Dupuis:
Oh yeah?
Steve Seid:
I didn't go. But I think that's a kind of a cool thing where people were pulled up in their cars and they were distanced and the really good sound system. But I'll tell you what, man, I cannot wait for concerts to start coming back.
Kurt Dupuis:
Yeah, one day.
Steve Seid:
Go check out those bands. Shoot us an email of some stuff that influenced you. We love music recommendations. So tell us kind of what were a couple of the bands that really were important to you all?
Kurt Dupuis:
Yeah, good deal. And as always check out this episode, as well as previous episodes at touchstoneinvestments.com/thewholetruth and reach out to us by email at thewholetruth@touchstonefunds.com. If you have band recommendations, if you have segment recommendations, if you have anything that you want us to cover in the show.
Steve Seid:
We're going to jump into in a second, our interview with Daxs Stadjuhar. He's in the LPL world and he's got an organization called The Network, which is a resource to various LPL independent advisors. Daxs specifically is responsible for practice management. And so basically he's just going to talk about what he's sharing with his folks right now. So it's going to be fascinating.
Kurt Dupuis:
Yeah, it's really cool.
Steve Seid:
Yeah. It's going to be a fascinating discussion. So stick with us, we'll be right back.
Steve Seid:
And welcome, everybody. We are very excited to have our guest, Daxs Stadjuhar, on The Whole Truth. Welcome Daxs.
Daxs Stadjuhar:
Thank you very much, Steve. I appreciate it.
Steve Seid:
Did I get that last name right?
Daxs Stadjuhar:
You did. Everything's great. Stadjuhar, you got it.
Kurt Dupuis:
You nailed it.
Steve Seid:
For my name, although not as many letters, I think one out of 15 people probably pronounce it correctly. What did you think it was, Kurt, when you first saw my name? Did you know it was Seid?
Kurt Dupuis:
No, I went Seid for a while. I didn't know if it was Seid or Seid.
Steve Seid:
I get a lot of Saeed too, that happens a lot. But I'm glad I got your name right Daxs. We are super excited to have you on, we're going to be talking about you, your firm, some things around the regulatory environment. There's just a lot to talk about with you. So maybe let's start with you work for an organization called The Network. Let's start with who The Network is, maybe the history and what you guys focus on.
Daxs Stadjuhar:
Yeah, absolutely. I mean The Financial Services Network, which we kind of shortened to The Network, tagline common bond of excellence. The Network was founded back in 1984, actually by a gentleman named Jim Harrington. Jim had a long career in the insurance agency business, branch manager in the Bay Area, San Francisco, Bay Area, and Jim, coming into the middle of the 80s, he saw an opportunity to take his business independent.
And Jim did, he took the business independent and joined an independent broker dealer in 1984. And you look back on that, Jim had one really overarching theme, and that was, I want to make this business a win for three different entities. I want to make it a win for our advisors. I want to make it a win for the broker dealer. And I want to make it a win for the strategic partner community, really the community of strategic partners, wholesalers, consultants out there among the mutual funds, the annuities, the insurance, et cetera. And he said, if we make it a win and all of our agendas are aligned to take care of that retail client, this can't fail. I mean, it literally can't fail. And then you fast forward from 1984 to about 2008.
Jim and I crossed paths in 2008 and to make a long story short, is after having some good dialogue back and forth, Jim asked me to come on board and be his succession plan and run The Network. Nothing was going on in the world in 2008, right? I mean to put it mildly, it was a pretty interesting, 2008 and early 2009, but that really gets you kind of a fast track of Jim starting The Network, it's evolution and how I got involved with the network and if you want me to, I can kind of pivot to what has happened since then, and kind of my background a little bit, or we can pivot elsewhere, but tell me where you want to go.
Steve Seid:
Yeah, that would be good. Talk about that and then also talk about kind of what's the focus of the network, what do you guys do present day?
Daxs Stadjuhar:
I had served as an army officer, infantry officer for just under eight years. I love the leadership. I came into our family business, my wife and I were both army officers and we left the service in 2002 and came into a family business. My dad had been an investment advisor and registered rep for over 35 years. At that point in time, he had just bought a business. So my wife and I literally came in, took our 7, 66, 53, 24 insurance licenses in California, all of over about a five month period of time and jumped both feet forward into the financial services space. And that was back in roughly 2002, but getting on board the network. I mean, Jim had asked me to come in and run the company and move down to the Bay Area. We were going through a broker dealer change ourselves, we were trying to recruit. We were trying to retain advisors.
We asked Christopher Mercado, I'm one of the owners of the network now. I asked Christopher to join The Network as a business partner and a feature owner of The Network in 2012. And then we had another gentleman, Jeremy Olen, another owner of The Network now who was a network advisor for many, many years already. But Jeremy was doing some pretty unique stuff with portfolio management and helping advisors. And we asked him to come on board and 2016 rolled around Jim and the three of us put together the succession plan. We purchased The Network from Jim in April 2016 and Christopher and Jeremy and I are all equal owners of The Network.
And you asked that question about kind of what does The Network do these days? We have six businesses and one of it is a compliance operations business, it's a business transitions business. It's not just recruiting an advisor or moving accounts anymore. It's literally uplifting a business and moving it from one place to another, infrastructure and all business consulting. And I'll touch on that here in a minute. But then that tech consulting portfolio consulting as well as virtual administrative services, that is what we do today, for our 326 advisors and anyone else who wants to come on board.
Kurt Dupuis:
I love the name, The Network. It has such a great West Coast, Bay Area kind of feel to it. As if Zuckerberg himself might be involved. What do you see as really the value that putting all of these smaller niche businesses together in a one stop shop ecosystem? What's the value that ends up trickling down to the financial professionals.
Daxs Stadjuhar:
First of all, I like to just tell people, listen, trust has got to be built right up front. And usually trust is built when you're talking to somebody because you truly understand their situation. I mean, you're listening and you understand their situation. I don't know how many times we just sit down with somebody no matter where they're at, another independent broker dealer or at a regional captive or a wirehouse. And you'll say, I think I know what you mean. And they're all trying to figure out how do they run this small business? And they're all bumping up to the same challenges, which is, Oh my gosh, I have to employ people. I have to manage money. I have to service.
And I like to sit there and say, there's five things every small business owner, I don't care what business you're in. There's five things you have to do every day. You have to find and prospect, you have to engage and close. You have to transition and integrate that new client into your business processes. You have to service and support them on a daily basis. And you need to build depth and retain that relationship. And the problem is you can't do it all. If anything, I tell advisors, you have to only focus on two things you have to find and prospect, and you have to build depth and retain that relationship. Everything else in the middle, you have to find people to help you. And whether that be people right there next to in your office or virtually, I mean if you’re going to find and prospect, engaging and closing should be a team effort. People need to see a team, transition and integration, that's an administrative function. You shouldn't be doing that. Daily service and support, 80% of the questions that come in the office should be handled by somebody else, not you. Those 20% the really moneymaking, really building depth and retention questions, that's what you need to take.
And when we talk to folks and we tell them, that's the way we see the world, they say, Oh my gosh, you're doing it. You're running a small business as well. You're dealing with it. You understand what my needs are. And then we just tell them what would the services we have whether it be our virtual administrative assistant team or our portfolio consulting or tech consulting, or the other resources we have with law firms, CPA firms, et cetera. They say you built the business model to help me do that. And that's where then I think the value comes in is we've listened to enough advisors. We built the resources that they need, or we're also innovating when they ask us to do other things and build out a custom solution. Service business isn't scalable. I mean, many people try to make it scalable. We just have a lot of great people that roll up their sleeves everyday and take care of our advisors. And we're very fortunate that we have the team to do that.
Steve Seid:
Well, what's your competition look like. I know there's some other organizations, if that's the right word that do this, you guys seem to be the biggest, or at least the one out here that I come across the most and hear the most about what does the competition look like? And am I correct when I say that you guys are the most prominent?
Daxs Stadjuhar:
You know what? Within the LPL ecosystem, we're one of the largest of the enterprise offices. I mean, I've got some great friends out there in the same business that we are in. And I think we all probably 80% see the world the same way. It's just a matter of how we go about solving those problems and bringing solutions to the table for the advisors in our community. There is a lot of competition and there's places we don't compete either. I mean, we'll sit there and say, we're not going to be a landlord. We're not going to take down office space, other people do take down office space. Other people have built single model solutions for investment management. Everything we do is custom. So once again, everybody can have a portfolio consulting or a virtual CIO group. It's really about A, how you price it. B, what does the team look like? C, where the variance is in the execution.
And I think that's from whether you take maybe the top 10 things advisors would ask for whether it be office space, infrastructure, technology, portfolio work, virtual admin, operations, compliance, et cetera. It's literally different levels. I mean, think of it kind of like an equalizer board for sound booth kind of stuff. It's really, how many switches do you have and then kind of what level of service do you provide? At the end of the day it does come down to that trust conversation and just saying, hey, have we built trust? Do we understand what you're looking for? And then getting to that buy-in conversation.
Steve Seid:
Yeah, that's excellent. And I know your role within The Network, you're kind of the guy who focuses on practice management. That's one of the big reasons we wanted to have you on here, one of many. In the world of practice management, where do you spend your time? I mean, what do you focus on and has that evolved over the years?
Daxs Stadjuhar:
Yeah, I think that, and I'm also going to do a plug for Christopher and Jeremy here as my business partners, because having two other business partners, we sat down early on in our partnership and we said, we do have to have our own lane. I mean, we're equal partners. We have our operating agreement. We know the decisions we need to make, whether it be unilateral or not, but how do we swim in different lanes, but all focus on the same goal. And I've got a background in compliance and as the OSJ and I love doing practice management business consulting, I've always loved helping people build businesses. Christopher really focuses on business development from a recruiting standpoint, adding new advisors to The Network, as well as helping advisors add to their offices. And then Christopher was a regional advisory consultant at LPL at one point in time. So he knows the fee based business inside and out and profitability metrics of businesses. And a lot of the mergers and acquisitions work.
And Jeremy being our CFA, he swims in the lane of running our portfolio consulting group and helping advisors add clients through being that very great resume, with the CFA and his experience to help advisors close new business. But kind of coming back to me, I mean, my role while it used to be 90% compliance. I've tried to shift that over the last decade, almost trying to be about 60, 70% business consulting/recruiting and less on compliance. I've hired a chief compliance officer to replace me. And when you look at that practice management business consulting, I can distill 1000s of conversations down into four things where advisors say, I want to grow. Number two, is I want to be more efficient. Three is, I want to add advisors to my business or add scale or merge or buy, I want to grow that way. And the fourth is I need a contingency or a succession plan.
And those are all single conversations that can take hours to tease out, whether it be growth and growth comes down to, jeez, what are you doing to grow? Is it through the tried and true relationship building and getting referrals from your clients and building depth and retention? Is it through centers of influence? Is it through marketing and social media and events? There's always so many ways you can get your word out there. And of course, being more efficient, boy, that just comes down, there's only really two levers you can pull there. I mean, it's implementing technology or adding people, throwing bodies at a problem. And some people may not have the capital to throw bodies.
On the easier side, they've got to implement technology, but those are the two levers. And whether it be through our technology consulting, work and integration, API integration of technology, or just virtual staffing, and then eventually having a full time person in your office, adding advisors, recruiting, mergers, acquisitions, we still love mergers and acquisitions work. Christopher probably works on 80% of them.
Kurt Dupuis:
I wanted to ask specifically about growth. So I'm curious how you do think about that. I mean, almost unanimously when we ask for questions from the audience, growth always comes up and everyone has questions about it. You look at the numbers of how quickly financial professionals are growing their books. It's an anemic number. So how do you think about that?
Daxs Stadjuhar:
I think the first thing I ask is, just treat me like a client. Give me your pitch.
Steve Seid:
Nice.
Daxs Stadjuhar:
I do tell a lot of folks, the first thing is don't tell people what you do, show them what you do. I mean, in my opinion, you need a good graphic representation of what you do. I mean, back 10 years ago, 20 years ago, people were teaching classes on, Hey, give me your elevator pitch. You know what? Elevator pitch to me is more or less, tell me about yourself. I mean, it's the old Dale Carnegie, how to win friends and influence people stuff. And I literally just tell advisors, we need to get down on a piece of paper, very succinctly, some sort of graphic that clearly articulates what you do.
Kurt Dupuis:
And is the goal there Daxs, is it more to go through the thought exercise of how you communicate your value proposition or is it to have a marketing piece that you can then go and distribute?
Daxs Stadjuhar:
It is absolutely a one-page marketing piece because at the end of the day, and this is boring and this is why people don't do it, is you have to tell the same story over and over and over to three groups, 24/7 for the rest of your life, if you're going to be successful. And that is your current clients, your prospective clients and your centers of influence who feed you clients. And it is massively boring. But if you tell them and remind them over and over what you do, they will remember you when they need that service, that center. I don't know how many times I would go into a center of influence that I knew really well and I'd remind them of something. And they would say, Oh my gosh, I just had a client do a buy/sell agreement. And they went off to Joe and he funded it with a $2 million life insurance policy.
And I realized I wasn't getting in front of that center of influence enough. And I didn't clearly put a piece of paper in front of them to say, please put this on the corner of your desk and the same thing with a prospect and the same thing with a client. You can't get referrals, if a client doesn't remember what you do. That to me, if you don't have that down, a really good graphic and a really simple explanation of what you do and you don't tell people over and over and over and over, you're not going to grow. It just isn't going to happen.
Steve Seid:
Yeah, that's great.
Kurt Dupuis:
That's a really, really good point.
Steve Seid:
Transitioning a little bit. You've been doing a lot of speaking lately around REG BI, kind of walk through some of the guidance you've been giving there.
Daxs Stadjuhar:
I like to remind people REG BI is more education and disclosure and it's part substantiation. The responsibility falls on broker dealers and in some cases it impacts RIA firms. That firm had to put together a new, what was called ADV part 3, also known as form CRS.
And it's a very simple two page document. Double-sided two page document that literally just broke down and said, we're going to clearly explain to clients what the difference is between brokerage and advisory. And we're going to give that client some recommended questions to ask. And I don't know if you've actually seen a form CRS as they call it, but actually gives a bunch of questions, like 10, 12 questions to the retail investor to ask like, Hey, what fees am I going to pay? How are you going to help me choose between an advisory account and a brokerage account? Or what are your conflicts of interest? What's your regulatory history? Who should I contact if you're not around kind of thing. So it's actually a really cool document you think kind of would be a no brainer, right? And I think advisors should use it. I know a lot of advisors shy away from anything compliance. And so that really don't want to give this to my clients. But to be honest with you, form CRS is a really good document to fully explain to your clients the difference between brokerage and advisory.
And then just on the broker dealer side, because remember for the fee based side, nothing changed. I mean, the fiduciary standard is still the highest standard in our country, REG BI did not tweak that at all. REG BI just upped the game. We used to be a suitability standard then we went to a know your customer, what was called KYC standard. And now it's a best interest standard. And I think what the SEC was focused on was when recommendations are made the clients and part of the rule, if you really want to geek out on this, there are some categories for what a recommendation is, but when a registered rep recommends something to a client, the SEC just wanted to make sure that that was in the best interest of the client and in the best interest of the advisor, i.e a commission. Did you recommend that because you want a commission?
And that's literally, I summarize all of my comments on REG BI that way I could go into the care model and the care obligation and what really a recommendation is. But when you break it down that way and explain to an advisor that at the end of the day, the first thing you have to do when you meet with any client is you have to explain to them the difference between advisory and brokerage and determine what is the best route for them. It's literally like starting a trek through the forest. Hey, we've got a fork in the road here. And on one side, you may say, you don't want to pay ongoing fees. You're going to buy and hold for a long period of time. And you don't mind paying transactions, guess what? That's a brokerage account. And if you say I want active management, I don't want to pay commissions I'd much rather buy stuff at no transaction fee or MAB, that's the fork in the road that goes to the left. And that's the advisory account.
And that's why we've been speaking so much on this is just to remind our advisors in The Network and others. That's where it all starts, depending on which path you take. If you go down the path of advisory, nothing changes. If you go down the path of brokerage, now, you've just got to substantiate more and more than every time you make a recommendation or a trade, it was done because it was in the best interest of the client, not in the best interest of your pocketbook. So try to keep it. We always try to keep things in simple terms, because that's how we're going to explain it to clients. If I have to explain it to an advisor, I want them to turn right around and explain it the same way to a client.
Steve Seid:
You have a bunch of questions that you've been having different people think about. Can you go through some of those questions?
Daxs Stadjuhar:
Right now, with COVID and the economy, I think the top four questions I've been getting asked is, Daxs, should I shut down my office? My office lease is coming up for renewal. I don't think I need my office space anymore, what should I do? And then that really teases out, are your clients going to come into an office again? Did you ever really use it in the first place? What would be your perception in the community if you don't have an office space and possibly mail and a client statements have your home address on them, right? How are you going to feel about that? I think the stigma of having a home office is completely gone now because no one can judge you on that since everybody's working from home. So that's one of the number one.
We've been doing some research and helping our advisors kind of guide through that because there's really three choices. I mean, if you have a brick and mortar office that you've had forever and you went in from eight to five, there's only really three variables from this point on, which is great, I've had to work from home for three months. So I like it and I'm going to keep on doing it, but I might keep that office. So it's kind of a part time office part time at home. You share your time. It could be, I don't want to pay for that so I want to go to a Regus. I still want to have access to a conference room or something else, or my mail goes someplace and have an address. So I'm going to go to a Regus, I'm going to buy something along their framework of just a conference room or a full blown office or just go home full time.
And explain to your clients. I can service you. I've got DocuSign. I can text with you compliantly. I can do GoToMeetings with you compliantly. I can share everything in a shared drive with you compliantly. And we don't really need to see each other face to face and shake hands again. Now there'll be consequences to that we all know it, but those are really the three models. And we have had people challenged with the decision on all of those and we'll see what happens. We will all wake up in a year and go, oh my gosh, 30 people shut down their offices. And is it working for them? And then some people will go, it's not working too well. Some people will say the best thing I ever did. I'm saving 30, 40, 50 grand a year.
Kurt Dupuis:
Yeah. I want you to put your futurist hat on for a second. And I want you to think about our business over the next decade, but maybe in two aspects. One, what is a change that's happening today that you see accelerating over the next decade? And what's something that no one's really talking about or changing that you see slapping us in the face somewhere in the next decade?
Daxs Stadjuhar:
Well, I think the easy trends that some people started were the virtualization of their business. I maybe don't need a full time person in the office next to me. So I'm going to virtualize my own staff, or I'm going to go to a virtual admin type company because I'll need somebody for 20 hours a week.
And I think there are people that are on different levels of that paradigm, but a lot of people are going to catch up really quick and people that were like, that's never going to happen. I mean, I had people two years ago saying I'll never do a GoToMeeting, I'll always meet my clients. It's like, hey, how are you doing now? And they're like, I love it. I love it.
Kurt Dupuis:
I was talking to a client recently that said the same comment, a guy you never would have expected that he enjoyed working from home. He was so proud that he just bought two monitors. He set up his whole situation in the basement. He was like, this is going to be my life for the foreseeable future, I'm just going to embrace it. But the last guy you'd expect to make those comments.
Daxs Stadjuhar:
Yeah. And you're going to have people that are running that race at different levels. You have people way out in front and you have people catching up and then everybody's just kind of going to get caught up, probably in my opinion, probably a year. Now, there are a lot of people that are still at the starting block, they've dug their heels in and are betting on everything's going to go back to normal and you admit it, jeez, I pray it goes back. I pray there's a vaccine. Everything goes back to normal because I'm a person that loves traveling and getting out and seeing advisors. And I'm being just personally productivity impacted by this because well, I can do everything virtual, it's great. It's not the same. It just flat out is not the same.
Kurt Dupuis:
Not the same.
Daxs Stadjuhar:
So if I just throw my futuristic hat on, I'm in my office. I've got my Surface Pro here. I've got a big wide screen, but three months ago I actually bought a virtual reality computer. And we homeschool so part of it was for my kids education wise, we want to go visit a museum, the Smithsonian? They get to do it in virtual reality. But I wanted to also do this to experiment with virtual reality meeting rooms. And our advisor's going to get out of the 2D model into the 3D model. From a, hey, I want to meet you let's meet in my virtual reality meeting room. And we'll actually be able to see each other full body and talk and see if it's different. Now, the problem is the cost of entry right now. I mean, I went to Dell, I bought an Alienwear virtual reality computer. I've got the Oculus headset.
Steve Seid:
Wow.
Daxs Stadjuhar:
It's not like an iPad where everybody has an iPad, you can do virtual reality. I mean, you need the software. So not everybody has that. But maybe the cost will come down. And will you be able to be in a virtual reality environment and engage better? I mean, we've already seen the webinars out there where people are saying, you know the problem with Zoom and GoToMeeting? You can't see people's hands and hands convey massive amount of communication power in meetings and sales and everything else.
So do you now need to get your hands above the camera? Do you need to switch out your camera and have a full room camera? Not just one directly on your face. I mean, what are we going to be doing here to make this better, a better experience for our clients. That's some of the futuristic stuff I’d put on there, but as far as will people completely move into their homes and do all that, it's an economic issue. It's a comfort level. I'm a Kolbe certified coach, K-O-L-B-E. Some people who may be listening to this, they've probably had a Kolbe A assessment.
And I think that's a lot of work that we're doing is trying to help people understand instinctually, how they're working and problem solving. And this whole shelter in place stay at home and work from home environment is not good for a lot of people that need human collaboration. And I think the tech companies are going to figure this out as well. I mean, you've heard Google say we're going to let people stay at home for another, year. And then others are probably saying, jeez, we're trying this, but we just don't have the same collaboration and R&D and other development, we'll see time will tell what the consequences of this whole thing are.
Steve Seid:
Yeah. That's really, really interesting. You had started talking about questions that you're having your advisors think about and you started, did you cover all of them?
Daxs Stadjuhar:
No. Well, first of all, I mean the office one is a kind of a no brainer. The others are kind of just economics based, I mean, should I buy a business? I've got an opportunity to buy a business or, hey man, I've been nurturing a purchase for six months, nine months. I mean, some of these things take a long time and then it's like, hey, when we saw that first big drop between February 21st and the middle, late March, we had a lot of people get cold feet on buying businesses and rightly so, I mean, people that are getting ready to sign leases, to take down bigger office space to because they were going to buy a business. So should I buy a business during this period of time? What will it be worth? How can I protect myself if we have another leg down. How it should I change broker dealers? That's a big one.
People study this all the time. Do clients move during a financial stress or when everything's great? Do advisors do the same thing? Should I hire another person? Should I grow? Should I expand? Or should I contract? I think those people that are growing always see every challenge as an opportunity to get out there and sell their wares and communicate and take care of their clients and expand.
Steve Seid:
Yeah. And maybe we'll conclude here with a little bit of the M&A stuff. So talk about where you spend your time with M&A and acquisitions. Is there a lot of competition right now for acquiring books? What does that look like? The people that are getting it done well, what do you see? Just some general guidance around there, because I think you're in a unique role and you have a unique perspective to be able to give us insight there that few can.
Daxs Stadjuhar:
Yes. I mean, we get asked the question all the time about, Hey, how many books are for sale out there? Where's the list? There are brokers. I mean, there are business brokers, around the country, but its kind of a deal like analogies with classified ads. I mean, how many jobs are posted that are available? There's tons of businesses out there that need employees. They just haven't posted the job. I mean, 90% of jobs available are never posted. Sometimes I’ve had people, I had one lady walked in my office one time, sorry to get off a tangent, lady walk in my office with a resume and hand it to my front desk person, we hired her. I needed somebody, I just hadn't had time to post a job description yet. She was great. She's still with us. She's been with us nine years. I mean, look at that initiative.
So the reason I tell that story is advisors who want to buy businesses, need to go find the businesses to buy. Look in your own building, look on your own block, pull out your Google, pull out your map and say investment advisors, financial planners find them in your area. And of course there is research out there. I mean, most broker dealers, as well as we have a data discovery database, and you can search for advisors by zip code. I mean, you can email them or you can send letters. You can try to get ahold of them, stalk them on LinkedIn, connect with them. It literally is still a grassroots level game.
And there's going to be some sort of catalyst event. God forbid, it's health. It could just be waking up and saying, you know what? I just don't want to deal with this anymore. Or I have achieved financial security. Or I'm not growing. And I like to tell some folks, if you're in the business of buying, you want to go buy a business. When you meet with a seller, you want that seller to walk away from that conversation the first time saying one thing, I better sell my business to this person, or I'm going to lose my business to this person. I mean, you better come in with your business plan, your graphic, your services, and say, this is what we do. Do you want to be a part of it? Yes or no. Do you want your clients to be part of it? So acquisitions are still happening.
We have a whole project management spreadsheet when we start helping advisors. And one of the first steps is we say, are you prepared to be prepared? Which means do you have the financing lined up? Do you even know where you’re going to get financing, what if you went and told your staff, hey, I'm going to go out and buy a business or planning on buying a business. Is your staff going to look at you and say, h, we're already a little bit overworked here, we can't handle that. I mean, what other purchases are you going to have is your own portfolio management dialed in. So if you actually have a downturn while you're purchasing a business, you're not going to be turning around taking care of your own portfolio.
So how is your time management? What's your technology look like? Is your technology all integrated? Because you're going to have to integrate another business into it. So are you prepared to be prepared to buy a business? And if you've done all that work, you've got your time management dialed in, your staff is on board. Your technology's squared away. Your clients are content. You've got a great communication plan with them. And now you can take that time to go look, then you're prepared to start having those conversations and sell yourself because that's what sellers buy. I mean, they buy you on behalf of their clients and the best ones will turn right around and say, you know what? You're going to manage my retirement assets because that's what they're going to tell their clients, Hey, I chose this guy because he has my money now. And I want you to have the same experience with his staff and his money management process and his financial planning process and her ability to be empathetic and take care of you through retirement and her ability to talk to you about longterm care.
So whoever it is, they're going to be buying you and your team. And that's what's exciting, when you get the logic out of it, because a lot of buyers come into it from a logic standpoint, okay, what's my down payment. What's my monthly payment. What's my after-tax ROI. What's this? When am I going to be fully paid off? You're helping somebody retire. I mean, you're taking 10 and 20 and 30 year relationships and absorbing them and carrying those legacies on. I mean, it's so much deeper than just a financial deal. Of course, people focus on the financial deal because the deal has to work out. But beyond that, I mean, it is an amazing opportunity to take care of somebody who has dedicated their life to helping others.
Kurt Dupuis:
That's been a theme, it seems like throughout this entire conversation, is that relationships still matter. People still matter, the emotional connection that we have with these ideas are not just numbers on a page. It seems to be a constant theme with everything we've talked about, with the technology, enhancements and M&A, what advisors need to be doing every day.
Steve Seid:
Yeah. And it sounds like, with the M&A, although there is some competition for these deals, you really can differentiate yourself if you approach it from that perspective that Daxs just described. That's probably pretty different and pretty refreshing. Would you say Daxs?
Daxs Stadjuhar:
Yes. And I will make it clear though. When somebody is selling their business and maybe I'll equate this to kind of a house as well, some people would just take the largest offer. And then there's other people that will sell their house and say, you know what? Honey, when we moved in here, little Daxs was two years old and we had the puppies born on the kitchen floor, and we had four other kids in his house. I mean, they have the nostalgia and they say, we want to sell this home to a young family. Now, listen, some private equity firms could come in and buy that house and give them a great price. Or they could turn around and go, we're going to accept $100,000 or less, but we want a young family to do what we did. And the reason I used that analogy…
Kurt Dupuis:
That’s a great analogy.
Daxs Stadjuhar:
…is because the same thing happens in selling your business.
There are aggregators out there, they can pay a lot of money and they even provide some benefits and do some other really cool stuff. But sometimes it's just the person going you know what? I've been in this community 30 years, I'm going to sell it to somebody else who's been in this community 30 years who lives just down the street from me, their kids go to the same school my kids went to it's that whole relationship side. So it goes either way, there is competition, but when people are focused on it's more than money then some really good things happen. And retention is really high and clients are taken care of.
Steve Seid:
So Daxs, did we miss anything?
Daxs Stadjuhar:
This has been great. I mean, one of the other things you had talked to me beforehand was just about what do I see advisors kind of, what do they struggle with the most? Where could they improve or where are the biggest opportunities and challenges of our industry? I would just say right now, like all small business owners, it's time management. And even on the best day, pre COVID, time management, the whole working on your business while you're in your business, it is darn near the toughest thing you have to do. Post COVID, it's darn near impossible with dispersed teams. Now, sure there's some advisors that are bringing everybody back in the office and creating a very safe environment for their team members. But boy, post COVID, all the uncertainty, everything else.
I think that's the one thing potentially where you're going to see a lot differentiators is people that built a really good team that allowed their lead advisor to be a CEO of the business, not just an advisor, but really be a CEO, those businesses, where the people are the CEOs are going to excel going forward. But the biggest struggle for everyone else is going to be time management for the next year. And they' are going to be people that literally have taken market share and other people that have just stayed stagnant.
Steve Seid:
Yeah. Boy, is that the truth? You can get to three, four or five o'clock in a day and some days you're like, wow, it's amazing how much I accomplished. And then there's those other days, you're like, how did this day go by.
Kurt Dupuis:
It evaporates.
Steve Seid:
It's just completely evaporates... So Daxs, that, that was amazing. I really want to thank our guest today, Daxs Stadjuhar, amazing insight Daxs, and we really appreciate you being on the show.
Daxs Stadjuhar:
Well, I really appreciate it. Kurt and Steve, this has been great and a lot of fun.
Steve Seid:
All right, we'll be back Costanza Corner's next.
Kurt Dupuis:
And welcome back to The Whole Truth and welcome to the Costanza Corner where we share an uplifting or positive story to close out the show. Seid, you got one for us today, what you got?
Steve Seid:
I think it's going to be uplifting. It is to me, but some of this stuff, these topics get a little political, but I think this is good. I think everyone should really celebrate this. China has come out and said that they are pledging to be carbon neutral by 2060. Now, why is that a big deal? If we talk about carbon in the atmosphere and where it comes from, yes, the U.S. is a big driver. China is a huge…
Kurt Dupuis:
Huge driver.
Steve Seid:
…and what their position has been historically is, hey, we are a developing country. So we should not necessarily take a lot of the burden for reducing carbon.
Kurt Dupuis:
I've heard that argument, like all you developed countries y'all did this 50 years ago. Why can't we do it now?
Steve Seid:
Yeah. The industrial revolution. And so we're not the ones that need to take the lead here. The problem is the size of that country. And they were using a lot of coal and all this. So them coming out and saying, this is a really big deal. And it surprised a lot of people.
Kurt Dupuis:
Where did you see this? I'm surprised I didn't see this.
Steve Seid:
All over. It showed up in Bloomberg, New York Times.
Kurt Dupuis:
No kidding.
Steve Seid:
Yeah. And the commentary seems to be about it. What China says and what China does sometimes aren't the same.
Kurt Dupuis:
Absolutely. It's posturing probably to the large extent.
Steve Seid:
Yeah. And they don't have a lot of specifics, but just to have this turnaround now, and just to acknowledge that coming from them is just a really big deal. And I was very much uplifted when I read it.
Kurt Dupuis:
So this is like a lot of information that we're being fed right now. You can either choose to see it optimistically, or you can choose just to be a negative Nancy and take it negatively so let's choose to see it positively, I like it.
Steve Seid:
Let's choose to see this positively Kurt, that China is taking an enormous and if they do it, significant step. So thanks everyone for listening. We'll see you next time.
Kurt Dupuis:
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