Kurt Dupuis:
Welcome to The Whole Truth, where two wholesalers help financial professionals build great practices and thrive in a rapidly changing industry. We'll bring you the stories and voices from those on the front lines of this change, and we'll have some fun along the way.
Steve Seid:
This is more than a podcast. We're building a community of financial professionals who are growing, forward-thinking, and want to get better. Thanks for listening and contributing to the discussion.
Disclosure:
The views expressed herein are those of the participants and not those of Touchstone Investments.
Steve Seid:
Welcome, everybody, to The Whole Truth. From the Bay Area, California, I am Steve Seid.
Kurt Dupuis:
From the still remaining world series championship Atlanta Braves, still, well, still, yeah. New season has started.
Steve Seid:
Yeah, still. That's true.
Kurt Dupuis:
I'm Kurt Dupuis from Atlanta.
Steve Seid:
This was a great one, I think. You know what you call this?
Kurt Dupuis:
I'm not going to say it. I'm not going to say it.
Steve Seid:
You won't say it? Okay. You said it in the interview, but this was-
Kurt Dupuis:
Yeah. You'll get to it.
Steve Seid:
There's no doubt that this was a phenomenal episode. We got to talk to Liz Stiles from Raymond James. She's the VP of Coaching and Advisor Productivity.
Kurt Dupuis:
Soon to be Liz Lenz.
Steve Seid:
That's true. Yes.
Kurt Dupuis:
We should mention.
Steve Seid:
Congratulations to that.
Kurt Dupuis:
Congrats Liz.
Steve Seid:
Basically, what that means is she heads all of practice management and coaching at Raymond James. She's been there for about a decade. She started her career in succession planning and acquisitions. So we were just delighted when she said yes to coming on the show.
Kurt Dupuis:
So a couple of the big things we talked about, people always like threes. Her big three are people, process, and tech. We got into something that Raymond James does as similar to our par analysis, it sounds like, but their gap analysis and got into what that is and where she's spending her time there. She had a really great comment. She said, "One of the hardest things to learn is how to unlearn," and because we often work with folks that have been doing things a certain way for a long time, that message is very potent.
Kurt Dupuis:
So we talked about just generally some practice management ideas and what they're working on over at Raymond James, but then because of her experience in the M&A space, we got into that. So just great, great thoughts throughout. It was an awesome episode.
Do us a favor. Subscribe to the podcast wherever you're listening to this. Tell your friends, and when we come back, we'll have our interview with Liz Stiles.
Well, to say we are excited to welcome our guest today would be a massive understatement. Let me set this up a little bit. So Liz and I met on a phone call months ago, and she's the Director of Practice Management at Raymond James. So I was like, "Okay. Well, there's probably a couple things for us to talk about." When we had our list of top people to have on the podcast, you were at the top of the heap. So I'm really glad that we could find some time and connect again and have you on.
Liz Stiles:
Wow! I'm flattered. Thank you for saying all that. It's a pleasure to be here. It's fun to do podcasts, and I love talking about the business with other people that are just as nerdy and passionate about the stuff going on in our industry right now as I am.
Steve Seid:
Yeah. That's an accurate description.
Liz Stiles:
I love it. Yeah.
Steve Seid:
You're at the right place. You're at the right place.
Liz Stiles:
I did get promoted. I'm now Vice President of Coaching and Advisor Productivity at Raymond James.
Kurt Dupuis:
This is why we typically have people introduce themselves.
Liz Stiles:
Yeah. Well, when we met, I was a director and they did promote me, and I've been very lucky to work with some of the management team at Raymond James. So they saw my passion for the work and they've let me take the ball and run with it in certain regards about what we've built here at Ray Jay. So I'm very excited to talk about it and glad that they believe in me as much as I believe in myself. So it's been a rewarding partnership so far.
Steve Seid:
That's fantastic.
Kurt Dupuis:
Gosh! That's a great feeling. Yeah.
Steve Seid:
Yeah. So let's start there. Maybe tell us about your role, if you want to talk about the difference between new and old, and then after that, follow that up with how you got there.
Liz Stiles:
Sure. Yeah. It's a good question. I love my job. I have a fun job. I get to work with financial advisors and their teams 100% of the time. So what that means for me is I get to look at thought leadership in our industry, so practice management thought leadership, which is coming from partner firms like Touchstone. It's coming from industry experts. It's coming from coaches. It's coming from research groups and able to take that information and figure out how we can apply it to our advisors and how they run their practices.
So my team essentially works with advisors who raise their hand and say, "Hey, I think I need help. I'm struggling with one thing," or "I'm struggling with a hundred things, and I don't know where to start." Essentially, what we do is we come in and we have a diagnostic process where we start to understand what's working well, what's not, and what they're most motivated to fix.
That last part is so important because you can have 10 things on your task list, but you're most likely to start on the one that you want to start on first. So figuring out what they're motivated to fix and helping guide them there so they can make the best decisions possible for their business. That's essentially what the job is. That comes out in the form of coaching programs and consultations and tools and resources, but our goal is to be a source of business advantage for the advisory teams. That's 100% of the job.
Steve Seid:
Talk a little bit about how you got here. How did you end up being in the position to be able to do that?
Liz Stiles:
Sure. I've always been a problem solver. I started out in the business in more of risk management roles, so working on the broker dealer side, working on audit risk management items. I always knew I wanted to work with financial advisors. You got to love the role of a financial advisor. First of all, they're so impactful to the clients and the institutions that they serve. They can steer them in the right direction, and their role is so much more than managing money. It's such an important job.
I thought, "If I could help people solve problems, you've got these roles that these advisors solving all their clients' problems, who's helping them?" because they're managing hundreds of families at a time, running a business. It's got to be stressful. So my thought was I'd love to work with the people that are in this profession, see if I could help them.
So I ended up finding an opportunity through networking at my firm to really our mergers and acquisitions team. It was called Succession Planning Acquisitions. At the time, at the very beginning, it was focused on working with our independent advisors who were looking to buy or sell a practice. That also morphed into people who were recruiting advisors for the purposes of a succession or acquisition opportunity. Man, did I learn a lot.
So you learn. There's so much importance to that transaction or moment when someone decides to buy or sell. What you realize is it's not just cash flow. It's not just the type of revenue. There's so many other factors about a financial advisor's business that go into that decision and how that transaction's going to be constructed, the valuation that they have, the transition plan. There's so many other practice management factors there.
It grew my interest in the practice management side, and at the time I had been working with a couple other leaders in the area and they said, "Listen, we have a couple great coaches, but we’d love for someone to come in and help us build and scale the coaching program at Raymond James." So Shannon Reid and Dave Patchen were two people that I worked with at the time. From there, we built out the coaching program, and offering, and over time now I oversee the practice management content as well.
Steve Seid:
Phenomenal.
Kurt Dupuis:
So of all of those things that fall under practice management, where are you finding that you're spending a lot of your time right now?
Liz Stiles:
Yeah. Great question. When you work with a lot of advisors, you realize the other time there's so many talented people out there, right? A lot of them are really good at what they do in terms of investment management and financial planning. They're passionate about more or less the sport of being in wealth management, right? They love it. As they're continuing to grow their businesses, they're reaching a point where now they're wearing so many hats, right? You're the manager, you're the thought leader, you're the head of the organizational structure and design of how your practice is being run. You've got so many different roles in addition to being the rainmaker and the person actually delivering the service offering.
So where I'm spending the most time with advisors now is really focusing on their organizational culture. So I would call that people, process, and technology, and ensuring that that's operating in an efficient and effective manner. A lot of times, that pulls in how they're working with their team, whether they have a team of one or a team of 10 or even larger, how does that function, and then looking at processes that they built. So instead of people running the practice, they have systems running the practice and the people running the systems, which seems like a small, but it's really a key difference in how the advisors think and run their business.
Steve Seid:
Let's start with the mix of people and how the teams operate. How do you diagnose that? What are you actually doing? I say this because Kurt and I just came off of a Colby training, which was our way to diagnose teams and make them work better. That's what we use. I'm curious of your approach to that. How do you tackle that?
Liz Stiles:
Yeah. So one of the first things that I actually wanted to change about our coaching offering when I came in was our diagnostic process because-
Steve Seid:
Oh, interesting.
Liz Stiles:
Yeah. We call it our gap analysis process here at Raymond James. We have a great partner with Actify that we're able to run our diagnostic process through, but essentially, it's a 70-question assessment that advisors take. So it's thorough. At the time, there was another coach here. Her name's Eileen Carpenter. She's still with us. She's brilliant, been working with advisors for years, and we were able to work together to create this assessment. Essentially, what it does is it looks at 20 plus different practice management category areas through the 70 questions, and then we bucket it up into four different practice intelligence zones.
So practice intelligence is what we call the Raymond James practice management thought leadership and content. So the four different practice intelligence zones are market and connect, plan and invest, review and delight, and refine your practice. In layman's terms, that's business development, your service offering, your client management, and the foundation of your team.
So all those 20 different topics gets funneled into those areas, and what an advisor will do is they'll take the assessment, and immediately based on the question, it'll read how they're running their practice and make suggestions of what areas of the business that they should be focusing on. It's at that point in time where they get an automated report back, thanks to the Actify system, a scorecard of how they're performing, and then a coach comes in and has a followup conversation where we're able to dig deeper.
You can ask an advisor about how they run their business, but once you really start digging deeper as to what got them to make the decision to run their business in a certain way, you uncover a lot more of that. It's either a focus area for them, a pain point that they know about or better yet, a pain point that they didn't or haven't thought about yet.
So what I love about this is we've got an analysis, but most of our advisory teams, they're not a one-man show sometimes anymore. It's multiple advisors. So I'll have them take it separately, and then I run a report that compares the difference on all the questions between each other.
Steve Seid:
Oh, my God! That's so cool.
Liz Stiles:
Perception is reality, folks, right? So you both could be running the same practice in the same jobs every day and have two different perspectives on how it's going, and those perspectives help us have deeper conversations with our clients, which are our advisors, about what they should be focusing on and making sure they're not only just building a great practice, but they're building a great team to be the leaders of said practice in the future.
Steve Seid:
Where are you seeing the biggest opportunities right now?
Liz Stiles:
Sure. Yeah, and that is really the two areas, review and delight, and refine your practice, which, essentially, client management and practice foundation. So what I mean by that is the two big areas that we focus on is how are we getting time back in our day to repurpose the effort and energy into the things that matter the most. Oftentimes, you have advisory teams that spend a lot of time working their tails off in the business but are not taking the time to work on the business, and sometimes taking a step back and thinking about, "What's taking up a large majority of my team's time?"
Well, majority of the time, it's managing clients, right? "So is there are a way I could be doing that better?" Frankly, the industry's evolving so fast. What the coolest thing about it, blessing in the curse, there's a lot of technology out there to make your lives easier, but then you got to change process, then you got to adopt the technology, right? It's a multi-step process.
So working with teams to figure out where some inefficiencies lie and, by the way, your branch professionals, the support staff, usually know where those spots are if you ask them, which-
Steve Seid:
Yes. Definitely.
Liz Stiles:
... by the way, we have one-on-one interviews with everybody on the team for exactly this purpose because questionnaire is one thing, but then you start to ask everybody similar questions about their view of opportunity areas, and man, do you uncover a lot. So those help figure out what process areas need to be fixed and which we can go back and focus on that organizational culture, people, process, technology to create efficiencies, capacity, and repurpose that time into what the leadership team wants to be focusing on in the future.
Kurt Dupuis:
So in your work with people, process, and technology, what's the biggest obstacle that you run into with your work there or the biggest challenge?
Liz Stiles:
Well, the first things first in any coaching engagement, you got to have people onboard willing to change. It's a prerequisite to making sure that the engagement is going to be effective. So one of the things we talk about, even before we engage with everyone, is how coachable the team is. In fact, we build in how coachable they are into that assessment that I was talking about, the gap analysis assessment.
Steve Seid:
Interesting.
Liz Stiles:
You have to be willing to change or at least be willing to challenge the status quo. I have a colleague, his name is Matt Ransom, very smart guy, and he told me something that I thought that has always stuck with me, and I don't know if he came up with it or not. So kudos to Matt if you did, but he said, "The hardest type of learning is unlearning." When you look at behavior change, that's really what it is. You're unlearning certain habits.
So in your mind you could say, "Yeah, I want to change, but change is hard, right?" especially when it comes to how we function day-to-day, what we focus on. So being coachable is really the first prerequisite. I would say the second and third things are hand-in-hand. The second thing is you have to have an implementer on the team, and that could be yourself, could be someone else, but someone who's willing to take the bull by the horns and really make the changes.
There's a little bit of grunt work when it comes to change, right? We got to build the processes. We've got to evaluate different technologies. We've got to observe something and figure out why it's not working. We got to ask the hard questions. Then once we figure out what's wrong, we got to be willing to design a new process or tweak something to actually make it work. So you have to have people that are willing to implement those particular changes or at least one person to help the team look at and helping them guide them through that change. That's tied with this idea of "I don't have time."
Steve Seid:
Yeah. So first I want to make the comment that it's something we've observed clearly, you've observed it as well, is that there's just a massive, massive opportunity for younger, and I use that broadly, FAs in this business to come in and to be able to drive, not only to be able to succession plan and take over business, but be able to drive the change that you are describing because sometimes they're the people, the implementers, that take the action, and some of our best engagements have involved those types of situations. So I'm really glad you said that.
So let's talk about when that's not the case. When you don't have an implementer on the team and you talk about an area that he or she wants to improve on, you set it up, you've got the goals, you've got the action steps, you've got the plan, everyone's excited, and the person doesn't take action, and the person talks about, "Oh, I just haven't had the time," how do you deal with those situations?
Liz Stiles:
Oh, yeah. I love those situations. This is where you put that coaching ballcap on and you just snuggle it into place and gear up because this is the time for additional discovery with the client, right?
Steve Seid:
Nice.
Liz Stiles:
Asking really good questions is the art of coaching, right? Not just, "Oh, why didn't you do it?" Right? So first of all, we talk about this internally. Why is always a hard start to a question because it puts people on the defense, right? If I said, "Hey, Kurt. Why did you do it that way?" immediately, you've got this defensive mode. So you definitely want to shift the question, "Hey, what held you back from prioritizing that this week?"
"Well, I just didn't have time. This and this came up."
"Okay. Well, tell me about how much time that typically takes and when it happened? What did you do those other days? What are the other things that held you back? When did you feel like you were running out of steam? What do you think caused that?"
So getting deeper into that day-to-day routine is huge. We all have the same amount of time during the day, right? Some people are really good at using it. Some people are not, right? We all have different things in our lives that keep us busier than others. Some have more things happening at home than others. Some people have different types of clientele that are demanding in different ways. What goes from good to great advisor is being able to suppress the noise of what's happening around you and stay laser-focused on your goals and being disciplined and taking action on the things that are going to move the needle the most.
So if we get to a point where you say, "Hey, I got these goals. I don't have an implementer. I'm willing to be the implementer. I just don't have time," we start really diving into day-to-day routine, activities, priorities, how they're making decisions throughout the day to figure out where is the gap and where's the opportunity that we have to maybe reconstruct your day or your week or even how you think about managing your time, tasks, and priorities to find that extra capacity because otherwise, you're in a rut, right? You're not going to go anywhere.
Steve Seid:
Yeah.
Liz Stiles:
So if you really want someone who's willing to change, goes back to being coachable, which is still the number one, you're going to find those opportunities if we start to ask the right questions, and it's in those moments where the coaching client, the advisor, the team member makes a decision, "How willing am I to make the changes that I need to actually meet this goal?" Ultimately, it's their decision.
Steve Seid:
Yeah. Do you find yourself challenging them?
Liz Stiles:
Oh, yeah. That's part of the job. The questions are meant to challenge you, which is, by the way, every coach has a coach. I have coaches in my life, and they sure as hell challenge me, and I'm happy to have them, makes me better, but yes. They're supposed to challenge you. You're supposed to be thinking outside the box. If it was easy, everybody would be the best advisor in the world and have their ideal practice, but it's not. It's supposed to be hard, and that's what bridges people over the hump there of getting from good to great. It's really focusing and having the discipline and commitment to finding ways to make it happen.
Kurt Dupuis:
There's a concept that one of the coaches at my gym uses. He talks a lot about how discipline creates freedom. Everyone wants to do their favorite things to do in the world all the time. Most of the time, I would love to eat ice cream and drink all of the beers every day, but there would be physiological sacrifices that I would have to make to do that lifestyle.
Steve Seid:
All of the beers? Every beer in your-
Kurt Dupuis:
All of them. Yeah. I like beers, but he talks about, well, if you discipline and structure your life around what you should be consuming, you have the freedom to not worry about it later on.
Liz Stiles:
Sure.
Kurt Dupuis:
It just seems like there's a strong corollary to that and in a lot of our coaching conversations, but I've never quite connected it that way.
Liz Stiles:
Yeah. It is. I recently coached a woman for a few months that came to me and she was having some issues with one, feeling like she had enough time during the day. So it goes back to Steve's comment there. She didn't feel like all the projects she had on her list for her team just they weren't getting done, and then the vision of what she wanted to build seemed blurry. So we started talking about how she got here and asked more questions about how she was doing.
It turns out that she wasn't making enough time for herself, right? What we focused on was things that would help improve herself showing up to work every day, right? It's all the stuff that everyone tells you is the simple things. It's exercising. It's eating right. It's drinking water. It's those little habits, but based on this person's situation, after a few months of just focusing on those things, she started to show up to work, she felt different than she did before.
When you have a super talented person that you're working with, they're highly intelligent, motivated to get things done, but they're in a rut, sometimes they need to focus on themselves and showing up their best self to work every day and their talent and their abilities will take over.
So we almost talked no shop at all about what's going on with her practice. We completely focused on how to improve her showing up to work every day. She's super talented. So from then on, she's off to the races, but it goes back to good to great, that discipline, how are you going to make time during the day, and how are you going to prioritize your energy because the burnout is real.
Steve Seid:
Talk about being an intentional CEO. We've heard you speak about that before. We've seen it in presentations. What do you mean by that?
Liz Stiles:
Every advisor that's running their practice, I wanted them to think of themselves as the CEO of their own businesses, especially in this world where Raymond James has always had this policy, but you're running your business, but if you want to leave, you can leave. We'll support you. W-2 or not, you are independent. It's one of the things I've loved about working with Raymond James and working with the advisors because the freedom of choice is so powerful in that. If you continue to serve your clients and your advisors well, then they're going to continue to choose you.
So that's table stakes to this conversation is you own your own business, right? So with that being said is that you have a choice in how you run your business. So when it comes to how you grow, how you manage your organizational culture, how you manage your service offering, what you deliver, how you deliver it, and how much and to whom, how you're managing and executing that client experience, and ultimately, those business decisions that drive the value of your business, the profitability of your business, and the growth of your business, all is your decision, right?
So that's what a CEO does. By the way, many CEOs, in addition to managing all that, are looking at the vision of their practice in the future and help guiding their staff, and their affiliates, and their partners, whether it be at their broker dealer or COIs that they’ve chosen to bring into their process, and driving towards that ultimate goal.
So you have to think of yourself as a CEO, and being an intentional CEO is thinking of yourself not just as a practitioner, but as somebody who's running a business, and that you're taking time out of your day, your year to specifically plan for the future of your practice, even taking a half a day a month to not think about clients and think about, "How I grow my business. How do I manage my business better? What goals am I achieving? How am I measuring success?" That's being more intentional about the business. So instead of letting the business just happen because you're amazing and successful, taking time back to not only reflect on what's going well, but finding opportunities to continually improve what you're building.
Steve Seid:
We'll start to a transition a little bit into some of your valuation work in a moment, but about different business stages…
Liz Stiles:
Yeah.
Steve Seid:
…and you've analyzed that. Talk about that a little bit.
Liz Stiles:
When you think about the life cycle of a business, no matter where you are in building your business, you have different priorities. When you're first starting out, you're really focused on business growth, getting the right clients in the door, thinking about, "Who's my ideal target? How can I be a category of one for that person? What makes me the most valuable solution to that client? How do I keep delivering that value over time?"
So it's a lot of prospecting, a lot of business development. You're really focused on growth, percentage of growth. You hear the joke that new advisors, "Take anybody that fogs a mirror," right? You've heard that probably a million times, and there's some truth to that, but really, it's about you're trying to figure out which clients are going to be the best fit for you and how your unique abilities can serve them.
So once you get out of that stage, what you find, and I work with a lot advisors who've done just a fantastic job at refining their craft and working with clients that they really love, and guess what happens? They are serving the heck out of all of them. They love them. They're working themselves to the bone trying to collect more clients, work with more families, do great work, and that becomes tough over time, right? You either have to hire more. If you have the same service level across the board, you either have to hire more people to service those particular clients or you have to think about the levels of service.
Steve Seid:
What is the right number of households or relationships for a single financial professional?
Kurt Dupuis:
I love this question.
Liz Stiles:
Oh, everybody loves this question because there's no magic number. I've got an advisory team. It's two advisors. They work with super high net worth clients and they say for them it's about 100, 110.
Steve Seid:
That sounds about right.
Liz Stiles:
Then I've got other advisors who work with different group of clients and say, "Hey, we have about 125 to 175 clients." If you had two advisors serving 50 each versus one advisor serving 175, and then if you talk to some of our professionals who are in our bank-affiliated channels, they've got 250, 300 relationships that they're managing.
So the answer to that is it depends. It depends on how you're serving them. It depends on what the client experience is like. Are they all advisory clients? Are they one-time commission, commissionable accounts, brokerage accounts? What's the service offering? How often are you doing planning with them? There's so much that goes into that. So it's a loaded question, Steve, which I appreciate, but it depends.
Steve Seid:
Wow. Well, let me ask the follow up. How do you know when you're coming across someone where you're like, "Okay. That's too much"? What are the things that is it because they're not unified in how they're servicing those clients? I'm just curious how you would diagnose.
Liz Stiles:
Well, and you ask them why they've kept so many households. It's because they have deep personal relationships with a lot of the clients-
Kurt Dupuis:
Right. Always.
Liz Stiles:
... that are suggesting them by other people may not be the best fit for them long term. Again, goes back to the noble profession of what an advisor is. You develop these deep connections, but how I go about doing it, I love doing this exercise and we take a segmentation, but we cross reference it with a time analysis. So what we do is we essentially take the clients and we look at their assets, revenue, and how their experience is in working with said client, right? You rank them, and through the ranking, you're able to come up with different segmentation levels. In those segmentation levels, we're able to see, "Okay. What's the service experience for each of those segments of clients?"
Based on that service experience, how much time does that equate to you as an advisor? Right? So then you take the number of people of that segment, think of how much time a year it's taking. You've got a total number, right? You start to add up those total numbers and you figure out, first of all, you could just look at time alone and say, "Hey, do I have enough hours in the day to be serving these people like I want to be or am I being more reactive than proactive?"
Now, the other side of that is once you look at the revenue associated with this practice and how many hours that you have in a week, you can look at hourly rate and start to compare those across the board, too. What we find a lot of the time is it's just tweaking of the service model and making sure that what practice they're looking to build and how they're looking to deliver their service offering aligns with the needs of that client because if a client doesn't need that level of service or doesn't want that level of service, the question becomes is, "Does my business allow a service level experience that will fit the need of those clients or is there a better match with them in either a colleague, a branch, another solution that will be more cost effective and aligned with what their level of needs may be?"
It's about making sure that the way you run your practice is aligned with those client needs, and that's what the segmentation does, but it's a math exercise, and it's not perfect, but it does open up a lot of eyes and ears.
Kurt Dupuis:
Let's get into the specificity and your experience with valuation. What are those key inputs to think about?
Liz Stiles:
We talk about this a lot especially when we have mature practices, "How do I maximize the value of what I've built? This is my life's work. How do I maximize that value?" There's a lot of different factors. If you've seen studies, they'll talk about multiples, and they'll talk about how they're constructing the business, but if you notice, when it comes down to it, if you've ever been in the middle of a negotiation between a buyer to seller or seen the negotiation rather, it's classic, right? The seller always thinks it's worth more, the buyer always thinks it's worth less, and the question is why because the seller has intimate knowledge about the practice and believes in it.
If you break that down like, "Why do I believe that this business is wonderful as it is? It's not a very risky investment. I believe in what I've built here." The other side of the table is saying, "There's some risk of me buying this practice." If you think about it in an academic way, you look at a discounted cashflow analysis, it's a discount rate.
I think of a discount rate, there's tons of different ways that people approach it, and there's valuation experts that can talk to you and written tons of books on it, but ultimately, I think it comes down to two questions is how sustainable is the business and how transferable is it because it's not like, "Hey, you buy this pen from me. I have the pen in my hand, you buy it, and I just hand it to you." We're talking about a business. We're talking about client relationships, and you can't just say, "Hey, here's your new advisor." Right? That doesn't work, right?
You've got to have some handoff and make sure that the client is comfortable with the new person that's going to be serving their relationships because the reality is the client has the choice to leave. It's the buyer's job to make sure that those relationships continue to be sticky.
So we talk about how sustainable the business is. Obviously, first thing, you have to look at the types of accounts that there are, which leads to the type of revenue that it's generating, right? Do you have an ongoing advisory relationship with these clients, which is likely resulting in recurring fees or is it a one time commission? But the other things that are a little bit harder to quantify but you want to look at is competitive value proposition, right? So what is the service offering? You see a lot of times that buyers like to have an opportunity where the service offering isn't quite where it could be, and they know that their team has extra expertise or value they can bring to the table to enhance the client's existing experience or services that they're getting.
Client demographics is a big one if they're taking distributions. We don't have a relationship with the next generation should something happen to that client. We want to make sure that we continue to serve that family and those assets. If we don't have next gen planning and we have an aging client base, that could be another risk factor to consider. So that multi gen planning, although hard to do, paired with competitive value proposition, how recurring the revenue is, is where I start to think about how sustainable is this business.
Now, there's another piece of sustainability that really drifts over into transferability of the practice. It's how you're running the business. If I said, "Hey, describe the way you manage your clients," and you can't describe it, and you're more reacting in the practice than having a business model or system that's running, how you're managing those relationships, it's going to be really hard for me as a buyer to make sure I'm delivering an equal, if not better, experience than you had before.
So the transferability of the business is based on your ability to take things like client management, investment management, the planning processes, and deliver an equal, if not better, experience. So in order to be able to do that, describe it to somebody else. You have to make sure first your backstage process. So that's the tasks, the workflows, the things that you're doing to make sure it runs efficiency can be run by somebody else. That's why systems need to run the business, not people, people who run the systems because you can take the system and they can be ran by new people. Then additionally, you have to make sure things like the products and services are available for that client should they transfer to a new owner.
The other thing I'll say is that transferability is huge, especially when it comes to geography, the team, the office location, right? Is the client used to walking in every day whenever they want, grabbing a cup of coffee, talking to the particular staff member that they love, buzzing out when they feel like it? Are you doing meetings at the client's house? Because all those different factors would figure out, "Okay. As the buyer, do I need to keep that office space open or do I need to travel to these clients' homes and do my meetings there with them?" because that's additional time and cost to that buyer. So that's going to affect some of the ways that they may perceive the transferability of the business, which is ultimately a risk factor for them. So that may be or may not be helping them perceive the value that business is higher or lower than maybe the seller perceives it to be.
Kurt Dupuis:
If I wanted to increase the value of my business, what are a few key takeaways of how I would do that?
Liz Stiles:
You want to be able to articulate growth in how you grow to somebody else, right? We have a lot of really talented people that have great, great growth rates and you ask them, "Hey, how did you grow?" and what do they say to you? You guys know the answer to this. How'd you grow your business? What was your number one source?
Steve Seid:
Referrals.
Kurt Dupuis:
Referrals.
Liz Stiles:
Referrals, client referrals. All right. So the next question is, how are those referrals generated? What specifically made those clients refer you business? There could or could not be a specific methodology or thought process or value or service offering that we know generates the referrals. What happens is you have an amazing advisor that's just well-connected and loved, executes really well, and they're an icon in and of themselves and they generate referrals. Well, what happens if that person goes away?
Kurt Dupuis:
Not super transferrable, right?
Liz Stiles:
This goes back to your salesperson that you mentioned before, thinking of themselves as a CEO. How did you grow then? What's your system for growth? Because did you build yourself a business that sustainable and grows on its own because you have a marketing plan, an approach, a service offering, you have values, you have an offering that aligns with a particular type of client that specifically resonates with that person or is it happening happenstance because you're an amazing salesperson? And it's just the person in and of itself. So to build value beyond that, you have to be thinking deeper about, "What's connecting these future clients and current clients to my team and me? I know that I'm amazing and I know that I can deliver great services, but there's something bigger than myself happening here. What is that? How can I articulate that, and how can I make that repeatable to somebody else?"
That's how you start to think about the sustainability of growth. Organic growth is not easy, but when you start to think about growth beyond individual contributions and about the growth of an organization, then it becomes bigger than yourselves, and that growth rate is one of those main factors. So growth rate paired with being prudent and diligent about how you're running your business, free cashflow or the results of that, which depending on your affiliation, depending on how you're structured, will be a factor for various different types of people.
There's a lot of other factors that you control right now that make your business valuable. If you're a buyer talking to a seller, yeah, you want to ask about their business, but some of the key questions that you should be asking the seller is, "Hey, what does your ideal transition look like? If there are three things I could take off your plate tomorrow, what would they be? If you could pick three things that you want to do until your last day here, if your last day working, what would they be?"
So that transition management approach is so critical to making sure that the handoff is a success, the valuation is a success, the deal structure is a success, and you're only going to figure that out if you understand what motivates each party and cater to that over a period of time and understanding what the client needs.
So that's why it goes back to sustainability and transferability of the business because if you understand those things at a deep and intimate level, you'll understand what the seller's role in executing those things are. You can ask them what they love and what they don't love about that role today and start to cater your transition management plan around the things that are going to maximize the sustainability of those client relationships, are going to help transfer those client relationships at the same time, make the seller and their team, if they're coming with them or not, very happy about the transition process.
So lots of academic approaches to this topic, but ultimately, whether you're thinking about selling 10 years from now or in a year from now, you've got a lot of things under your control that you can start to look at and build to maximize your experience on the back end.
Steve Seid:
So you get to view a lot of practices, the FAs that are growing the most.
Liz Stiles:
Yeah.
Steve Seid:
What's the commonality here? What are you seeing growth-wise?
Liz Stiles:
One, they have a very clear idea of who their ideal client is and how their service offering aligns to that ideal client. So they're picking niches and they're going narrow and deep, which is a really good segue to the second thing I think they're doing is they're creating a unique client experience and community around the people that they serve. What deepens that relationship is the stuff that technology can't replace. It's the like-mindedness, it's the core values, it's the things that you have in common with each other, and it's you being uniquely qualified to serve them, and understanding that client's position better than anybody else could, which is going to allow you to create an experience that's like no other.
Steve Seid:
I was just going to give a message to our Whole Truth audience. This is why Kurt and I have 87 million episodes on client experience and service and why that will not change because, to us and clearly to Liz, too, that's a big deal in this industry and how people are growing. So it's the heart and soul of many things.
Kurt Dupuis:
People can't see her, but she's literally on the edge of her seat-
Steve Seid:
Yeah. She's doing-
Kurt Dupuis:
... talking about this.
Steve Seid:
It's the first time I feel like we should have video.
Kurt Dupuis:
Yeah, we should have videos.
Liz Stiles:
Well, I wasn't prepared for the video, but if you want to take a picture of me at the edge of my seat, I wouldn't be mad about it because it's true. I get excited about this stuff.
Steve Seid:
No. We love it. Okay. We've got a few more to get through and, boy, I mean, we could talk to you all day. You mentioned something about a vulnerable value proposition. On the flip side is someone who has a really solid, defined value proposition, driving that client experience. What is a vulnerable value proposition?
Liz Stiles:
Yeah. A vulnerable value proposition is if I said, "Hey, what's your value proposition?" most people don't love the elevator pitch, right? I love having the idea of asking the client, "Hey, what do you think our value proposition is, and what made you choose us?" If you start to ask your clients, some of your best clients that question and you don't like the response, your value proposition may be vulnerable because what it means is that their perception of you and your perception of yourself may not be aligned or it's an opportunity to talk to your clients about exactly who you are and what makes your relationship with them so special and hopefully, have them understand and agree with that same thing.
Kurt Dupuis:
Well, so you talk about performance quite a bit, but how do you measure performance?
Liz Stiles:
That's the first question we always ask and how they measure themselves against that goal. When I look at just KPIs of an advisory practice, which is I think where we want to go with this question is we certainly look at how their value proposition is constructed, the things they're doing that align to that value proposition. That often comes out of that gap analysis to make sure that the way they want to be running their business is aligned to that and that they don't have major pitfalls in their practice.
The gap analysis does score them, so I can see whether or not they've got huge opportunities in the way that they grow, and the way they manage their clients or their service offering. So there's some soft elements there. Other KPIs I look for are for their, one, the sustainability of the revenue and the growth rate. That's certainly one of them. I look at the amount of financial planning that they do and the robustness of their offering, right?
There's a study. I think Investment News had a study that said 86% or 87% of advisors say that they do comprehensive financial planning and another, whatever the delta is to 100% percent say they'll do it for an extra fee. Everybody provides comprehensive financial planning. So if you say that you do, show me how and then I'm going to measure against that. If you're saying everybody's got a financial plan on file, I'm going to see how many of your clients actually do, right? So when I start to think of about that, that's really what I want to want to be looking at.
Another is client retention, and another way to look at that is net new assets. So there's outflows that are going to happen in your business, and certainly, you're going to be growing. Your clients love you. They're going to have assets. They're going to want to invest more with you, but making that a net positive number. I'd love to see that at least 10 million per advisor per year. It doesn't always happen, but we want to be looking at those net inflows and those outflows.
Certainly, if you're an independent advisor, looking at your bottom line cashflow and what those percentages are looking like, and especially, if you're a solo advisor. You have staff, but you're paying yourself a salary, plus taking distribution. So we want to look at the operating profit of that business as well. So that's another piece of it, but those are some KPIs that we generally look for.
So the gap analysis, we're looking at revenue, we're looking at net new asset, we're looking at client retention, we're looking at profitability if it is an independently business that's running their own business entity, and then we're looking at strength of the financial planning process.
Steve Seid:
Excellent. Weren't you looking for feedback here as well? You're still doing research. I remember when we were talking about how you could benefit from coming on our show was you want some feedback there. So what specifically are you looking for? How our audience is measuring success, essentially?
Liz Stiles:
Exactly. Yeah. That's what I want to figure out because everyone measures success differently. I'm a nerd. I read all of those Cerulli and Investment News research reports, and there's so many different metrics that you look at, but with an advisor, especially if you do take time to be an intentional CEO, you've got a Friday morning. It's you, a cup of coffee, a really great New York bagel, and you're looking at your practice metrics and you're saying, "Okay. What am I looking at? How do I know this is moving in the right direction? I want to know what those metrics are." So yeah, anybody who's listening that wants to shoot me a direct message on LinkedIn and tell me what they're looking at.
Steve Seid:
We absolutely are going to ask our audience. I'm going to correct you, though. You meant New Jersey bagel because ours are better.
Liz Stiles:
Oh, okay. I'm in Florida and I-
Steve Seid:
That's just a side...
Liz Stiles:
It's all better than we got down here. I love the bagels, but they will fly New York water down here to make bagels.
Steve Seid:
Does it work? Does it work? Because I live on the West Coast now. I grew up in New Jersey, obviously. There are people that claim to do that. It can't be replicated. Pizza either. It's just you can't.
Liz Stiles:
Yeah, same. I think that it's a little nostalgia, right? You have the whole experience there.
Steve Seid:
So we're going to finish up with a couple of questions. You've been phenomenal. Thank you for coming on. I know we're already-
Liz Stiles:
Thank you for having me.
Steve Seid:
Yeah. Yeah. This is one of those episodes that as soon as this is over, my phone's going to light up and what are you going to say, Kurt? You're going to say that was-
Kurt Dupuis:
Banger.
Steve Seid:
That was a banger.
Kurt Dupuis:
That was a banger. That's a hit. That's a top 40 billboard banger right there.
Liz Stiles:
I love it.
Steve Seid:
Yeah. That's a banger.
Liz Stiles:
I love it. Well, I'll talk to you guys anytime. I think there's way more we could be talking about, and depending on what you want to hear more about, we can go even deeper on some of these topics.
Steve Seid:
We will absolutely take you up on that. Before we get to our final couple of questions, where can people find you, engage with you? What should they be looking up? Is it just RJ advisors or share where people can get in touch with you.
Liz Stiles:
Yeah. I think Raymondjames.com has a section for coaching, consulting. If you want to get in touch with me directly, you can find my LinkedIn profile. I try to post relevant articles that I think are interesting to me and maybe interesting to others. So I actually got married last year. So I'm in the process of changing my name-
Kurt Dupuis:
Yeah. Congrats.
Liz Stiles:
... which I'm very excited about, not the paperwork. I'm excited to take my husband's last name, but my name is Liz Stiles legally now, but it'll be Liz Lenz, L-E-N-Z. So you can find me on LinkedIn.
Steve Seid:
That's a good one.
Liz Stiles:
Yeah. I have a little news reporter vibe with the Liz Lenz with the weather.
Steve Seid:
That's nice.
Kurt Dupuis:
It is. Wow. I can see that.
Liz Stiles:
It's got a little ring to it. It's going to be fun. So, but yeah, you can find me on LinkedIn there. Again, would love the feedback. If you have interesting articles to share with me, I think I've already shared that I love reading. So give me a ring. Share with me your insight.
Steve Seid:
That's great. Yeah, Stiles is a hard one to replace. That's a good last name, too. So you did all right. You did all right. Okay. We'll do a couple more questions with you and then we'll certainly do a part two in the future. So one of your findings in your research is that 63% of financial professionals do not have a marketing plan. Why is that?
Liz Stiles:
So I think the better question here is if I said why is that, what do you think the advisors would say?
Kurt Dupuis:
They don't see value in it. That's why they're not doing it. If they thought actually putting a plan together would drive more clients, they would do it, right?
Liz Stiles:
Right. It's more of like an exercise, right? So they don't have the big T word, Time.
Steve Seid:
Time. Yes.
Liz Stiles:
Yeah. Like, "Oh, yeah. I probably should do one of those. I haven't had time to do it."
Steve Seid:
Once you realize all those plans serve a purpose was to save time and make you more effective.
Liz Stiles:
Oh, well, and you'll love this. There's people who have, and we've gotten some of these stats from our sources, from some Investment News sources over the years, but there's people that do the plan and then there's taking the plan and putting it into action, right? Maybe I wrote down what my goals would be for the year and all the things I'm going to do in my calendar year like events, networking things, sponsorships, charitable donations, charities that I want to get involved with, client gifts, all those things that can help drive advocacy, drive networking, drive your ability to get in front of that ideal client, and what happens is is you get that plan and it sits in your desk just next to your business plan or maybe it's in your business plan and you don't pull it out until you get that webinar or reminder that someone says, "Hey, you really should do an annual business plan."
It's the same concept is not only do you have to create the plan, but then you got to measure the plan along the year, "End of 12 months, this is where I want to be with assets or revenue or number of clients. How do I manage that into smaller goals that I can look at on a monthly or quarterly basis?" That's how you get real traction. By the way-
Kurt Dupuis:
Periodization.
Liz Stiles:
Yeah. You got to look at smaller chunks and you'll know if you're on the right track. So if I said, "Hey, I want to have 12 million net new assets next year," and I've got 12 million of outflows every year, my asset goal isn't 12. It's 24, right? So what does that look like every month, every quarter. Okay. So that means that I want to grow my business and that means two million in inflows need to come in a month, at least. So what does that mean in terms of ideal client? Is that two ideal clients? Is that three? Is that one maybe?
So let's say it's two. Let's keep the math easy. It's a podcast, right? So you have two $1 million ideal clients coming in a month. That's six a quarter. So when you're doing your monthly or your quarterly pipeline review, and you're looking at the marketing activities that you have lined up for that quarter, I don't need you to plan out six months of marketing activities. What I need you to do is look at that number. Everybody would say, "What am I going to do this quarter to get me six awesome ideal clients that I can engage with?" That's what I need you to look at. I need you to look at smaller chunks.
So you know what? I'd rather you not have a big old fancy plan. I'd rather you have a three to six-month plan and smaller goals that keep you moving, and that allow you to not only give yourself a pat on the back, but hopefully give your team a pat on the back when they help you achieve it because, by the way, everybody's a salesperson in this business. So just like you can source the client, so can they, right? They're an ambassador to your brand, your service offering, your model, your team, your culture. When that person comes in, now everybody can celebrate and you have more wins, and who doesn't love more wins?
Kurt Dupuis:
I'm going to assume you listened to all of our podcast episodes and you're just stealing from our-
Liz Stiles:
No, I haven't.
Kurt Dupuis:
... but that's exactly, almost word for word at the end of last year we talked about the best laid plans was the name of the episode, and that was the key takeaway is annual plans are garbage. Think about it in quarterly chunks and the real activity that's going to drive those results. That's beautiful. I mean, we didn't say it as eloquently, but that's the same idea.
Liz Stiles:
Yeah, exactly. Yeah. You got to have small wins. You got to have meaningful wins.
Steve Seid:
Love it. Final question. What separates good FAs, so think you're above average, from the really great ones in your ops in your experience?
Liz Stiles:
That's a great question. Suppression of noise and discipline.
Steve Seid:
Nice.
Liz Stiles:
That's what I would say.
Kurt Dupuis:
Boom.
Steve Seid:
Laser-focused.
Liz Stiles:
Yeah. I mean, there's a lot of talented advisors out there that love working with their clients, and it's really great to work with them, the people that become great. Whatever the definition of great is, they're able to take the things that are happening around them and have a really great filter to focus on the ones that they're going to move the needle the most, and then their discipline in their approach. So it's ability to really think about what matters the most. Don't get caught up in the drama of the world and the things that are going on. Stay really focused on your goals. Suppress the noise around you, and if you're disciplined enough, you're going to reach those goals because the people that are in this industry have a lot of grit. So they have the energy, they have the ability. It's about making sure they're focusing on the right things to get to where they want to go.
Steve Seid:
That is fantastic. I want to thank our new friend, Liz Stiles, soon to be Liz Lenz, two great last names, for coming on the show. She was phenomenal. Our Costanza Corner is coming up next. This is The Whole Truth. Stick with us.
Welcome back to our Costanza Corner. Kurt, you're leading the way this week.
Kurt Dupuis:
This is going to be a quick, easy, but extremely fun one.
Steve Seid:
Ooh, I like it.
Kurt Dupuis:
So your homework, if you've made it to this part of the episode, is to go to YouTube and type, seed and feed marching abominables, and I'll tell you what you're going to find.
Steve Seid:
Seed and feed marching abominables. Okay.
Kurt Dupuis:
What you're going to find is a group I am about to join. Think of a mardi gras parade procession but on crack, people dressed up-
Steve Seid:
Is that possible?
Kurt Dupuis:
People dressed up like complete nut jobs, playing random instruments with music being secondary or maybe third in line, but it's just a group that likes to have fun and party, and they go to parades and events and stuff all over Atlanta and they march in different parades. So I'm trying to join this group. So if you're in Atlanta, you've probably heard of these folks, and someday soon you might see me in the procession.
Steve Seid:
What's the application process like? How do you join a group like that or do you just show up and-
Kurt Dupuis:
I think it's just pretty low bar.
Steve Seid:
It's pretty low bar? No hazing process?
Kurt Dupuis:
I think you just show up and haphazardly play some kind of musical. There are kazoos in the band. So that tells you the level of musicality required, but a neighbor around the corner has been involved with this for a while. So I've been connecting with her on some music stuff, and she's convinced me that this is something I should do. So just YouTube that. You can implant my face on one of those pictures and that'll be me in a few months.
Steve Seid:
You'll come back and you'll tell us stories and tales from your epic mardi gras on crack.
Kurt Dupuis:
I bet there's some characters in this group. Yup.
Steve Seid:
Excellent. Thanks everyone for listening. We'll see you next time.
Kurt Dupuis:
See you.
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