From Executive Assistant To COO Scaling A $4B Advisory Firm

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Wealth, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

Resources Featured In This Episode:

Looking for sample client service calendars, marketing plans, and more? Check out our FAS resource page!

Full Transcript:

Michael: Welcome, Allison Felix, to the “Financial Advisor Success Podcast.”

Allison: Thanks, I’m so happy to be here.

Michael: I really appreciate you joining us. I’m looking forward to the discussion today around, to me, just what are some of the really interesting, unique challenges that come when advisory firms grow to a certain size where…and the founder can’t do everything and run everything and manage everything. And you have to start down that path that the industry consultants call hiring dedicated management, right? The separation, where the firm starts hiring people whose sole job is to manage other people, which you don’t really have in a business till you get to a certain size where that just becomes necessary, you have to get there.

And I know you’ve lived a version of that journey yourself both wearing that COO and Managing Partner hat in a large advisory firm and what I know as actually a really cool sort of 20-year career journey from executive assistant to leading the firm. But just that journey of what it looks like both from a personal career and just as a firm, when you grow to the point of, “You know what? I think we just need someone whose sole job is just to manage all the people and stuff that’s happening,” because there’s just a lot of stuff happening in the firm when it gets to a certain size.

Why Cassaday & Company Chose To Create A COO Role [04:15]

Allison: Sure. So, for us, and I know that every firm is different as you mentioned, we were probably about 15 years old as a firm before we started considering the idea of a COO role. And what was maybe unique to us, but not certainly unique in the industry is that our CEO was also an advisor. And so, when you’re looking at the combination of managing a firm and maintaining a book of client relationships, there comes a tipping point. And so, for us, it was about, like I said, 15 years when we start talking about it, close to 18 by the time I sort of officially took the title because my CEO at the time had approached me and said, “You know, I think that you should go back to school, get your MBA, we’re looking at the growth of the firm, what this would look like, I think you’d be great positioned in this role.”

And it was the first Chief Operating Officer role for the firm, so not only was I super flattered that he thought that much of me to come in and have that influence in sort of leadership level. But certainly, as a firm looking at our strategic path and our vision, we decided that it was absolutely necessary to walk down a path where we were separating the CEO and COO roles as well as continuing to navigate our succession plan. Because in addition to being CEO, the adviser was also the primary rainmaker and sole owner for quite some time. So, for us, it was, yeah, walking down sort of multiple paths to figure out who else do we need here in the C-Suite?

Michael: So, you noted that this was 15-plus years into the firm when it got to the point of saying, “Hey, maybe we need to do this.” So, can you size the firm for us? What was the actual size of the firm when it was getting to this realization of, “Oh, I think we’re going to have to do something different from here?”

Allison: So, we started talking about it in 2008, and so I ended up going and entering into an executive-level MBA program in ’09, which led to the graduation of that program in 2011. So, that was sort of the launching point of having a COO with the firm, but we were talking about it three-plus years earlier. And so, I would say we were probably at the 20 to 25 employee headcount mark, by that point. Today, we’re at almost 75 employees. So, we’ve definitely had an expansive number of headcount growth during that time, but we were in a healthy state of growth. I think at some point, we’ll end up talking a little bit about some challenges may be that we’ve experienced over our path, but one of those was the loss of a senior advisor at the firm at that time. And so, we had a lot of course corrections but like I said, we were probably about 20 to 25 employees at that point.

Michael: Okay. So, what were the challenges that I guess you were hitting or feeling at the time as you’re a 20 to 25 employees that was leading to this, “Hey, I think I think we need to change the structure, I think we need the COO role?”

Allison: So, I think it was two things and I think I would only use the word challenge for one of them. And so, the challenge was the growth that was happening at the time. Our model had been and always has been to bring on young, influential students right out of college, fresh and new and don’t have bad habits and really excited to learn. And so, we had brought in these advisors, young advisors in training, and mentored them, and they were all launching into gaining their own clients, marketing and building client relationships. And so, we felt like we were a well-oiled machine in some ways in terms of bringing clients into the firm.

The challenge there then becomes, “Well, what’s the attention that you need to both of those concepts? Do you need to spend time on the client’s needs? Do you need to spend time on the firm needs? How do you balance the two of those?” And so, from an operational standpoint, I would say that the growth was the launching point and maybe quick growth, right? If you can call quick growth a challenge. But everybody understands growing pains in the fact that sometimes your growth exceeds your ability to keep up with it. And so, at that time, that’s kind of where we were. As I mentioned, we lost a key member of our firm who had had two employees with him.

And so, when he left to start his own practice, it shook the organization a bit, it was, “How do we come back from this? How do we look at this as an opportunity to rise up together and continue to make this a really great firm, but more cohesive than we’ve ever been before?” And so, we spent a lot of time having corporate retreats, we had put together a firm leadership team before that, and we really just came together as a group to make sure that the firm was going to stay strong despite this disruption because, at that point, we’d never had such a key advisor leave the firm.

Michael: So, what was the reaction going on with the firm? I’m just trying to understand, was this like, “We lost a key person and a bunch of clients in revenue, and so suddenly, our economics are out of whack, we have to right-size team and restructure?” Or was this more from the direction of like, “Oh, we lost someone with a lot of clients and revenue, that hurt, how do we make it to the point where we don’t lose people in the future?” And it’s not about how do we restructure for the person that we lost, it’s really how do we restructure so that hopefully, we have better retention and that doesn’t happen again? Which version of it was going on?

Allison: Yeah, and I think it was kind of a blend of both, but I would say initially, it was, “How do we look to restructure and keep pushing forward?” So, going back to me talking about the timeframe, this all happened late 2008, early 2009, I think we all understand what was happening in the market at that time.

Michael: Not the best time to have a key team turnover.

Allison: Yes, right, not the ideal time to have a significant advisor with a large practice book of business with a couple of staff people sort of uplift and go out and start their own business. And so, one of the things that has always made our firm really strong is that the CEO when he was founding the firm decided he wanted everyone in the firm to think entrepreneurially. And so, we’ve always paid our employees from reception all the way up to the CEO the same way, we make sure that everyone is paid on top-line revenue. And so, we could come back to that, but frankly, that really put everybody in an investment position.

So, when you have a top adviser who’s bringing revenue with him and not leaving it here, that impacts everybody’s paycheck, right? That’s not a chief-level problem, that is a firm-wide level challenge. And so, we got creative about restructuring positions and compensation and even how we were helping young staff with not high-level salaries sort of make it through. And so, it became a little bit of a rallying cry where we said, “We’re not going to let this bring us down.” At the same time, we are going to look at how do we prevent that in the future? And so, I think you’re always interested as a business leader or owner, how do you attract and retain really excellent talent?

And that is something that’s been at the forefront of everything that we do outside of bringing high-level service to our clients. And so, that was a great opportunity for us to kind of get to pull ourselves up by our bootstraps. I mentioned that we were really feeling good about the business we were bringing in at that time. And so, we had decided, “Okay, a chief operating officer role makes sense, oh, by the way, somebody is going to leave the practice, we’re going to have to restructure some positions at the firm, figure out what support looks like, how the investment in staff should shuffle a little bit to make sure that none of these people also leave as a result of this top advisor leaving.

Offering Compensation Through Combining Salary And Top-Line Revenue [13:02]

Michael: So, I am curious to hear more of this top-line revenue-based compensation across the firm. So, how does this structure work for team compensation?

Allison: So, we’re a hybrid, we’ve got some commission business, but we are largely fee-based. And so, what we have always promoted to employees who are coming into the firm is that we will pay them a combination of base salary and basis points on top-line revenue of the firm. And so, for most people, the base salary was so insignificant that the revenue made up the largest share of their income. And so, they were motivated to ensure that everything about their job was done well, and the clients were kept happy so that the firm continued to grow. We ensured that people were only focusing on their highest pay-off activities. I think that the whole reason for someone like a chief operating officer is that if you’ve got a CEO who’s also an advisor, you want them doing nothing other than talking to clients and asking people, “Can I invest this money for you?”

And so, that is entirely the model that we have structured with shared team support, so that our advisors are doing nothing but talking to clients, and have continued to develop different support service teams within the organization to continue to allow them to do those things. And so, when you’ve got everybody being paid the same way everyone knows where their bread is buttered, they’re all rowing the boat in the same direction, all the sort of cliche things that could be said but are actually true. And so, we were willing to say, “Okay, what do we need to do to make up for the loss of another advisor?” And part of a Chief Operating role is ensuring that your staff understands where are we headed? How do you play a role in that? And how can I be here to be both your chief cheerleader but also hold you accountable to meeting the goals that you set for yourself and how they support the firm’s goals?

Michael: So, help me understand a little bit more of just this…I’m sort of just fascinated with this compensation structure. So, I guess even of a rough breakdown, how much tends to be based salary and how much tends to be the sort of like revenue-based compensation? Is this like 75% salary, 25% variable? Or is this more like 25% salary and 75% variable? How does the breakdown work?

Allison: Prior to 2021, any employee that was hired…and I’ll give a for instance, but generally base salaries in our office were slightly under $20 grand. Now, if you’re anyone, whether you’re coming out of college or you’re coming off of another role at some other firm, there’s no way you’re going to live on $20 grand in the Virginia DC area.

Michael: Yes, greater DC metropolitan area is obnoxiously expensive.

Allison: Ridiculously expensive, and that was all pre-current state of things. And so, we had to be really transparent about how the business has been growing and succeeding in order to ethically communicate to our candidates that this way of being paid actually comes out to be a benefit to them. So, for instance, if you are a new hire in 2002 and you come on and your salary is $20 grand, but your basis points on revenue generated a $30 grand salary, okay, for a total of approximately $50 grand. As the firm grew and the revenue grew, so too did your revenue share.

You might have the same basis points, but frankly, with the growth of the firm, came gross in your comp. So, we’ve had employees who’ve been at the firm 15, 20, 25, 30 years. So, if you like myself who’s been here over 20 years started out at a percent of revenue and the firm has grown exponentially… We’re talking from a couple of hundred million to now we’re just over 4-plus billion. Obviously, you’re going to have an impact there from a revenue perspective.

And so, the transparency in our growth in our numbers is really what gets employees excited about this process. And the fact that there are so many tenured people that we can say, “We are living it,” and we would never have stayed with a firm if this process didn’t work. Now, there’s all sorts of sort of caveats and ins and outs and how that worked over time. At some point, you come to a level where you say, “Well, I can’t give everybody 1% of the revenue,” right? Even if you’re not…

Michael: Or just at some point, the percentage just have to be fairly small percentage because the denominator is just so big when you’re a billion or multiple billions.

Allison: Sure, sure. And so, as someone who is partnering with us, they asked a lot of questions about that process. And so, what we did in the beginning of ’22 is that we normalized that comp to a more 50/50 split. So, based on whatever your earnings were in ’21 as an existing current employee who was earning revenue share…because what I didn’t mention is that we often have people come in for about 60 to 90 days at a flat base salary before we transition them to that revenue share plan. Because we’re largely fee-based, then, as many of your listeners know, revenue comes in quarterly. And so, the bulk of your income as an employee at our firm is received quarterly and thus you have a key budgeting component to your lifestyle and understanding sort of how all that works. So, we give staff coming on to the firm a 60 to 90-day window to get acclimated, and then time it properly with what we would call sort of a fee payroll, if you will.

Michael: Interesting. So, not only is there this heavy revenue-based compensation component, but they’re actually on the quarterly billing cycle. So, more than half your paycheck might get paid in three-month lumps every three months because, hey, that’s how our business works, so you’re going to be aligned to this as well.

Allison: Yeah, so the key is that you have to really work with new hires initially upfront and make sure that they’re comfortable with this. Once they’ve been through two, three, four quarters, they’re pretty set, they understand what’s happening. But initially, this is very different than how other people are paying. And so, we get a lot of questions, “Well, is it a year-end bonus?” No, it’s not, it’s paid throughout the quarter.

If you have an up-quarter grade, if you have a down quarter, we all take the hit, I don’t have to lay you off because of financial circumstances, it’s just it’s a little bit off of my paycheck, it’s a little bit off of yours and it’s sort of shared around the firm. And so, to be honest, that’s how we sort of got through 2008. If you lost a primary revenue-generating advisor at your firm, you’d have to give some really hard looks at, “Well, who did we hire recently? Where can we make some cuts? What do we need to look at?” And we have never laid anyone off for economic reasons.

Michael: But for better or worse, you’re getting paid as a percentage of revenue on both sides of the advisor, if a key advisor with 20% or 30% of the revenue walks out the door, guess what, your rev share just went down by 30%? So, all right, what are we going to do to make it up? What are we going to do to grow it back? What are we going to do as a team to make sure that doesn’t happen again, because now everybody really wants everybody else to stay and retain? Basically, that’s very good for cohesive culture, right? It’s harder for someone to leave when you know all the co-workers you leave behind are going to have to take a personal income hit because you bailed out of the wagon. And that’s the point, right? That helps build team cohesiveness.

Allison: Sure. And like I said, coupled with the market conditions at that time, it became the rallying cry to say, “We’re going to do what it takes.” And so, we had very little turnover at that point during those years because everyone understood that we were all invested. And so, key earners, top earners at the firm are doing everything from starting to share in salary expense at the firm or as small as something like giving gas gift cards to staff who may just need those kind of boosts at a time like that when maybe their income was impacted.

So, markets over the last decade or so have really been helpful but you grow some assets. I mentioned when you go from…at the time, we were looking at how do we become a $1 billion firm before this advisor had left and now, we’re at $4 billion and we continue to look and say, “Well, how do we get past 5 or 10?” And so, always keeping smart goals as your forefront, which I think is really the key to the COO role is making sure that the firm is driven by these sort of benchmarks, we call it vision-driven progress. You set a plan for a number of years out and you don’t know what’s going to change, so how do you have a vision? You work towards that vision and you course-correct along the way.

Michael: So, this comp structure, it’s not as though someone joins the firm where you might get a low base salary and that’s literally all you earn until you go out and get clients and bring in revenue and then you get comped as a percentage of revenue. But it sounds like that’s not the model here. So, if I’m an administrative staff that my compensation would normally be $50,000, I might still start at $50,000, it’s just my $50,000 might be a base salary of 15 and a revenue share, based on the current revenue of the firm that if we calculated today would give me the other 35,000 of comp to get me to my 50 total. But it means 70% of my comp is going to be tied to that variable formula. So, for better or worse, I’m now living with the ups and downs of the firm and that’s how you try to create the alignment. But I’m still getting paid, if I was going to get paid 50, I’m still going to get paid 50 out of the gate. It’s not like I started with nothing and have to build up.

Allison: Sure, sure. What it ensures is that everyone is nuts about client service. If you are not somebody who is willing to walk by and pick up a ringing phone, then you don’t understand. And so, we are sticklers about ensuring that clients are happy.

Happy clients produce stickiness plus referrals plus sort of all the other benefits when they have rollovers to be made during other periods of time, or maybe they didn’t invest everything with you right off the gate, this is an opportunity for them to…basically, you’re earning their trust. And so, everyone from, like I said, the receptionist who’s absolutely amazing with our clients, all the way up to our top advisors understand what it takes. It’s not, “Oh, the advisors sort of approach the clients in one way and we as the support staff approach it another way,” which is not to say that everything is a money motivator, right? There are people who innately want to be good service people and we have a lot of those. But I think it goes hand in hand, you understand if you live in a high cost of living area, you need to make enough to live comfortably, and still be able to get your job done in a happy environment.

Michael: So, when team members are starting then, I guess it’s not necessarily going to be a standard basis point rev share formula either. You’re going to end out just over time, like team members come in, we benchmark their starting comp to blank, $40 grand, $60 grand, $100 grand, $150 grand, whatever it is, for wherever they are in the organizational chart. Our base salaries are fairly limited, $20,000 or less. And so, you have to go through the math exercise every time someone joins the firm to just set like, “Okay, I want their starting comp to be here, our base salary is 20 or less.” So, okay, based on our trailing revenue, like, you’re going to get 200 basis points, you’re going to get 100 basis points, you’re going to get 72.5 basis points. And then, everybody’s got their magic basis point number of what piece of revenue they get from their position?

Allison: Yeah, puts our HR team on their toes, right? So, they’re constantly looking at what the last 12 months of revenue were so that we can say, “Okay, well, maybe somebody who was hired as a paraplanner, for instance, six years ago, had 80 bps?” Well, today, that could look like 60 bps based on just where the revenue is, it doesn’t mean that their starting salaries were necessarily different.

Michael: Right, but just the firm is bigger, so every paraplanner hired over the span of 10 years is going to get a different, probably smaller basis point formula over time because it just takes a smaller percentage of a bigger total revenue for the firm to get them to the starting salary that you want to get them to.

Allison: Yes, and so since I’ve been here as long as I have, I know staff who had well over 100 basis points and now we might have people who are under 20 or 25 basis points, right?

Michael: And so, what happens if someone gets like a promotion or like a change of role? I get when you come in out of the gate, here’s where we want to get your comp, your basis is this, so we can do the basis point math to figure out what your basis point…your revenue participation would be. That sets you at the starting point. If at some point down the road, I started as a paraplanner but eventually, I get promoted to be a support advisor and then a lead advisor and then a senior advisor, I climb the proverbial ladder, do my basis point thresholds get changed as I get promoted up the line as well?

Allison: It’s definitely something where we look and say, “What accomplishments have you had? This promotion is obviously deserving for a number of reasons, let’s look at where your comp should be.” And as I mentioned, we’re sort of broken up into two timeframes, pre-2022 and then sort of what is today. And so, pre-’22, absolutely, employees were getting basis point raises almost exclusively. We initially set it up so that we would not have high base salaries because then you have a high fixed cost.

And so, if you do have a market downturn, you’re still beholden to the fixed cost of the salary and thus have to make the decision that if something goes awry that you would have to lay people off. And so, for a long time, that was our model.

Michael: So, I guess I’m just wondering like do you worry about or did you have to deal with team members who just were there so long that their compensation ended up being rather large relative to the position? I think of your example of like an administrative person 20 years ago where $40,000 or $50,000 was like a really good income for an administrative position. And they’re getting 20 of base and $30,000 on the rev share, and then over the past 20 years, the firm 10X’ed, which means if I’m getting the same rev share, I could be an administrative staff member making like $200,000 or $300,000 because my 30 went to 200 to 300 on the sheer amount of the growth. Did you have challenges like that, that came up with this over really long-term team members?

Allison: Absolutely. And so, as an employee, great for you, right?

Michael: That’ll cut your turnover down for a certain segment of the team.

Allison: And so, I’m pretty sure our receptionist just celebrated like her 10-year anniversary, so that gives you one example. But what that ended up doing for leadership is taking a look at, okay, so you have the opportunity as an administrative person to continue to make above-average pay rates. But what we’re going to do is ask you to also invest back into the organization. When your organization grows, we all understand that capacity becomes a constraint. And you have to start looking at, “Well, who are we going to hire and who’s going to pay for that?” And so, as team leads and directors of the firm started to get into those positions where they were so tenured and were earning so many times above their peers elsewhere, it became a discussion around, “How do we keep this going?”

And if the options are, “Well, we cap your salary, maybe you get a moderate cost of living increase, we could go that route,” or do we say, “You take your basis points and you start paying in to the pool for your departmental staff?” So, we’ll use client service as an example. If you have a director who’s earning three or four times what someone in their role would make at another firm, we don’t not want them to be paid well, we still want them to be motivated. But we also want them to have the capacity relief that comes with adding additional staff. And so, our managers understood that and they understood that, “I can continue to earn what I’m earning and maybe kill myself with the amount of work I have and maybe have the client experience suffer.”

Or I can say, “Cap me,” which who would ever want that kind of scenario because you never know what’s going to happen. Or you say, “Let’s look at this as a team,” and understand that strategically, we still only have a certain pot of dollars that needs to be allocated. And so, you could take maybe your 30 bps and cut them to 25, and that would feed into the pool that would pay your support staff that added to our client service team. So, when I started, the firm had two client service professionals, and today, I think we have seven or eight. So, that’s a great example of a team that’s grown really significantly and has grown because of the investment of the most senior people in that team. And so, they were more invested in who their people were, they understood the economics of bringing in new employees.

And so, again, you’re talking about entrepreneurial mindset at many levels of the organization. It didn’t become, “Oh, the mean old CEO took money from me,” and it became, “How do I invest in my people?” And so, that became a model that existed for the handful of people who stayed a really long time. If someone leaves the organization, you obviously have a reset when you rehire, and so you have to factor in the economic sort of decisions that you know are going to come. But, yeah, when you have your most tenured people, there came an investment back into the organization. And that’s both at administrative levels as well as advisor levels.

Leveraging Partnership To Install A Firm Succession Plan [32:57]

Michael: And so, what led you to a transaction deal last year in the first place? What brought you to the point of deciding you wanted to do that, particularly since it entailed other complications like re-did the compensation structure a little? That’s a lot to inflict on yourself.

Allison: That’s one complication, we’ll say, and we can come back to that. But the comment I had made earlier is that we had lost a senior advisor back in 2008. But in 2006, we had developed our very first succession plan. And as you are probably well aware, as your listeners are, getting planners to develop a succession plan, though it would seem logical, doesn’t really happen with any regularity that it should in our industry. I still think…

Michael: Who really wants to think about death and dying.

Allison: You deny it, right? And the same thing as estate planning or life insurance, nobody wants to think about that.

Michael: It’s the exact same reason why clients don’t want to talk about estate planning either, absolutely.

Allison: Well, we have a solution for that too, so I can get to that. So, our initial succession plan we developed in 2006, then we lost a key player in 2008, which ensured a reevaluation of the succession plan and a tightening up of making sure that we were heading in the same direction and then if somebody left, that it had had to have a version of a consequence that still allowed the firm to operate, right? We were responsible for 30 to 50 people when you extend out to spouses and families and all of those things. And so, we really took a look at succession planning at that time, both from a formal plan that was bound by contract, funded by insurance, and then included things like adding the COO role and eventually, my transition to president and COO of the firm. All of those were succession planning discussions.

Our CEO, unlike the traditional people who don’t want to talk about death and demise, understood that if he were gone, it would put the firm and his clients in some version of disarray or jeopardy, and he didn’t want that. When you’re in this business, there is a responsibility that comes with keeping your clients whole and making sure that they are comfortable. Otherwise, they’re going to find someone who will. And so, understanding that responsibility to his clients, he felt a really strong push to develop a plan and we continue to tweak it over the years.

And it got to a point when we were growing at the rate that we were growing, an internal succession transition and buyout wouldn’t have been financially feasible. That was just…we had outgrown our ability to fund the plan solely by insurance and when you start looking at sort of the small pool of people who could have participated in a succession plan or buyout of him and his interest, it did not make sense for us. And so…

Michael: Because you just got to a point of we’re billions of dollars under management, we’re tens of millions of dollars in revenue, which means you put a 2 or 3X valuation on that depending on your margins value of the firm and suddenly, you’re getting to a point where anybody who wants to take even a small piece of this has like a seven-figure check and loan. If you want to own a material 10% or 20% piece, you could be looking at an eight-figure loan, and just hard to find successors within the firm that are willing to take loans of that size. That’s how the math started coming down for you?

Allison: It did, and our founder is…just as anybody would when you put that much investment into a firm, you sacrifice a lot initially. And so, you are putting a plan like that in place, not only for taking care of your family who is there if something should happen to you but he and his wife happened to be very charitably inclined. And so, making important decisions based on their family mission, this was something that was important to them because a buy-out over a longer period of time might not have achieved all of their goals. And so, we started entertaining the conversation. It’s very common when you get to a certain size in the industry that you’re going to get calls from firms saying, “Hey, have you considered this? Have you looked at partnering?”

M&A is really a prominent thing now in the industry and as baby boomer advisors are starting to get to a level where they need to look at their succession and decide what they’re going to do, ‘21, for a number of reasons, became really active in that space. And so, we went through a very, very intense process of researching and vetting and being vetted before we landed on a firm that we felt was going to allow us to continue to succeed as we had been, basically staying in the background, not getting in the way of what had led to our success. It was kind of a learning experience for me, the number of groups who, though consolidation and consistency across their partner firms might make sense from an efficiency and economic standpoint, if you’re taking firms who are a success and changing them, I think you’re killing the reason that you sought those firms in the first place.

Michael: So, you wanted a firm or it was appealing when you were talking to prospective buyers to work with the buyer that was willing to let you mostly keep the systems and the structure and the way of doing business, I guess the compensation structure, amongst other things, who weren’t going to come in and change you, that was actually a driver?

Allison: It was, it was a significant driver. That coupled with the interest to maintain some internal ownership and having generations of owners for the firm moving forward. So, you hear a lot about when you’re going through this process, Generation 1, 2, 3. And looking at the longevity of the firm in such a way that says, “We’re not looking to hand this thing over and walk away,” there are a lot of questions you have to ask when you’re going into something like that. And some people do want to hand over the management responsibilities, maybe they do want to become now an employee of something larger, they don’t want to have that level of responsibility. We still wanted to maintain a level of control and decision-making.

So, our driver was much different than someone who’s saying, “Hey, I’m a sole practitioner, maybe I’m getting to be closer to retirement and I need to look for a firm who’s willing to take over,” versus one who is willing to say, “No, we understand what led you to this level, we understand you still want to keep going with your brand, with your client service model,” and support that and be in the background saying, “Great, how do we help you keep doing that? And how do we get other sort of owners within the smaller entity that continue generationally?”

Michael: So, who did you ultimately end up picking to do the deal with?

Allison: We went with Focus Financial Partners.

Michael: Okay. And so, I guess you’ve sort of implied some of the drivers or factors of the decision, but just help us understand further, so why Focus? Because there’s so much buying activity, I’m sure you did not lack for potential suitors who were willing to buy and do a deal, so you had a lot to choose from. So, why Focus? What made that deal happen versus all the other people who were looking to write a check?

Allison: Focus came to us and said, “We see what’s led to your success already and we don’t want to get in your way of that.” And that was really appealing to us. We did have some interest, there were partner firms we looked at and said, “All of these firms would give us value in different ways and it’s not always financial value.” There might have been deals that were higher dollar values but that was not our driving factor. Our driving factor was our clients know us as Cassaday & Company, they know what we offer, we don’t want to disrupt that. We still want to be here, we want to be here as long as we possibly can. If we’re not looking to retire or get out of the way and let someone else manage this thing, are you willing to partner with us and help us keep that consistent?

And more so than any others…and I will say that there are other firms out there who are interested in that same model, “How minimally disruptive can we make this for everyone involved?” And at the end of the day, Focus just felt like the right partner for us. I don’t think that there are partner firms out there that you can go wrong with, in that you just have to decide what your driving factor is. Why do you want to go into a partnership? And for us, it was we want to keep the core decision-makers of the organization together and we need a partner who’s willing to let us do that.

Michael: So, what happens now going forward that you’ve done this Focus deal? Where’s the firm go from here? You have this restructuring of your comp, restructuring of ownership. So, what happens next after all the changes are assimilated?

Allison: As far as clients are concerned, Cassaday & Company is still Cassaday & Company. And so, we are still doing business as Cassaday & Company, there’s no name change from their perspective, nothing is changed as far as how we are running the business and how we are servicing clients. And so, short of having additional resources that Focus provides us, having some additional compliance and things like cybersecurity oversight, all the things that we would hope to have in our business, those are some value-adds that they are providing on the back end.

But as far as a client is concerned, it’s business as normal. We just this week had our quarterly Client Advisory Board meeting. We asked clients of ours to participate for about a year term and we meet on a quarterly basis. And we asked them, “How do you perceive it as a client? Has anything changed in your mind? Is there anything on your end that has been impacted?” And largely, their responses were, “No.” If anything, they were just asking, “How is this benefiting Cassaday & Company? Will there be new technologies?” Things of that nature. But as far as they’re concerned, it’s business as normal.

Michael: So, take us back for a moment just when you were first deciding to make this split and shift of the roles into a CEO versus COO role. I think it sounded like you were getting there in 2007 and 2008, kind of amplified by advisor leaving and financial crisis craziness and everything that was rolling through. So, I guess I’m just wondering when the COO role gets introduced and you have sort of a founder-led, founder-driven CEO role already, how did the roles get split? Who did what? How do you carve that up?

Allison: So, I think that that’s going to be a different answer for us based on if you were bringing a COO in from the outside. At the end of the day, it’s a partnership between the CEO and the COO. And so, they are the two people at the organization that are largely deciding this, short of you having a board maybe that is involved in defining a COO job description. But the COO is what I like to just sort of identify as the jack of all trades concept. You’re charged with ensuring the well-being of the entire organization. And so, the CEO is really strategy and vision, and the COO ends up having those strategic discussions but bringing it down to the detail level.

And so, you are encapsulating parts of your role that are CEO, CTO, CMO, Chief HR person sort of all rolled into one. And I think that if the objective is goal attainment, then the COO is charged with ensuring that all of those things are met, and if not, why not and problem mitigation. So, the CEO is not getting down to those detail levels, they’re letting the COO do that. And in our case, as I mentioned, our CEO was also the chief rainmaker at the firm. And so, in our world, he was backing off of things like interpersonal issues, personnel stuff, process and procedure, and he was focused on his book of business and spending time with his clients.

Michael: And so, from like an organizational chart perspective, does that literally mean like everybody reports to you and you report to the CEO? And so, he doesn’t have direct reports because he’s just making rain-setting vision and managing his client base, and you’re the one that has to drive, as you frame it, the goal attainment for everything we’re trying to do across the organization?

Allison: So, because of the culture that we have at the firm, we like to think of ourselves as much more flat than that sort of hierarchy in terms of who’s reporting to who. As we’ve grown, naturally that has kind of come to fruition. And so, I do oversee all of the functions that have a sort of tangible client-facing or back-office function, whereas the investment committees and the advisors tend to work a little more closely with him but the truth of the matter is, it has a lot more to do with tenure and trust. People who came in after I already had the title knew that they kind of gravitated towards coming to me, whereas people who maybe were there prior to me having that title, it would be kind of mixed, right? It depended on the issue.

So, it’s been a nice but slow transition over time, where maybe early on, I was managing things like accounting and finance, technology and marketing, and HR, whereas a lot of client-facing stuff was still going to him as the managing exec with our RIA. We both have a broker-dealer relationship and then also fee business, he was the one who at the time was licensed and was used to dealing with a lot of the operational issues that came from our broker-dealer. And so, over time, there’s been a nice healthy transition where people have come to say, “Okay, well, now I know Allison as the COO exists, I know that she is competent and capable, she’s in all our conversations,” there’s just this natural gravitation that comes with, for one, a CEO who really knows how to delegate and not sort of hoard that level of responsibility, right?

For some people, that’s really hard to let go. And he understands that, as I mentioned, his highest payoff activity is talking to his clients and talking to new clients and people who might be able to invest with him. And so, he understood that over time, things were just naturally going to sort of migrate over to my plate, such to the point where we now look at my role and say, “Okay, well, what needs to come off my plate?” And how do we add other positions at the firm, whether it’s HR director, IT administrative person, or office manager type that can support the level of work and focus that needs to be managed?

How Allison Organizes Departments’ Offerings To Create High-Touch Client Services [49:39]

Michael: So, what are the…you sort of mentioned them as functional areas that are flowing up to you at this point. What parts of the business are you dealing with in practice day to day, week to week, month to month?

Allison: Sure. So, it’s most easily described by some of the department names we have. And so, we have a client service team but we also have an onboarding team, we have one team that is specifically focused on just onboarding new business. In addition to those two, we have a financial planning team, we have an investment and research team, we have a tax planning specialist, we have an estate planning team, we have a life coach, we have accounting and operations, marketing, technology, we actually have a separate data administrative team, we call them our business process team, and they’re really focused on data feeds and developing viable use of data, whether it be through our CRM or through internal built reporting on the health of the organization.

And so, I can go moment to moment dealing with, “Hey, this policy in the HR manual says this,” and because I’ve kind of worn that hat in a previous life, I might get that question, all the way to, “Hey, we’ve got this question at the broker-dealer level about the use of e-signature.” And so, it can vary, and so back to that sort of jack of all trades, you have to be aware and in touch enough with what each of your roles are managing to be able to help them work their way through whatever problems they feel need escalation. When you take the departments out of it, it’s also anything associated with legal, the partnership, compliance, and strategy. So, we engage a business coach, and so we use a lot of coaching tools within the organization just to continue to grow and succeed and develop goals and ensure that we’re meeting those. And so, I’m in touch with all of those things.

Michael: So, I’m just wondering how do you just keep track of whether all the things that are supposed to be getting done and worked on are getting done and worked on when you got that many different teams and groups. I’m just sort of looking back, I was scribbling notes as you went of client service team, onboarding team, planning, investments and research, tax and estate, life coach, accounting and ops, marketing, tech, data administrative, legal, compliance, strategy. There is like a dozen…

Allison: It’s just a couple, right?

Michael: Yeah, like dozen-plus different groups that just I’m assuming at the end of the day, they’ve all got the things they’re supposed to be doing and are accountable for and some metrics to figure out if it’s going well for them. So, just how in practice do you manage or keep track of all that to try to make sure that everybody is doing the things that they’re supposed to be doing?

Allison: Sure. Well, I could say I don’t sleep, but you do have to know that’s not true.

Michael: Yeah, at some point, the body just shuts you down.

Allison: Right. And so, you would think that maybe this was pre-planned, but we just nicely came back full circle. When you compensate your people the way that we do, there is a level of ownership that they understand is within their position or their function. And so, when you have a manager who is responsible for all things financial planning, she or he is going to understand that they have a certain level of responsibility for making sure that things are getting accomplished and they understand that they need to loop me in when that’s not happening. So, at the leadership team level, we are very in tune with what goals we’ve set, what goals are being accomplished, where we are with them.

But we also have a separate management team who is also making sure that on a more frequent basis getting into more of the weeds, less strategy, more detail. What’s going on? What needs to be done? What technology or process are we vetting? How does that impact others in the team? And when you give your team some autonomy, decision-making, and tell them to own something, most of them step up and do it because if they didn’t, that wouldn’t work in our culture. And so, I think that there’s a really healthy process for communication.

The collaboration and teamwork that comes from that pay structure has sort of led to how we’re able to stay on top of so much that’s constantly going on and our desire to continue to raise the bar. When we’ve added ancillary services…I mentioned earlier, we have a life coach at the firm. When you are talking to clients who may financially be totally stable for retirement and can retire but they can’t, then that’s an opportunity for a discussion. And sometimes as an advisor, you’re not equipped to have the level of discussion that needs to be had. And so, you bring in somebody like a life coach and that has been transformational for not only our firm but some of our clients.

Michael: So, you have a life coach that works both with the team internally as well as with clients?

Allison: Yes, her primary responsibility is working with clients. There is certainly interrelated conversations that happened with the advisors or key staff, but we brought her on to talk to clients about a myriad of issues, decisions around retirement, downsizing, job and career changes, grief, maybe medical diagnoses that have an impact on your plans. So we are seeing the benefits now of the longer she’s here and the more we put her in front of clients, the more we realize what clients may want to talk to her about. And that is continuing to keep the advisor as a resource for the client but not an expert in a conversation on grief, for instance.

Michael: And so, from client services end, do you charge for that separately? Is there a fee to work with the life coach? If your assets are at a certain level, you’re an ‘A’ to your clients, and you get access? How do you the capacity? Because I’m presuming from the sheer size of the firm, you’ve got thousands of clients, so there’s a lot of people who could call on the life coach, you can’t just sort of open this up to everyone.

Allison: Sure. And so, I’ll tell you that one of our challenges and lessons learned was that we had, two years prior, launched an estate planning offering at the firm, and I can go into detail about that. But the lessons learned from that was you don’t roll out a service like that all at one time and just say, “Hey, clients, sign up.” Otherwise, you’re going to have a list a mile long. So, just as you alluded to, if you got thousands of clients, you can’t have them beating down the door of this singular life coach. So, in that way, our advisor acts largely as a gatekeeper. So, we’ve communicated that we have a life coach on staff, but you’d be surprised…it maybe goes back to the same concept like the succession planning or the life insurance, people aren’t that interested in talking about certain topics.

And so, someone who hears about a life coach, they might have mixed emotions about their interest level until they understand what working with her might look like. And so, the gatekeeper, the advisor, ends up referring her. She does not generally have clients calling her out of the blue, they go through the advisor. And so, in that way, the advisor acts as sort of the data resource where they’re saying, “Okay, here’s the client situation, here’s why I think you would be good to talk to them.” We recently had someone who is considering signing on and the husband said he was ready, the wife was unsure, and we kind of get why maybe she was unsure about signing on. And once the life coach spoke to the client’s wife or the prospect’s wife, a potential client, we were able to understand some things that maybe she wasn’t willing to talk about for whatever reason.

So, the ways in which we’ve used her have been vast, but they’ve been controlled. And so, that’s the key because going back to a service offering we offered a couple of years ago, estate planning, that was rolled out in such a way that I think all of us would have potentially done that differently. But to your other question, we do not charge for that service. That is an ancillary service that you receive as part of your fee and what we do is tailor the offering. So,  you’re not going to come in and say, “Hey, great, now I’ve got a life coach that I can meet with twice a month for the next 10 years.” Right? So, that’s not the offering.

We’ve both tightened up kind of what the offering is but also her focus and make it clear when she starts working with someone, “Hey we’re talking about a career change here, I kind of see this as maybe six to eight sessions,” right? Whereas if it’s, “We’re downsizing,” “Okay, great, here’s a process for that, let’s talk, we’re probably going to only need about four sessions.” And so, she’s able to manage that flow at this point at a year in. Just like any other service or offering at the firm, if it becomes large enough or there’s a capacity constraint, we look to invest in that role further.

Michael: So then, talk to us about this estate planning service you mentioned here as well that you were working on rolling out as expanded services to clients.

Allison: So, I think the estate planning service while the best thing that we’ve ever done is also the most challenging thing we’ve ever done. We ended up bringing in a lawyer into the firm, and she is a split role where she is a Cassaday employee, but she is also an attorney with her own law practice. And we said to clients, “Hey, as part of your fee, we’re going to review your estate plan and if you need a new plan, here’s a base plan offering that we will provide for you, again, covered under your fee. And so, come meet with our state planner.” Well, you may not…

Michael: And so, if they wanted it, then…

Allison: And then she would drop it out of her law practice because as a compliance stipulation, you cannot sort of, as an advisory practice, be drafting plan documents. And so, if somebody said to you, “Hey, Michael, I know you don’t want to talk about life insurance, but if I’m willing to do X, Y, Z, and you get it free or you get a benefit,” you’re much less hesitant maybe about talking about your demise because suddenly, you’re not necessarily paying for the service, right? So, when you have X number of clients, and as you alluded, into the thousands, suddenly understanding that they can get a review and potential draft, that was an overwhelmingly popular service offering.

Michael: Interesting. So, I guess the flip side, worth noting, if you take the pain of paying friction out and you make it really easy for clients, it turns out they actually do engage with some estate planning.

Allison: They do. And so, we have routinely, over the last three years, managed to queue in excess of a couple hundred people. And also, in that time, went from one attorney to now seven employees within the department, so you’ve got a mix of three to four attorneys and a couple of administrative people as well. And so, that became something that we said, “Hey, had we looked at that differently, maybe we wouldn’t have rolled that out to all the clients at the same time,” maybe we would have used a gatekeeper recommending who needs it instead of saying, “Hey, raise the banner, flash the lights, and set off fireworks, we’ve got this great new offering,” and then everybody got in line. And so, that became the biggest challenge for us was how do you manage a client’s expectation while also giving them a service that is now complimentary, but they believe to be something that they deserve because they’ve been a member of the firm? So, that was a lesson learned on how to communicate your most popular service offerings.

Michael: And so, how do you think now about how to communicate it and manage those expectations?

Allison: I think much like we’ve done with both our life coach and then we also brought on a CPA exclusively for tax planning, we don’t do any returns or prep at the firm, but from a tax planning standpoint, we use the same model, which is the adviser is the referral source. And so, instead of sending out large announcements, bold print, “Hey, look at this great new hire,” we still make sure that people are aware that we have these people on staff, but the resource comes through the advisor.

Michael: So, how do you think about this, I guess, just from a cost perspective of the business? I get ancillary services and trying to do a little bit more for clients. But when you add up an internal CPA and seven people in the estate planning department including multiple lawyers, to put it mildly, these are not inexpensive roles. So, suddenly, you’ve got hundreds of thousands of dollars, if not $1 million of expenses for add-on services. How do you think about that? Is that, “We’re very profitable, this is a reinvestment back into the clients?” Is this a necessary cost of doing business? Is it like, “Eventually, we’re going to have to charge for this because this is getting really expensive?” How do you think about that level of possible add-on services?

Allison: You hit on almost all of our thought processes that happened over a period of time. And so, we’ve gone every route that you mentioned. So, going back to the comments that I made, if we need to invest back in the firm and whether that’s others investing back in, for instance, top advisors or owners of the firm, right? They understand that bringing on certain levels of employees and service offerings will result in attracting additional clients, clients referring others. If you’re playing golf and say, “Oh, well, I met with my financial advisor with my estate planner,” “Well, why’d you do that?” “Oh, because they are all under one roof.” “What?” Right? Is that an attractive feature? And so, some of it’s just investing back in the business, cost of doing business. If you want to stay competitive, then you need to be adding things that are different than the person or the advisor firm down the street.

And so, you also have to put a large investment into your marketing arm because if you are not doing that, then none of this really comes to fruition on the front end where you get to a level where you can invest in these kinds of things. And again, compensating people with the same philosophy, which is, “Hey, this is your revenue share, if the firm has a tougher time, then everybody’s pay goes down, if not, we all make good money.” And so, how are we paying for all of these things? But then to your point, there are now ancillary and additional estate planning service offerings that are being charged for. And so we went from, “Hey, everybody all in,” because we had no idea the interest level that we were going to receive, it was overwhelming. It’s outstanding, we love it.

Michael: Yeah, it’s a nice problem to have, yes.

Allison: That is correct.

Michael: It’s much better than like, “We spent all this time trying to come up with this new service and we roll it out and 3 out of every 1000 clients care,” like that doesn’t feel good. So, it’s a wonderful problem.

Allison: And so, yes, when you have catastrophic success, I guess you can say without sort of sounding pompous or what-have-you, but we’ve put in a lot of years in everybody doing what they needed to do to invest back in the firm and understanding that all of these things are what make us attractive to investors in the area where we are and it’s a very competitive market. You have to differentiate yourself from the firm down the street. And so, yeah, just all of these things are, to us, a cost of doing business and continuing to raise the bar of what could we do better and different.

Michael: But I think you said like you are looking at starting to at least have a charge for some clients for this going forward?

Allison: For the estate planning arm specifically. I think I mentioned that there was a base plan. When you open the door to estate planning, that is a world in and of itself. And so, if you’re going from, “Hey, I just need a trust,” to, “Well, I also need a special needs trust and I need somebody to help administer and I need this and that,” so there’s a very defined offering and then there is the sort of above and beyond. And so, if you start charging for the above and beyond, you can start adding then some capacity to provide those levels of services. And so, yeah, it’s been a lesson learned for us about how do you define the offering before you do it. We often like to say that we’re building the plane as we’re flying it. And so, that’s a great example of something that I think, though it was so successful and continues to be, it’s also put us back on our heels and said, “Okay, how do we do that differently next time?”

Allison’s Journey From Executive Assistant To COO [1:08:08]

Michael: So, share with us a little more about just your path into this role. I think you’d said so it’s 2008, there’s this realization that the firm needs to start just kind of separating out the CEO and the COO role so the founder can focus on clients and rainmaking that he was so good at and you could drive more of the operations. I think you said at that point, you went back to school to get an MBA so you could take the role. So, talk to us more about just your path in, I guess, getting the role initially and then how it’s evolved for you over the past 10-plus years.

Allison: Sure. So, in the very sweet intro that you gave, at the beginning, you mentioned that I had been the assistant to the firm’s president at the time. When you work with somebody who’s leading the organization in a role like that where you are exposed to everything that he’s got going on or she’s got going on, it’s up to you to make something of that or look at your role as just there to provide coffee, right? And so, I took every learning opportunity that I could to understand our business. I came out of college with a communications degree, I had nothing even remotely related to the finance industry in my background at all. And so, it became a task in understanding what our firm did because I was invested in the firm and I wanted to stay and grow with the firm.

And so, when you start out with a firm that’s really small, I think I mentioned that we were about 15 employees, you have a small space, you sit near other people. For years, I sat next to our client service staff. And so, I would just absorb like a sponge anything that they had going on in their world because I wanted to learn and understand. And so, as we got bigger, he trusted me to be a part of everything from the hirings and the firings and the payroll and the accounting and I was also the office manager, in addition to being his assistant. When you’re a small firm, you wear lots of hats. And so, I did everything from bring him coffee to paying the payroll to billing the clients, right? So, that’s just sort of what you do.

And so, I got exposure to all the things that were sort of happening at the organization, but also just it was my personality, I would challenge him or I would ask for things or just made my presence known. And I think that the relationship that we had is what led to the Chief Operating Officer role being identified as a need for the firm, but also being identified as a role for me specifically. He and I had such a good strong level of communication where he knew I was not going to hold my tongue. When you’re a chief operating officer, you need to be the Yin to their Yang, you need to support their strengths or be the opposite in terms of strengths and weaknesses, right, play off of them. But you also can’t be a yes person, you’re not there just to tell them that every idea they’ve ever had is so great. You’re there to challenge some of the things that they’ve done and support the vision and move that along.

And I just think as we grew, there was a natural progression of people understanding the level of trust he had in me and that translated to them having that trust. And so, the MBA was really just sort of the capstone of that. It was an executive-level MBA, which meant that they were educating us not to do all of the functions that you would do in a business, but that you would oversee and manage those functions, right? So, I’m not working on a server, but I know enough to manage the IT director when he’s having a challenge or we need to talk about switching a platform or name your item in IT, right, or data or marketing. Or eventually, the client-facing roles, client service, financial planning, research and investment management. A lot of the problems that you come across tend to be very similar in terms of, “Okay, well, conceptually, what makes sense?”

There’s always details that you have to get under your belt and learn, but if you sort of have a take-charge mentality and say, “At the end of the day, is this good for the firm? Is this good for the clients?” Those are the things that are going to drive you to be in a role like that. And so, I was blessed that someone saw those traits in me and didn’t expect me to be somebody who was sort of a wallflower in the background. Once the role came under my belt, I understood that I couldn’t stop learning there. And so, what I did was formed a local group of, at the time, female COOs. And so, regardless of industry, I wanted to surround myself with other people who were going through similar challenges or be able to vet ideas with them regardless of industry. Because when you’re focused on things like technology, HR, accounting, administration, none of those are similar across multiple industries. And so, for me, it’s just continuing to learn, going to conferences that feature other COOs, and continuing to not sort of rest on where we are.

Michael: So, talk to us more about, I guess, how you learn to do this role? You noted you’ve been in this firm since it sounds like straight out of college for nearly 20-plus years, but didn’t have a finance background, didn’t have a management background. Now, you are in this leadership position with a firm with tens of millions of dollars of revenue and 70-plus team members. So, how do you learn to do this COO role or where have you gone to try to figure out how to do this role well?

Allison: I think that the piece about learning from an education standpoint just comes from what the traditional means would be. And so, grad school was one of those avenues, industry education and conferences and things of that nature are another. Asking questions really is the core sort of opportunity to learn and then do. And so, somebody once said, I read this piece where they said, “A great COO really needs to have a balance of curiosity and excellent communication.” And I think that that’s really true because if you are not interested in all facets of the business, then you really shouldn’t be in a COO role, you are responsible for so many different elements of the organization. And so, for me, I think that that’s what led to my ability to do that.

But I think the number one thing that really influenced my path is the fact that at the firm level, we have used an executive-level business coach for 20-plus years. And so, to have another resource that is working with you at that level and saying, “Here’s how your leadership skills can be developed or better developed.” For me, I’m a focus-driven, task-oriented person. And so, sometimes you need someone to say, “Yeah, but sometimes you also need to be the interpersonal expert,” right? “And you need to be working with people and where they are and understanding them and what drives them. And so, that was really critical for me was figuring out what drove our people and then meeting them at that space. There’s an obvious sense of maturity that happens over 20 years, or at least I would like to say it’s obvious, maybe not for everyone.

Am I perfect? No, not at all. And as you stated, I don’t have the finance industry that some others do have. But what I think I bring to the table is a willingness to learn and understand enough to make competent decisions. At this point, as a COO, you work very closely with the other partners at the firm. So, if there was ever a decision that I didn’t feel 100% certain of, there are other people to go to, I would never make certain level decisions without them.

But there are many, many other decisions that I feel very confident in making, either because we’ve been through similar circumstances or just lessons learned in the past. But yeah, I can’t speak enough about the experience I had as someone who was a working professional going to an MBA program. I think that’s a very different experience than waiting maybe two years after your college graduation and then turning around and going right back to school. I think that your perspective is vastly different and I often think that if I even went now to that same exact program, I would take different things away now than I did 10 or 11 years ago.

The Surprises Allison Encountered On Her Journey [1:17:39]

Michael: So, what surprised you the most about this path of building and scaling the firm? I think when you started and came into the role, you were essentially like 20-something team members, now you’re 70-something, so the firm 3X’ed, there’s a lot of people and complexity. So, what surprised you the most about building and scaling up the firm?

Allison: When you’re in it and you’re just kind of looking strategically at what your needs are, I think you’re just operating in the moment. And so, to say that any one thing surprised me, I don’t think I would pinpoint one particular thing. I think the rate of growth once we lost that advisor in ’08-’09 to where we are today, I think that is the most surprising. We’ve been willing to put in the hard work and the dollars to make that happen but even with that in mind, growth in this business is not a given, you have to work extremely hard. And our marketing effort, which we’ve not spoken about has worked very, very well for us and we feel really blessed about that.

I think that the thing outside of the growth that surprises me is just something that none of us could have foreseen, which is the impacts of what COVID had done to all working environments. And the fact that we have now gone from a firm who said, “Oh, I don’t know, you want to work at home like maybe a day a week? I don’t know, that sounds like too much,” to now, “Oh, you’re hybrid and you want to maybe only come in one day a week? Sure, we can manage that.” Right? I think that is a complete 180 to where I feel like we were pre-COVID. And what that situation did to businesses, for better or worse, because I do know that there are both sides to that.

In our world, it changed us to be a much more flexible, adaptable environment. And I don’t think if you asked me three years ago if I would have seen that same shift possible for our organization and to still last year have brought in more money than we’ve ever brought in before ever. And so, it was really a testament to our people and the dedication that they have that they would be able to thrive in that kind of environment, which I know has been absolutely so difficult for so many of us.

How Allison Leverages Seminars To Grow Cassaday & Company [1:20:12]

Michael: And so, where did all the growth come from? What is driving all this growth for you at the end of the day?

Allison: So, for many years, we started down a path of educational seminars to potential investors and I know that there are a lot of people out there who do that. The thing that we did was continue to hone that craft and that message and that presentation again and again and again, and we invested in it and we invested in various coaches and we would have people come and we would have them rate us and say, “Well, this works and that doesn’t work and don’t say this,” and really took that as a serious, intentional growth engine. And so, for us, it wasn’t about, “Here’s why we’re amazing and why you should work with us.” It was, “Let us educate you about some key important things and if you walk away from this dinner tonight and have only a few takeaways, then that’s great. But if you feel like that your portfolio is worth a second look, that’s also complimentary.”

Of course, that’s mostly a given today, not totally, but people were attracted to our message, and I credit the CEO who did the presentations for years, but who also understood that investing in people who would help him get better in doing that. He never rested on, “Oh, I’m some kind of public speaking expert and I’ve got all the answers.” He would record himself, he would watch it, he would get coaches to weigh in, we as staff would give him feedback, we were always motivated to make it better and that included where we held them and what the venue was like. And so, we changed it again and again and again to improve it and then eventually, it got to a point where we said, “The only way to scale this thing is to let other people give the presentation.”

And so, we kind of started over and said, “Okay, now instead of one speaker, we’re going to get five, six, or seven of you advisors to give it,” and they did the same thing, they went through and honed the messaging. Somebody giving a message that’s 65 years old and been in the industry forever and has a lot of experience to speak to is not going to give the same message that a 25-year-old who is in the industry a very short period of time is going to give. So, while your messaging can be similar, it’s not going to be the same. And so, you have to continue to hone that craft, practice that message, record yourself, get people to give you the hard feedback. I sat through test runs with people, I gave almost like a grading sheet and told them, “Do this, don’t do that, say this, it worked really well when you gave this graphic” those kinds of things and we were invested in making that happen.

And finally, what that did was led to a base of clients who, coupled with the service offerings and the intention to service from our employees, that led to a healthy contingent of referrals. And so now, when you couple this sort of honed process of seminars that’s educating the public and exposing them to us as a firm, coupled with people who are already working with us and very happy, we now have a healthy stream of business that’s coming from both of those sides. Never mind people who maybe came in as an investor and wanted to date you before they married you, and so maybe they didn’t have all assets with you and then over time and trust, realized that they wanted to bring more assets in.

Michael: And how often do you run these seminars?

Allison: It can vary, and certainly, the last couple of years with COVID impacted that. We’ve even went to do…

Michael: At least pre-COVID environment, before the war.

Allison: Yup, we did do some virtual seminars over the course of COVID and some outdoor events, but previous to that, we were doing anywhere between 50 to 60 a year.

Michael: Wow.

Allison: Yeah, which are…

Michael: So, on average, every week.

Allison: Yes, and they usually were chunked, we would send like one invitation for three nights out of the course of a week or two because we would…and like I said, it’s a concerted effort. We would look to what restaurants were generating how many leads? What time of year? All those sorts of different data factors, which serve mailing list criteria. It was a very dedicated effort to ensuring that that was exactly what we wanted out of it.

The Low Point On Allison’s Journey [1:24:59]

Michael: So, what was the low point for your personal journey on this path?

Allison: Let’s see. Low point. I think that I’ve been lucky to continue to feel like I’ve moved upward in the organization and not just because of title changes or tenure, just understanding more about the organization. I think it’s a hard one for me to answer what the low point was. I do think that looking at a partnership last year was probably the hardest we’ve ever worked. And so, from the standpoint of being able to balance my personal and professional life last year was more of a challenge for me than probably any other year that I had ever had. And so, the time and attention that that effort took was definitely difficult from a balance standpoint, but also just we were working all hours day and night to make sure that that decision was the right decision.

And so, you’re researching and you’re vetting and then when you decide to go through the process, you’re being vetted and going through due diligence, and then you’re making sure the clients are comfortable with it, and all before a certain time marker, right? We wanted to make sure that that happened in 2021. And so, I think that that was really hard for me because I really had to make sure that I stood behind the decision that we were going through. There had always been this message that said we’re never going to sell the firm and we’re going to stay independent and we’re going to kind of walk down a path that was pretty consistent. And we had to get comfortable with the change that this was going to potentially bring to the organization. And like I said, I feel very comfortable that we landed with a partner that let us still be who we are.

So, in the end, it was a very worthwhile effort and I don’t think we have ever learned more about the industry and what it takes to consider your sort of next path when you get to a size like ours. But personally, it tested a lot of my belief that I was going to be okay. Were we going to be acquired by someone? Did they need me anymore? Did my role still hold true as a need in the organization? And so, when you’ve grown up someplace and you feel like there’s a version of that that is your home, it’s very hard to start asking some of those questions. So, I think that that probably was an example of the greatest challenge. Again, I don’t know if I would define it low point but I think that it was one of the greatest challenges I’ve ever had in my career, and certainly the hardest we’ve ever worked.

The Advice Allison Would Give Her Former Self [1:28:15]

Michael: So, having been in the COO role for 10-plus years, what do you know about it now that you wish you could go back and tell you 10 years ago when you were just taking on that hat, finishing your MBA program?

Allison: Oh, gosh, so much. One is just what growth we’ve had and the expansion, so whether that just be headcount or service offerings, I don’t think that I really could have foreseen that because there was such a long time before we hit 50 employees and then I feel like we exploded just beyond that. It was sort of in the background. Rearview mirror is what I want to say. And so, I think I don’t even know if I could have prepared her for what that would have looked like. At the same time, I probably would have told her, “Have the confidence that you do know what you’re doing.” You’ve asked me how did I know what I was doing? And I hate to make it sound trivial, like there’s a version of what I feel is common sense or gut reaction to things, right?

So, sometimes you just hear something and you say, “Well, that’s not right,” or, “That makes total sense and I feel really comfortable with that.” And sometimes you have to trust that that is just how, there’s nothing more than your body telling you that that is the right thing and it’s a gut reaction and sometimes that’s okay. But when you graduate through roles at the same firm and especially go from somebody who is considered a sort of junior person, an assistant level person…which, by the way, I have such a healthy respect for our executive-level admins, I think that you really have to be on top of your game to have a role like that.

But in the progression, I kept thinking, “Will others respect this growth? And did they see that I was fit for this?” Right? It didn’t just happen because I was somebody who got along really well with the CEO, right? Did I have what it took? Or have what it takes to lead people who are looking at me as somebody who is in the tough conversations and making difficult decisions and was I equipped for that? And so, it’s different if you’ve had the role and then you go to another firm and you still have the role, right? Because there’s a sense of you’ve done it before.

But when you’re growing into it, there can be a level of doubt, I would say, for ensuring that you really are the right person for the role. And I think that I’ve really been blessed that I’ve been so well received in all of my sort of positional changes at the organization, including when the president title was added to my title. There were so many women in the organization who said, “I really was so excited about that announcement.” They felt like they were represented, they were staff people who felt like they were represented at the sort of highest levels of the organization, and that meant a lot to me.

The Advice Allison Would Give Young Women Entering The Financial Advisory Industry [1:31:25]

Michael: So, in that vein, I guess I’m curious, as I’m sure you’re very cognizant as well, our industry has a dearth of women across the board in advisory roles and leadership roles. So, I guess I’m wondering what advice would you give to young women that are thinking about coming into the industry and trying to decide if this is the right industry and right career for them, given sort of the challenging gender dynamics that exists today?

Allison: So, I would say 100% do it because of so many reasons. One is that depending on the role you take within the organization, right? So, there’s a shortage of female advisors, we know that that is a problem in the industry. And yet, we’ve seen women who went down a path of maybe becoming an advisor and at the last minute, for whatever reason, said, “Maybe I don’t want to do that,” and they have gone on to have other successful careers within the industry. Being an advisor is not the only option. We have a great example of that in our director of financial planning. Went through the CFP program, was an advisor for a period of time, she felt like she was much more suited for being in the financial planning space than the advisory space.

And so, I think that what women are hesitant about often comes down to two things. And I don’t like to brush with a broad stroke but I do think that one is there’s this concern around the sort of financial or let’s just say there’s too much math in the industry. I’ve heard that from people, it’s like, “I don’t know because I don’t feel confident in math.” There’s so much more to the role than understanding numbers, right? And so, it’s not as simplistic as, “Well, I wasn’t good in math, so I can’t go into finance.” I think that’s too broad strokes to say, “I shouldn’t look at the industry for that reason.”

I think the other thing is that it’s about exposure and understanding. As a younger person, my parents didn’t work with a financial advisor. So, that was not in my world of understanding that that job even really existed in such a way that I would be interested in learning more about it. It just didn’t strike my fancy for whatever reason and I think that exposure is everything. We often speak to students at various alma maters of people throughout the organization and we often tell them, “Go talk to your parents’ CPA, go talk to your parents’ attorney, go talk to your…” Right? Because if you don’t know people who are in those spaces, you don’t really know the extent to which the jobs might exist.

And so, if you don’t have the exposure, then you don’t learn enough about the industry to even know what paths you can take. And we have so many women in our firm but also women in manager leadership roles that we are sort of defying some of the industry norms in that women are not well represented. We have struggled in acquiring and retaining female advisors and that is something that we take pretty seriously. But we excel in having women who are in powerful leadership positions, who really understand what goes on in the industry and excel in their positions.

What Success Means To Allison [1:35:04]

Michael: So, as we wrap up, this is a podcast on success, so one of the themes always comes up is just the word success means very different things to different people. And so, you’ve had this wonderfully successful career path with a very large and successful advisory firm, so the business and career have gone well. But I’m wondering, how do you define success for yourself at this point?

Allison: Success for me personally, outside of success for the firm, is really just continuing to gain the respect of peers within the industry. There’s so much talent that I have experienced across my years with the firm and in this position. And I mentioned to you that the challenge for me was feeling a level of confidence and having sort of grown into the role internally. And so, for me, when I have outside parties who come to me to ask for advice or come to me to seek out, well, how did we set up X, Y, Z at the firm because maybe they saw me speak at a conference or maybe they heard us in some other form or fashion. That, for me, is a definition of success.

If I can be somebody who helps others in the industry be a success in their own right…there’s certainly enough work to go around, there are enough clients for all of us. This industry is worldwide, certainly something that is not regionally protected, right? I spoke with a group out of Nevada last week who had seen a couple of us speak at a conference and they really had a question about succession planning. And they just emailed in to the firm and they asked to speak and I took some time and talk to them because so many people have given back to us that if someone wants to seek out what we have to give, then I want to be able to provide that. And so, if people continue to seek out those things from us, then I absolutely will consider that a success.

Michael: Well, very cool. I suspect you’re going to have a number of people who are reaching out based on this episode as well. So, for those who do want to follow up with Allison, this is episode 282. So, if you go to kitces.com/282, I’ll have some links out to connect with Allison on LinkedIn or to reach out to her company if you want to explore further. But thank you so much, Allison, just for joining us and sharing the story and the journey on the “Financial Advisor Success Podcast.”

Allison: Thanks for having me. It was great.

Michael: Absolutely. Thank you.