Ep #1: Know the Role in the Firm: CEO or Advisor

Welcome to the Advisor Summit, the podcast where financial advisors gain analytical insights and tactical strategies from the industry's top minds. Each episode we bring you exclusive conversations with founders, C suite leaders and industry innovators, uncovering the trends, tools and techniques shaping the future of financial advising. Whether you're looking to scale your practice, enhance client relationships, or or stay ahead of market trends, the Advisor Summit is your go to source for expert guidance and actionable takeaways. Hi. We are so excited today to have Brad Gatto on the podcast. Brad and I met several years ago. He's been an awesome, awesome client of Track that advisor, and we're here today to pick his brain. So, Brad, thank you for being here.

Absolutely. I'm actually really excited to do this. It's always fun to talk to you.

So I know it's been, it's been a good road. So first I want to just start off with you kind of telling, telling the audience, what is your story? Where did you come from? How did you get into advising? Where are you based out of? We'll let you run the show first.

Obviously these stories can get really long, so I'll try to truncate it as much as I possibly can. I never, ever set out to be a financial advisor. I couldn't spell financial advisor. I didn't know what they did. The day I got my job at a big box firm, it was in 2006, and I called my wife and I said, I got a job. I'm a financial advisor. And she said, that's great. What do you do? And I said, I have no idea. So that's how I started. And so worked at a big box firm until 2009, left, went to the independent broker dealer space and started an independent firm, which is Fiat wealth management, back in 2009, had two business partners, long story. Ended up selling out of that after 18 months, sold my shares to one of the two partners and went to the FMO world, actually. And prior to going to the FMO world, I couldn't spell FMO or could I spell like fixed indexed annuity. I didn't even know really what they were coming out of the big box store world. All I knew about indexed annuities was they were the devil. Like, they were terrible. Don't use them. Never, ever, ever. And so again, very ironic that I end up in this independent broker dealer space and then in this FMO world, obviously had to learn a lot about indexed annuities really quickly. That was my job. I was a wholesaler on the indexed annuity Side, specifically the FMO I worked at just happened to specialize. And so we had life guys, life insurance guys, annuity guys and gals. And so I was an annuity guy and I had never looked at an indexed annuity in my life, let alone barely a fixed annuity. And they handed me a phone and said, start dialing. And I'm like, or what? And I don't know what I'm selling. So I did that for nine years and it was at the end of 2019 that I needed back in the retail side. So January 1, 2020 was my first full time, like full day, full time job back in the retail side. And interesting enough, ended back at Fiat. Ended up buying back into the company. I'd sold to my business partner. He was still, he was the sole owner at that point. Bought half the company back from him. We became joint owners of the firm and 2019. But I came back to work in 2020 and, and here we are like. And so it's been an interesting journey since then. We stood up our own ria. So I've went from my words, my opinion, what I call the hell purgatory in heaven version of our industry. I started a big captive company that was my. What I didn't know it was hell until I left and, and I went to an independent broker dealer. That was. I thought that was amazing. I didn't know that there was an even better world out there than that. That was purgatory. And now in the independent RA space, so stood up our own ra. So Fiat is an RIA up here in the Twin Cities area. We're in a suburb of the Minneapolis St. Paul area. And Yeah, I mean that's the short version.

Correct. And you started in 2020, which, what interesting timing there.

It was terrible. It was. I mean I got into this industry in 2006 and I thought I was pretty rockstar stuff because I didn't, I couldn't spell financial advisor. The markets are roaring, you know, so you couldn't, you could throw a dart at a dartboard and make money. And then very shortly into my career, 08, 09 happened, you know, and specifically it started in October of 07. So if you. And it was end of 06 for me. So I was barely a year into the industry and the market started to fall apart and 53% in 16 months at the big box room I was at, we had a, a money market account that our clients used a lot that they could write checks out of. So we had like, we were basically cashiering in banking for our clients as well. That money market broke the buck. Like, people lost money in cash and froze, like, it froze their money. And so very early in my career, I had experienced the worst financial crisis since the Great Depression. And I had clients whose checking accounts, quote, unquote, were frozen. And then I left, decided to come back, come out of here and covet it. So don't follow me around like I. I Right. My timing is not. Is not great. It's not great.

Huh? Wow. But you're thriving now. I mean, I. And I can attest to that. So, I mean, you made it work. You've done an incredible job. Incredible job.

Yeah.

So you went from an fmo. Now obviously, you have your own ria. Talk to me about seeing both sides. Most people, you know, I know several people who've kind of done. Done both, right. They start the IMO and then they become the advisor or vice versa. But talk to me about that, that journey. A lot of people don't want to talk openly about IMO's FMOs. Sometimes it's a very touchy subject, but I think that it is important to have the conversation. So what is your opinion on it? What makes a good one? What should people look for? What should people look out for? What is your opinion?

There, there's. There's a lot to that question. Right. I know I'm gonna start with the first part of the question, which was I've gotten to see both sides. I. So it's an absolute blessing for me because what I. What I realized after I had worked in the FMO world for about a year, year and a half, was that when I had left the big, you know, the security, and I'm not saying the big box. I know I called it hell, but, like, it was fine. Compliant, firmly planted in cheek. Right? Like, I already told you, these are my opinions. There's no advice in here. So it's. And left to become independent. I mean, for all intents and purposes, you're. We started our own business. It just happened to be in the financial advisory space. Right. And so we were entrepreneurs overnight. And so 18 months later, I sell. Part of the reason I sold is because I just had my first kid. It wasn't going as well as I had hoped. And so we needed. I needed health insurance, needed something more secure ability. Off I go to an fmo, which I had never even heard of. And it was a massive blessing. Like, I. The. I don't want to, like, get too much into the. The two untouchable topics of politics and religion. But like for me it was a God moment and I didn't know it until now. Like I never planned on being there that long. I was only there for nine years because I had such a great setup, such a great boss, such a great situation, loved what I was doing. But a year and a half in, what I realized was I was at this advisor's office. He had done an event for a couple of days where advisors were kind of watching what he was doing. And he asked my opinion of what he was doing. And I said, I love it and I love everything about what you're doing. And he said, why? And I said, I don't know why I can't put my finger on it, but I just love it. And I said, but if I figure it out, I'll get back to you. And it was later that night I had a light bulb moment that still impacts me to this day. It's driven the way we've built Fiat. And that was what I loved about what he was doing, was he was a really, really good business owner that just happened to be a financial advisor, not a financial advisor trying to figure out how to run a business. And that is why in the first 18 months I helped start Fiat before I'd sold out. The reason we didn't have the success I thought we were going to have is because I didn't know how to run a business. I had no idea and I never even thought of it that way. So not only did I not know what I was doing, I didn't even have the thought that that's what I was doing, that my prim was to run a company. My product was financial advising, but I didn't know how to be CEO, cmo, cfo, coo. I didn't know any of that stuff. And so I had nine years of sitting with independent financial advisors all over the country and my job was to wholesale fixed annuities to them. But what I got out of it was a PhD and how to be an independent financial advisor, how to run a company. And so Erica, I got, I was sitting in these advisors offices and not asking questions like, well, how much annuity business do you write? Why do you write your annuities that way? I was like, how do you run your company? Like, why did, why did you make that decision? Yeah, like, exactly like advisor comp. How do you pay your advisors? Why do you pay them that way? How do, why did you hire that person? And I always kind of got made fun of a little bit by these Advisors, like, why do you care so much? And because it was fascinating to me that that's where I failed. And I didn't even realize that's why I failed, because it was a failure. I mean, I didn't sell out of my business because I wanted to. I sold out because I had to. I had a little kid on the way and needed to pay bills. And so when I came back to the retail side, what I told my business partner who I was, who had carried the torch for Fiat all by himself for nine years, was, I want to be the best business owner that I can be that happens to be in the financial advisory space. And so that's my focus. And so I knew right when I came back, Erica, that I wanted to be the CEO of the company, not the advisor. And so from day one, it's been a very purposeful build to kind of get me into that role. Now it's not the only way to do it. And a lot of advisors want to be advisors, and that's awesome. You're a much better person than I am, because that's a hard deal, hard job. I just, statistically speaking, it's brutal. I just wanted to run the company, and I really, really like the entrepreneurial business owner side of it. And so all that to say the FMO world, to me, was a blessing. I got paid to hang out with advisors and paid well. Like, it was a great job. So now coming back, the FMO to me, is a business partner, and a really important one. Probably one of the key business partners you have as an independent raa. If you're going to do any insurance business as an raa, you could make the argument that they're probably the most important business partner you have because they can make the most impact. And so I don't take the FMO relationship lightly because I know the way the world works. I can tell you exactly how the FMO from the inside, and I saw how impactful we were to the advisors we worked with if we had a good relationship. But not every FMO is built for every advisor. You got to know what you need out of a business partner. I think one of the biggest mistakes advisors make when they choose an FMO is they choose on shiny objects, not based on what's going to help them, most specifically based on how they're trying to build their business. Because every FMO has their things that they're good at, right? Or they have, you know, kind of a the market cornered in one area where it's like, look, this is Our, our biggest value prop is this.

Yep.

If that's what your company needs, that's where you should go. And so very purposeful for me in that type of relationship. But I again, I view them as a business partner the same way. I've since bought Matt out, so I'm the sole owner of the company. But when Matt and I were together as business partners, I looked at the FMO the same way. Like if you're not what's in the best interest of my company, I just need to go find a different one because there's so many of them out there and so many good ones that have really good value propositions. You just need to find the one that makes the most sense and that's.

You being the CEO. Right. Instead of a salesperson. I think people who are the salespeople running the company. Shiny objects are really fun, you know, and they're very enticing and lucrative.

Yeah.

But yet you back and we look at the CEO as a whole of that is your job is, is defining vision and where are we going and, and placing partners where they need to be. So that's a good encouragement.

The shiny object is, is short term.

Yeah.

Usually shiny objects get dull, you know. And so as a, you know, one of the things that I've tried very hard and you've helped with on the data side, which I'm sure we're going to get to, is always trying to have that, that five to ten year mindset. Like the way I can best help my company from an executive level is trying to be five years in front of my company. That's how I can benefit my employees the most. That's how I can benefit my clients the most. And usually shiny objects don't last.

So yeah, they're fun for a second. And some people are like notorious for shopping around. Right. And they kind of switch and switch and it's like, well, if you can develop the five to 10 year plan, you're going to really know long term what works. So thank you. I think that that's again, not too many people talk about it. I think it's an important subject and you have a ton of knowledge on it. So appreciate that, those 2 cents on that topic. But as we move into data kind of segwayed us there. Talk to me about data. Talk to me about the importance of it in your office. When did it become important and why? Like did you, did you go through something that said it was important or like you always knew it was important but you just didn't do anything with it. Talk to me about your, your segue into.

Yeah. How we met, coming into, back into the retail world the way that I did. I knew it was important because I'd watched other advisors flounder without it. But I suck at it.

You're not alone.

There's a problem. Right. And I knew that. I just didn't know how to fix it. And so here's what I did know. I knew that if I kept putting money into our marketing machine that we were going to grow. And I knew at the small scale that we were at that I could get away with mistakes. I could get away with not knowing my data very well. I could get away with all that stuff. And so maybe I'm not the most efficient, but because of my size, I could make those mistakes. I also knew that as we grew that that wasn't going to remain. In fact, if you study the RIA space in any detail, what you find out is that between that 4,500 million of asset mark and a billion is where RAAs go to die. Because the complexity starts to catch up to them. And if they don't have systems and processes built at that time, those inefficiencies that worked out when you were a nice small little company don't work anymore. And all of a sudden if you're caught flat footed or on your back foot, what, and trying to keep that marketing machine moving because we all know, every advisor listening to this knows you can't shut it down. It's a train like, and the second you shut it down, it slows down. Like, it's so hard to get it moving again. So if you want to keep that moving, it's really hard to build systems to catch up to that. If you're at that half a billion, you know, 600 million, you know, type mark, much easier to build when you're smaller and have those systems built so that when you get to these levels you don't become a statistic because that's.

Again, our profit margin is so high. Like, like to your point, the problem is high in this industry. And so it just, it creeps, it creeps up so fast to your point. And then all of a sudden you're like, oh shoot, you know, where the wheels are coming off.

It's funny that you say that, Erica, because I say that to people all the time. We get, we can afford to make mistakes. It's not like the restaurant business where you're working on such thin margin that like you have a bad month or two and it's just over. You got to shut the doors. We get to make those mistakes. The problem is the mistakes get more expensive the bigger you are as a firm. And for the advisors that aren't watching those efficiencies, the net income isn't following the top line. The top line may be going up, but the bottom line isn't proportionately. And so you get to this point where, yeah, you're making good income as the owner, but because your top line is so high, that mistake becomes so big all of a sudden, can wipe out all your net income with just one little. And that's why there's that danger zone between that half a billion and a billion. And that's kind of, from a company perspective, that's kind of where we're at, is at the beginning of our death curve. So.

So you're ready for it.

I gotta be honest, I didn't know you existed. And it was a friend of mine who's in this space that doesn't market at all, but subscribes to Kitsis. And there was. I don't know if you're in a podcast article or whatever. He forwarded it to me and said, hey, I think you should look into this. And I thought it was a joke. I was like, what? Somebody does this? Like, wait a minute. It literally was like one of those moments where I was like, come on. Like, do you need me to need? Like, you couldn't have entered our picture at a more perfect time. We were a much smaller firm then, but it was already becoming a problem for us because as my. I have sub advisors, I don't take any of the clients. And so because I'm trying to just be the CEO as much as I possibly can. So I got multiple advisors doing marketing, doing all kinds of marketing. You know, direct leads, seminars, referral type events, all that kind of stuff. At the end of the day, without, if I don't. When I send my dollars out into the ether, if I don't know how they're coming back to me in any meaningful way other than the fact that I had just had money in my bank account at the end of the month, hopefully that's not a business. And so data to me is. It takes the emotion out of decisions. Data allows you to make objective decisions on the health of your company, which trickles down to the health of your employees, which trickles down to the health of your clients. It's just really important as a leader to be making good decisions. And I just don't think you can make Good decisions without empirical data.

Yeah. So talk to me about. We met and I came out there. That's when I was still doing office visits. And you know, we kind of implemented some processes, helped you get the dashboards, all the reporting, all of that. I mean your team took it on like champs. But talk about the difference that's happened over the last few years. Right. So when we first met and having it and now and then seeing it versus now, you guys are heavily involved. You're, you're trying to understand it. We're, we're changing processes, we're looking through things to make sure that we're better. Maybe like on a scale of 1 to 10, like how, how were you using it? Were you not when we first came on and how you felt about it to where you're at now and you know, just some of the benefits you've seen or any specific examples that you're using data to drive decisions now?

Yeah, I would say the first year on a scale of 1 to 10, we were a 2 or 3. Now you were helping create the data, which is amazing, but data is only good if you do something with it. And I realized very quickly, Erica, that for me personally, like, if it was going to be up to me to monitor the data and to mine the data for meaningful information to impact change, it was never going to happen. I white knuckle it for a while. I just realized I was really bad at it. I didn't like it. And so one thing we did to kind of stave off my inability or lack of talent in that area was not only do we obviously use track that advisor, but we were paying for these quarterly reviews so that you would help us mine the data. And that worked for a while and we still do it and I still value it and I want that outside opinion. But we've gotten to a point where now I have an employee whose primary and sole responsibility is to watch our data and tell me what to do with the data. I have a whole employee dedicated to that. So it's. How far we've come is like I didn't know my numbers. Do you help me figure out what the numbers are to now? I basically have somebody who's a scientist that, that is, you know, trying to mix together the right potions of our numbers and put it together in a meaningful way that we have better outcomes and we're still pretty in infancy stage with that. That person's role just became their role at the beginning of this year. But I can already tell you, so I do One on ones with my advisors. We meet some of them weekly, some every other week. I've got dashboards to go through with them. So I get to have. I hate being the bad guy. I hate like. But I don't have to be because I just have numbers and numbers, there's no emotion to it. It's just they are what they are. And so as a leader, it allows me to make, not gut check decisions or how I feel about something, just be data driven. And you know this. One of the things I asked you to do was have some of these hard conversations for me because I don't like to do it. And you did and it really helped. And so one, it's always good to have an outside opinion, right? You can't be objective about your own situation. It's impossible. That's what objectivity is. There's always a subjective. We're all biased about our own stuff. You know, and I'm the chiefest of sinners in that I think Fiat's better than everybody. I don't, I literally don't understand why any client would ever do a business as anywhere else. But I would hope that all other advisors feel that way about their company too. But you can see the problem in that when I voice it out loud, the second I say that out loud, people are like, that's ridiculous. I know it's ridiculous, but it's also the only reason our company is successful because I genuinely believe that. But it also immediately emits a blind spot and so been very helpful for us to one, have access to the data. Two, use your team to help mine data for us to have reviews done of our data to get that third party opinion. And now we're going to your point through a whole entire rework of our sales process based on the data. Because what the data tells us is there's a hole in our sales process where we're terrible. Like we have some parts of our process that you've confirmed for us we're really good at and then we have other parts where we're really not as good.

Well, and I will piggyback on what you said about the new position that you guys have created because there is a beauty in the outside perspective, but there is something that lacks there. Like I don't have boots on the ground. Right. I don't know your advisors, I don't know when they're struggling, when they've had a hard week or a hard month or who they're sitting in front of. Right. I can take these guesses From a. From a numbers standpoint, and that's one thing I'm great at, is people are like, you know our business more than I do, and you've never even set foot in our office. But there's a downside to that. Right. And so also bringing that position in house is. Is so healthy because. Because they have boots on the ground. And so there's. There's a positive and negative to both. And obviously we're going to partner with him in that. But that is really cool to see you guys moving in that direction to where don't wait a quarter. Right. I mean, you can have weekly reports now because you're not waiting on us or we're some bottleneck. I'm a huge advocate of it. So I do. I think you guys have gone to, like, a 10 engagement. I mean, you've got someone in house doing it, and that's our goal. Right. I mean, our goal is for people to, like, grasp it, understand it, know the importance, and then, like, just start running and go off on their own track. So it's been fun to see you guys do that.

Any kind of good. Like, I'm a visionary. That's my. You know, in the EOS model, the. The. Yep. Where a visionary shows up in a negative way is gut. Making decisions based on gut. And I'm a run out in front of my company and all these sorts of things. And so knowing that and trying to understand the weaknesses, the data, what the data does is it takes some of my gut out of it, and it gives us the ability to. To check and make sure that that's right and to make good decisions. I. I can't even tell you, Erica, what keeps me up at night is this. Half a billion to a billion. Like, I'm telling you, I've studied it way too much. It's kind of like before you go on vacation and you study like, you're going to, like, some country you've never been to, and you, like, look up every virus they have and every, like, everything. You're like, you work yourself into a tizzy before you ever get there, and you're like, oh, this is gonna be terrible. Whereas if you actually even did that in your own community, you probably not even want to live where you. Where you live. Sometimes you can just know too much. I know way too much about this. This death zone for RAAs. But one of the things that makes me feel confident is we know our numbers and that. I mean, that is a sleep at night factor for. To put it into perspective. Of an advisor. This is my safe money, right? My safe money is my data. It helps me understand that I'm making good decisions, not just in the short term, but to be able to understand the trajectory so that I can build a vision for the company. Okay, if we keep doing what we're doing, I put a dollar in the pipe, what's going to fall out is this, that's going to equate to this. So when I put together a five year plan for my company and I'd say we should be at 2 billion in five years as an example, it can be realistic and backed up with data. And so as a CEO, I can't cast a five year vision in any meaningful way without that data, without doing that.

And you're staying ahead of it and that's the job you wanted. So you're doing a great job. It's awesome. So next steps on trucking. The last question we usually kind of, kind of round it out with is where are you trucking? You kind of talked about a little bit professionally, like where, where are you heading personally and professionally? We're going to kind of wrap it up there.

But yeah, that's a big one. So I kind of alluded to it. We're creeping up on that half. You know, we're. Well, that's not even true. I'd be disingenuous to say that we're at about 400 million in assets. When I came back five years ago, we were at 27 million. And so we've seen some nice growth over the last five years from 27 to 400. But I, I fancy us a regional style RIA with I don't know, 5 to 10 billion. Like there's no reason we can't do it. We will do it. It's just for me in that I'm not doing it for the number. My vision for what we're building is for me personally to increase my influence in my community, to promote generosity. Like I really feel like I'm called to be in this industry simply because nobody has a more intimate view into people's finances than their financial advisor, if anybody, outside of their own home. Right. And it's just my belief, Erica, that that the happiest people on the planet are the ones that are generous with their time, with their talents, with their energy and with their money. And obviously not too many people know about people's money and if they even can afford or have the money to be generous with. And so if I can continue to fire myself as an advisor, which I've done almost exclusively now, down to a handful of clients. My goal would be to fire myself as the CEO, be kind of a board member and just evangelize generosity and teach families how to be generous for selfish reasons because it's going to improve their quality of life. You know how that goes. Like, yeah, it's better to be. A lot of times it's more fun to be the gift giver than the gift receiver. You know, to watch you open the gift of something I gave you, there's probably actually even more joy in that than receiving. And it's that type of relationship I want our families to have with their money, to, you know, hold it with a very open hand and understand the, the gift that is generosity. And so that's the goal. And the only reason I, I throw out like a 5 or a 10 billion is because why not? Like, if, if we can do it, why wouldn't we want to do it? Like, I just think growth is fun. I think challenges are fun. And who knows, maybe it's 100. I have no idea.

Yeah, but spoken like a true CEO right there. Just keep on going.

Why not? I literally just said that to one of my marketing people. I just said, I don't ever foresee us not marketing, because that sounds boring.

Yeah. Yeah. So, no, that's great. What a cool goal. And I agree. I mean, and obviously I know your heart and that we've talked a lot about that of just, it is, it's life changing when you can give and give freely and it's so fun. So kudos to you. That's. That's such a cool goal and I love how you frame it. So what about personally, anything big going on on the personal front, you guys, anything you can think of for your child this year?

Yeah, I. This is gonna sound really ridiculous, but, like, when we, we moved into a home about four and a half years ago, and one of the promises I made when we moved into the house with my wife was it didn't exactly. It didn't fit check all of her boxes. And I said, eventually we'll be able to kind of do what we need to do the home so that it checks the boxes that you want. And so we've got a big rental going on this year. And so personally, I want to be able to do that for something that I had promised. And obviously this, some of the, the growth and success we've had here at Fiat is going to be able to help that. But the big thing for me, Erica, is I've got a 15 year old son who's now driving. I've got an 11 year old son at home. And so the, the personal always shies into the professional being able to show up at home the way that I, I want to be able to show up at home knowing that my, I mean it's, I'm a snap and my oldest is going to be out of the house and so I don't, can't put a exact quantifiable like what that looks like for me as far as a goal is concerned. But that balance of we've been in hyper growth mode and Fiat is rightfully taking a lot of my time. And if you're a really good business owner, the, the best way you can gauge that in my opinion is how important are you to the business. And it's, it's a tough ego thing. Right. Because part of your ego you want to feel important. But if you're that important to the business, you don't have a business, you are the business. And so I'm trying to balance that ego that I have of like I want to feel important here, but I also want the company to be able to run without me so that I can show up at home, I can coach baseball, I can go on the vacations that my family, you know, that kind of stuff. And so it's that continued goal at home of I want to get that renovation done for my wife and continue to show up at home.

Yeah. The integration of the work life I'm.

Bad at, by the way, to be very clear.

Well, no, I think people, I love to work balance a lot. I know and I think people use balance and I don't love that term because I don't think it's like that. It's, it's this like give and take constantly. Right? Like yeah. There are some seasons where it's okay to be heavy, the work season and then there's seasons where the home you are needed. And to your point, if you can be a good CEO, you could be able to create space for that on both fronts. So best of luck to you in the teeter totter. It's, it's a beautiful thing and kudos to you and I hope that you get that done for your wife. Speaking from a wife's perspective. Awesome when your husband pulls through like that. So good work.

I'm trying.

Yes. So thank you so much just for your time today and being on here and just sharing your wisdom. I think again, we've just been an incredible client and I learn from you every time that we meet and every time we discuss. And I also just admire your desire to grow and not be a statistic at the end of the day. So hopefully some other people learn something, too. But again, appreciate your time. Thank you so much for being here.

Yeah. Shameless plug. You're a big part of that, right over the. I told you, FMO is a really important business partner, and they are. You're a really important part of the story. Finding you a couple, three years ago, whatever it was, not knowing you existed ahead of time. One of the reasons we're able to continue to even think about scaling is because we know our data, and it's you and your team that are behind that story. So appreciate that.

Well, good. That's our goal. Thanks, man. Okay, Have a great day. Thanks.

Bye.