A Candy Bar, a 10-Year Old, and a Successful RIA

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This is Greg Bartalus for Barron's The Way Forward. My guest today is Barbara Hudock, CEO and founding partner of Williamsport, Pennsylvania-based Hudock Capital Group. Today she will discuss how philanthropy became a key part of her own identity as well as that of her firm, and she will also explain how philanthropy can be a win-win for advisors and the communities they serve. Barbara, thank you for joining us.

Thank you for inviting me.

Oh, my pleasure. The topic again is philanthropy, and I— what I think is really interesting about your story is that unlike so many people who engage in philanthropy and who do it because they came into wealth or they started late in their life, it's really been with you since you were a child, quite literally at age 10. We could trace it back to there.

So as a child of 10, as a child, I grew up in Charlotte, North Carolina. We attended a very traditional Baptist church. Actually, Billy Graham used to preach at our church several times a year. That was before he was famous. But the minister had been talking about tithing. And even at the age of 10, it kind of spoke to me, and I had decided that maybe it was something that I wanted to do. I had calculated— my allowance was 50 cents a week, and I had calculated that a tithe would be 5 cents, which was exactly what it cost for a Cherry Hump candy bar. Which was my favorite. And it was waiting for me across the street at the laundromat. And so as I sat in church waiting for the offering plate to come around, I was debating in my mind of, so is it a Cherry Hump candy bar, or do I drop this nickel into the offering plate? And I knew that nobody would know if I, if I didn't drop the nickel into the offering plate. But thankfully, Thankfully, the higher self in me made the decision to make that 5-cent deposit into the offering plate. And even as a child, I could feel the sense of fulfillment, the sense of giving back, the sense of being part of something greater than me. And that was— I never thought about the Cherry Hump candy bar after that, and it was, as my Mayo Angelou said, "I have found that among its other benefits, giving liberates the soul of the giver." And I couldn't, of course, I couldn't say it any better because I think it's absolutely true. I think it frees us from the bondages that money and finances can have on us. So that's how that started at the age of 10, and by the time I became an adult, I didn't tithe all the way through, but at some point in my adult life, I realized that I was missing something, that I needed to be giving back. And so even as my practice, I made the decision to contribute 5% of our gross revenues back to the community. I call it my community appreciation budget. And it has to be at least 5%. I probably would have made it 10% in the beginning, but I got some static from some of my colleagues. And so it's 5%, but it's 5% of gross revenues, which is a healthy number and makes a— my desire is to make a positive and profound difference in the lives of the people that we serve and in our communities.

So it clearly makes you feel good about yourself, but tell me a little bit about the recipients and what they tell you about what it means for them.

So it is astounding to me the feedback that we get because we contribute to the community theater, to the symphony, to the Salvation Army, to the— in fact, our team recently spent a day, a Saturday, the whole team went over to paint the walls of the local Habitat for Humanity— not Habitat for Humanity, it's like the YMCA, a different name, which is escaping me right now. One of my favorite beneficiaries is actually Barons in Education, and through that, we sponsor 6 or 7 different schools. I think it's 6 schools, or at least we originally started sponsoring 6 schools. And the feedback that we get from the— not only the professors, but the students about how valuable an experience that is, and that they— all of the students receive Barron's newspaper.

They—

the faculty does as well. They have a trip to New York with the investment committee from the school to visit Barron's and talk with the investment investment people at Barron's. It's experiential. It allows the kids, students, and one of the professors from Bucknell University, which is close to us and one of my— one of the schools we sponsor, I received a letter, a handwritten note from one of the professors, and he said he just wanted to thank me so much because they use that in their classes every day, that they start with the They have to read the Barron's articles before coming to class, and they start that interaction and communication about them.

So since COVID has there been any shift in where the money is going directionally, or is it kind of a similar trajectory?

It's a good question. It really has been a similar trajectory. I believe very strongly in the arts. I believe the arts The symphony music, theater feeds our souls. In our area, they have started taking the arts out of the curriculum in our schools. To me, I think it's as important, if not even more important, than some of the other traditional subjects. We contribute, we have a group called Youth Symphony and the Strolling Strings. That is a group from our high school that sings, and one group is a singing group, GQ and La Chanteuse, and then they have Strolling Strings, which is all musical, violins, cellos, string instruments. And we support them in any way we can support them, and that gives not only them the education and the ability to be coached in music, but it's entertaining. They go out to local venues and entertain whenever they're asked, which I think is absolutely awesome. It creates great joy.

In your firm, you mentioned that some employees might have been like, well, I don't know about 10%? Maybe we can do 5%. So more specifically, for individuals who— let's say someone who's maybe reluctant or not fully on board with this and is like, "Hmm, I don't know," but then they come around and change their mind and not only accept this but become advocates for it. Tell me about those people. I'm sure you've worked with some of those.

Absolutely. When I said that I had static, it was when there was another partner in the firm, and it was that partner that did not want me to do the 10%. But what we also do is we give a matching contribution. So if anybody on the team contributes up to $5,000 to a local charity, we match them. And that has gotten, like you just said, that has gotten people involved and people who weren't really interested, even if they give $25 to the Red Cross or something that is of interest to them, then we match it. And the nonprofits are extremely grateful for that. We just had one of our team members, she was named as YMCA Person of the Year for our local— there's a group. And because of that, because she's been contributing not only her time but her money locally, and we match it, I fully believe that it is in giving and in serving that we receive. And it's an intangible but a powerful reward from from the giving. We have had clients who have come in. In fact, one of the clients that I asked the question, what's most important to them, which we'll talk about later, they said that they had heard great things about us from friends, but that what really pushed them over the edge was they knew how active we were in the community and how much we supported the local nonprofits in the community. And that was why they came with us. That's a key client.

Right. So it's a virtuous two-way street. You give, you get back. There's really no downside in terms of goodwill. And on a business dimension, it can only hurt. I mean, it only helps. Sorry.

Exactly. I think it's a win-win. There have been, you know, people who assume that I give because I can give, but I gave when I couldn't. And people assume that I might give for some business benefit, but it's not true. I give because it's actually more selfish than those reasons. I give because it makes me happy. It makes me feel good to feel like I'm making a difference in our community and in the lives of the people around us.

Yeah, and you've mentioned that you've actually compared the act of charity and philanthropy to exercise, basically saying the more you do it, the more effective, the more better you are. But here's a question: how does that manifest itself in being better or more effective? What does that mean specifically, that you target your spending better, you have more experience with who's reliable or the best ROI, etc.? Absolutely.

I, just like with exercise, and that came to me at a time in my life when I was really trying to get into an exercise routine, and I realized that my intentions can be absolutely honorable, but if I don't get myself out on that treadmill or on the weights or whatever it is that I'm using, my intentions aren't gonna get me there. I'm not going to have the rewards, the physical rewards of working out that I'm going to have. Same with dieting. You know, I know every diet in the world, but if I don't actually practice it, I'm not gonna have the rewards.

Yeah, I mean, I work out all the time in my mind. I can relate.

Exactly. Most of us, I have had people say to me, "Well, I would give if I won the lottery," which is why I think that that 5-cent contribution for me was critical because it was the hardest 5 cents I ever gave.

I don't know how you did that as a kid, and I would hope that without your own money, that perhaps someone close to you bought you that candy bar on occasion. I mean, were you entirely deprived of having that? I hope not.

No, no, I was not.

All right, that's good.

And we had a family friend who used to come and give me a quarter. Quarter or something, or give me a nickel. And I know I did get the candy bar.

That's good.

But not that time.

Yeah. And that stayed with you, huh, from 10? It wasn't like you fell out of it, but it was like, boom, it was established at that point.

There was such a sense of— there was such a lightness. It was— I felt stronger and more— I hate the word, but I felt more spiritual. I felt— no, I felt connected. I felt connected with the other people that were in this church. And even though it was only a nickel, I was giving my fair share, as they might say. And that's one of the main reasons that I fight so hard, because I get a lot of negative feedback from evaluation company, the company that comes in to give us evaluation every year. They say nobody does that. You've got to stop that. And I said, no, I'm not going to stop that. I had to take a cut in my salary in order to rationalize to them because I didn't want the valuation of the company to suffer because I was determined to make this. And what I wanted to say was, well, maybe they would be more successful if they did. But of course, the accountant who's doing the valuation is not going to hear that.

Yeah, yeah, I hear you. That's being counters, talk, speak the language of numbers. I did want to go back, you touched on it, an actionable idea, and it's regarding business and what clients want in advisor. It's a really interesting thing. Tell me about this.

So, and I saw this someplace, I don't remember where because I would love to give credit. It might have been Horse's Mouth or one of the other journals that we have out there. But the question, may I ask, what is the most important criteria an advisor must have for you to want to work with them? Well, I've started asking this not only to new potential clients who are sitting with me, and I wait until pretty close to the end of the first meeting to ask that question, but I also have been asking it to my longstanding clients when I'm with them. And somewhere in the meeting, I'll say, you know, I just— this is my favorite question recently, and I just want to ask you this question. And I will ask them that question, and they come back to me with, well, when I came with you, I, you know, I heard from this person and this person, but they give me specifics, and they will say— most of the time they will say trust or communication. The person I was with before, they didn't reach out to me. They waited for me to reach out to them. Those are the two most common answers, but I'll get stories. And very strong feedback, which is exactly what I want. And it reaffirms to me that the communication that we are providing for our clients is important and valuable. That would be my key takeaway is to just test it with a few people, either potential clients or current clients, and see what the answer is.

That's great. Trust and communication, I mean, that's the vast majority, or is that very— the most common?

It's definitely the most common. There's usually a story around each.

Well, thank you so much for joining us. I really appreciate it.

Thank you, Greg.

Thank you.

Thank you. You have a great day.

You too. My guest was Barbara Hudock. For more advisor-specific podcasts, please check out Barrons.com/podcast. For The Way Forward, I'm Greg Bartalus.

This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.