Ron Carson: Lessons in Leadership for Financial Advisors

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Hello and welcome to Barron's The Way Forward. I'm Greg Bartalus, and my very special guest today is Ron Carson, the CEO and founder of The Carson Group. Ron founded the company in 1983 and just reached a major milestone that I think he will happily discuss shortly. And today we're going to discuss leadership lessons he's learned over the years, look at what firms need to do to succeed in the future, and he'll share a snippet of wisdom from a panel he just appeared on here at the Barron's Independent Summit in Salt Lake City. Welcome to the podcast, Ron.

Thanks for having me, Greg.

I don't want to leave people hanging. What was that news, that milestone you just hit?

Yeah, so yesterday, we knew we were getting close. We just passed a couple weeks ago, $35 billion in assets, and we were hoping around that time it would correlate to 50,000 families that we're serving. And I got a notification last night that we did that. We now have 50— Carson Group now handles 50,000 families in the United States.

Wow, congratulations. And you, on the panel, you mentioned, which I thought was a great story, the very first client that you landed. Tell us a little bit about that.

Oh my gosh, yeah. And so they asked me to cut it. There'll be a video out on LinkedIn. It's 5 minutes long, so indulge a little bit longer video you might watch. But boy, it was interesting going back and thinking about that first client. I started the business cold calling out of my dorm room, literally out of a phone book. And I connected with farmers or people that serve farmers. And I had this elderly couple in Fairmont, Nebraska that had just sold their drugstore. And I remember driving out there, had my meeting with them, and they gave, they opened an account and they gave me a check for $2,000. And I was so excited. I was listening to ABBA, which was, you know, one of my favorite bands at the time. And I remember playing Dancing Queen as I'm driving away from that. And wow. I mean, I was totally an unconscious incompetent. Then. I didn't know what I was doing, but, you know, I didn't know, I didn't know. And thank goodness, you know, that I knew something about farming and I could relate to people. And then when I, you know, really related that to the profession today, and boy, has it changed a lot, you know, since 1983.

On that first call, do you remember any aspect of it? I mean, was it the farming aspect that clicked or anything?

Yeah, what clicked for them was they had, for the first time in their life, they had a little bit of money. Because they had just sold this business. And keep in mind, I mean, this was— interest rates were high in 1982. The prime hit. Do you remember? Do you have any idea what the prime was, Greg, in 1982?

I think we were double digits, but—

21.5%.

Yeah.

21.5. Brutal. You could get money market yields in the teens, and you could get a CD. So the fact that most people didn't really want to— and we'd had a brutal bear market too. I mean, inflation.

Yeah.

And so the fact is that they had a meeting with me and trusted me and they were like, "Yeah, come on out." Because again, I'm calling out of the blue. No one's ever heard of me. There was no caller ID. It was a rotary dial phone. I made my calls early in the morning or late at night 'cause with farmers, that's the only time you could ever get ahold of them. "Yeah, come on out." And it was like an hour and a half drive from where I was to have this meeting, Gertrude and Herbert. And they since have passed away. Just, I wanna make a note 'cause I think about this Every time I talk about them, their children ended up becoming clients of mine when they passed. And when Gertrude passed away, she was 95 years old and her son said she would always watch, she'd get an instant cup of decaf coffee and watch the news. When they found her, the coffee was in her lap, not a drop had been spilled. She just passed that peacefully.

Wow.

So not only are they great clients, but I take inspiration on how I want to pass someday.

Well, I know you are a big black coffee fan. I am. As am I.

Yes.

What was the trajectory? I mean, you went from $1,000 to $50,000. Like, how— when did that— was there a hockey stick? I mean, how did that all play out?

Yeah, there was several S-curve explosions along the way, you know. So early on, it was— I just worked hard for just a little bit. I remember driving out to Hastings, Nebraska, and I had this— the biggest opportunity that I'd ever had in my life. And the guy had $50,000 to potentially invest. I'd never come close to having a $50,000 client. And the first few years, Greg, of my profession, I was doing things the way everybody else was doing them. And just out of, you know, the necessity of figuring out a way of surviving, because I was not successful, you know, in this business early on, I started doing things. And that was part of the panel today. And my advice was we let so many other people do the thinking, our thinking for us, and not being curious and not being afraid to fail.. And so I started a thing I termed in my first book, Love Affair Marketing. How do I make people feel so good about me that they want to reciprocate and do business and refer other people? So I started showing up with random gifts like Valentine's Day. I bring people chocolates. And if it were whatever the, any reason I could to give somebody something. And I realized how powerful, and I developed a whole program around Love Affair Marketing. So that was a huge growth in my business. Just emotional reciprocity. Then the next break was systemization. I'd read this book around called The E-Myth by Michael Gerber. And it's like, if I could systematize processes, I could be much more efficient. And that was a huge hockey stick in my business. And then the third was passion prospecting. It's like, why don't I take the passions that I love, whether it's golf, I was a pilot, so I'm flying, hiking. In those days, I loved to collect and drink red wine. I was a big Nebraska football fan. Why don't I just create events around this? And I will have unlimited clients because they will know someone they want to share that passion with. So I started Passion Prospecting, and that's when my business really accelerated and had more clients than, than I could serve. And then became the challenge of how do you scale the business, bringing advisors, leveraging it to technology. So I'd say there were 6 or 7 S-curves where, you know, you would go along, you would build, you come up with an idea, your business would dramatically grow, and then it would plateau, and then you figure out what the next thing is to accelerate your success.

Okay. Now, bringing it back to today and the future, are there any invisible trends, if you will, things that people are missing that are really going to have a dramatic impact on this industry?

Yeah, I think there's two. I don't know how invisible it is, but no one seems to be doing anything about it, so maybe they don't believe it's real. And that is a war on data. Talent. We don't have nearly enough people in our profession, and we're not bringing them in. I mean, there's more, there's more advisors over the age of 80 than under the age of 30 today. It's a, it's a problem, right? And you're going to see wage pressure accelerate, and it's going to be truly a war on talent. And the other one is, again, it's talked about a lot, but I don't know if people appreciate the power in AI and having clean data. And I look around, there's a massive amount of tech debt in our independent space. I think we've been really slow to move. A lot of the big providers today have not, they can't make the move. And there are some incumbents that are coming up that will be able to make more at a lower price and really scale their business and over, outlay, AI kind of capabilities where we're gonna be able to create 24-hour, 365-day view of everything that a client is doing in the human experience and being able to offer alpha opportunities for them. I think very few people are prepared to really leverage that in the future.

So for the average advisor listening, acknowledging each one's a different size, different imperatives, et cetera, what would be some actionable advice or things you'd recommend to get the ball rolling in that direction?

For them? And which one, the talent?

Well, both actually. I was going to either order.

Yeah. So here, the talent that— and we also talked about culture today on the panel. So first of all, figure out what your talent's going to be. You know, you're going to be a high-performance culture. Are you going to be a family culture? You know, what is the culture that you want to really be intentional about? And then— and that is a big differentiator in the marketplace. You can attract the kind of people that want to be part of that culture. Maybe your culture is just all around impact. Great. But the more you can define it, the more you'll start to attract people. Two is have a career track for people to come in. I think we've done a terrible job of selling what it means to be an advisor in an advisory firm with an RIA firm. There's just so many opportunities that have nothing to do with sales and provide real tracks for them to come up. On the tech side, and this is gonna get really interesting, is probably companies we haven't even heard of today are gonna be the major disruptors because they're gonna have leverage, they're gonna be able to leverage data. And if I'm an advisor out there, I wanna spend some time really taking a look at who are some of the companies I haven't heard of that are providing services that are where Google was before we had ever heard of them, or Apple was before we ever heard of them, or think of NVIDIA, you know, it's a household name today, No one had heard of them before.

I mean, the Nvidia stock was dead money for about a decade. It was fascinating.

Yeah, it was, right? It took them just, you know, how many years to be an overnight success. Exactly. And, and so as, as Gretzky said, go where the puck is going, not where it's at. Take some time. And this is one of the things I recommend in my coaching program for years is schedule that creative thinking time and think for yourself and really trust your internal instincts and align yourself with a place. Think about, there's no idea that we're going to know what's going to come at us. So what kind of platform offers you the most flexibility to leverage technologies that we haven't even been invented today, that's going to create a better experience for all the things that matter for a human. And that's where I think the human experience is going to morph. Into, I brought in, take a step back here, Burt White joined us who was at LPL for many years. He's our Chief Strategy Officer and he's really, him and Terry, the president of Carson, is working with our leadership team on what we call the now-next. It's like, what do we need to do now and what's the next version of the value proposition? I'm spending my time and energy on what's the next-next and beyond. And a lot of my time is going around saying, Today, you look at most firms, they provide a very similar value proposition. We all talk about, you know, we give good service, we have great technology, but I think the winners of the future are going to be around solving problems for the human in a proactive way, leveraging data through AI.

Yeah, and you've also talked about just in terms of the need of scale to do that, that right now so much money is going to a handful of the largest firms and that you think in the future, an even greater percentage will go to even fewer firms.

That's correct.

Really got to scale and look at the bank.

Look at the— Greg, look at the banking, banking industry in the '80s. Any idea how many banks there were like in the mid-'80s? Just a wild guess. A lot.

68,000.

Okay. 68,000. Today, more than 50% of the market is controlled by 5. 5 of the biggest banks. You've got to be a certain size to have scale to even compete. Compliance is going to get harder. Tech is going to get more expensive. Your talent, you're going to have to make a much, much larger investment than that than you ever thought you would. And you just can't do it at a small base. Now, there's the arguments out there that the niche players will still be effective for a while, but pretty soon these large firms are then going to drop down and have niches in everything to compete directly with you, but they're going to be doing it with a lot of firepower on top.

Right. And your average investor will say, well, why not just go to the one-stop shop that does it all?

Yeah.

Yes. Yeah. So you mentioned NVIDIA being an overnight success in quotes, but you, you've been in this business for over 40 years now. You've accomplished success very much on your own terms in an unorthodox manner. What are some leadership lessons that advisors can learn from, you know, while fully acknowledging everyone has different life circumstances?

Man, I made a lot of mistakes along the way, Greg. And one, that I seem to repeat time and time again is I viewed, I viewed people working at Carson as an expense and was, and would try to get a bargain. There is no such thing, a bargain when it comes to talent. And one of my mentors said, find the best people you can and get the heck out of their way. And even though that advice was shared a long time ago, it's really hard to do. And so that's one of the things I feel that has been a real differentiator for us is going out and getting really, really top-notch people. Matter of fact, we're going to be making 3 announcements in April that are really big for us, like people I could never imagine, you know, would ever come to our firm. So I would tell people out there, stretch as far as you can because they're some of the best investments you could possibly make. The second would be, is don't be a library of information. Be a librarian. I think we put so much, I did as an advisor, put so much pressure on myself to be able to answer accurately any question that the client would throw at me. And as soon as I decided to become a librarian of information, they'd ask me a question, I don't know, but I know where to find it. You just dramatically expand not only the accuracy of an answer that you can get, but your credibility. And it's, and also, Also, you're taking an enormous amount of pressure off yourself.

Tell me now about next-gen talent. You mentioned that there are more advisors over 80, they're all CFP holders, more over 70. You can slice it and dice it in different ways. Directionally, there's a very clear takeaway, and a lot of the numbers are quite dispiriting of how many advisors enter the field and leave within a few years. This has been talked about for a long, long time, but it really does seem that right now we're in an inflection point. This long talked about reality is manifesting and the consequences are really, really important. Tell me first off, in your opinion, why a lot of these people are leaving and what firms can and should do in order to keep them and ideally keep them happy.

I think a lot of firms do what I used to do is I bring somebody in and just expect them to figure it out on their own or think that they're going to want to work the way I did and pay their dues. And I even see this in our coaching program today. It's like they didn't work out, but there was really not an extensive training program for them. We put a lot of resources into training our own people and training many of our advisors in the partner offices, bringing them in and giving them a way to be successful and having exposure to many different parts of the business because there's lots of different ways that we need competent professionals to provide services today. And we just have a PR problem. I mean, if you think about the financial crisis, Wall Street scandals, everything you can imagine, the young people today have seen their parents lose their home, lose their job, have their 401(k) money stolen from them, a Ponzi scheme. Oh, and by the way, we don't have a true fiduciary standard. Right? I don't even know if someone's acting in my best interest or not. It's no wonder we have a hard time attracting and keeping people in this profession.

100% agree. And the PR problem is a really good distillation of it because there's so many aspects to it. But to the extent people think of the industry, it's this, you know, it's this blob of negativity and whatever, but they don't even make these distinctions. This is a lot of a lack of awareness. And then to the extent many are aware of it, oh, it's uncool, or you need to be a quant, you need to have an MBA, you need this or that. And there's a real perception different. So I know that so many people in the industry are fantastic, incredibly talented and intelligent, but I sometimes wonder if they're too close to it and they don't see what the outside public sees. And to them, it's like, "Oh, bunch of people in suits or whatever, and what's the difference?" There's a differentiation issue. And everyone is different. A lot of the services are similar, yes, but you have to figure out how are you different and make that abundantly clear. And there's just a real— I mean, it's encouraging that the industry is flourishing despite this, right? So that's the big positive takeaway is that I see upside on that level.

Yeah, I used to say that our profession dramatically overcharged and underdelivered, and I really believe that was true because— and I'll put myself in that category— I was a sales guy that people were paying me, you know, a percentage of their assets to guess what they should do in the market. That's really how I started off in this business. Today, I think we're dramatically undercharging for the value that we're creating. And no one wants to pay a fee. And if I'm an advisor, I don't want to accept a fee. I want you to make an investment in your future because you're expecting to get a return on that investment. And now, if you get into it, it is so rewarding. I mean, you get to be at the epicenter of every good and bad thing, which is also good because you get to be there for your clients through the tough, tough times, the great times. You become part of people's family. Many times we're the first or second call if something really good or really bad happens with that family. And the idea that you get to work on this cohesive, comprehensive team of professionals, attorneys, CPAs, you know, CFAs, and just create a proactive, seamless, proactive service model that can really deliver exceptional value for what people invest.

Yeah, the industry definitely delivers. So much more than in years past. Like for every dollar you pay for an advisor, you're getting a ton more back. So that's great for clients. And also in terms of the impact of the work, it's very palpable. I mean, it's so hands-on and so in a way intimate. I mean, some family's finances, this is, you're not gonna talk to your friends or this or that. So there's definitely a special relationship, a lot of importance there, so.

Yeah, and I have clients today that were some of my, that haven't died off. They still stop in. I still get to see 'em. I don't have any direct retail clients anymore, but, you know, it's like I've watched their, their kids grow up. I've watched their grandkids grow up. It's, it's one of the most rewarding things I've ever done in my life.

Just a final question and maybe a final comment or two. You've talked about an abundance mindset. Tell me about that.

Yeah. So I grew up and I was telling the story on the panel. My parents went broke when I was 17. We were farmers and my whole operating system, Greg, was fear and scarcity. You know, everything I did out of, of, because I was afraid I worked hard, because I was afraid that there wasn't going to be enough, that I was going to have that proverbial rug pulled out from underneath me, no matter how good times were. And people that have known me for a long time are surprised to hear this, but for most of my life, I was pretty miserable. Even though I was, I was from the outside looking in really successful, I wasn't happy. I didn't feel any joy. And doing some work with a therapist and some other work, um, I ended up shifting my operating system to abundance and this abundance mindset, this law of abundance in a way I operated that because when the coaching business, I shared everything that I was doing and it would come back to me a hundredfold and better ideas and ways of taking my own ideas and making them better. But I've learned that since I've shifted this abundance and things are going to be okay. I just watched, by the way, I had some health treatments done in a hyperbaric chamber in Costa Rica last week. And so you watch a movie for all this time. And I watched this movie that Brad Pitt was in called Seven Years in Tibet. I don't know if you've ever seen it, but there was a quote in there, a Buddhist quote that says that if you have a problem and there's a solution, you really don't have a problem. And if there's not a solution, then don't worry about it. And the point was, is don't worry in either case. I spent most of my career and life worrying about the market, worrying about the clients, worrying about this, worrying if interest rates were going to go up. And about a decade ago, I was able to make that switch along with this abundance mindset, realizing, you know what, nobody knows what's going to happen. But here's what I do know is I'm not going to protect what I know. I'm not going to live in the past. I'm going to approach every day with fresh eyes. My clients don't— don't expect me to be a fortune teller, but they do expect me to do the best I can in that moment. And making that shift has not only brought a tremendous amount of joy and happiness to my life, but my business exploded. I started to attract different people and abundance started showing up. And even the quality of the stakeholders that come and work with me at Carson has gone up exponentially.

Well, that's great. A great way to wrap this up, I think. Thank you so much for joining.

Thank you for having me, Greg.

My guest has been Ron Carson. For more podcasts and the latest wealth management news, visit barons.com/advisor. 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.