Ryan Parker: What Advisors Can Learn From EP Wealth’s Rapid Growth

This podcast is 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.

Welcome to Barron's The Way Forward. I'm Greg Bartalus, and my special guest is Ryan Parker, the CEO of EP Wealth. Today, we're going to dig into growth and hear about how EP Wealth grew its AUM tenfold from 2017 to the present day and discuss how advisors can succeed in their own M&A efforts. Welcome to the podcast, Ryan.

Thanks, Greg.

Great to be here. So tell us a little about your background, before you joined EP, what you've been doing since then, and then we'll dig into all aspects of your growth strategy.

Well, I appreciate the opportunity to be with you, and I'm one of those people who almost 30 years into this career got into it almost by mistake. Graduated from college with a degree in political science, which made me particularly ready for financial services, but found my way to a mutual fund company and started answering the telephones and just found that this was a business that you are required to learn every single day. You can't have the same day twice. And so spent the first about 15 years of my career on the asset management side of the business. Then I got an opportunity to lead some teams at LPL Financial. And then about 2016, opportunity of a lifetime, which was to join Edelman Financial as the first CEO not named Rick Edelman. We had a great time continuing to build that firm until we merged with Financial Engines. And so after that, took some time off, spent some time at Citizens up in New England, And then my wife, who's from Utah, decided to move back home. And through that, that's when I reconnected with Brian Parker, who's not related to me, at EP Wealth. And we just found that there was a great kinship for how we could build a company together.

And tell me now a little more about your strategy, because the local angle is quite impressive and interesting and a little bit different than many other firms.

Yeah, and I think that, you know, first and foremost, the strategy is rooted in simplicity. Which is that this is a service business that needs to completely stay laser-focused on the needs of clients. And if you do that combined with creating a great place for people to either build or enhance their career, then you've got a foundation upon which you can build. So I think the strategy piece that you're talking about really talks about our inorganic growth strategy. So EEP really started to have partnerships. We talk about partnerships. I never met someone who wants to be acquired. And the reality is, is that mindset really shapes what we're looking for in local partners. And so it started in 2014 with our first group outside of Southern California in Denver. And the whole theory is if— when you can find like-minded entrepreneurs who are also focused on growth and you want to be able to both build something of significance while being part of something larger, meaning a lot of advisors grow their business a certain level, they know that they're not spending their time where they really have passion and skills, which is with the clients. And so by coming together, they become regional hubs for us. So those leaders then attract other types of advisors so we can build around them both inorganically, but probably most importantly is organically. So we see inorganic and organic growth as two sides of the same coin. So when you find the right local partners who can establish that hub, it not only allows us to expand in that geography by having additional inorganic growth,, but it creates real firepower to be able to get out and grow organically as well.

Now tell me about local autonomy. What are some of the pros and cons of that?

Well, in the end, the pros outweigh the cons. And the reason that is, is that everyone who has joined us as what we call regional director or regional leadership is already a proven business owner. They're people who've made the tough decisions around setting strategy, being financially responsible, being able to attract develop and ultimately retain great staff. And so the pros are when you find people who are really skilled at that and say, we want you to continue to do that, but you're gonna do that with more resources and more support, you are enabling them to exercise their best judgment. The cons can be that you also attract a lot of, you know, really smart, really capable, and sometimes some really big personalities. So you have to have low ego as an organization, that there's not only one way to do things, but there's the way that we've collectively gotten together and said, this is the best way to serve clients. And so in the end, I'd much rather have a hungry autonomous leader who knows how to run a business than someone who you would install and sort of drop in as a bureaucrat who doesn't have that innate sense of how to do it.

How do you mitigate for the possibility of, let's say, a big ego like that? I mean, is there the getting to know each other phase? You might go out to dinners and stuff just to really to the extent you can get a sense of each other, the chemistry, et cetera? I mean—

It's one of the most important things that we do, and it's not just with the principals of firms that ultimately partner with us. The courtship, for lack of a better term, is much more complicated today than it was several years ago. Any firm of high quality probably has 10, 15, 20, 30 people who are looking to partner with them, or in some cases, just acquire them. So we spend a huge amount of time upfront trying to align not just on the business, but on the philosophy. And also we want people with strong personalities. We want people who know how to go out and win and who are hungry, but they also need to share the humility and the ultimate goal, which is to serve. So a lot of the mitigation is before you even put together a financial bid or any of those other things, you're making a decision on culture and on the ways that people think and act, 'cause those things will carry through past the transaction and into the marriage itself.

And presumably, given your experience and deep network, I mean, everyone talks to everyone, so you're probably getting the skinny on certain people through other channels as well, right, that help inform you?

Sure, and they are as well about us. One of the things that we do is give every prospective seller a list of every single one of the people with whom we've done a partnership and say, just call anyone, email them. We're not gonna curate the list, we're not gonna tee up a reference check, and we think that that allows a level of transparency that gives them more comfort that there's not some sort of skeletons hiding in the closet.

Right. Keep it as a two-way street. Exactly. Yeah. Yeah. Many firms have— when they make deals, it's a different philosophy where it's kind of like you will— they will integrate them and say, we're doing it one way. This is a different approach. And yet both can succeed. There is no right answer. It all depends, I guess, on the firm and your goals. Can you, on a broader level,— you know, say, let's say you're a company and you're considering engaging more aggressively in M&A, you know, to help them kind of figure out which strategy might make sense for them, are there any telltale signs, or how would you go about that, you know?

Yeah, so, you know, I can't sit here and tell you that there's any sort of formula that is responded. I mean, ultimately, I think depending on where any organization is in their own life cycle, they need to first and foremost take a moment to be authentic and understand themselves. Every team, every individual, every company has both strengths and weaknesses, and part of it is not trying to use M&A as a cover for any of the weaknesses that you probably need to get stronger before you consider it. And then I think the second piece is that the market really craves differentiation, and there isn't much there. So if you can find something that you can go out and differentiate on, I would really suggest that that informs the strategy more so than the mechanical piece of it. So for us, we chose the hard path, which is we fully integrate on the back office, the middle office, the investment piece, you know, the financial planning standards are there, but that's to enable that local entrepreneur who knows—

Right, the front consumer-facing is more boutique.

Exactly, and that was a choice that basically reflected a lot of our co-founders and the way that they built their business, but it doesn't necessarily work for everyone. There may be people who are better off having tighter integration on the front office and maybe offering more choice in investments or more choices in custodians or tech platform. But I think it really starts with an authentic assessment of who you are, who you want to be, and what are the strengths you can accentuate.

Right, that makes sense. And that'll steer you to the, yeah, okay.

At least it's a starting point. Then the second piece is that there's, There's nothing better than going out and either it's going to conferences, listening to podcasts, just doing the research to make sure you're getting multiple endpoints and don't get just an echo chamber within your own firm of 3 or 4 voices that might drown out some insights that you could bring in from the outside.

Your firm was founded in 1999, you joined in 2021, and it's majority owned by employees. Tell me a little about that. That's interesting. And you do have You're backed some private equity, but it's not significant, right?

Well, it's that Bryan Parker and Derek Holman started the firm in 1999, and they have been and still are advisors first and fee-only fiduciaries. And so a lot of our ownership structure reflects the fact that A, we want to be able to control the client experience, stay true to that fiduciary network, but also have flexibility. And so back in 2017, the business got to a size where, I think Brian and Derek and my predecessor Patrick decided that they didn't want to keep refinancing their homes to do some of this work. So they brought on Wealth Partners Capital Group as their first outside minority investor. I think the key part of it is that Wealth Partners brought more than money. They brought an expertise in mergers and acquisitions that actually helped jumpstart a lot of the growth that happened from 2017 to the present. Through that, We found that having a minority, non-voting, non-controlling outside partner who also brought something to the party was the best way to both maintain the trajectory of the company while being accountable for building something that is the long-term. So in 2020, Berkshire Partners out of Boston came in and they also partnered with us. But in the current state, they are still both combined minority, non-controlling. And I think most importantly is, and this is a little bit in the weeds, but the way that the company is managed is it's Brian, Derek, Patrick, and I are empowered to make the decisions, just like it was in 2011 when Patrick started, in 1999. I think that is the thing that allows investors to come and go over time, but for us to continue to think longer term.

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Okay, okay, that makes sense. In terms of, again, on local, uh, you said in an interview, not only do you have partnership deal, but you actually, you said you doubled down on the firm's local program. So it's kind of interesting. You don't just get the status quo, but you really drill down and double down, if you will, on this. Just add to that a little?

Sure. We're looking for people who have a growth mindset, but also a track record of growth. So if you've grown a $500 million or billion-dollar RIA in a local market, you're already doing something well. So I think about our presence that we have in Portland, Oregon area, in Vancouver, Washington. That group came to us at the beginning of 2021, and Chad Burton and Rob Black, who are the principals, were already outstanding at being able to grow through seminar marketing and through the radio. Well, the first thing that we would do is double down to help Chad do more radio, to do more podcasts, to do the things that he's already naturally really skilled at, but then build around other skills, whether it's through our internal marketing, through our relationship with the custodians, but, The first thing is, is to amplify your strengths. And that's really, if you look across our now, you know, 20 regions sitting here today, each one of them had something that they did well, where they now have more time and more resources to do more of it. That also gives them options to do something that's adjacent.

The landscape today, how is it different than a few years ago, and what do you foresee in the future?

Well, the thing that's, you know, right in, should be at least, in our collective faces right now that's different than 5 years ago, is just the rapid evolution of how technology is once again remaking, first of all, what consumers, before they even become clients, consumers are demanding more. They're demanding things that are more personalized, more tailored, more quickly delivered to them. But in some ways, I think that we're like 1994 or 1995, where we're just at the beginning of how the internet at that point changed the way that all companies interacted with consumers. I think what we're seeing now with the confluence of, you know, artificial intelligence may be the buzzy part of it, but there's a whole change to the infrastructure that's gonna be able to create a better client experience, but then that's also gonna raise the bar. So 5 years ago, we would not be talking about the fact that, you know, we could drop, you know, 10 different documents into an AI processor and within 10 seconds get a synthesis that you could go back to the client and say, Is this the right read of your overall financial condition? And we're just at the beginning of it. So I think in one way, that's probably the most visible. I think ultimately though, things that we may not all see as much is that the war for talent and the war for more diverse talent is really heating up. We're now at a place, and the CFP Board talks about the fact that decisions are made by women investors 2/3 of the time now. And we're really just getting started where through whole demographics and the fact that most women live longer than their husbands or partners, that's an area that we see now much more clear-eyed than maybe 5 years ago. And I think that also goes to the next generation of investors that are now coming into a place of both affluence and the need for advice. So just those 3 things amongst others are really reshaping the way that we need to think about creating the offer, packaging and delivering it, but then who's ultimately providing that advice.

Okay.

And I want to ask you now, with M&A or just even running a business, it's very outward-focused often about prospecting clients, referrals, etc. But I think you're a big believer in growing the internal team and how that can pay dividends, even if it might take a little longer or not entirely be clear. But can you speak a little to that?

Well, the, the Usually the best talent that you have is sitting under your nose. And also because of the partnership model, we're constantly hiring through those partnerships. So we had a group in Michigan join us at the end of 2024 with 45 employees and majority of them were not advisors. And so they have an opportunity now to look at different career paths, more expanded career paths. And I think that is part of the secret sauce of being able to have people who are coming in at different stages of their career, they're no longer siloed or stuck in one career path. And so we ask ourselves, what's each person's highest and best use? How do we have a clear-eyed conversation with them so that they can match up, you know, what they love doing with what they're good at? Yeah, exactly. But sometimes you have a, a skill gap, and if someone has the will, we're much better off investing the time and energy to train them than it is to constantly be hiring from the outside. So we've developed a whole internal advisor learning and development team that has programs that advisors can opt into or sometimes be suggested to them by regional leadership that's about building skills. But it's also within the non-advisor population. I think increasingly having a balanced set of homegrown talent that are advisors and non-advisors also creates a more common language about how you can serve clients better together. So that to me is part of the secret sauce that allows for sustainable growth versus constantly feeling like you're on the hamster wheel.

Right, and that should help also with retaining employees and just opening up future paths for them and whatnot.

Well, in many ways, our colleagues are similar to our clients. They're making choices all the time about whether or not you're providing them with the best environment, with the best outcome. And if they see something that looks better, these days, there's not that huge a friction for people to either change careers or change advisors. And so you're winning back people's hearts and minds constantly.

I have a question for you about organic growth. Can you name one specific yet surprising idea that you have found often results in organic growth?

Well, I don't know if it's surprising, but I think the one thing that, that I've seen over and over again is helping advisers to ask a better question. Because oftentimes there's something that is unstated by the client or the prospective client that if you can dig into that that next level, maybe reframe a standard question or something that feels really generic, you get that person talking. And I think a lot of times for organic growth, the client or the prospective client, she's gonna tell you exactly what they really want. He's gonna say this was the bad experience they had the last time. And so you can get everything right, top of the funnel, great marketing, the best outbound marketing campaigns that result in conversion. I mean, there's a lot of science to marketing and our head of, Marketing is definitely a data scientist first, but when it comes down to it, this is a people business. And so helping people to ask better questions that are more genuine and authentic, frankly, creates a deeper level of trust. And I think that's a secret to ongoing organic growth.

Yeah, that makes sense. I mean, advisors hear a lot about being listeners and better listeners, and that's true. But again, asking, framing questions differently is also very important.

Right, well, sometimes if you aren't asking the right question, then you can't listen to the helpful answers.

Exactly, exactly. Is there anything else we haven't touched on that you wanted to bring up?

Well, I just think that for us, and I would say advisors in general, we're probably in the first part of a long-term trend in this country about being able to help millions of people with better and better advice. And so, you know, at EP, we're trying to build one of those nationwide fee-only firms that will, survive through cycles. But I also think that the fiduciary movement in general is one that we want to continue to support, because in the end, when consumers are getting better advice, that's healthy for all of us. And so sure, we want to win as a company, but we also want to cheer on our colleagues and really help elevate the entire financial advice game.

Great. Well, that makes total sense. Well, thank you so much for joining.

I appreciate it. Yeah, thanks for the time. Really appreciate it.

Thank you, Greg. Certain, you're welcome. My guest has been Ryan Parker. For more podcasts and the latest wealth management news, visit barons.com/advisor, and be sure to check out The Way Forward: Next Generation, a new podcast that puts the spotlight on the emerging leaders who are shaping the future of financial advice. For The Way Forward, I'm Greg Bartalis.

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.