Spuds Powell: How to Take a Mature Practice to the Next Level

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.

Hello and welcome to Barron's The Way Forward. I'm Greg Bartellis, and my guest today is Spuds Powell, Managing Director of the Los Angeles-based RIA Kane Anderson Rudnick. Spuds was ranked number 1 on Barron's Top 100 Independent Financial Advisors list last year and also was inducted into the Barron's Hall of Fame. Today, he will explain how to keep growing a wealth management practice once it reaches a mature stage. Buds, welcome.

Thanks, Greg. Good morning.

Good morning. So let's dive right into this topic and first explain why this is such an important problem to tackle.

Well, for folks who have been in the wealth management industry for quite a while and have had some success, you eventually get to a point where you bring on a lot of new clients and eventually get to a stage in your career where the lion's share of your time needs to be spent servicing those existing clients and delivering upon all that you promised when they hired you. And at that point in your career, it makes it really difficult to continue to grow. And so I think it's important to be very strategic and thoughtful about finding that balance between providing exceptional service to existing clients while also creating opportunities to grow your practice.

And why do advisors often not do what they're supposed to do? Why does inertia often— take control?

I think there are a couple of risks when an advisor gets to that stage in their career. One risk is that they overemphasize client servicing and stall out and, and stop growing. The other risk is they neglect their existing clients in pursuit of trying to bring on too many new clients, in which case their existing client base gets disappointed and they start to see an increase in the amount of turnover in their practice.

So tell me about team structure, personnel, resources, all of that, what, what's needed.

So one of the critical steps in order to continue to grow a mature practice is making sure that you have the right team supporting you. And as part of that team, it's imperative that you have wealth advisors that are seasoned, that are experienced, that are very, very sort of talented and that you are totally comfortable as the senior wealth advisor transitioning clients to and sort of handing off the bulk of the client servicing responsibilities to those advisors for those clients that you think are appropriate to transition. And I know in my career, as I've sort of faced those stages, it's been difficult to hand off those relationships But, but in hindsight, it's better for both our clients. It's better for the advisors that work with me and my team, and it's enabled me to free up the bandwidth to continue to grow my practice.

When you are considering doing a handoff, um, when do you feel like it's time, or you have the right person and/or it's the right time? What are the telltale signs of, you know, the time is ripe, the person's right, etc.? It's—

there's sort of two parts, I guess, to my answer to that question, Greg. First of all, Stating the obvious, you want to make sure that the advisor you're transitioning clients to has great credibility. They've got great experience, they've got great credentials, and you know that from a technical perspective, your clients will be in very good hands with those advisors. They'll have the expertise to be able to provide good, compelling financial planning services and information. They'll be able to comment on the capital markets and asset allocation and so forth. But as importantly, maybe more importantly for me anyways, the advisors have to have the right personalities. They have to be honest, they have to be trustworthy, they have to be personable, they have to have great people skills and communication skills so that I have the peace of mind of knowing that not only will my clients feel good about the, the technical expertise that they have, but they'll also feel really comfortable working with the other advisors on my team and feel as though they're people that they can relate to and trust. So once you have the right team and, and once you make the commitment to transition some of those smaller clients to other advisors on your team, the second really important step in the process is, is being very thoughtful, very strategic about maximizing the growth opportunities from existing clients. Over the last few years, more than 50% of the, the new assets I brought on to Kayne Anderson Rudnick have been generated from additional deposits made by existing clients. And so every single time I meet with a client, I think of it as another business development opportunity. And, and, and so I, I put a lot of time and thought and effort into every client meeting that I have. And I think in order to have success motivating existing clients to increase the size of their investment with your firm, there's a few things that, that I think are worth focusing on. You know, first of all, I'm a huge believer in face-to-face communication. I don't think anything can replace sitting down and sort of shaking hands and, and having that sort of face-to-face interaction. And I pride myself on, on making house calls. So 90% of my client meetings take place either at their home or at their office. And in every single one of those meetings, I really focus on, on being authentic and being open. And, and, and, and, and I try to spend as much time as I can focusing on what we have in common, what, what keeps us up at night, what, what excites us, what our hobbies and interests are, and particularly those things that we share in common to try to kind of strengthen that rapport and that relationship that I have with clients. I also really focus on being the best communicator I can be. I think one of the mistakes advisors often make is they, they talk over or beneath their clients and, and, and sometimes make the mistake of using technical jargon that doesn't make a lot of sense. And so I really, I do the best job I possibly can of trying to communicate with clients in a way that they understand and that they're comfortable with and, and that makes a lot of sense to them. And then lastly, I'm constantly looking for opportunities to try to provide my clients with pleasant, unexpected, sometimes shockingly pleasant surprises. And, and, uh, and I'll, I'll sort of give you one random example. One of my clients happens to live, uh, up in Tacoma, Washington. I was visiting with her, oh, early last year, and during the course of the conversation, she mentioned to me that her daughter and her daughter's family were visiting Los Angeles last summer. I happen to live in Los Angeles, and I, I know that my client has a couple of grandkids who I think were 7 and 9 at the time. And so when I learned that, that her daughter's family was gonna be in Los Angeles, I offered to lend her grandkids wetsuits and boogie boards and surfboards and beach chairs during their visit down to, to Manhattan Beach where I live. And they took me up on the offer. And I know her grandkids had a blast using all those beach toys while they were in town. And it was a sort of pleasant surprise that my client wasn't expecting, but gave us sort of good kudos. And it's just a good example of the way of something we've done to try to treat our clients as something unique.

Right. And I'm sure that story was told probably countless times to countless numbers of people, and they've probably told some other people as well. Yeah, yeah. It's funny because in that vein, I was speaking with someone recently, and She was telling me about an editor she had worked for, who I know, and she said— we were just kind of catching up talking about this person, and she said, "You know, some years ago we won an award, and then a week or two later, unexpectedly in the mail was this, like, really nice quirky box of chocolate." And she's like, "I never will forget that. It was just this unexpected thing." So the element of surprise can definitely go far.

No question about it.

Now tell me about— the importance of identity and having a niche because it is a crowded landscape. And to many people, advisor world is just a jumble of names and it's hard for them to discern who's who and what's what. Tell me a little bit about that and also in terms of business development and marketing once you have that identity established.

Sure. So as I mentioned, the majority of the new assets I've been able to generate for the firm have come from additional contributions made from clients. To the extent that I bring on new clients to the firm, I've had my greatest success focusing on two different niches. About 25 to 30% of my clients happen to be single women, most of whom are widows. And I find that by, by sort of developing the right relationships and rapports with these women, by being an effective communicator, they tend to be great sources of referrals. And, uh, and so, yeah, I'll give you a real-life example of something that I did that has proven to be very effective in terms of growing my practice. Um, I had clients that were married, and unfortunately the husband was on hospice and was dying. And, and at that time, he was in the skilled nursing facility, and his soon-to-be widowed wife was spending all day every day at his side. And I knew through conversations with her just how exhausted she was and how stressed she was and, and worried she was. And, and so knowing that, with her permission, I went and visited both of them at the skilled nursing facility. I brought a huge bouquet of flowers and some chocolates and sat there with her for several hours, kind of reflecting upon his life and their relationship together and being the best listener I could possibly be and just sort of being there to support her from an emotional point of view. And unfortunately, he passed away, you know, within a matter of just a couple of days. And it was thanks to, actions like that and, and the, the depth of the relationship I had developed up until that point in time, that I was in a great position to be able to be a real support for her and to kind of hold her hand through this transitional phase. And, you know, thankfully she has since recommended me to a few friends of hers that she's developed through widow groups that she's gotten involved with since his passing. And, uh, it's, it's, it's— I think it's important to put in the time, put in the effort, go above and beyond to, to try to develop those types of relationships. The other, the other niche that I've had some success with is, uh, I've got quite a few clients that are partners at a couple of different law firms, and You know, one instance, I host an annual day at Dodger Stadium where I invite a few of my clients who work at these law firms and invite them to invite colleagues of theirs. It's a fantastic night. We go out for a nice dinner and enjoy a nice ballgame. That's been a great way to develop new clients from those specific law firms. In another case, the law firm has a fairly complex and complicated pension plan. And for those partners that retire, it's not all that intuitive, you know, what that pension plan means to them. So I familiarize myself with that plan and am in a good position to be able to kind of educate my clients about what it means to them. We run cash flow projections to kind of help them quantify what that impact will be on their retirement.

What about social media? How does that play in?

One of the fabulous benefits of social media is it's a great way to, to cast a very wide net and, and to kind of leverage compelling information broadly. You know, thankfully we've been ranked on that Barron's list of top independent advisors now for quite a while, and we're very proud of that. We're very grateful for that. And a number of years ago, we hired a public relations firm to help us enhance our sort of social media presence. And as part of that, we've spread the news about the ranking that we have on that Barron's list of top independent investment advisors, which has led to a number of, in some cases, very large clients who have found us through internet searches. You know, as an example, I got a call out of the blue about 2.5 to 3 years ago from a gentleman who owns a plastic piping company and found my name and Kane Ehrson Rudnick's name through a Google search. And among other things, saw our ranking on the Barron's ranking and, um, after their due diligence, uh, initially decided to invest approximately $10 million with us. And thankfully, we've done a great job of servicing them and exceeding their expectations, and the relationship has grown to the point where today they have approximately $270 million invested with us. And none of that would have happened without sort of the social media presence that we now have and the partnership that we have with Barron's.

Okay, that's great to hear. And let me ask you, if you, let's say the person listening does have a mature firm, what's an actionable idea that they could do, implement today, something quick and easy to get the ball rolling?

Well, let's see. The first thing that comes to mind is to take advantage of the opportunity to overcommunicate to anyone who refers an opportunity to you. It seems to me that it should be totally obvious that if you get a referral from somebody, that initially you express a lot of gratitude and appreciation. And then as that prospect goes through their due diligence that you're proactively communicating back to the person who made the referral to give them updates on how that initial due diligence process is going. And then on an ongoing basis, assuming they hire you, provide the referral source with constant updates on how that relationship is going. And yet in my experience, I find that it's shockingly rare for not only wealth advisors, but really for any professionals to provide that sort of ongoing feedback. And so I know when I get referrals from accountants or estate planning attorneys or from clients, I, I go above and beyond to provide those periodic updates on how that relationship is going for several reasons. You know, first of all, it's a way for me to constantly stay in touch with the person who made the referral. And secondly, it's a way for me to constantly sort of educate and inform them about the types of clients that we work with. And then thirdly, it's a way for me to constantly remind them that we're providing, you know, their friend or their family member or their, their coworker that they referred to us with a really positive experience, which ultimately makes the person who made the referral look good.

You said that it's rare that others do what you do. Why is that, do you think? I mean, part of it might be laziness, busy, but you're exceptionally busy. So what's the difference here, do you think?

It's probably a reflection of people's priorities. You know, it's easy to get laser-focused on servicing clients and trying to find new clients. And, and, and losing sight of the importance of, of taking a step backwards and, um, and sort of broadening your thinking a little bit. Um, so I think that's probably part of it, but I just feel like if you're not providing really good feedback both initially and on an ongoing basis to the people who make those referrals to you, you're missing out on another great opportunity to generate new referrals and, and to provide lots of positivity to those people.

Excellent. That's great advice. Well, thank you for joining us. My guest has been Spuds Powell. For more advisor-specific podcasts, please check out barons.com/podcast. For The Way Forward, I'm Greg Bartolis.

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.