The Customer Service Dimension

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Hello and welcome to The Way Forward. I'm Jack Otter, and I'm joined by Steve Cassaday, Chairman and CEO of Cassaday and Company, a $4.3 billion RIA in McLean, Virginia. We're going to talk mostly about how he runs his firm, but we'll get into a few other issues too, including his investment philosophy. Steve, thanks so much for joining us. We appreciate it.

Thanks, Jack.

Real quick, how long have you been running the firm?

27 years.

Congratulations.

Thank you.

Can you tell us a little bit about how your practice works? Rather than a few FAs and a big back office, your business model really revolves around collaboration. Team members each have their own expertise, their own areas of expertise. What are the benefits of this and how does this play into the way you service clients?

So our firm is idiosyncratic in many ways and at many levels. We have departments that are responsible for attracting and retaining subject matter experts in all of the areas that represent the financial planning processes. We have attorneys on staff for estate planning. We have CPAs on staff for tax consultation. Obviously, the firm has 17 or 18 certified financial planners. That's our largest department is the financial planning department. And then we have an advanced strategies department that works on risk management. So, By having these specific departments with subject matter expertise, whenever a client comes in, we have a group dedicated that sits around a table and has a conversation about the client's specific situation. In my experience integrating the wealth management process, you know, by having a CPA who talks to the estate planning attorney, who talks to the insurance person, talks to the financial planner, the investment management person, etc. This simple process solves all of the problems that investors have, all the mistakes, the blowups, the things that go wrong, a result of this lack of coordination. So that's why we do it that way. And the collaboration among these groups helps the advisors always be on the leading edge, always being able to bring to bear best practices and so forth.

And I imagine that helps with scale and growing. As long as you've got silos of expertise, presumably it's a little bit easier to scale up. Than with just individual advisors who are trying to be holistic themselves. But I do want to ask, with so much discussion of scale these days and the technological implications and everything else, what do you see as sort of the thresholds for scale? You, you manage a little over $4 billion now. Is that enough? Do you need $10 billion to be where you want to be? What are your goals?

That's a great question, and the answer is it depends. I would say that when you get to a certain critical mass of AUM and thereby revenue that allows you to do things that are, I think, of paramount importance for the scale process. For example, if you want to attract and retain someone who is a subject matter expert, CPA, an attorney, or whatever you're talking in the DC area, you know, multi-hundred thousand dollar annual salary. If you don't have the scale in terms of revenue, the critical mass in terms of revenue, you're not going to be able to hire and retain that type of talent. So, that's why I think it's important. And also, you know, I'll be honest with you, I'm 65 years old. I've been in the business for 43 years. It's not about the money for me anymore. It's about having people come up to you at the Christmas party and saying things like, "I don't know what I would have done if I hadn't met you guys. We feel so comfortable having you as our advisors," etc. And we feel like we pull people out of burning buildings every day. I mean, smart people with a lot of money have said to me, I feel like a lost child at the shopping mall. And because they just don't understand how to put all this stuff together, and the more wealth they have, the more complex it gets. So the reward for us— sure, there's money, but the reward for us is practicing the art at a very high level and having people be really satisfied that we can do that. And so I think having significant assets under management means that you have the ability to bring to bear resources that are going to help perpetuate that cultural sort of effect that we have on our clients.

I love that lost child at the shopping mall analogy. Did a client actually say something to that effect to you?

He did. I wanted to tape him, but he wouldn't let me do it.

Just before we get back on track, I just want to ask you, what are the biggest issues that have sent people off track that you're able to course correct for them?

Well, the behavioral part, the behavioral component is the number one reason why people don't have the outcomes that they want to have is the way they behave about money. They're nervous. They have prejudices. They make, they buy when they're comfortable. They sell when they're uncomfortable. So that's something that we, we bring to the table and we refined it to a very high art to the point where we regularly tell our clients it's inevitable that we're going to have a decline.

Don't get spoiled because you think we're geniuses now, obviously, because you're all in on Bitcoin, right?

Yeah, no, no, no, GameStop, not Bitcoin. Just, just kidding about that. But the point is that we, we feel like we tell them all the time to be aware and be ready and prepared emotionally for the inevitable decline. The other thing is that being able to have, as I said earlier, a team of professionals dedicated in-house team of professionals that provide a comprehensive overview of everything with a dollar sign in front of it that the client needs to be concerned about is something that is a gigantic advantage of, you know, having the size and the girth that our firm has.

So given what clients are telling you, I suspect that referrals are a key part of your growth strategy. Is that 100%? Have you acquired at all? Tell us about your, What's happening with growth at Kasaday?

So, 75% of our new money comes from either existing clients giving us more money, inheritances, 401(k) rollovers, that type of thing. And the other 25% or 30% comes from— excuse me, 75% comes from referrals from existing clients or new money from existing clients. The other 25% to 30% comes from social contacts, web traffic, seminars. Symposia, those types of things.

Obviously, as, as that money comes in, you have to grow that team of experts. Uh, what are the keys to hiring someone? Uh, how do you vet a candidate and say, yes, this is the right person for Cassidact?

Well, in the old days, most of the core people that I have now that have been with me for 20 years or more, I met them in some weird way at a restaurant, socially, and I talked to them for 5 minutes and I said, You need to come work for me. And they'd be like, well, you know, what would I do? And I said, doesn't matter, we're going to figure that out. And, and I— it's true, I mean, it's happened. Literally, there's 10 people working at our firm where that happened. And I have a good ability of recognizing a specific type of person. And what we try to do is hire people with innate abilities that can't be taught and then put them in a position where we feel like those abilities would allow them to thrive. Doesn't always work out as we originally set it up to work out, but ultimately those people found some sort of niche at the firm where they could thrive and do the work that they really love doing. And it's made employees sticky. And I think it's one of the reasons why we get best places to work in DC and Virginia and in the industry, those kinds of awards all the time. The other thing is now that we're getting bigger, we have 67 employees. I've trained my department heads to look for certain things in people and ask them, "What did you like? What do you like about your coworkers?" And they'll say things. I said, "Well, you need to hire more people like that." And they immediately, because they're smart people, they immediately got it. And so now, I've delegated the hiring process. And so, now, they're hiring people to work in their departments who I think are just intelligent, bright people who are willing to work hard. Who understand how we compensate our employees, which is completely different than anything anybody else does. We pay our employees based on the firm's top-line revenue. So, every employee receives a small percentage of the firm's top-line revenue, not profit, but top-line. So, that way, everyone is entrepreneurial. They all think like owners, which is really important because you don't want people sitting around answering the phone, chewing gum, you know, and not paying attention, not being, you know, totally engaged. You want them to think like they own the place, and they do. And as a consequence, the quality of service that we provide is, is really excellent. And the funny thing about it, Jack, is that the hiring process is, is a date. It's not a marriage. You know, you basically hire, hire the person, and then we dump stuff on them. I mean, literally, we bury them to see quickly if they can dig themselves out. So the reason that people leave happens very quickly is the pace. We are so busy. Some people thrive in that environment. Some people get overwhelmed and we quickly see, you know, who is that person and who is not. And they usually will just self-enforce and kind of leave.

That sounds like a trial by fire. You said one thing that I wanted to follow up on. If people are compensated on top-line growth, I see the logic behind that, but that also means somebody, perhaps you, needs to keep an eye on margins, right?

Yeah. Can we talk about that later? No, you're right. So we don't want to have 100 people getting 1% of the firm's revenue. I'm not the best with math, but I knew that probably wouldn't work out. So the answer is you bet, and margins are important, but I also recognize that having turnover, unhappy people, subpar employees is also a problem. And I'm just willing to make the sacrifice on margins to make sure that we have virtually no turnover for important people that we take surveys for these best places to work things. And I mean, we get 99.5, 99.8 for 60 people, 4.8 out of 5, that kind of those kinds of scores happen because people are delighted to work there. So, if you send an email out at 10 o'clock on Saturday night, I usually get a response at 10:10 or 10:15 from all my employees. That's the kind of culture that we have. So, that's worth something in the margins or the sacrifice that I was willing to make to make sure that we have a very unusual, very strong culture that clients recognize and see and feel that makes them in turn happy. So, they refer their friends. They say, "My advisor does these things." They're like, "What? Your advisor has attorneys on staff, accountants on staff?" And it just works. And the long one has worked for us.

And how do the spouses feel about these 10:10 PM Saturday night emails?

Well, I don't know. I think that they— well, I think that it's just like you and your spouse or anybody else that come home and say, "I love where I work." Steve did this today for all the employees and the spouses are like, gosh, it's incredible. In fact, when I see them in social situations, um, and you know, I've known most of my employees, I knew them before they were married. So I met their wives when they were girlfriends and we've known each other for 10, 15, 20 years. They always say, you know, so-and-so is so happy. You know, we're so happy that, that, you know, Joe works for you. And that's the kind of stuff that, you know, you can't put a price tag on that maybe, but that's not my style. I'd rather have everybody be really happy.

And then they knew, everyone knew it was part of the deal coming in if Steve was there before the spouse. So, you've made it pretty clear what differentiates your firm certainly from the inside out and I suspect from the outside in because all of these things are the things that clients see. Do you have any advice for your competitors in terms of, or your peers, I should really say, in terms of how to find a niche in your industry. I'd say there's certainly room for growth, but it's growing fast. There is a lot of competition. How should a firm decide what their place in the world of RAs is going to be?

My personal view on that is that a niche is restrictive. My guidance would be, my fatherly advice would be, the things that I think are going to make you be at least in my case, successful in the long run is customer satisfaction. And if you work at it like it's a science that you have to learn and master, then the benefits of that are just gigantic. And think about this, Jack. You can completely— advisors can completely control the customer service dimension. You have complete control over how good it is, unlike the stock market interest rates, the Fed, et cetera, which we tried to control that, by the way. It didn't work so good. But the customer service, you could completely control. So, we literally sit down, break every customer engagement into its component parts and say, "How could this be better? What could we do better?" And then when they come up with that, the next year we sit down and we, "How can we make it even better than it was last year?" And it's amazing when you ask your employees for for input on this type of stuff, the quality of suggestions you get are really over the top. And we practice radical inclusion at our firm where we ask everybody, you know, what do you think? What would you do if you were me? I've asked 25-year-olds, what would you do if you were the CEO? And they get cross-eyed and real nervous, but then they know if they bring something to me, I'm going to say, what would you do if you were me? And they always have great answers. So the niche for us has been customer service that is literally ridiculous. And we have people saying— I had a client call me the other day and he had sent me an email like 8 o'clock and we had our leadership team meeting which runs for 4 hours. And he sent me another email at like 10:45 and he goes, you know, I'm just making sure that, you know, everything's okay because I'm so spoiled. You usually answer your emails in like 10 or 15 minutes. That's an example of the kind of things that you do. So niche for us, I think, is going to be being a firm where customer service is absolutely paramount. And customer service means responsive to questions that are technical, financial, tax-related, whatever. You know, should I do this? Can I do this? Would you look at this thing for me? Whatever. And doing a really good job of giving a comprehensive, cogent answer that reflects your knowledge of the client's situation. That's what the niche should be. The idea that, you know, you're going to specialize in preferred stocks or highly concentrated stock positions, that's fine. And I think that works. There's a lot of great firms that do that kind of thing. But for us, I think it was customer service.

So when you go out there with that great customer service, who do you see as your competition? Is it, is it the big Edelmans and Mariners? Is it firms your size? Is it wirehouses?

What we This is going to sound really arrogant, but the only time we ever lose in a competitive situation is when it's between us and the client doing it themselves. That's our biggest competitor. And we try to work on why that's a bad idea. And then when we lose to other firms, we ask the client, can I call you and debrief? You know, I understand and I respect your decision. Can we just understand what it is that we could have done better? And they're forthcoming about it. And usually the reason that they came to the decision was we didn't do a good job of explaining what we did. And when we do that, they say, "Well, maybe I should reconsider." And I'd say about half the time we end up salvaging the relationship. But in terms of losing to other groups where we stack up against them and we say, "Here's the weight of the evidence about what Cassiday and Company does, and here's what the alternative you're considering does." And they look at it and they go— and it's honest, it's ethical. And they say, "No, there's no question I should work with you guys." So, we very rarely lose in competitions. It's usually for some exogenous reason that's not related to the actual consideration of the advisor and what he or she does.

Gotcha. Now, the brother-in-law or something like that.

Exactly right.

And those rarely work out. So, I want to ask you about your succession planning. You've had a succession plan in place for about 15 years now. Why is that important? I realize it's kind of obvious, but let's set a baseline. And what are some mistakes that firms make when setting a succession plan in place?

So, we recognized in the early 2000s that not having a succession plan was an abdication of our fiduciary responsibility. You think about it. I mean, you have clients that are, you know, in their 80s that have been with me for 30 years or more that really depend. I mean, they're friends, they're like family members. And if I got hit by a bus and suddenly they got a call from some stranger they had no relationship with, it would be very traumatic for them. Plus, I don't feel comfortable that they would be— that someone would drop in their lap that was not familiar with their situation. So, what we did was two things. I worked really hard to make myself obsolete. So that if I were to suddenly not be on the scene, that there would be continuity, there would be no hiccups, the firm would run fine. So, we've done that in terms of the governance of the firm, the executive functions of the firm that was in place. But then the other succession thing that I think a lot of your listeners are going to be interested in is how do you actually get the value, monetize the value of your practice for your heirs? And that's trickier. So, we felt the first goal of the succession plan was to make sure that there was continuity and sustainability in the practice. And we did that by all of my advisors I hired right out of college with the two exceptions. So, of the 11 advisors, 9 of them I hired directly out of college and they've been with me for 25, 24, 23 years, you know, right down the line. And the reason I did that was I wanted them to inculcate the things that I thought were important culturally and be like a sponge, want to learn technical aspects of the business and so forth. And also that they would then see that it wasn't just a practice, that it was a community of advisors who had people that were clients that were very much reliant on them for very important things and therefore would want to be part of the continuity plan. That we were developing. And these guys are all totally in on that. So, I also wanted to make sure that if I were gone, they were competent to run the firm. And so, I groom them for that. I basically throw tough decisions in their lap and go out and hit golf balls while they figure out how to do stuff, which is very, very satisfying because they end up figuring it out and sometimes do better. In fact, most times do a better job than I would have done. So, we put together a plan. It's funded by insurance, bound by contract that if I were to pass, that my estate would receive a nice check and that the ownership of the firm would pass to 3 guys, my 3 original advisors that I hired. And then, we have an executive team, which is part of making me obsolete. The executive team runs the firm on a day-to-day basis. And if I were to you know, drop dead tomorrow, there would be absolutely no hiccups in, in how the firm runs. So I think it's really, really important. The mistakes that people make are manifold. One of them is making one of your kids to take over your practice. You know, practice our size, I have my 3 sons all work for me. They're not going to be my successors. They've known that since they started working, and they're totally comfortable with it. And I think other Other advisors have, I think, let's just say, not a complete understanding of what the consequences of their children taking over the practice are and haven't thought it through. So, that's a big mistake they make and also not having a contract. And, the third and the biggest mistake is if you were the founder, the proprietor, there's a curse associated with that, which is this is my baby. I work so hard, You don't deserve this. The amount of money you're paying is not worth it. I had to get all that stuff that has to go away because you have to make a significant sacrifice monetarily to make sure that the integrity of the client relationship is preserved, that the clients are still served at least as well or better than when you were there, and that the people who you're counting on stick around. And I was willing to do all that. And my guys saw the sacrifice that I made. We knew it was a good deal when we inked it because everybody was unhappy.

But that's a great definition of a fiduciary if you are willing to take a hit financially yourself in order to ensure the best possible deal for the clients.

It is, right?

How do you explain this? I mean, obviously, I'm sure everyone in your firm is quite well aware of this plan, your sons first and foremost. How do you explain this to clients? Is this an onboarding thing? Does it come later?

It's a great question. So, we think it's a competitive advantage. It's a big competitive advantage. So, we say one of the questions we ask clients is, you know, so you're working with Fred and they say, yeah, Fred's our advisor. What happens to you if, you know, Fred gets hit by a bus? And they're like, they have no idea what the answer to that question is. And you could see the wheels turning in their heads, especially when people come to us, they're getting close to retirement, they're maybe a little older, husband's worried about the wife handling the money if he's not around, etc. And then you ask that simple question, what happens if Fred's not around? And they have no answer, they have no idea, and they realize how irresponsible it is for the advisor not to have a succession plan. And they go back and they say, what happens to you, to us, if it happens to you, Fred? And he usually doesn't have a great answer. And we say, look, here's our Here's our succession plan. Here, by the way, here are 4 articles that have been written about us and our succession plan in the industry magazines. And they take them home and read them and they're like, I see how important this is. And then they see I'm 65. They see the average age of the firm is 32. And that's by design. We did that so that when I'm 95 and you're 95, Mr. Client, you know, Joe here is going to be 58 and, you know, he's still going to be involved and he was in your first meeting. Now he's known you at that point. We have known you for 3 decades and that's important to clients. It's a gigantic competitive advantage to have a succession plan.

And I would suspect that this helps you recruit people to see that this is a firm that doesn't rely on Steve Cassidy as great as he may be.

Yeah, that's right. It's sort of a, you gotta swallow your, you gotta check your ego at the door. And sometimes this is a great example of that, but yeah, you bet. And I think that the— it's funny, people— and I don't feel like I'm that old, but I guess I am. I remember when I got into business, my boss was 33 and I thought, "God, he's really old." But I'm 65 and most of my employees are 30 years younger than me. They look at me and they say, "Gosh, what happens if Steve's not around?" And so it is an important consideration. You're right.

I want to ask you a few investing questions, but first to pick up on one of the things you said, which was that you'd hired most of your advisors straight out of college. I'm assuming in those days your firm was small enough that you were the lead advisor for all of your clients, because I suspect, you know, when, when a client— if a client were to find out that, hey, your brand new advisor has, uh, is, is only 3 months out of school, that might be a concern.

So there was a— we put a plan in place and it kind of evolved, but ultimately the plan became we hire, you know, Joe out of— right out of college, or he would intern for us, which was even better, intern his junior year, and then senior year graduate, come to work for us. And we would have them do grunt work. And basically, they'd be Velcroed to me all day long. And I'd say, you know, including pick up my dry cleaning, take my car to the shop, pick my car up from the shop, and, you know, then sit in client meetings, see what we say, see the questions we ask, see how we handle objections. Understand the technical stuff that goes into crafting the client's plan, investment configuration, all that sort of stuff. And after about 2 years, they're ready to really be set out as the primary relationship person. I am still there. And they say, I say, I have you with Joe because he's young and has plenty of bandwidth to take care of you. I am involved in everything that happens in your portfolio. You, but I might not always be the person that you're directly speaking to, and I want to make sure you're okay with that. Yeah, sure. We like Joe. He's great. And then they end up spending time with these bright young people, and they're so impressed with them because they're very well trained that they are totally comfortable. And very rarely did people say, you know, I don't want to deal with a 25-year-old. That really never happened, probably because I was in the background and very visible, copied on emails and all that sort of stuff. But now these guys My first advisor I hired in 1998, was it '98 or '97? I can't remember. And, he's incredible. He's 45 now and has a huge book and is very, very good at what he does. And so, it's funny, I see people at Christmas parties that started out with him when he was in his 20s and they're like, "Really happy with Chris, love Chris." And so, same thing with all my other advisors. So, it worked. And I think the fear that everyone has about inexperienced advisors is usually well-founded. But in our situation, the safety valve was the fact that I saw everything that was done. And by the way, all of our investment management stuff, we have a uniform investment management deliverable for every client. So they're not buying GameStop and Bitcoin. I'm not paying attention to it. They're all buying the same things.

Sure. So real briefly, what is the investment philosophy of the firm right now? I know you went all in in March, you told me, when the market was collapsing. That was certainly a good call. Tell me about that. Now, some people wonder if we're at an inflection point with bond yields rising and an apparent rotation to value. What are your thoughts?

So in March, we have a home in Naples, Florida, and I usually go back on a week, off a week. And, March 15th, I flew down. I was going through National Airport, Washington Reagan National Airport, and I was the only person in the TSA line and there was like 20 people in the entire concourse. I thought, "This is serious." And, when I got down here, I worked half a day and got on my bike and I was riding my bike listening to CNBC and they said the market's down 2,600 points, largest point drop in history. And, I pulled my bike over, called my executive assistant and I said, "Get the Investment Policy Committee on a conference call. And I sat there on a park bench and we got like 10 people on a call on my cell phone. And we talked for, you know, probably 30 minutes. And I said, look, it's either the end of the world and we're all going to die from this virus and it doesn't matter, or it's a generational buying opportunity. And they were all like, you're right, it is. So we thought literally we, at that point we said, we're going to sell these things and buy these things in every account. And They, it was basically the contours of that were set on that call. By the time I got back to the house, I had a spreadsheet with all the transactions that we were going to do, you know, on there. We proved it and entered the trades next morning, which was the 20th of March. I think that was a Friday. I can't remember, but basically a day or two before the bottom, pure luck. But, but, um, we ended up buying aggressively, you know, tech stocks which the FANG stocks, which we liked, but we thought they were too expensive. But when they were down 35%, we thought maybe they're not so expensive anymore. And that worked out super well. And small and mid-sized companies, we bought them and reduced our bonds, took tax losses, which we were able to put in our pocket and use. So we won't have any capital gains probably for a couple years. So it's just literally a home run. I like to say that I was prescient, but it was sort of a red or black, red pill or black pill kind of decision. And we did it and it worked out really, really well. In terms of our overall investment philosophy, I've been in the business for a long time. I've seen a lot of stuff and there is no system of investment management that works 100% of the time. There's just no such thing. And the only way it could possibly exist if we were to develop some sort of system for timing and timing doesn't work. In fact, more money is lost attempting to avoid bear markets than has been lost in any bear market. I say that all the time, but it's true. So we recognize that we had to not do timing. You control risk by the shape of the pie chart, how much you have in stocks versus bonds versus cash versus other things. And then we put together 6 models that go from crazy risky to really conservative and everything in between. And we show clients historical performance of those models and they They go, gosh, I really like this return, but I don't want to have 60% downside. This downside looks great, but the return's not going to work for me. And they go back and forth. This is us. This is where we want to be. And they're totally engaged, invested, and resolute about their commitment to that model. And then our job is to populate the pie slices with investments, which we choose based on our investment policy committee and other work. And then everybody owns the same stuff, which we believe based on our research is the best of breed in every case. And if it's not, we make a change. And as a result, it's—

we actually—

this is another thing that you've— I know you've seen probably, Jack, is that a lot of larger RIAs don't really think they can say they're doing investment management where they could say we have a uniform investment management deliverable that applies to all of our clients that reflects a massive amount of research been tested. It's not perfect. It's imperfect, but it's the most nearly perfect thing that you can find and that they go with it. A lot of the good ones do, but not everybody does. And so we tell our clients, this is why we do it this way. And some people say, not interested in that. You know, I want to buy individual stocks and, you know, sell options. They're not a fit. Those people aren't fit for us. So what we have as a result of all this stuff is a $4.2 billion RIA with demonstrably good investment results that reflect a lot of thinking and a lot of research, all done pursuant to producing a pretty good return most of the time, which is sort of our mantra.

You just made a reference to stocks that sounded as if you didn't hold individual stocks for your clients, but earlier when you're talking about making those trades in March, it sounds like you do. What's your investment vehicles of choice?

ETFs, actively managed mutual funds. We have hundreds of millions of dollars of individual stocks, but they're usually sacred cows. I still want to sell or highly appreciated types of things.

You also said something interesting. When they're looking at the pie charts, they are in a sense choosing from a menu according to their risk tolerance, which obviously makes a lot of sense on many levels, including behavioral, but it also raises an issue, which is that absent a certain amount of risk, you're not going to hit a specific goal. So you must, I assume, work with them to either adjust their goals to fit the likely performance of that investment approach, or else you tell them to save more.

That was a great question. The answer is we have had clients say, "I don't want to take any risk." And so, which, I mean, every advisor's heard that. Nobody ever comes and says, "You know, Steve, I want to take a lot of risk." Most people are sensible enough to know not to say that, but some say, "I don't want to take any risk." And I say, "If your mandate of your investment policy is not to take any risk, you are in fact setting up a risk that you're not aware of. It's not top of mind, but it does exist, which is that you're going to run out of money if you live a long life." And so the probability that people will spend 35 or 40 years in retirement is very real, and people don't consider the consequences of that. So, we tell them, "Look, I'm going to push you to be more aggressive. You're going to be very uncomfortable with my suggestion." And I say, "Is that a deal killer?" And they kind of look and they get thoughtful and they go, "Well, maybe not." And now, the door is open to them understanding that risk is a necessary component of a long-term successful investment plan. And here's what we say to people, two things. Number one, declines become recoveries. The risk is that your portfolio is going to decline. Declines become recoveries. Every decline historically has become a recovery. And they say, well, what if the decline doesn't become a recovery? Well, if you have a 40% decline in the global markets and it doesn't become a recovery, it's not going to matter where your money is. All that stuff is going to be gone. And they're like, okay, I understand that. The second thing is I tell them this, which is true. In 43 years in the industry, I've never received a phone call where a client said, Steve, something happened. I need all my money tomorrow morning. That never has ever, ever happened to me. And when I speak at the Barron's conferences, I always ask everyone in the audience, 150, 200 people, all advisors, anybody ever called you and said that? No, no, nobody ever does that. So, but the fear that people might need all their money at an inopportune time, like the market's down 40%, is what makes them jittery. You know, what if I needed $2 million and it was only a million? Well, you know, what am I going to do? Well, that never happens. So, I've seen everything, you know, people dying, you know, people divorce, chronic illness, spouse in jail, kids in jail, spouse and kids in jail. Nobody has ever called me and said, I need all my money tomorrow morning. So, what happens is people, when they retire, take incremental withdrawals from their portfolio to supplement their living expenses. They do that for decades. And if something happens, they don't call me up and say, I need all my money tomorrow morning. They say, this happened or that happened. I need a new deck. I want to buy a car. My son lost his job. I need to help him out for a few months so he gets on his feet. That's not, I need all my money. So what you do is when the declines occur, you tell them it's going to happen. You need to be prepared. I promise you this portfolio is going to decline. You're going to be unhappy, but when that happens, you leave it alone, let it percolate, and it will recover. And that advice saved so much grief in my clients who otherwise would have panicked and sold at the bottom instead of hanging on and let the cycle run its course.

Well, what I really want to know is the full story behind the spouse and kids in jail. But luckily for your client— what's the word I'm looking for?

Confidentiality.

We're out of time. So I will instead ask you to follow the Barron's tradition and share with us one actionable idea for your advisor peers who are listening.

Yeah. So I'll tell you the thing that I did early in my career that transformed my business was a simple thing, which is a time log where you get a piece of paper and it's like a blank calendar. It says 8:00, 9:00, 9:30, 9:45, and when you come in in the morning for 4 days or 5 days, you write down everything you do in 15-minute increments for a week. And when you do that, then you go back and you look at all those things and you say, what can I do? What can I delegate? What should I eliminate? And what can I automate? And when I did that, the first time I did it, I looked at all the things on the list and I was like, 90% of this stuff I should not be doing. I could automate them or I should to just delegate them to somebody else. And then, I ended up doing only things basically all I do every day is say, "Hi, I'm Steve. Can I help you make smart decisions about your money?" That's all I do every day. And that's all my advisors do every day. That's why we have all these employees so we can isolate them from unproductive things that need to be done, but they should not be doing them. So, when I did that time log, it was transformational for me because nothing I've ever done has had such a big impact on my career and on the acceleration of our growth. So that's the thing that I would recommend people do. It sounds silly, but if you do it, it'll be like, my gosh, I should have done this 10 years ago.

I think that's great advice for just about anyone in any business. It might even be good advice for retirees, right? Yeah. They can make much better use of their time if they actually know how they're spending their time. Steve, thanks so much for your insights. It's really been great talking to you.

My pleasure, Jack. Thank you. Have a great day.

Please tune in next week where we will have Steve Sandusky interviewing Bill Carr, formerly of Amazon and the author of a new book called Working Backwards. They're going to talk about leadership principles and how maybe you can use those principles to grow your business as Jeff Bezos did. Perhaps not quite the extreme, but good insights nonetheless. And thanks for joining us for another episode of The Way Forward.

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