The Promise—and Peril—of Working With Family Members | Next Gen

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Welcome to Barron's Advisor: The Way Forward Next Generation, a special series spotlighting the emerging leaders shaping the future of financial advice. Twice a month, we'll be digging into the strategies, insights, and game-changing moves that will help you take your practice to the next level. I'm Allison Tucci, and today with me is Lisa Van Arsdale. Lisa is a senior wealth advisor in SageVU's Illinois office,, and today we're going to be talking about selling her firm as well as selling to women. Welcome to the podcast, Lisa.

Thank you for having me.

So I would like to start off by just learning a little bit more about your business. What type of clients do you serve? How is it structured? What industries do you really focus on?

Sure. So it started as a mother-daughter firm. We are in the Chicagoland area. We have a couple of offices that we navigate to and from for client meetings. We typically grew through acquisition from acquiring a couple other practices. Today, where we're at, we're at Sageview Advisory Group. They're based out of Newport Beach, California. And so that was a recent transition for us. We were with LPL Financial for almost 15 years. So I feel like I kind of grew up at LPL and they were lovely and a great partner to us. And then we made the switch over to a smaller RIA just for some of our client needs. Clientele. We aren't in the high net worth space. We have a lot of working and retired teachers that we work with in the state of Illinois. They have great programs that financially have put them in a really good place. They have to work really hard. They say that they're good savers and then they have really healthy, good retirement that we hopefully help them get to. So families, small businesses, we don't have account minimums. So it's not necessarily always the traditional clientele that that is out there, but it's who we gravitate to most and who we feel like we can provide the most support for.

So you mentioned you're working with your mother.

Yes, Judy.

So let's dive into that for a second. So how does working with your mother really impact your personal relationship? About 15% of advisors are really working with their parents, so it's a good chunk.

Yeah, I will say it's a, it's a club that you gravitate towards. And, and once you're in the either father-daughter, daughter-mother, son-father, whatever the combination may be, um, then you kind of— they all kind of come out of the woodwork and there's a support group there because you all meet together and say your parents are crazy, and then the parents are all meeting together saying, what do we do with these kids? And so it's a good dynamic to have. Um, but I reluctantly got into the business. I thought I was going to be an elementary education teacher. I loved math. I I soon realized that you don't really teach math to kindergartners, so that didn't work out great for me and switched to statistics and then finance. And so she kindly sat me down one day and said, you know, you love teaching and you know you love math and statistics, and so you're a perfect set to be a financial advisor. And that's what she did at the time. So still tried to get out of it for a while, but I ended up loving it. I will say the dynamic of working with your mom, it's funny, people joke I call her Judy at the office. I don't call her mom. She doesn't— once she has dropped my childhood nickname in a meeting, but that was only one easy, easy swipe. But it's also— it has its challenges too. So we've had to work really hard on communication. We've had to work really hard on boundaries. We're in coaching programs that have really helped us to say, okay, I just need to talk to you as my mom for a second, or I need I need to talk to you as my boss. That was a whole nother dynamic when we weren't truly business partners at the beginning. Um, or I need to now talk to you as a business partner, and I think we should do this. I'm not going to lie and say there haven't been many of tears shed at the office, um, or we're pretty good at keeping that behind closed doors, but it's just, it's emotional.

And when luckily we don't disagree on much, we just have those skills that really complement each other, um, that has made it work Can you share with me a story of when your perspective that you probably wouldn't have had otherwise without being that mother-daughter really helped your clients?

Absolutely. So I think we have a lot of clients that are second and now third generation, which is really great because we'll accidentally schedule meetings back to back and a grandma will come in first and then they'll come out of the conference room and then their grandson is sitting there waiting. And we didn't know that we booked them back to back and then they'll go to lunch and have a great time. But for us, that dynamic of one, these clients have also seen me grow up, right? I've, I started there the day after college. I've now been there for 15 years. So they've seen that growth and that plan kind of come to fruition. But they get the best of both sides, right? They get Judy's wisdom and expertise in her life history where she can talk about how it was raising two kids as a single mom and the financial decisions that she had to make. To put us through college. And then I'm there to show like generationally some of the things that are more timely of what the process was to go through college and applying for FAFSA and all the things that are in the now of buying a home and things that are a little more in the day to day of what is occurring in my life versus what may be occurring in hers. So we made the choice a long time ago to do meetings, all of them together. And so we have 800 households which is one of the pieces that led us to needing to find some more support and finding our perfect fit at Sageview. But it's a lot of meetings that we— a lot of people would look at us and say, just split them in half. Why doesn't Judy do half? Why don't you do half? Your workload would be cut. And that wasn't fun for us. It wasn't as fun for the clients because they love the back and forth and the banter that we have with each other and just the different roles we play in a meeting. Has really then helped us grow the practice as well through referrals and, and that next generation of clientele that comes through.

It's no surprise that wealth management firms have been trying to target women. 45% of females are now the primary or sharing in the responsibility of being the breadwinner of the household, up from 15% in the 1970s. Women are now investing more, being involved with it more. How have you seen really your dynamic help with entering into that market?

Well, we're definitely a minority because not only is it Judy and I as business owners, but we have an all-female team. So we have 9 amazing, bright, talented females running our day to day. And so we go to conferences and we'll walk in and everyone's like, Wait, you're all women? And I'm like, yeah. And it's not on purpose. We didn't intend it to be that way. We've had men work with us in the past, but we just felt the empathy that women bring to the meetings and the comfort that they can bring to letting somebody open up about their finance has been really important. We did a survey a couple of years ago with our clients and we specifically asked them, why, why did you choose to work with us? And we don't have only female clients. We have many female clients, many same-sex couples. And there was still this group of either single men or male-female partnerships. And we just asked them flat out, we're like, why? But why choose us? Right? Where there's a plethora of male advisors also in this world. And they said, because if anything happens to me, I know you'll take care of my wife. I know you'll take care of my daughter. I know you'll take care of my mother. And so for us, And so that's been one of the ways we've actually grown, which is a sad way to say it's a positive for us, but right, we then not only have the surviving spouse, but then their children get involved and then they become clients. And so we just have worked really hard at kind of developing that kind of not so traditional aspect of how, of a different way to grow your practice.

So transitioning to your entire business, the mass affluent market, it puzzles some people who mostly focus on ultra-high net worth. They think it's not profitable. They don't know how to do it, and they kind of shy away.

If you value the clients that give you $25 a paycheck versus coming to you with a big check, we've found just from the referrals that then they give, because we've treated every client with the same amount of support, and the same amount of structure of what, of what they get for our services, the referrals that they bring in have just been through the roof. And so part of how we got to where we were with the client base we have obviously started from acquisition, but then we got to use that in the growth strategy that we had. So if we use our teacher clients, for example, every new school year comes in a new band of teachers that they need help and support too. So we've got a couple of great teachers that will refer us or district heads that might be influential in that first startup when they're meeting with HR and then who do they want to meet with? And we can be on a list to help support them. The industry loves to segment everybody, right? And you have to have your A clients and your B clients and then your Cs and your Ds and everyone gets a different service model. And we looked at it and you can be so much more efficient and so much more tactical if you offer the same service across the board. And so that was a choice we made. And I know a lot of advisors are going to disagree with that choice, but it's building that first relationship so that then they can go tell their friends and family. And so we're really fortunate that we don't have to do a lot of outward marketing. We really don't do any. It's all referral-based at this point for our growth of new clients.

What are the challenges addressing this market?

I mean, you get a few duds, right? You get a couple that are either really far in debt and don't know how to get out of it and don't necessarily take your advice. Then I feel like you've got the risk of people that are going to take a lot of time that don't turn into those clients that you expect them to. But part of that is doing your duty as a financial advisor. And so we love the purpose and the reason that we became advisors in the first place. So helping people who need it the most, it was always backwards to us, right? It's not the high net worth that always need the most support and the most financial guidance. Sometimes it's the ones who need the help to figure out how do I put my kids through college or how do I buy that first house or how do I buy a car or those little wins that they need in maybe the beginning of their careers. Versus waiting for them to work 50 years and then say they're good enough to become a client because they hit a certain threshold. That just never felt great for us. So when we were acquired by Sageview, that was one of our main questions from just a culture and a value standpoint is did they believe in account minimums? Because we did not. And if that was— that was one of the due diligence questions that ruled a lot of offices out for us because it just wasn't how we felt we could connect to people and really help serve who we wanted to serve.

You're listening to Barron's Advisor, The Way Forward: Next Generation. At Janus Henderson, we strive to deliver better outcomes through insight-led investing, innovation for clients, and a partnership approach that's core to our identity. I'm Jessica Liancini, Head of Fixed Income Client Portfolio Management. I'm passionate about my role in investments. It allows me to partner with our clients, simplify fixed income, and support them in achieving better outcomes for their clients. Janus Henderson, investing in a brighter future together. We're going to take a short break. Stay with us. Welcome back to Barron's Advisor, The Way Forward: Next Generation. Let's get back into the conversation. You mentioned this transition a few different times during our conversation. So, so we're going to dive into—

All right.

First step, pre-deal. What were the biggest challenges? I'm thinking now you're looking at valuation, you're looking at your contracts that you have to look at, your partnership agreements maybe that you've already established, that checklist that you're going through.

And for us, it wasn't— we didn't ask for this, right? We weren't out there looking for a change. We loved our time at LPL. LPL was an amazing partner to us. I still think they're a wonderful firm. I have lots of friends that still work there. Our problem was we became such good partners, right, that then all of our free time that we did have was spent on councils and boards and things because we just cared so much about the people and we believed in their mission so deeply. And so we had to take a step back and say, what do we really love to do? And we love to meet with our clients and we love to take care of them. And so we had to kind of wash out some of the extras at that point because personal relationships were taking a hit, health was taking a hit, and we had to figure out a different solution. So we kind of laid down the cards and said, we have two options. We can either build a team of a bunch of advisors to come in and help support us, or we could have found a support partner in more of the, the bigger RIA space that took some of that weight off of us. Right. I didn't need to decide another HR insurance plan for our team members one more time. Right. It just wasn't bringing me— let's be real— any joy. And OPL had a virtual CFO program, right? We were like, we'll test it out, we'll see what they do. And we started to peel back the onion and started looking at the valuations and we were like, What did we just do? Like, what— from a business owner perspective, we've now grown this business to a really nice size. And what would that mean? So then we started doing our due diligence of what other options were out there. We started making a few phone calls. They started calling us. But you just have to really make sure, right? First, what's your valuation? What are your numbers? Is your house in order? Right. And what I think people don't always realize is you should always be ready for these conversations because you don't know when they will come.

What was the biggest surprise that you saw when you were going through the valuation conversations?

I think what surprised us the most, and again, in the back of my head, I knew it was always going to work, but the demographics of our clientele being focused on that affluent market and not having— right, they didn't necessarily care that they didn't all have huge dollar amounts because they knew they were going to have these clientele for a longer trajectory. The recurring revenue of the contributions that we could prove were coming in, right? Because of that teacher business, right? And the contributions that they were making from their 403(b)s was always revenue that they could see heading in the right direction. Even when you get to RMD age, we knew exactly how much— we start in the red every year just because of RMDs, right? It's a— you have to do it. You can't get around it. But as advisors, what growth do you have and what plan do you have just to make up for the RMDs you have to send? Well, we, are really fortunate that a lot of our, again, those teacher clients that may have a pension from the state of Illinois aren't necessarily touching the assets we manage for them. They have those pensions that they can rely on. So those just continue to grow. And if they don't need their required minimum distributions, we're just, we'll do the distribution, pay the taxes, but funnel it right back into a non-retirement account. And they can see those assets staying whole minus the taxes. I mean, we can't, can't do anything about, then I would love to find a solution around that. But it just— I think if you have enough of a pattern that you can show the business, you have to know how to explain your numbers, right? And I think that was what really helped us is we knew the profitability numbers so well inside and out because it was just of interest to us that anything they saw on a line item, we could explain and adjust about how that would really help them as an overall company too.

And it sounds like what people would have perceived as maybe your biggest weakness actually wound up being your largest strength. I think that's a fantastic story for advisors who are looking at maybe it's not profitable in mass affluent. You just proved them the other way.

Oh yeah.

Yeah. Which is great. Now the last phase of the acquisition story.

So my favorite part, post-deal. This is my favorite part.

Post-deal. So how did you approach it?

Transparency has always been something we've really stood on. And so being transparent and overcommunicating was how we wanted to approach this transition nightmare as what it was. And then what we decided to do is we were going to have a meeting with every household. So we chose not to kind of do the typical transition where you just send everybody a DocuSign and say, we're making a change, sign this, come along with us. It'll be great. We took the opposite approach in saying we'd like to meet with you first. We're going to have a formal agenda. We're going to tell you why we chose to do this, what the differential in cost is, if there's any. But it will benefit you. I promise we're not— you will not lose on that deal and what it will take to do that. And then we asked them to please come with us. And so I think because we structured it that way, it was a very successful transition. We moved 98% of the business. I think we always laugh because we look at the I think it was about 10 clients that maybe didn't come with us and 5 had passed away. And so we, we, that gets faulted against us. And I'm like, I don't think that's true. Like, I can't control that. But, you know, at the end of the day, numbers are numbers. So that's what it ended up looking like. And then through that, I think because we were so transparent, we got referrals from it. And I just kept looking at people and I'm like, we're making this huge change and asking you to come with us and you're just giving us more business or more friends of yours that— but again, it was how we handled it. That they felt so valued and respected that they, one, came along with us, but two, then shared it with their friends and family.

I feel like advisor transition and advisor growth for their own career development has changed so much from Judy's generation to our generation. It used to be just, just grow your book, make it bigger. You probably would stay at the same firm that you're at now. It's where do you go? Why do you make that decision of going and do you build it yourself or do you go affiliate or do you go laterally potentially?

So we have this recommendation that we give our clients all the time and I feel like we just lost sight of doing it for ourselves, right? So we tell our clients like, when's the last time you called the cable company or when's the last time you called your phone company and renegotiated the deal? Like, do you still need to be with Comcast or DirecTV or there's so many choices. How do you know what services are really out there and what benefits are being provided. And you think you don't need to do it, but even as advisors, you need to take a snapshot of your own business and look at the growth you've had. And just that you don't have to go, right? You don't have to jump ship if you're comfortable where you're at and you're getting the greatest benefit, then you just have more confidence that you are in the right place. But you just don't know with an industry that's changing as much as it is what else the other options are that may be out there.

What are the biggest changes that you see in the industry and how do you think it's going to affect your business?

I think there's definitely still going to be a huge shift of advisors exiting over the next decade. Times are changing, markets are changing. There's compliance in the regulatory world is adding a lot to everything. So I think there is a group that is potentially ready to maybe not get out, but to slow down. And so there's that where they're looking for their next round to come in and kind of take over and they can't find enough, right? There aren't enough choices, is at least from what I'm hearing, right, where there's a lot of pressure on the younger advisors that are out there now to take on not just— you don't just find one advisor and you become their succession plan, right? Because now it's, yes, you'll do that, but there's 5 other advisors that are also looking to potentially have you come save the day and save their practice and come in and do it. And so it's just, I think we still have a shortage issue. I think what changes is the offerings is constantly on the table, right, of what clients really need and what they want. Robo came in and threatened all of us to not have a job at all, and we're all still here standing. So that'll be interesting to see as AI comes into our world of what goes and what stays. I think there's still a human aspect to our jobs that will always be a human aspect. They're there to help support us. And I'm a huge believer in all sides of it. But it just is a piece of the industry that will be forever changing. But I think some drastic changes in the next decade for sure.

I think that's what makes it exciting for us to be in the industry is that it is changing, especially in comparison to other financial verticals.

It's—

we're getting this influx of capital and it's allowing the propelling of innovation to occur.

It's a great industry to be in. I wish there were more younger advisors coming in. I wish there were more women in the industry that they felt comfortable that they could conquer the world. It's such a great industry that If I can encourage one or two at a time, I'll do it. I'll go slow and find them. But it just— it's such a rewarding career because your clients are such lovely people and they need you, right? And you end up meeting them in return. And so that relationship that you build, it's just— it's special. And so you just keep that in the back of your mind. But sometimes the nitty-gritty stuff is— and the deal world is part of what comes with the territory. And so not to be frightened by some of that. That, but just kind of take it in and analyze it and use your resources and make the choices that are best for you and your clients.

Well, thank you so much for joining today.

Thank you for having me.

The production team for Barron's Advisor: The Way Forward: Next Generation is Ellie Ismailidou, Rebecca Bisdale, Paul LeBlanc, Kinga Rojek, Joseph Lesby, and Alexis Moore. Melissa Hagerty is the executive producer. Jenna Mathis is the director of programming for Barron's Advisor Programs. Greg Bartolis is the editor-in-chief of Barron's Wealth and Asset Management Group. We'll be back soon with another episode. Thanks for listening.

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.