Tony Carpentieri: The Keys to a Successful Practice | 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 your host, Allison Tucci, and today with me is Tony Carpentieri, a private wealth advisor from Merrill Lynch's The Erdman Group. With about $20 billion assets under management. And today we're going to be talking about how you can expand your existing establishing practice to a growing enterprise. Welcome to the podcast.

Thanks for having me.

So I would love to just jump right into it. What really drove you towards wealth management?

Yeah, as I was growing up, you know, I always had a real liking to numbers and people and like everyone says in the industry. But the funny thing is, is statements used to come home on our countertop and then I started I started asking my mother about these statements. I said, mom, what is this? And she said, well, we're investing for your college. And I said, well, how do you do that? And she would tell me about how she would talk to a financial advisor and how he would be helpful in terms of talking to her about how much they needed to save and what they needed to do in order for us to try to go to college. And so after that, I really felt a very strong connection to helping people. And when I think about it and I look back on it, you know, you have these certain times in your life where you could pinpoint and say, wow, so early on I felt something that I really felt connected to. And that's how I started in terms of thinking about what kind of industry and sector I wanted to be in, in finance. Went through, you know, college and got my MBA really quickly after that and then started to really pursue the career.

For individuals that are maybe first thinking about financial advisory right now, what sort of lessons learned did you have from those early days?

When I first came out of college and graduated, I started in philanthropy. And philanthropy, I was sort of a telemarketing coordinator was my title at the time, and it's kind of where I learned how to cold call. And rather than calling and saying, hey, invest dollars with me, I had an institution that I said invest dollars in this institution and it becomes more valuable in terms of my diploma and future diplomas. And then as time went by, I, I was able to get recruited to Merrill Lynch through Merrill Lynch Trust Company. And in the trust company, you learned how to do estate planning and do a lot of the planning and sort of behind the scenes work about how people would invest those dollars and ultimately get the plan in place. 2008 comes along and Bank of America bought Merrill Lynch. And so I was asked to join a team to become their dedicated banker and do all credit and balance sheet management, whether that was art lending, yacht lending, aviation lending, mortgages, checking accounts, savings accounts. And I tell you that story only because I do think the value proposition of which a larger team like ours delivers is that they really have focused on sort of 4 main focal points for a client or a family. They have to be really good at doing their private banking and servicing their private banking. They have to be really good at financial planning and the estate planning piece. 'Cause that is really what brings as much as, you know, as much as we do around families and brings that into focus. Investments, right? Which is, you know, something we all really love and adore. And, The last piece is you're talking about philanthropy. And so my journey started in philanthropy and went to the trust, you know, and estate planning side. And then you really had banking. And so I've hit sort of these four silos. And then the last piece we always talk about is we know people don't need another friend at a cocktail party, but what they do need is a friend to talk to about money. And money's a funny thing, you know, and money follows money. So people want to know what other people with money are doing. I think that's part of the deliverable. And I also think that when we talk a little bit about the team, the team has been really created and set up in order to service families. And that's what we focus on. We focus on the we, how do we solve for we, and then ultimately really focus on putting the family first to getting that client experience. So the family that we have, our clients, they get the best experience, then our team is going to do really well. And then we're all happy at our homes and our nuclear families.

I'm assuming that a lot of your, your business comes from organic referrals.

It comes from organic referrals. It comes from leadership in terms of cultivating new relationships out there. And what I think that really has been beneficial to our our business and our culture of the team is that everyone on our team has equity in the business, whether you call that equity participation, soft equity. And the one thing I could always talk to about a potential client is that it puts us on the same side of the table as them. Because if they are having a great experience because our, you know, each generation of our team is developed in terms of how they look at their equity, then we can ultimately be on the same side of the table as the client. And if they're happy, they're going to refer more clients. And so, and so goes the domino effect.

So for that high achiever that you brought onto your team, let's just have an example and pull it through. They're, they're hitting all their strides. You're giving them certain targets. What do those targets look like to hit within that 6 months, 12 months, 18 months? Is it acquiring new clients? Is it taking over existing relationships that you have? Can you break that down for me?

Yeah, like anything else, there's a piece that is qualitative, right? We want to make sure that the culture stays very, very good between everybody. Number 2, as I mentioned before, is that we're always looking to solve for we. So when I think about solving for we, it's more about how do we make sure that it's great for the families that are going to get that client experience? But more importantly, how do I make sure that everyone is on the same page so not any one person is the maverick talent within the team, right? We want to ensure—

No Top Guns here.

There's no Top Guns here, right? Everyone can be a goose, but everyone can't be the maverick.

Deal. I like that.

And then lastly, when you talk about that, so there's a piece that's qualitative, right, about how they're really— how they are being part of the team. But then there's the quantitative piece, and that's all sort of revenue driving, and that's, you know, Producing, making sure that you're actually executing on your plan. Yes. And when we go and we think about the team itself and we develop the talent on the team, we're really looking for a lot of execution. So, and you might have heard the saying once before, right, where ideas are welcomed but execution is worshipped. And I think we are, we're looking to execute faster than anyone else.

A lot of what's happening in our industry overall is clients are wanting more and more, more capabilities, more access because they're getting it and there's more competition for those items. How are you thinking about those horizontal capabilities?

Yeah, and it's a, it's a really great question. When I look back and I look at the '80s stockbroker and what that looked like, And then you have the '90s where it became sort of a, you know, a banker. You really started to look at cash and other things other than just securities and investments. In the 2000s, you really had what, what I would call the start of the immediate gratification, right? Where there was just a lot of planning. There was a lot of thought process around advisors, financial advisors. And then in the 2010s, you looked at service. Service just became the thing that everyone wanted. And so when I think about what the industry is asking of us, I think about the 4 I's of the industry. The first one is they want immediacy. Yes. And that's not— it's not so easily accomplished when you have 150 families that you have to cover. And that's why I think we've done a very good job of continuing to build and grow advisors, just not even around our area, but also in other areas of the firm. But I think the immediacy is what families really want. And so they want to be able to call you and get you right away, and they want a response right away, and they deserve that. So we've built the team around immediacy. The second thing is they're looking for intelligence, right? And I hope so. In a fast AI world, right, where they can go and ask anything that they want and get an answer for, what they're looking for is really application around intelligence, right? What is sort of Joe and Mary doing next door that I'm not doing? What are some of the most smartest and sophisticated families doing?

Comps.

What are the entrepreneurs thinking about as they build their moats around their businesses? And so when you can share that intelligence and apply that intelligence across, you know, to multiple different facets of your business, they're asking for that. The third thing is infrastructure. They want to build and have resources that are closer to them. So we, over the last 4-year period, have, we've hired a person of head of our growth and talent, we call it. We've hired an alternative investment specialist and we've hired a tax attorney for the families that we cover so that they can, we can bring resources quicker and faster for them. Again, sort of that flywheel idea of immediacy. And then the last piece is the intangibles. What are we doing as advisors that are the intangibles that people want but necessarily don't necessarily have to ask for or pay for? And I think that's more about cybersecurity. It's more about fraud protection. And then lastly is, you know, are you completely being objective with the client's money?

You're listening to Barron's Advisor: The Way Forward, Next Generation. We're going to take a short break. Stay with us.

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Welcome back to Barron's Advisor: The Way Forward, Next Generation. Let's get back into the conversation. Looking forward, do you see any big changes where the financial advisor is going to have to adapt and continue to expand their capability? And what areas are those?

So I hate to use the buzzword, but artificial intelligence is here and it's faster than you and I can give it credit for. And if I was, you know, here today and someone said, look out 15 years from now, I would say, I don't think that artificial intelligence will replace really great financial advisors. What I do think is that if financial advisors are not using artificial intelligence, they will replace those advisors that don't. And so I think AI is sort of, you know, it's on our side and it could be a great co-piloting, you know, tool for us in terms of how we develop relationships. And that could be as simple as portfolio monitoring. Right, and reallocation. It could be cash flow modeling for clients and families. And then when I think about, you know, AI in general, I do think that it's great for the culture fit of a team because it will only create velocity for a team. So again, execute faster.

So how are you applying it currently today? I know there's a bunch of use cases. You just mentioned a few, but are there ones that you would say are more user-heavy that you leverage more often internally with your teams? And then next, are you talking about it with your clients in the sense of, you know, I just actually transcribed the notes from our meeting and I'm sending this to you and this is from AI as an example. Break down some of those use cases both with your team and with your clients.

Yeah, so chatbots are, they're real and they're terrific. And if you're using them correctly, again, application is key as we continue to develop our skillset And I think that we have to do that over the next 20 years. So chatbots, I think, are number one. Number two, I do think that you're seeing a lot of heavy lifting being helped and sort of guided by operations. I think operations will kind of get quicker and faster in that regard. And then you're going to have to remind me what your second question was because I did not.

Your applications towards clients. So I think a lot of folks, at least from what I've heard, is they're afraid to start having that conversation with their clients that, that they are using AI, especially with potentially the older clients that are, might not as technology advanced as that next generation. Um, you hear they don't want to be on Zoom. I mean, I try to get my dad to even do a video conference and it's, it's, he doesn't even know how to turn on the camera, right? So you start having these conversations with people, but practically what use cases are resonating with what demographics?

Yeah, uh, again, it really is on the user more so than anyone else. So I would never put pinpoint that, you know, the older crowd is not as good as the younger crowd because they have two different, you know, um, two different styles, and they'll always have two different styles. What I do think will happen and what we've seen in terms of, you know, Innovation by its very nature is unpredictable, and it's really nice to see that even some of the younger generation, we're opening up accounts faster because we can do it so much cleaner between the phone or through online portals. The older generation though, for those that are saying, hey, Tony, did you listen to the earnings call? What did they say? And I could sit there and pinpoint and say like, here are the 5 most important pieces of that earnings call. That maybe I didn't get a chance to listen to, which again, I would be happy to share with them that we didn't listen to it, but here are the 5 most important. I now can get that quicker and I can get access so much quicker. And that's what I mean by the intangibles is are you being resourceful enough to apply those things in your business?

So a really important topic I think in our industry overall, and we touched on this a little bit, was the lack of advisors, new advisors really filling the gap that the older generation is leaving because they're retiring. I'm sure you have your own perspective on it. I would love to hear it.

Succession planning only works if it's transparent and for the people that actually are looking to do it mold the people that want to develop. And no one's benefited more from that than me. When I came into the business, I looked at the business and said, here are 3 really great advisors that have unbelievably different skill sets that I could really learn from and just, you know, take through on osmosis. When I think about succession planning today, the development of the sort of energetic, new, up-and-coming, and emerging players is the most important part of it. And what I find in the industry is that we have that energy when we begin, we kind of become experts, but we need to reset and have that energy again and really invest in the younger folks. And thankfully, no one on the team here is, is going anywhere. But I do think for the younger generation to build out that growth strategy, to empower them to feel good about what it is that they're building with us and alongside us, I think that is the key to sort of a true succession plan.

I mean, you have an interesting perspective. We oftentimes put a lot of the onus on the younger generation to fill that role in the succession plan. But you mentioned something that, that really resonated with me. I'm sure it did with some of the other listeners, and that's it's also on the advisor that's retiring. That advisor has to spend the time with that, you know, younger advisor, that energetic advisor, as you're mentioning, to help them along the way. I think oftentimes, you know, the past 5, 6 years, I don't say they get off scot-free, but they've been getting larger checks to exit and not actually have that responsibility. But to really have success with your end client, it sounds like It has to be that partnership between the two generations.

Yeah. And I don't fault them. You know, I know I came up and everyone looked at the millennials and said that, you know, we might be a little bit of a lazier generation. What I do know is that we all need to help transferring the intensity that we all had when we started for everyone else to have. And every generation will look back on the, you know, next and say they're doing it differently. But you've got to be open to advice and you've got to bring in the right coaches in order to make sure that you are developing the right talent. And if you do that, I do think that we could find ourselves in an industry that is still blooming and could really have a great growth projection.

So any final notes that you can provide for maybe advisors that are just starting out?

Productivity. Comes from passion, prioritization. And when I think about how you prioritize your time, it's going to be a subset of how much you are driven to build and develop and, and create something. And so when I'm thinking about my younger self, sometimes, you know, our greatest strength can be our greatest weakness. And I was so focused on what it was I was looking to try to achieve and be a part of, that you're sometimes, you're not peripheral. But I do think that if you've got the passion and sort of prioritization, you can be productive in this business and you can find great ways to build really fantastic practices.

Well, Tony, this has been a fantastic conversation, and thank you so much for coming in today.

It's so nice to meet you and the team, and thank you very much Thank you for having me.

The production team for Barron's Advisor: The Way Forward: Next Generation is Ellie Ismailidou, Rebecca Bisdale, Paul LeBlanc, and Alexis Moore. Jenna Mathis is the director of programming for Barron's Advisor Programs. Greg Bertollis is the editor-in-chief of Barron's Wealth and Asset Management Group. Allison Tucci is a freelance host for Barron's Advisor and SVP at AssetMarkt. We'll see you next time.

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.