Unexpected Lessons Learned While Navigating Challenges | Next Gen

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We raise our hands, right? We say, oh, you can call me, I'll do that, I'll do that. And that's not an efficient way to grow a business.

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 my special guest My guest today is Hollis Montgomery. Hollis is a financial advisor at Morgan Stanley specializing in multigenerational strategic planning. Today we'll be discussing balancing her institutional clients with balancing her personal clients, as well as balancing her home life with her work life. That's a lot of balancing, Hollis. So you grew up learning about wealth management at a really young age, working alongside your father. How did you prepare for that transition and how did you grow the practice into what it is today?

I found that this industry is a relationship business, and the obvious side of that is that we put our clients first and we're here to serve them. But I found that it's even more true when it comes to the folks that you work with. So day in and day out, I have been fortunate enough to find people that are so much smarter than I am to work with and to grow my business with. And I really feel like that's the key to growing a business, is having the right people in place. And I've been fortunate enough to, to grow with and bring in people over time that have helped fortify this business and grow it to where it is today.

So what's the size of your business right now and how many people do you currently have?

So I am on a team that has about 21 people on it total. Day to day, though, I work really, really closely with a group of 3 of us. And I like to say that because these are a group of 3 where if you call our office at any time during the day, one of the 3 of us is going to pick up the phone and that, that touch feels important, that authenticity and that personal relationship that we're all building. But also resources are incredibly important and our industry is growing towards that teaming model and I'm a huge believer in it. So this is my way of balancing the two, that authenticity, that personal touch, but also knowing that being able to bring a large firm like Morgan Stanley to the client requires a large infrastructure and a team that's capable of having different specialists in different areas and also knowing each other and working well together too.

Can you tell me a little bit of a story about when you all work together that might have been a challenging time? You all bound together and you served a client in a certain way.

Yeah. So it's funny, in this industry, no one likes to talk about maternity leave, but I'm sort of the one-woman show that tries to bring this up as often as I can. I'm 30 2 years old. I have a 3-year-old and a 2-year-old, and my business has doubled in size in the last 5 years. But I will say that my team has become so much closer and also more efficient through my maternity leave. Right. So I like to tell the story where I found out I was pregnant and I started to call around. I thought, okay, I'm going to find an expert who's someone who's done this really well. Unfortunately, in our industry, there's not a ton of women who are producing FAs. Financial advisors whose teams dependent on their revenue production and their people whose livelihoods are dependent on my revenue production. I didn't have an opportunity to find someone who could really guide the way for me. So I felt like I was kind of forging my own path on that. And I— it was hard in the moment. I feel that it was something where I had to trust my gut again and really just work through what would be best for the business and my clients. And ultimately, I look back on it as a huge opportunity for the people that work with me to grow and to step in and become even more vital parts of my team. And to be specific here, when a client calls and needs something from my team or from, you know, a wire transfer or something like that, they don't need to be calling me. But I do feel like there's sort of this we raise our hands, right? We say, oh, you can call me, I'll do that, I'll do that. And I'm the worst at that. I always think, well, I'll just do it. And, and that's not an efficient way to grow a business. By getting out of my own way, by stepping out with maternity leave and genuinely taking some time apart, it allowed me to realize that things move along just fine without me. I have great people around me and sort of retrain clients to call the best resource on my team. You don't have to call me first all the time. It felt like there's a before and after of my business, and in so many ways, anyone that's had children, there's a before and there's the after. But to specifically relate it to business, it felt that it opened a door. And I mean, the numbers speak for themselves. Anyone can look at my business and look at the numbers. We have grown exponentially during the time where I also was growing my family. And it, it can happen. It can really— they can both happen at the same time. And I know that it's incredibly rare in this industry. But again, I go back to the people, the team, the people that you bring around yourself. And I also want to stop and say the people at home too. My husband is incredible. I would not be the financial advisor that I am. This business would not be the size that it is without his support and that infrastructure that I have at home too.

That's great. And one of my mentors once said to me, you can have everything, but you can't have everything at the same time. So I'm going to talk about Morgan Stanley for a second. A large portion of the full-service brokerage net new assets in the U.S. are from Morgan Stanley. A lot of individuals believe that it has to do with two acquisitions that have occurred, the E-Trade acquisition And then the Solium acquisition, which is one of the largest providers of stock option plans. So those two assets together really contributed to the growth. Does your team work and capitalize on those acquisitions? If so, how?

We are in the center of those acquisitions and it is a great time to be at Morgan Stanley. There's a woman, Caroline Kundak, at Morgan Stanley who loves to open and close her calls saying It's a great time to be at Morgan Stanley, and it's true. And my team sits at the center of a lot of those acquisitions. So let's take a step back. The Soleum acquisition in 2019 allowed us to have the Shareworks platform. So many wonderful components to that, but one of them is that private company cap table access. So we're able to take a company from small and private all the way up through the lifecycle of sort of that classic Morgan Stanley IPO investment banking side of things. And then from the wealth management side, we're obviously there from not only the traditional wealth management side of things, but Morgan Stanley at Work is able to come in and provide 401(k), stock plan, deferred compensation, corporate cash investment management. So our team works a lot in the institutional space, right? So we are able— we are one of very few teams at Morgan Stanley that has specialists in all of those spaces. So with the E-Trade acquisition in 2020 making us a massive player in the, in the stock plan business as well, we are just feeling more confident than we ever have in this business. And it's fun to have what we have always had, which is best-in-class advice, but we're pairing it with that best-in-class technology and it's making a difference. We're really feeling it day to day as we go out there and meet with clients and prospects.

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Welcome back to Barron's Advisor: The Way Forward, Next Generation. Let's get back to it. On the big picture, it's been kind of a crazy ride in the markets lately. We had COVID, we had inflation, we had deflation. The VIX had its largest spike in August 2024 since inception. How do you deal with both your corporates that you work with, your executives that you work with, as well as your personal individuals with this market uncertainty? Do you have these conversations with them proactively?

That's how we deal with it, right? So the last thing you want is to feel like you're on your back foot, right? So We want to make sure we have already, prior to the VIX spiking, we want to talk about, hey, what's it going to look like when the VIX spikes? What does your longer-term plan say about your ability to withstand this kind of volatility? And that brings a lot of comfort. We say, hey, remember when we talked about this? Remember when I said this was going to come, right? So that's, I found to be very helpful. And then back to the relationship side of this business. Knowing people, really, really knowing them, their spouses, their kids, their, their goals matters when things really escalate in terms of volatility. So we saw that with COVID We saw where when people felt known and seen, when we understand a family and their goals, when we understand a corporation and their core values, It matters when things are getting a little bit hectic that we can come back to, hey, what's our main focus here? Let's bring it back in and we'll work to achieve that goal.

Well, many individuals really prefer liquidity and will sacrifice yield during times of economic uncertainty. You see it all the time. It's pretty much liquidity preference theory out there. So how do you explain cash, cash equivalents to your clients, and how do you know What's the right amount of cash to have on reserves?

So this is a very different question when we think about it from a corporate perspective versus a private client perspective. So I will stop and ask you which one you would like me to answer first.

I'm going to say both.

Okay.

Start with corporate and then we'll transition to personal.

Right. So my favorite anecdote with corporations on corporate cash is a treasurer that once told us, hey, I lose a dollar, I lose my job. So it's a very different conversation that we're having versus with a family or, you know, a family office or an endowment or something like that. So we take that very seriously. So liquidity preservation, capital preservation, liquidity, and essentially cash equivalency is the mandate more often than not in the corporate cash investment world. So on that end, yes, it's been lovely to have a 5 handle on the cash reserves, right? But that's not the world that we're looking at as we think about rates coming down, and it's about thinking a little bit farther out in terms of, okay, how do we want our corporate cash strategy to look given the yield curve changes over time?

And then on the personal side, you said it's quite different dealing with individuals with cash. I feel like people are— it's a little bit more of a personal conversation. How do you approach that?

And you said a little bit more of a personal conversation is correct because Oftentimes we see the emotional and psychological aspects come in when we're talking about personal family wealth, where that is not part of the conversation with corporate cash investing, right? So if I'm talking to a treasurer, very different than talking to the matriarch or patriarch of a family. It is much more important to think about the whole picture of the family and what goals they're trying to achieve. When we think about cash and liquidity, it has to do with what their annual spend is, what their short-term liquidity goals are. And going back to, hey, you got to know your family, right? You got to know how much they are going to be needing in terms of liquidity, what that risk tolerance is. But like I said, the 5 handle on cash was really nice. But that's also, you know, we're seeing this massive growth in the overall stock market. So 5 doesn't seem so great when the S&P's up 20-plus percent. So it really— diversification is the name of the game. It's a kind of a classic answer to that. Question, but it's, it's true and it's as true as it's ever been.

And that makes a lot of sense. I think a lot of people get emotional during times of economic uncertainty. They try to exit the market, they go into cash. We all know and we all seen people who have exited the market, taken a hit. They try to time the market. Individuals, it stacks to impossible. And I think the overarching theory is just stay invested. When you're thinking about that conversation, do you talk about lending products with them? Do you look at securities-based lending as a way to access cash quickly while keeping people invested, or how do you approach that?

Sure. So it's standard practice for us on the private client side of the business to have a securities-based lending feature presented to the client, typically utilized when needed and when appropriate with the family. But yeah, absolutely. One of the best parts about working at a place like Morgan Stanley is being able to think about both sides of the balance sheet, right? So smart, wealthy families, intelligent investors are utilizing lending, and we're seeing that even with rates higher now. We're seeing it— we saw it a lot when rates were lower, but it's got to be part of the conversation.

I couldn't agree more. And it's so interesting because only about 1 to 5% of wealth management brokerage accounts are really being used right now collateral on lending products. What do you think institutions need to think of to increase that adoption amongst advisors? Because it really is an advisor-sold product. I don't see many clients coming in and saying, hey, can you slap an SBL on my brokerage account?

And you're right, we don't see people typically opening with that from the client perspective. But it is something that once they have experienced or utilized a lending product, when they're able to help their child purchase a house it for cash, and then we come in after and do a technical refinance and they're able to get that house, their dream house, their dream first home because the parents were able to help with that transaction. We saw that a lot, especially during some of the wilder COVID real estate days. There are some really beneficial tools that aren't possible or strategies that are not possible without utilizing lending as well.

Now, in terms of our generation and really looking towards the future, what are the 3 common challenges you see with younger investors?

Busy is the new stupid. That's my favorite term. It's a Warren Buffett phrase. I think our generation and maybe the world— I don't know. I don't like to blame things on certain generations, but we have confused being busy with having purpose and being important, right? I think that we have absolutely missed this concept that simplifying things is often the most powerful way to achieve what you're looking to do. And we have so much noise around us, right? This access to information has made this busy world seem like a goal, right? So I would say number one, no question, we, need to slow things down and simplify. It's not often, um, the most complicated, in-the-weeds answer that's the right one. We want to keep things simple and orderly, uh, and I'm finding again and again that's not the, the thing that gets people excited, but it's the best thing for the client. Um, and then beyond that, when we think about the next generation, I really do feel that For number 2, we'll say that long-term mindset matters when it comes to investing. So starting to automate what is possible in terms of savings. We wanna automate savings where possible. And then the 3rd one there is, you know, don't say no to free money with a 401(k) or something like that. So don't let some of the short-term distract you when we start to think about becoming an investor and thinking about things long-term.

So as we're finishing up this podcast, is there anything else that you'd want to leave with our listeners?

This is a great industry. I feel a little bit like a cheerleader for this industry. And you don't often see people say, hey, come be a competitor of mine. That's— it's a little bit counterintuitive, but I have this passion for— and maybe it is just gratitude for this industry. And in a lot of ways, I am just lucky to be here and I feel grateful for that. And I want young people to join and to, and to see what it's like to, to get to help families and corporations with, with their finances. But also from a personal perspective, I'm never going to miss a soccer game. I'm never going to have to, you know, sacrifice a lot of things that I think people really do in this industry. If you build it with the right people around you, it can really bring the best of both worlds.

Thank you so much for joining us today.

Thank you, Alison.

The production team for Barron's Advisor: The Way Forward: Next Generation is Ellie Ismailidou, Rebecca Bisdale, Paul LeBlanc, Kinga Rojak, Joseph Lesby, and Alexis Moore. Melissa Hagerty is the executive producer. Jenna Mathis is the director of programming for Barron's Advisor Programs. Greg Bartalis 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.