X-ray Your Practice

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Hi everyone, I'm Sterling Shea from Barron's, and it's a pleasure to welcome you back for another episode of The Way Forward. Our guest today is Peter Rohr, who is a financial advisor and principal of The Rohr Group Private Wealth Management with Merrill Wealth Management, headquartered in Philadelphia, Pennsylvania, where he and his team have achieved terrific success in organic growth and developing an outstanding business focused on high net worth clients. Peter, thanks so much for joining us.

It's an honor, Sterling. Thank you.

Peter, talk to us. Tell us how have you and your team been managing the remote workspace so far and talk to us about how you're managing productivity in your team these days.

Well, I'm going to pivot a bit on that question because I saw the fantastic Barron's 100 Summit and I saw how many spectacular advisors talked about how they're handling this. I almost give you a little bit of a view for us because what we tried to do, to kind of give you an analogy, is with the depth of technology resources that we have here at Merrill Lynch, things were relatively seamless. Nothing goes without a hitch, but we were fortunate to have the infrastructure in place. In doing so, what we did is after the initial shock of what occurred, we kind of sat back and realized we weren't sure how long we were going to be in this situation. The team got together and we created a bunch of initiatives and we listed out those initiatives and created silos. And so the analogy I would give you is imagine that you're a fisherman, it's your livelihood, and you're out there every day fishing, but one day a storm comes. And so what you need to do is pull your boat out, and when you're doing so, you're gonna get the barnacles off and you're gonna repaint it and you're gonna look at it this way, maybe fix the tiller and tune the engine up. And that's really kind of what we've done. So there's been this really wonderful pause that refreshes, for lack of a better term, where we've kind of looked at our business inside and out, gave it an X-ray,, and, um, we're able to maybe, we think hopefully, be prepared more for the future.

Peter, that's great. I want you to unpack it a little bit for us though. Can you share a couple of those initiatives that you're, you're talking about? Give us an example of what one of those, one of those work streams was.

Yeah, so one of the things that was happening, that's a great idea, is that when we were going out to appointments, you know, typically we go out as a team. My partner Sue Butler, who's in the, uh, family office practice, is a lot of times participating in these meetings. But what was happening is going off to the next meeting, we really weren't able to have a system. So what was happening is the portfolio team put in a questionnaire that was very simple for me and for Sue to answer. So when we came back, so what we're able to do is actually give kind of the tenor and tone or flavor of the meeting. That was basically either through copy talk, speaking and letting them read the notes, or from Sue's written notes. And what that did is it actually gave Each client is different. Each one has their own goals, objectives, personalities, likes and dislikes. Having this set up ahead of time was an opportunity for us to give the portfolio team, because we're now able to collaborate, there was able then for them to kind of read into it and be able to be up and running when the time came to maybe to implement those investment ideas going forward. And then a second one, which was interesting, is we created a service box. And what happens is so many times you're busy and we are very fortunate that I have this incredible team. And in doing so, So they all are very collaborative, but they all have different strengths. Someone's really great at the recorded lines. Someone's really great at, you know, processing wires. Someone's really great at looking at our variances. And so we are able to put, um, all of our emails into one box and we let, um, that service team go through and pick what their strengths were. And we found that things were not falling through the cracks and that people were enjoying their workload more. So creating one central email for the service team and one central for the portfolio team and letting them pick and choose when they had either the time or the inclination or the ability really helped streamline the operations. So there's two examples for you.

Well, there's a couple of good things in there that I think are really worth note. I love this notion of X-raying your business right now to spot areas that need a little refinement or a fresh approach or just deeper examination. And the second is building a service approach that's customized around individual clients because you know, you know, the nuances of what they're looking for, how they like to communicate. Those are two really good takeaways. Brad, one thing I want to ask you about is, you know, I know you're a gregarious guy. I'm sure that you and your team are really thriving kind of in-person contact the way you used to have it in this highly dynamic, engaged environment. But yet you're finding productivity in some of these, you know, some of this workflow that you have now. When we do get the green light and things will be totally safe for us to all gather together again in the office, Will we go back to the way it was before? How might it look different? And how do you think that the future is going to be different in regards to client engagement, even well beyond the coronavirus situation?

Well, I think that's a terrific question. You know, it's something that I've been working with the team already, because when you look at the fact that we're fortunate that we have two offices, one in Philadelphia and one outside in Wayne, you know, who wants to work where and when? And then when you think of weather-related issues, transportation issues, we think we're going to actually incorporate where someone would have a choice. Imagine each day, let's say Wednesdays were Catherine's time or Tuesdays, and if they choose to come in or work remotely or work in the Philadelphia office or work in the Wayne office, which in the past would have been a real great exception, right? We want that collaborative workforce. We want to be able to share that intellectual capacity and skills, but now seeing that ability where you maybe have a healthier workforce or you maybe have someone who needs the break that day because they have to pick up their child at school or they need to be here, I think it comes into our environment where it actually becomes becomes a perk and exciting. And then your second part of that question, if that's okay, is what's been amazing is I used to hop on a lot of airplanes and I used to drive a lot. And, um, that was part of the, you know, that, that commitment. You know, I'll wake up at, you know, 4:30 in the morning and we'll make sure we get to Washington, DC for the 8:30 meeting, or we'll make sure that we're in New York by 8. And, you know, for many clients, that they'd much rather be in the comfort of their own home on their own time, maybe even a little bit more of a private atmosphere where maybe some of these things shouldn't be discussed, or that you get to see someone in a conference conference room. And so I think that will change. And so giving the people the optionality to choose, I actually gives them more— it's almost like customizing your car or your house. If they want to meet in person, great. They want to do a WebEx, fantastic. They want to do a conference call here, they want to meet remotely. I just think that enhances, um, the service model.

One of the other things that I've always admired about your business is you seem very passionate about the culture of your team, and I want you to take a minute to describe that and what it means to you and why do you think it's important? And also talk about how you've worked to kind of preserve and enhance culture since we've been in this work-from-home format.

Having always been at my firm Merrill Lynch, there was always that, you know, people say Mother Merrill, whatever you want, but there really is something true to that atmosphere and where people have always helped me throughout my career. And you know some of those names, they're, you know, top of your list. And there's people who aren't on that list though who would take the time And so culture is important to our team. And so we really want to be collaborative. So one of the big awakening points for me was realizing that, you know, we need to be more— I need to have all these best ideas. I need to take some of this experience and intellect and some of the age. You know, I have a, you know, we have a 50-year-old, a 40-year-old, a 30-year-old, 20-year-old. We go all the way down the gambit. And what's interesting is about 12 years ago, we sat back and kind of empowered them to come up with a model that was comfortable for them where they could be they can contribute to the culture where they all had a piece of that. And so what really came away from that is when we hire a team member, is I wait till all the other team members interview that person, and then I will be the last. And then we bring everybody in and we ask what that commitment would be. And the people that we brought on because of that, you know, diverse in mind, thinking, age, whatever you want to be, these are people who have been just permanent high-performing members of our teams. And so, the hard part is keeping that culture. So, we try to talk every morning at 8:30, which we do, and we have a call at 4:00. And we try to do fun little things like have a Zoom call, which I know everyone has done, or we have someone, steaks where someone shares a recipe. But, I believe that client-first culture, and that's important, client-first, they all share that and they're passionate about that. And I think that continues to drive results.

Well, it has. Your business has grown tremendously. Let's talk about what the future might look like. If you envision within the next few years, perhaps your business doubles in size, does that mean that your team's going to double in size or get substantially larger? You've found some scalability in your business, but what do you think the team of the future is going to look like? Is it necessarily going to be bigger, or what type of roles would you envision adding looking forward?

So you bring up a great question. So we had a team member who had some illness and had to take care of himself and was out of pocket for about 5 months to get himself well. He's doing great today, by the way. And it was amazing that everyone kind of chipped in and helped with that role. And in doing so, when he came back, we helped develop a new role for him. And what I found out is the capacity of my team, the ability for these people to reach with the help of technology, with the help of being collaborative, so we were able to almost redesign a more touchpoint service model with this gentleman who came back who really wasn't on the front lines, and now he is. And I would argue that you don't nearly need to add people. You add people for maybe diversity of thought, mind, kindness, all of those issues that are important, but technology and what clients expect, and also when you are dealing with a client, the ability of delegating those responsibilities into your team I don't see a very large team in the future, but what I see is a team where you really want that specific skill set and the ability now for us to hire people where they can be maybe two locations, work remote, can travel more. I think that's enticing where we can get maybe the top candidates. So I see technology playing a bigger role, but it's important always to refresh. And some of the younger members we brought on our team have been invigorating not only to the team but to the culture.

You, uh, You mentioned a couple of things that you're doing in terms of team communication, leveraging technology to consolidate kind of emails and details for different parts of the team, the investment team, the client service team, what have you. Also the Zoom calls that you're doing. What else are you doing? What's in the Peter Rohr playbook for the most successful communication these days with your team?

Being old school, right, to some level, you know, having those scheduled calls each day is important. And every Friday we do a WebEx call, so we get to see everyone's face and everyone has a nickname, which is great. But in terms of collaboration, you know, that idea of taking the boat out of the water, these, these grouping emails where you're— imagine if you could, you know, in a way I was on the— I was on that floor with all my team members. And so you could always kind of play ringmaster if you wanted, or lion tamer, right? You know, if you're— if something happened. But what's now is happening is with me removed from that set and the fact that they're in— they're handling the responsibility and their own little pod, service pod, portfolio team pod, where they're actually depending upon each other and becoming more interdependent, you know, and, you know, amongst each other and independent of me, has actually increased not only communication with me, but more importantly, it's created a culture amongst themselves. And there's friendships that have developed. That I didn't think would. There is a closeness that's on our team, and more importantly, there's a respect now for what everyone brings to the table. Because now that they're cross-pollinating, where they used to be in their own silo, now basically they're plowing everyone's field, so to speak. You know, I'm going to help you here, here, and here. And they get to see it, and they have a further understanding of, of what these people do, and it actually helps them become a better professional. So it's creating an environment in which they're independent of me but interdependent and work together with themselves.

Okay, pivot a little bit and tell us about your strategy for communicating with clients, even what it was before, how it's shifted in light of the work-from-home format and the COVID situation. How often and what's the nature of those client interactions these days?

So, of course, March and April, we were on triage. I felt like M*A*S*H, whoever came in first, and the nice thing was the team was able to divide up the names and speak to everybody. But one of the great suggestions that came from one of our team members is, "Hey, let's get back to as normal as normal can be." And so we already had a preexisting list of people who wanted to either meet or discuss monthly, meet quarterly, or meet semi-annually. And so what happened is we got that list and that calendar back up. And what we did is we, with the help of the service team, we went out and reestablished that list. So imagine kind of like the stream is running wild after a storm one time, and they went out and put the sandbags in and said, "Okay, let's get control of this thing." And what they're able to do is get everyone back on their kind of normal list. And so it has a sense of normalcy to people, but more importantly with the e-portal and e-communications we have with some of this incredible information that's coming out from our firm, either from research and maybe some softer issues that we're able to communicate with people. So one of my best emails was from an 81-year-old client of mine in California. And he said to me, Peter, I've never used Amazon before. I had a flip phone. And now with your help, I've had your team help me set up a WebEx. They helped me set up a Zoom call. I'm now buying on Amazon. I really love this. This is amazing. Next thing you know, I'm going to buy a Tesla. And he put a little smiley face after that. So, you know, we've created a whole new level of client interaction by the necessity of being and utilizing technology.

Now, what are you hearing from those clients? I mean, what are their biggest concerns right now?

What's interesting is for a long period of time, it was COVID, which is understandable. And then it kind of dawned later about the election. But what's really been happening most recently, and it's basically recency bias on this, has been, what am I going to do for income? There's been this real understanding that it's finally sinking in that the 10-year bond is at its today's levels, below 1%, we'll say. And what's happened is people are wondering what that does to their asset allocation, what that does to their income, And in essence, what that does to the stress of the portfolio, and that's really been within the last 3 weeks where people are wondering where rates are today, where's my income coming into the future? We all get COVID, we all get the election, we all get that. But now they're starting to think longer term because the Fed is saying rates are going to be down for some period of time and clients are actually focusing on, which is surprising. So that's where we are.

That's interesting because I'm curious to know how that meshes with your business because I know you've been a cornerstone of your success has been your passion around passive passive investing and utilizing ETFs for the value they can provide clients. Do you want to expand a little bit on how that's playing into the psychology of today's client mindset?

Traditionally, the clients in my, let's say, our net worth area, the ultra-high net worth, already have been wealthy once. They don't need to be wealthy a second time. They're coming from a conservative bent on equity, anywhere between 40% and 50%, and they're not at those higher levels. The calls have been, Utilizing Monte Carlo simulation is, hey, we might need to increase your equity allocation 5%. And in doing so, we might need to focus on these areas that are providing additional dividends. So when you look at the dividend on the S&P 500 today, which we won't measure, but it's clearly above what's going on on the 10-year Treasury bill. So when you talk to people like that and you show incremental steps forward, right? And what happens is it's so organic. If they're in a ladder bond portfolio and as those bonds come due, it engenders a conversation.. And that conversation is, hey, do we roll this over into a 10-year bond yielding X, or do we look to increase your equity allocation incrementally, additional 4 to 5% where we can garner yield that's 3 times that and currently taxed at a lower level? And so that's helping people understand risk. It's helping them understand word. It's making them understand again what's coming forward for them. So it's been a wonderful talking point because we're very heavily weighted in fixed income, as you know. And as these bonds mature, it is really a graceful entrance into the equity markets where at comfort levels that they are, where we can achieve yields that might be greater than what's occurring right now in the bond market.

Wow, interesting. Now, another area of investments that I want to talk to you about, you've had such traction in the ultra-high net worth category, and I know you're having really kind of deep multi-generational conversations with these families. Talk a little bit about ESG. It's an area that we continue to have very high conviction for. I actually think some of what's going on out there in the world today will be more of an accelerant than a drag on adoption of ESG as a framework. What are you hearing? What do you think? And how's that playing out across some of the conversations you're having with clients?

So first Sterling, I would agree with you 100%. It is the future of what we're doing. And, you know, it's interesting. It's very easy to say environmental, right? But now you have to start factoring really what social means, right? In the lives of what's going on here. And then you have to look at governance as it relates to what's been happening. So it's not just the capital E anymore. S and G have become very popular. And I think the one thing that we all want to be in this space, and I'm fortunate enough that about 15 years ago, we got a large biodiversity where they made me, I had to learn or not. Earlier today, we were saying necessity is the mother of invention. I mean, I didn't know what ESG was. We went out and got certified by the American College, and I'm a certified social responsible counselor. But you have to understand that there is not a conversation we are having with our high net worth next generation millennials that is not centered around ESG. And as advisors on this call, I'll just give you one example. We felt that most school-aged children, college-aged children were home. So we offered a compliance-approved conference call where we had a little menu, like 30-minute sessions where you talk about socially responsible. The demand was overwhelming. And what was interesting is it's the parents who forced their children, college age, high school age, and older, who were home during that period of time and still may be home today, that got on that call. From that, I can't give you a number, but it's above 20 where we opened up accounts with that next generation. And all of the emails from the clients that we care about and think about every day, and that they were more pleased with that call than anything I could provide them directly. And it talked about why ESG, what it means, and it's then engendered conversations at the dinner table. And I've had some of those larger clients, well, Peter, what other service, you know, something they've never considered. And so that would be an idea for some of the advisors listening on this. What a great way to host something that you can run with, but it is the future of what we're doing for both the E, the S, and the G. Wow.

That's an absolutely brilliant approach. And I think involving those younger generational family members in that discussion, just repositions you away from being simply the financial expert to the family to being this kind of broader trusted family counselor, which I'm sure is a referral driver as well. Agreed. One thing you mentioned about a little earlier in the conversation that I'd like to dig into a little bit more is this notion around your clients' utilization of technology. You mentioned the client in California is now using Amazon, Amazon wants to buy a Tesla. How else are clients adapting to technology right now? And what do you think the long-term ramifications might be in your business for that?

So I think there's two opportunities, again, speaking to your reader base. One is we try to have one of our team members reach out to that individual who might be having a WebEx or a Zoom call and walk them through carefully that technology. And I can't tell you How much that's been appreciated through our WebEx system because, you know, for security reasons, right, our WebEx has a number of layers of controls to it. And to take that time in a patient manner, what it's done is that has so much goodwill attached to it that not only are we helping those people then communicate with us, but they're also seeing us as a resource for technology. And so what occurs is, as they embrace that, the ability for e-communication for us, the ability of hosting information, a lot of our emails on the e-communication site, when it was really impactful things related to ESG or the election, or any of those things. We're going unread. And what we're seeing is that's not the case anymore. And we're able to get our point across, um, and on a, on a topical point or some great research from our firm, getting that out there where it's being read and embraced more. And that being said, then it has actually allowed for greater productivity. And I have to, you know, we have to examine at what cost, right? Because, you know, we're all working 24/7, you know, there's no boundaries anymore. You know, clients are, are emailing you on a Sunday because time's a flat circle during this period of our time, our life. But what's happened is this embracing is communication has gone greater. The ability then to take the email or a voicemail or any of these things and give it to a team structure. I'm able to introduce other members of the team. So it's not like, oh, I better call Peter. Maybe it's now Sue or Catherine or Gabby or Bill. So the nice thing is I'm able to offer the whole team, all 11 of us, as a resource versus, hey, it better start at Peter and he'll drip it down to the right person. And technology's helped us cut through that middleman and made me more productive because now emails, calls are going directly to the team members and not being filtered through Peter. And I think that is going to help us be more productive. And my last comment would be the average FA might, might have more longevity in this environment. It might not be total burnout, right? Getting on the train at 5:30, going into the activity, you know, just fighting your way out of traffic. You know, maybe you can work out of your house at home for a little bit, but I think it adds longevity to some of the great advisors on your list because now they can also have a little bit of more balance in their life because of technology and the fact that clients embrace it, not our teams, but clients.

Well, Peter, you're giving us a ton of really good actionable ideas. I really like that one for a number of reasons about the scalability it can provide, that presenting the team as a whole rather than one individual. And I love this previous I love the idea that you had around creating an event, a virtual event for younger generational millennial family members to talk about socially responsible issues and how that manifests in an ESG investment framework. Really good stuff. But you know my final question is coming, which is for you to give us one more, a final kind of actionable idea that you would offer to the advisors who are listening in based on your success and what you're thinking right now. Can we ask you for one more nugget?

Of course, thank you. What's happening is the world in the nonprofit and foundation world has been seismic shift. So your traditional museums who depend on revenue are seeing financial catastrophe, for lack of a better term, versus some of the ones that are feeding the homeless and that are doing things that are focused on diversity have been seeing an increase. Both of these organizations need your help. So what's interesting is, going into a LinkedIn for your clients, and we think we know our clients, right? But if you go in and I try to do 3 a day, I go in through our client base, I try to just look at their LinkedIn profile, and I can't say I'm very successful in doing 3, but I can at least do 1, max 3. And you go through and many times you'll see their organizations that they're devoted to, and some of those organizations have one of 3 needs. One, they're that traditional nonprofit that depends on an art museum or depends on revenue in that resource, and they might need guidelines through an RFI. The second one is the opportunity as it relates to they've received all this new money, right? Because they are focused on feeding the homeless or diversity and those guidelines. And the last one is, and this is the most successful, is if you look at your firm's ESG opportunities and the ability for the, the products and services that are divided there, the RFI, and I go back to the client, and I ask them, I see that you're very focused on ABC Foundation. You know, I love the opportunity because our firm is an expert in ESG investing. Let me take a moment and describe that to you. Is that something I can reach out to that organization and just tell 'em about our services with a gentle introduction? And what happens is this introduction leads to a long-going conversation. Oh my gosh, Peter, you know, we're flush with cash 'cause we, you know, we do X for the community, or, oh my goodness, we haven't had anyone walk through our door in 5 months and we'd need to better understand what we're doing. But if you talk to them about aligning their mission with their investments and you have your FAs and advisors look through their ESG offerings, utilizing LinkedIn for your existing client base, because what they do, I've yet to have one client say no. They all say, "Thank you for thinking of that. My goodness, you could be a big help." Wow, fantastic.

I love it, Peter, and it's good for multiple reasons. And I know that every firm out there has strong resources around that subject area, so I hope the advisors I hope advisors take note of that idea. It's a really good one. And, uh, I really appreciate you sharing that and, and your insights with us today.

Thank you, Sterling. It's been an honor.

Well, I'd also like to thank all of you for tuning in. We'll be back next week with another newsletter and another episode of The Way Forward.

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, 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.