Building a multibillion-dollar advisory practice through mentoring
Will McKenna: Hello and welcome to the PracticeLab podcast where we talk to top advisors about what makes them successful, so that you can apply those lessons in your own business.
I'm your host, Will McKenna, and our guest today is Jeff Dobyns. Jeff is the founder and president of Southwestern Investment Group, based just outside Nashville in beautiful Franklin, Tennessee.
Jeff started the firm back in 2002, and has enjoyed just incredible growth since then, turning Southwestern into a multibillion-dollar enterprise. One of the keys to Jeff's success is a mentorship program, where the firm brings in brand-new advisors and trains them over a two-year period to jumpstart their career and fuel the firm's growth.
In this episode, you'll learn all about Jeff's mentorship program. You'll hear him describe the four stages of growth that his business went through and how you can move through a similar evolution. And then Jeff shares some of his secrets of working with high net worth clients.
So, go ahead and grab that cup of coffee and join me as we head into the PracticeLab.
Will McKenna: Jeff Dobyns, welcome to the PracticeLab podcast.
Jeff Dobyns: OK, thank you, Will. Thanks for having me. I'm excited to talk with you.
Will McKenna: Well, it's great to have you, and I'm really looking forward to this too, you know, so much for us to get into. But I thought it might make sense for us to just start with a current snapshot of your business. So, can you paint a picture of your practice as it stands today?
Jeff Dobyns: Sure, we have about 40 different advisory teams in our practice, headcount of maybe 160 or so people in the group, nine offices in seven states, roughly $4.5 billion of assets under management.
Will McKenna: OK, that's great. And, I know you started the practice back in 2002. So, that's pretty amazing growth to reach that level of assets in the last 18 years or so. And I know one of the drivers of your growth, and one of the unique parts of your business, is this mentorship program that you've put in place. So, can you talk about why that's been such an important part of your business?
Jeff Dobyns: I think there's probably two components. Why it was key is when we first started, it was similar to when I started with the CPA practice in the in the ‘90s was, we didn't have, you know, a sophisticated training program like the big wirehouse firms did, I think they still do, or the insurance firms. So, it was a little out of necessity us saying, we have somebody who really we believe in who wants to be in this business, but we don't have a program to just send them to and have them report back in three months or six months. So, the benefit of it, I think, is that you can really create this culture and teach people the way that you really think is best for them to excel.
And, you know, when I think about I sold books door to door in college for Southwestern, which is not as glamorous as it sounds, with 100% commission and 80 hours a week. But I can specifically remember, my third summer, I'd worked my tail off, and I was going to follow a guy that had just had all kinds of records, and he had just done so well. So, I went to work with him for a day. And I think it was on a Wednesday, and I watched him all day for 13 hours worked. And I was really kind of embarrassed for him, because he was not that good. But he sold five times more than I did.
And so, I think the following three or four days, I sold more in those days than I ever sold before. And it was really just a testament that nothing had changed. I was the same person I was the day before. But I had some belief barriers that I think I limited my thinking to. Because I assumed that these folks that did really, really well were just a lot smarter and worked harder, and they had these glorious words that only they could say. Sometimes watching people mentoring, one of it is just to obviously train and teach and educate. But the other component of that is just to say, ‘Hey, you know what, if you work hard, you're talented, you can accomplish a lot.’ And I think sometimes just helping people watch and see you actually can be successful, and you shouldn't limit your thinking.
Will McKenna: So, Jeff, I know you got some of your own mentoring and coaching from a couple of different programs, like Tom Gau and CEG Worldwide. Can you talk about what you learned from those courses in terms of segmenting your client base and then growing your business?
Jeff Dobyns: Well, I still review my notes periodically from Tom Gau's "Million Dollar Boot Camp" back in the ‘90s. And he said, there's two rules to being successful. (And you've heard this before, but it's just so powerful.) Rule number one is you make money by being in front of clients. And rule number two is always remember rule number one.
So, it just doesn't stand to reason that if you're going to follow those principles that you can do every single thing. In fact, the rule would describe that you don't make money by doing anything other than meeting in front of clients. So, all of that prep work, all of that paperwork, all of that planning work, by definition, in order to be in front of clients, you have to delegate those tasks to somebody else to do it. And the thing that's interesting to me is you then either don't abide by these rules, and you're not as efficient as you can be, and you spend a lot more time behind your computer than you are with clients. Or you learn how to train and develop a team to help you that you can ultimately trust that they're going to do that better than you. So that way, you can spend time with clients.
So that Tom Gau rule from way back has stuck with me. And it's easy to say, but then it's really a challenge and probably a lifelong process to figure out how to do that well.
Along those lines, CEG Worldwide was really brilliant thing, because I had spent all this money to go pay for this training program with CEG. And the first three days that I was there, it was like, they talked about the power of working upstream. And that you obviously do better and make more money when you work with a smaller number of clients and provide better service. But those clients have to have more money. And I remember sitting there saying, ‘Wow, that makes perfect sense. But I can't do anything that we're talking about in here, because I'm so busy, and I have so many clients.’ So then, unfortunately, I took a whole year to really understand and get the courage to implement the segmentation. But I knew I had to do it. It just took me a little longer than I hope anybody listening to this podcast does. And they figure out how to do it a little bit faster.
Will McKenna: We talk to a lot of advisors who describe a similar kind of Catch-22, where they're just so busy running the day to day and serving the clients they have, it's hard for them to kind of make one of these clean breaks. I'd love to ask you about some of the ways you implement this with the advisors coming up through your program. And you sent me a piece of paper that shows you've laid out four stages of development. What does this describe exactly?
Jeff Dobyns: I actually did a presentation, I think, at a Raymond James conference a few years ago, and I really tried to say what's helped us grow over the last 20-plus years.
That's a never-ending spectrum, I guess of, you know, the early days, I'll just describe it. I realized in my mind, I can think of things on a scale of one to 10. Ten is the Tom Gau meeting with clients. That's where the real heavy lifting is done. And then the other end of the spectrum, number one is opening my mail. And I think Ron Carson says, you know, that one time, he thought he was the only one that could open the mail as good as he could. And it was kind of … we all struggle with this delegation and control, it's ridiculous.
But in my mind, it was number two, or three or four is answering the phones and scheduling appointments. Five, six, and seven is doing para-planning and estate planning work. Eight, nine is doing investment summaries and all that kind of thing. And so, in the early days, when most of us are getting started, we're probably spending the majority of our time on those activities that are not very fruitful. They're important, but they're certainly not being in front of clients.
And so for the first four or five years of my career, I spent a lot of my time doing that skill set from like three through 10. I had a good assistant could do one or two. But that was really she was capped and I did the rest. And then after a few years, I said we've really got to get better at having somebody to do the paperwork and scheduling appointments and doing those things. And so we developed some people in that middle bracket.
And now maybe trying to go into this new phase that's really trying to become irrelevant. I was at a planning conference a few years ago, and it was a great presentation about all this work our whole life in this business to be very important and to feel like we want our clients to think that they can't live without us. And we're the only ones that have wisdom and knowledge. And this man that ran his wildly successful practice said that now he's spending the last five or 10 years of his career to try to become irrelevant. And not because obviously he's providing this client subpar service, but he just developed this team of brilliant minds that are living in their sweet space and that are able to really help clients. And so, I'm trying to become irrelevant in that regard and plug in and develop and train and hire people that can do everything between opening an account and meeting with the clients and do really well.
Will McKenna: I love the titles you've given to these four stages of development, and I'm just going to read that for our audience.
- Stage one: Do everything. So, you're doing everything from open the mail, as you said, to following through with clients.
- Stage two: Controlled chaos. So, it's still in those kind of early days, and I love that title.
- Stage three: Develop and reward the team. So, here's where you're really building out the infrastructure and developing those kind of business processes it sounds like.
- And then stage four, as you said: Become irrelevant. So, make the team so powerful and talented and good that they're doing it, and you're playing a different kind of role at that point. And presumably, thinking more about succession planning and maybe other kinds of transitions in the future.
Jeff Dobyns: Yeah, although I would say that I'm middle aged 45. So, I think most of the people that would have that concept of becoming irrelevant would say, ‘Well, OK, I'll do that at 65.’ And I guess I would just challenge all of us to say, that's not, it doesn't mean that we're riding off into the sunset, that we're not working or not trying to be engaged or making a difference. But we're just willing to say that there's other people that we could bring around and develop that could do all that heavy lifting and really help.
And so, I would just encourage people that are developing their practices to consider implementing some processes to become irrelevant, much more early in their career than they might otherwise.
Will McKenna: Alright, so let me summarize what we've heard so far before we move on to the next section.
We started with a great overview of Jeff's mentorship program and the importance of having new advisors work shoulder-to-shoulder with senior advisors to accelerate their progress and shorten the runway to success.
Next, we heard Jeff describe the four stages of growth in his business and the 10 levels that he breaks that down into: everything from opening the mail at level one to spending time with clients at level 10.
And finally, we heard Jeff talk about the importance of coaching in his own development, and the lessons that he learned from Tom Gau and CEG Worldwide, which gave him the courage to segment his client base and reach even greater levels of success.
So, now we're going to switch gears and focus on Jeff's work with clients. Because in addition to running Southwestern Investment Group, Jeff also leads the Dobyns Wealth Team, which is a talented group of eight associates working with about 250 clients. So, let me pass it back to Jeff and hear how he works with clients.
Jeff Dobyns: Our strategy has always been about comprehensive, really holistic planning. And what's fascinating about that is we're doing stuff even in the last couple weeks or months that we never would have done before, with tax software and additional estate planning work to help clients understand what their thousand-page estate planning documents really mean. And helping clients with accounting and paying bills and analyzing spending and all this stuff that takes a lot of time. And so, if we want to provide those levels of service, then we obviously have to have people in our team that can do that. Because there's no way in the world I can do it, or the advisors can do that. And I guess that's the way the world … seems to be that's the way the world is going, with competition and cost cutting and all that, it seems to me like the way to really continue to provide value to clients is just helping them with every aspect of their financial life. And so, we're trying to do that.
Will McKenna: Yeah, you have to be that first call for all those issues, right? Any other detail on the kind of things you just mentioned recently that you would want to share with the audience in terms of exactly what you're doing on those issues?
Jeff Dobyns: You know, something I just was telling a client today. So, she just retired from Abbott Labs, and I just looked her in the eye, I said, ‘We've got to get your estate planning stuff done.’ Because what happens in my experience is people meet with their estate planning attorney, they mean to get around to it. And I hate to say it, but oftentimes the estate planning attorneys aren't super proactive about getting things done. And I think that estate planning area, and just grabbing the bull by the horns and saying we're going to get this done, come hell or high water, because your money and your family is too important to just leave it to chance. Life is short, and we don't know what's going to happen.
Will McKenna: It sounds like half the battle with some of these issues is just the tenacity of getting these things in your teeth and not letting go of them.
Jeff Dobyns: You know, we had a client recently that was an elderly guy, but I really got involved with him. I said, ‘We've got to help you get your deal squared away.’ And you won't believe this, but this guy had a net worth of close to a billion dollars, and he had never personally met with his estate planning attorney, which is really a shame. But there was just too many people involved. There were the accountants, there were estate planning attorneys, there were bookkeepers, there were admins, all this. But we really started to peel back the onion to get involved. So, I can remember like it was yesterday, we sat in a conference room and met the attorney and met the accountant. And within a few minutes, I said, ‘Gosh, it's weird your 401(k) which had $17 million or so in it had the beneficiary as the estate.’ And he had made a large commitment to his alma mater when he passed away. So, within a few minutes, we were able to collaborate and change the beneficiary of that 401(k) to his college and save over $5 million of income taxes.
My passion is, if we can do that for clients or for guys that aren't clients yet, you do that enough times, you're going to have plenty of business to say grace over. And so, the charities win – everybody wins but the government – has kind of become my motto.
Will McKenna: Speaking of working with charities, Jeff is also very involved in giving back to the community and working with nonprofits in Nashville. His latest passion is spreading the word about the benefits of gifting appreciated assets, rather than just writing checks as donations, because he believes that can be a potential win-win for both the clients who make the donation and the nonprofits who receive them. So, listen in as Jeff talks about this technique with two of the charities he works with: the Prison Ministry and the Signatry Foundation.
Jeff Dobyns: One thing that I've really become passionate about, and it started actually, I'll go back maybe 10 or 12 years, but I was at a charity breakfast. I've been involved with the Prison Ministry for a long time, and I was at a breakfast as part of the Finance Committee counting money, you know, after the fundraising breakfast. I'm going through these envelopes and there's checks from really prominent wealthy Nashville business owners for $5,000, $10,000 and $50,000. Personal checks.
I just sat there and said why are these guys not gifting appreciated assets? This is insanity. These guys all have highly appreciated assets, and they're writing checks to charity.
I went on a mission to say, ‘How do we educate and encourage people to do better?’ And I really started to learn about donor-advised funds. And so, the Signatry has been a partner, I've been on the advisory board for the Nashville group for a long time. And really what they do is help people gift appreciated assets more efficiently. And so, if we can gift appreciated assets and be a little smarter, there's a massive amount of monies that we can give to the charity, that's not going to the IRS. And so, everybody wins but the government – that's something that we can all get behind.
Will McKenna: That's great, great story. Thank you for sharing that. And one of the things that we touched on earlier that I want to come back to is the idea of productivity. I know our audience loves hearing from guys who are as successful as you are, about how you're spending your time and how you're finding which areas to focus on and which areas to delegate.
Maybe walk us through a typical week? And how do you think about productivity in the stage of career you're in now?
Jeff Dobyns: Over the last seven or eight years, actually, I made a commitment to try to not be in the trenches on Mondays. I felt like that allowed me to be rejuvenated and have some time to do some thinking or some reading or some strategy and some follow-up or personal things. And so, really, I've tried to say, “On Mondays, I'm going to allow our team to prepare for the week.”
They have a huddle meeting, they go through all the preparation that they need to do for that week. And I just try to stay out of that. I think that's really helped them take responsibility and ownership and develop. So, they are really planning the week and all the things that that entails for the week of client meetings.
Then, Tuesday, Wednesday and Thursday, I tend to have three to four client meetings a day. I almost always have at least one person from our team in those meetings. I think that was a huge change that we implemented a few years ago from an efficiency perspective. And that allows that person to be responsible for a lot of follow-up. And so that provides me the opportunity to focus on the next thing.
Will McKenna: I love that. OK, let's talk about what's next. What's next for you, Jeff? And for Southwestern? Where do you see the business going from here over the next three to five years, and what are the big opportunities and challenges you guys are looking at tackling?
Jeff Dobyns: Now I'm really excited. I've been rejuvenated in the last six to 12 months on the opportunity to grow our advisors, as far as their production, and then to grow our team. And I think it seems to me like there was a movement years ago for a lot of wirehouse people to go independent. And now it seems like there's an opportunity for independent folks to partner with like-minded organizations to really scale.
Our firm has a commitment that we want to be at $10 billion in AUM and $100 million in revenue in 2027. We have a plan to do that. And really the plan is twofold. One is growing our current advisors' production, helping them all become even more successful in scale. That allows them to provide opportunity for new young people to enter the business, and enter the mentorship program and support them. So, we have an opportunity for a lot of young people to get started and have a very high probability of being successful for the next 40 years. And then two is partnering with some people that are independent, that are either looking for scale, mentorship, or succession planning. As you know, that's a big, big, big issue in this space.
What I’ve found is people don't want to just trade off the 40 years of clients that they work their tail off to acquire and have a high level of responsibility to serving to anybody. And so, we've been plugging them into our model, helping them by providing a mentee that can work in their hip pocket that they select that they train the way that their clients want over a few years. And then by the time that person is ready to scale back, it's been just as seamless as it's been with my practice.
So, I'm super excited about that. And I think it's really neat, because I feel like we have two responsibilities of serving those older advisors that have spent 30 to 40 years in the trenches, how to help them transition the next phase well, and then the current advisors to grow. And then of course bringing in new people is something we need to do in this industry. Those days of bringing in people and 90% of them failing is something we shouldn't be proud of. And I think our mentorship program has been able to really reduce that failure rate. We probably have a 95% success rate. But it's because you're only bringing in, I think now we have 12 folks in the mentorship program. So, you know, you can't hire 100 people when you're doing it this way. But the ones that you do bring on you, there's no wasted effort, you don't have any failure.
Will McKenna: Right, they stick. That's great. All right, let's summarize this. If you were going to step back and give some advice to fellow advisors, top two or three things that they could do to improve their practice and their business, what would you advise them?
Jeff Dobyns: I think, constantly investing in yourself and your business. And so, by that I mean, you've got to spend money on infrastructure, pay people well, incentivize them, spoil them, keep them around. So, invest in yourself and your team.
And then invest in your personal development. I mean what a return on my investment in time spent on learning. And so, I've just made a decision for the last 20 years, I'm going to be in coaching of some kind, at least one program nearly all the time. And there's no question. I mean, my business is up 400% in the last eight or 10 years, and there's a lot of things that I've learned in these coaching programs that have made a huge impact.
Whether you're going to the Barron’s conferences, or you're going to due diligence trips, I just committed to it. And if it's good enough for Tiger Woods, and all these guys spend lots and lots of time, energy and money on coaches, even at the top level, it's crazy for us not to think that we should have a couple people speaking into us that see other businesses, other advisors, and can help us just shorten that runway to say, ‘Here's where you are, and here's where you're trying to go. How can we help you get there a little bit more quickly or a lot more quickly?’
I just encourage people to have a partner. I think that's been a game-changer for me personally, and all of our advisors that are top producers have partners. And that's cool because it means the younger partner is hitting their stride much, much sooner, and they're never going to slow down. And the older advisor has somebody who's pushing them, and doing some of the heavy lifting themselves. And so, I'd say building a team, investing in your team and invest in yourself with some good coaching consistently will pay off.
Will McKenna: What a great place to end! Jeff Dobyns, this has been a delight. I really appreciate you coming on the PracticeLab podcast.
Jeff Dobyns: Will, thank you, my friend. Keep up the good work.
Will McKenna: All right. So that wraps up this episode of the PracticeLab podcast. Special thanks to Jeff Dobyns for coming on the show. And thanks also to my colleague, Chris Jenkins, for connecting me and Jeff. For those of you who want to go deeper on today's topic, you should check out Jeff's appearance on the Michael Kitces podcast, and we'll link to that in the show notes.
Will McKenna: If you liked what you heard today, please hit the subscribe button and consider leaving us a rating and review. PracticeLab is sponsored by Capital Group. You can find all our episodes and lots more at practicelab.com. I hope you found this conversation with Jeff Dobyns as useful as I did. And I look forward to joining you on the next episode of the PracticeLab podcast.
