Will McKenna:

Hello, and welcome to the PracticeLab Webinar series. I'm your host, Will McKenna. I want to thank everybody for joining us today. Great to be with you. You know, it's business-planning season, and so our topic for today is how to build a high-growth business plan in five steps. And I'm excited, we're excited, to share with you some of the best practices in business planning that we think can help you both set and achieve goals in your practice and ultimately boost the growth of your business.

We've got two great speakers here today to help us break it all down, but before I introduce them, let me just cover some housekeeping details. If you look in the Additional Resources section of your webinar player, you're going to find everything you need, including slides to this event, the CE credit quiz. I'd go ahead and open those links now so you have them. You're also going to find this handy-dandy worksheet that we've put together to help you during this event. Download that if you haven't already. There's some other goodies in there, too, and you ought to take advantage of those well. We'll return to that topic as we go. Also, we love getting your questions and comments, so please keep them coming throughout the event. We'll try to answer as many as we can. And if you do have any technical problems, just let us know in that same window and we'll get it fixed for you. So with that, let me introduce our speakers.

Michael Novak is president and CEO of Wellspring Financial Advisors, a very successful RIA firm based in the great city of Cleveland, founded in 2007. And Michael is a member of Capital Group's RIA Advisory Board. You'll hear a little more about that, and I'm going to let him describe his practice in detail in a couple of minutes.

And then Ryan Radtke is a relationship manager here at Capital Group, 10 years of industry experience, all with us. He's got the CFA designation. Ryan is based in Seattle, and he works with investment advisors all across the Pacific Northwest and the Rocky Mountain states. And we just found out that Ryan ... Well, although he's in Seattle now, he also grew up in Cleveland, so he and Michael (laughs) were doing a little bit of the Cleveland "Who do you know" game before we got on the call. And they have many people in common, in fact.

So we do have Cleveland and Seattle in the house, so maybe we have a little fun with this with the audience. You know, these are both two great sport cities and rock-and-roll cities, so let us know in the comments, who are some of your favorite Cleveland bands, Seattle bands. Maybe we have a little impromptu battle-of-the-bands. And then also a more topical question now that we're in football season: Which NFL team do you think is going to make it farther this year? So we'll have a little fun with that.

So guys, welcome. Thanks for joining us today. You know, Michael, as we get going, why don't you kick us off just with a thumbnail sketch of your practice as it stands today in terms of what you all offer, types of clients you serve, the size of the business, you know, what differentiates you in your market, and so on.

Michael Novak:

Sure. Thank you, Will. Thanks, Ryan. I was going to say before we start, the only thing we can't talk today is about the Cleveland Browns, but I guess we've already ... we're past that moment.

Will McKenna:

(laughs)

Michael Novak:

So I can't wait to see what the chat or maybe some of the comments are going to be about the Browns. But I founded Wellspring in 2007 as a family office, and I think that's a term that's been a little abused these days. But ultimately, Will, if you look at kind of our target families, where we are today much different than 16 years ago when we started. But our minimum family size today is 50 million dollars.

As a family office, our model is basically three legs of the stool. From a tax standpoint, I'm a CPA, so we do income tax planning and tax compliance. So we actually prepare the returns, and we do the bookkeeping. From an investment standpoint, it's the public markets and the private markets, the alternatives, active and passive management. And then, obviously, the financial piece is financial planning, estate planning, bill pay, cash flow management, net worth, family governance, family meetings, we might get into that.

As far as differentiation, I think maybe the size of the type of families we work with, you know, it's kind of a one-phone-call solution. So families come to us where they're looking for a provider that can basically take care of pretty much everything for them. I think the one thing maybe on differentiation on your comment, on your question on that, the one thing that we tend to do is we really get involved in preparing the family for the money, just as much preparing the money for the family.

So we're all on this call, everyone that's listening in today, we're all very technical, we're all really smart. But the soft side of the business, which I'm sure we'll talk a little bit about at some point in the business-planning aspects, the soft side of the business is a little bit different. And so we spend a lot of time with family governance and family meetings, and in helping families through that.

Will McKenna:

Well, that's a great description. And I hope everybody was writing this down as I was, which is, "Preparing the family for the money as much as preparing the money for the family." That's a great way to frame it. And want to hear ... We'll hear more about this as we go. Obviously, a very successful practice in providing services for those bigger, more wealthy families.

That's a great start, and, you know, we are talking about business planning today. And I think we're all probably on this call familiar with some of the problems inherent in business planning, so we're going to talk about that. Let me just thank the audience so far for what we've seen. We got both sides of it. We got some, "Go Browns." We have, so you know, Michael, you're not alone, "Cleveland rocks." The Raspberries from Cleveland, I Foo Fighters, that's news to me.

Michael Novak:

Yeah.

Will McKenna:

They're saying-

Michael Novak:

Yup.

Will McKenna:

... they're from Warren, Ohio. I don't know if that's-

Michael Novak:

Yup, that's true.

Will McKenna:

... Dave Grohl or other-

Michael Novak:

Yup.

Will McKenna:

... members of... Yeah. I would've thought of them ... I think of them as Seattle, I guess, because of Nirvana. I don't know. Ryan, we're not helping you out much here with Seattle, but we do have some Seahawks fans. Others (laughs) are writing in, "Detroit Lions, Pittsburgh Steelers." That wasn't the question (laughs), but we're …

Michael Novak:

Yeah, any Steelers’ fans, anyone who's a Steeler fan can just get off the webinar right now, because we don't take-

Will McKenna:

Oh, man.

Michael Novak:

(laughs)

Will McKenna:

Michael's laying down-

Michael Novak:

(laughs)

Will McKenna:

... (laughs) the gauntlet. Okay, let's get back to the program, guys. Well, you know, I think we've all ... We're all familiar with some of the problems with business planning, that, you know, sometimes it can seem complicated, or it can be a wasted effort. And, you know, how many of us have experienced that? And I love the picture on this slide ... what I would call the dreaded dusty binder. You know, you work hard, you put together a business plan, you bind it, and it just stays on the shelf collecting dust for the rest of the year.

But there's also some potential, a lot of positives with business planning. Michael, I know you've seen the good and the bad in this and gone through your own kind of transformation on business planning. Can you tell us your story?

Michael Novak:

Sure, thank you. Again, where we started from is clearly much different than where we are today as a firm. I mean, when we started, we would take any client with a pulse, frankly. And now, it's a different relationship where we are. But given the aspects of business planning, you know, it's too difficult not knowing where to start. I think it's kind of like philanthropy, just get started.

You have to figure out where, and Will, I shared this story with you before, but early in my career at Wellspring, I had a client family who was asking me what kind of business I had. And I thought it was kind of a foolish question, and he said, "Do you have a lifestyle business, or do you have a real business?" And he said, "By the pause in your answer, you have a lifestyle business. And if you can't figure out the two and the difference between them, then you're never going to be able to truly have the business that you will want to have at some point in your career."

This was probably 2009. Wellspring was founded in '07, but in 2009 was when we really started looking at "How can we do business planning." There was, I think at that time, six of us at the firm. We're now around 30. [We] kind of went around the room and said, you know, "Who's good at this?" And no one raised their hand, and we're like, "OK. Well, obviously, no one's good."

And I think most people that are on this webinar, including me in the beginning, we're really focused on clients. We're very good with client relationships. We're really good with delivery, and we kind of put ourselves and the firm kind of behind that. And so ultimately — I saw that one slide before working in and on the business — you’ve got to make the time to work on the business.

And so we started back in '09 going through, we'll get into this probably more details, Will, but going through an operational process, where it was really looking at transforming the business, creating a process for everything. How do you build scale? How do you look at everything you do and build transparency around the things that you do? Not just for clients, because we're good at that. Not in the community, we're good at that. But how do you do things internally for the people that are here for your … as you bring on new people? And so, creating a process is not easy.

And so we went through EOS, Traction EOS. I'm sure a lot of viewers have maybe heard of that. I'm not suggesting EOS is the best. It's just what we did. And frankly, we chose it because it seemed simple. I was on a flight. A good friend of mine had given me this book, and by the time I had finished this flight, I had dog-eared pages, I had highlighted everything. It was insane. And I brought it back to the office, and I said, "Wow, this is great." And as you read it, it's so common sense, but you just don't do it, because you just don't focus on your time on it.

So we wound up back in '09 using that as our starting place to build out a framework from there. And frankly, it changed our business. In the beginning years, it was very difficult. The first year was a ... basically we hired a consultant. We went through about an 18-month period with that consultant. We had several quarterly off-sites. We had weekly meetings and check-ins. But we completely reworked the business internally and ultimately externally. And so that was the key driver for us in how we got to where we were.

Will McKenna:

That's fantastic. So we're going to dig into a lot of those details, and when Michael says, "EOS," I don't know if you guys can see that, but the, it's this ... It stands for, "Entrepreneurial Operating System," correct, Michael?

Michael Novak:

Right, yeah.

Will McKenna:

And it's this book, based on this book, “Traction,” by Gino Wickman. No ... they're not sponsoring this program today.

Michael Novak:

(laughs)

Will McKenna:

But we'll talk about this and others. And I think part of your comment was there are many, many ways to do this, that your point was don't, you don't have to find the perfect way. Just pick one and go with it.

Ryan, let's bring you into the conversation. I know you work with a lot of advisors. What are you seeing out there in terms of how advisors are approaching business planning, maybe on both ends of the spectrum?

Ryan Radtke:

Yeah. Thanks, Will, for, for having me, and a special thanks, Michael, to you for being here to share some of your wisdom. I won't opine much on the Cleveland versus Seattle debate. I love both cities. We'll know the football answer on the 29th, because the Browns come to Seattle to play the Seahawks, so make sure you tune in then.

This is a great topic to talk about. I personally think it's undervalued in the impact that it can have on the business. And so the question, Will, you asked was, "Hey, you meet with hundreds of advisors. What are they doing?" If you put it on a continuum, on one end I talk to advisors who don't do any business planning. On the other end are teams where it is a core focus in everything they do. And importantly for this conversation, there is every iteration in between.

I talk to lots of firms who say, "Hey, we're always building, so we're always planning," but they don't have anything formalized. And there are those who do it really well. I know we'll double-click on that as we go through. You mentioned, Will, at the beginning a couple of issues. I see three big issues out there when it comes to advisors in business planning. Number one, there is no plan. Number two, if there is a plan, it's not specific enough. And then number three, it doesn't hold anyone accountable. Looking forward to expanding on that as we talk a little bit more.

Will McKenna:

Well, that's a perfect way to frame it up, and, just one more .. somebody, I guess, is coming back to you, Michael, in the comments. It's Robert … had this to say. His quote was, "Cleveland has a football team? A Steelers fan is asking." All right.

Michael Novak:

Yeah (laughs), I think we still do. I don't think after this next week we will, but-

Will McKenna:

OK, well, good. Well, let's dig in. As we were saying, there are a lot of ways to do this. In fact, I've got a few different books here. I don't know if you guys know “Traction” or if you follow Donald Miller, also very good at this stuff, “How to Grow Your Small Business.” He's got a great podcast. Here's ”The One-Page Business Plan, Financial Services Edition.” There's tons of them out there.

Will McKenna:

And our team kind of went through a bunch of these and did a little bit of a synthesis. And what we found they all have in common is they have the five steps that we're going to go through today, and that's why we created this workbook for the event and for you all to take and use, if you find it helpful. And so, let's go ahead and jump right in.

The first of those, as you can see on the slide there, is to assess your practice. And this makes sense. It just means, "How about run a diagnosis of where you stand today?" Many of these approaches, as I noticed, whether it's EOS for you, Michael, or some of these others, they often start with an assessment of, "Where do you stand today? Let's rate your business."

And I will tell the audience, and you'll probably see it on the slides we have here, Capital Group does have a tool you can use to do this. First of all, a nationwide study of top advisors called "Pathways to Growth" that you can download from the PracticeLab site and read about what top advisors are doing. And then, we have a tool that allows you to compare yourself and your practice to a nationwide sample of others to see your strengths and limitations and what you need to do to improve and, more importantly probably, have a plan to get there.

But Ryan, talk about your experience working with some of the advisors on this, whether using our tool or through some of this process with Pathways to Growth.

Ryan Radtke:

Yeah. Well, you mentioned at the beginning I work with RIAs, and there's sort of a common joke in the RIA world, that if you've met one RIA, you've met one RIA. The idea is that the flexibility of how to do business, that's a huge benefit, but it also has drawbacks. Namely, you showed a couple of books. There is no one single blueprint that makes everybody successful. And that's not a unique problem to RIAs. All advisors feel that. So the challenge then becomes do you actually know how you're doing compared to peers? And I'll take it a step further. It's maybe not as helpful to know how you're doing just compared to general peers, but how are you doing compared to those that are going two, or three, or four times faster than you? That's the benefit of this Advisor Benchmark Study. We isolate those high-growth practices so you can benchmark yourself.

As an example, there was one firm who took our advisor benchmark study. Their stated goal was, "We want to grow faster." That's probably not a surprise. Most advisors out there, within reason, want to grow. Interestingly though, when they took the study, they scored in the 90th percentile on new client acquisition. They were really good. Their below-average scores? Strategic scale. So they were really good at bringing clients on, but ineffective in their processes because they didn't have great standard operating procedures. That's what was hindering their growth, and that's the benefit of the Advisor Benchmark Study. If you just looked at new client acquisition for that firm as a proxy for growth, there wouldn't have been that specificity on how to get even better. And because we have such a robust pool of advisor data, it is a very deep set of information.

So while this is business planning, and the Advisor Benchmarking Study is great for that, I'd be remiss if I didn't mention a big part of the business, which is investments. Advisor benchmarking, fantastic tool for business management, but we have a similar set of numbers diving deep into portfolios as well. Our portfolio insight program is done in conjunction with our portfolio consultants. They analyze, they anonymize, they report portfolio-level data so advisors can see what their peers are doing. If you want to know how much international other advisors have, or are they increasing or decreasing duration? And then importantly, how does your model look compared to a high-quality benchmark? Our team can help answer that as well.

So between those two, business management, Advisor Benchmark Study, Pathways to Growth, and then investments with our portfolio insights. It's a benefit where we use our toolkit to give you insight into your business and more time back with your clients.

Will McKenna:

Oh, that's great. Let me just tap into a couple of the questions that are coming through. So Julian asks, "Is the tool specific to investment practices, or also for holistic?" It's very much holistic. There's a whole section around broader financial planning, wealth planning, to include tax planning, estate planning, et cetera. So hope that answers for you, Julian. Let me plant a seed too. Maybe, Michael, we'll come to this later, but Derek asked, "I'm a former business owner, sold it when I was 35 before starting my practice. How can I sell that knowledge and expertise to owners?" And he asks, “Is that through consulting?” But let me just put a pin in that. Maybe we'll return to it.

Somebody else was asking for a book list. Just simply, this is “Traction” by Gino Wickman. That's a good one. You can see, like you, Michael, I've dog-eared a few pages. I'm personally a fan of Donald Miller, and again, he has a very good podcast, so if you're a podcast person, look that up. This is called “How to Grow Your Small Business.” And then this is just kind of one of those simplistic, you know, “One Page Business Plan” by Jim Horan, H-O-R-A-N. Hope that's helpful. Let's go ahead and jump forward to step two in our process, which is identifying and prioritizing goals. I think in our workbook, we talk about the very well-known SMART goal-setting framework. Not trying to invent a new wheel here by any stretch, but Michael, let's hear from you in terms of how do you approach goal-setting, and how does this process you have help you in that regard?

Michael Novak:

Yeah, and real quick, just looking at … I had the pleasure of doing, of taking this, the study, and filling out for Wellspring, and then, looking at the toolkit [that] hopefully everyone's going to spend time with today. And I would say that the benefit, frankly, is looking in the RIA space, is you have a toolkit that's created for RIAs specifically. And then to Ryan's comment about benchmarking, in peer groups, a lot of us, we always kind of... like we do it in our investment practice, where we're looking at benchmarks and absolute and relative performance all the time. And I think the nice thing about this toolkit is that you can get that product and that process through that, so just EOS was what we used, but I didn't know this existed back in 2009, or else I probably would have used that.

So, as far as the SMART goals, I think ultimately, once you get through the assessment, you get to the planning phase, and so the way we do it, and hopefully throughout this webinar, we have very specific takeaways for everybody that's listening, but the way that we do our planning is we have an annual planning process where we have a two-day offsite at the beginning of the year, where the management team meets out of the office. Why? Because if you're in the office, you're going to take a call. In the office, you're going to go check an email. And so it's like, get out. To work on the business, get out of the business.

And so, we meet two days off site. We lay out the one-year goals for the year. We have quarterly rocks, where every 90 days, we have a project that each person works on, in addition to, so these are ands not ors, in addition to their job every day. And then we have the firm goals for the year, so we have that one-year plan, and then every one year, we roll out a three-year and a 10-year, so that always just keeps rolling out every three years and every 10 years. That one year, that off-site, we get into a SWOT analysis. We do the five dysfunctions of a team. We get pretty vulnerable about, you go around the room and say what's the one thing that you bring to the firm that no one else does, and what's the one thing I either want you to start or stop doing this next year. So it's … we're in the people business, so you've got to spend time on your people when you're doing these things.

So once we lay out those rocks and those goals, they have to be measurable. They have to be specific, back to your page four of your handout. Ultimately, the accountability is a huge piece of this, because at the end of the day, how many meetings am I going to come to where my name's behind something and I'm not giving an update, or I have nothing to talk about, or I missed deadlines? And so, the transparency of accountability has to be part of that culture of going through this process.

Will McKenna:

That's great, and any sense of ... Can you give us a for instance? Like, what would be on that list of one-year goals, whether it was for this year or looking ahead to '24? What are some of those examples?

Michael Novak:

Yeah. So, one of the firm goals this year was develop a strategic marketing plan, which is kind of interesting. I mean, we, probably much like a lot of other firms, we've been very fortunate with referrals. And frankly, I used to laugh about it, that we're the world's worst marketers, that we really didn't spend a lot of time on that. And whether it was the centers of influence program or whether it was direct, we weren't really doing that much. And so, we had a goal for the year, so we hired somebody to come in and work on marketing last year, so we hired a full-time position for this.

We created a LinkedIn presence that we never had. We created some direct things that we never had with clients. We are tailoring communications to centers of influences on marketing and brand identity, but also just thought leadership. I mean, that's really the way we market, is by being thoughtful, much like Capital Group, and doing this PracticeLab, or the materials that you might get online from them as far as thought leadership, and so we are tailoring that towards G2 clients. We're tailoring it towards older clients. And so we're being pretty thoughtful. So, that was something we never had in place, and we have quarterly metrics that we wanted to succeed, and so we've got measurables based on each quarter in that.

Will McKenna:

Yeah, that's a great, great example, and speaking of strategic marketing, we had a webinar before this on digital marketing, mastering digital marketing for advisors. So if anybody wants to go back to PracticeLab and check that out, that's worth looking into. Timothy asked, "How does the tool apply to 401(k) practices?" Absolutely, it's in there. We also have a set of questions around how much retirement plan business are you doing? To what extent is that a core part of your business? Et cetera. So, again, check it out. And not trying to overdo the commercial for that. Frankly, we all believe pick whatever approach works for you, but we do have this tool that's really quite powerful. Ryan, anything to add in terms of the advisors and how they prioritize and set goals? Any other advice from your travels?

Ryan Radtke:

So, I'll echo what Michael said, and I'll just add that we've all heard some iteration of the quote, "A goal without a plan is just a wish." We're in marathon season. Just had Chicago. New York is coming up. The distance runners out there, they know you can't just wake up and say, "Hey, I want to run a marathon in under four hours." You need a 20+-week blueprint to get you there. It's the same with a business. Do you have a plan to get it done? I work with an advisor in Oregon. He actually had a binder, similar to the one, Will, you showed at the beginning, with much less dust on it. He pasted the goal on the outside to grow 10X over the next 10 years. Inside were the specific steps.

And that prioritization, that's a big factor. Another advisor I work with, our practice management team, he's here in the Seattle area. He identified a problem he had, and the problem was that he had clients who love him, and specifically they rave about his newsletter. They demand it every single month. The issue is it wasn't generating referrals. He knew he was leaving prospects on the table, so that became his prioritization. "How do I turn those positive feelings, those good vibes, into clients becoming a better source of referrals?" So he found a way to lean into something that's going well as a way to fill a gap.

We talked about Advisor Benchmarking Study. That's a great way to identify priorities. Another way, some top advisors, I hear they hire business coaches, executive coaches. If you're not quite sure where to start, those are a couple of ways for you to figure out, "Hey, here's where I should prioritize," if it's not clear what you need to focus on.

Will McKenna:

Oh, that's helpful. And let me just also thank Michael, in the chat, offered up a couple of ideas. “The 12-Week Year” and “Uncommon Accountability” are also great resources, so add those to your potential nightstand reading list on this topic. OK, let's pull up our first true poll. We had a little impromptu poll there, but our first poll for the audience. What are your goals for 2024 as you look ahead? And, just go ahead, same thing. Pop those into the chat box there, and we'll revisit some of those. Let's now talk about process and accountability, our next step on the path. You know, Michael, I know that the system you're using is very process oriented, and you've talked about accountability and how central that is to your team's success. Tell us more about what you're doing there on process and accountability.

Michael Novak:

Sure. So, there's a lot of tools with any system that you use, so much like your toolkit here, or in my case just using EOS. So, kind of looking at what you're seeing here on the screen. Kind of on the far right there, this weekly manager update. So one of the tools that we use through our process is, outside of these quarterly meetings, we have a weekly meeting that is the same day of the week at the same time of the week, and literally starts on time. If you're not in the room, it starts, and it ends after an hour. If you're not finished, it's still over after that hour. You start the meeting out by doing a check-in. You go over the rocks for the quarter, and basically on or off. That's all you say. So you're not spending a lot of time going off on tangents. You're really focused on what you're talking about.

If there's an issue, you put it down to the issues list for that meeting, and then when you get to the issues, you're basically prioritizing, so you're only talking about the most important things for the firm for that time. So it's very; it’s not strategic. It's very operational every week. But you're only focusing on those things. You have to-dos from the following week, with a person's name, and you're basically saying, "Did you do it or did you not do it?" And so the accountability piece is extremely transparent for the management team.

That's called, in “Traction,” they call that the L10 meeting, level 10. At the end of the meeting, you give that meeting a grade on a scale of one to 10. You hope it's a 10. If you didn't start on time, maybe it's an eight. If you didn't end on time, maybe it's a six. If you didn't get through certain things, maybe it's a five. But ultimately, you go over the quarterly things every week, just to say if you're on or off. If because when you get to the end of that quarter, and we have our quarterly off-site, your rocks should be done, because you've been talking about it in some form every week, whether you're on or off, or if there was an issue, why you're off.

So from a process standpoint and accountability, that level 10, that weekly meeting for us is critical, from a process standpoint. Again, we're really good with process for onboarding a client, or investment management, or 401(k)s, or whatever anyone on this webinar's doing. We're probably really good with that, but internally, our own processes to manage the firm, my guess is that's probably something we're not all good at, and so, using anything to start. Don't let perfect get in the way of good. Just start with something. And and create that process with the accountability of checking in on that. So we do it every week, every quarter, every year.

Will McKenna:

That's fantastic, and again, I think EOS is particularly good at that. That kind of laying out that precision kind of process. And thank you all. Great engagement here from the audience in terms of goals for 2024. Really good stuff, and a few that caught my eye, "Increasing assets per client," so kind of that, that wallet share, "Being more strategic!" I think there was an exclamation point on that one. I like this, "Growth, but smart growth." "Run the business instead of it running me."

Will McKenna:

Chris offered the specific thought of creating monthly newsletters that aren't market related for clients, and post those regularly, weekly on LinkedIn. Several of you had the idea around increasing the number of multigenerational accounts and getting into, I think, Michael, you said G2s, so those next generation. John just wrote in, "Acquire five clients with greater than $2 million assets under management." There's a smart goal.

Michael Novak:

That's a smart goal.

Will McKenna:

Specific, measurable. That's a great smart goal. Joe had one, "10 new referrals from my top 20 clients." Those are all very specific and good ones. So, thank you for that. And by the way, these are great things for you all to share with your Capital Group team as you think about planning for 2024. And we can probably, Ryan and all his 100 or so (chuckles) colleagues around the country can help you identify your goals and then be there to be your accountability coach along the way.

Ryan, anything to add as you think about process, accountability? What are you seeing?

Ryan Radtke:

Yeah. I mean, just in the idea of teaming, team buy-in, it's a must-have. The best mixture that everybody has a voice when it comes to business planning. Now, it may not be equally weighted, but everybody is at least heard, and it gets them on board with the firm values and gets them to buy into those goals. It can also help solve a problem. We all know about the talent shortage here in financial services, and what better way to be able to train the next generation of your advisors or give feedback to the team? If you can reflect back on something you crafted together. If they're smart, meaning the goals, if the goals are specific, measurable, et cetera, you'll have that ammo to make everybody better. You'll be able to coach them and mentor them along the way.

And then finally, I would just say, goals and planning, that is a great way to reflect your business values, what you do better than the advisors that are across the city or your competition, to make sure that everybody at your firm is singing the same tune, from the person at the front desk to the para-planner, to the rainmaker, making sure everybody's on board is a great way to do that.

Will McKenna:

Yeah. That's excellent. And more ideas are coming in, some around more of that operational end of the spectrum, what we I think call strategic scale in our benchmarking study. In terms of trying to set up, somebody said, "Standard operating procedures that, you know, save me time so I can focus on what I love." Jennifer just wrote in her 2024 goals, "Getting plugged into activities that I love to do organically, build relationships, start sponsoring events at local community events and gatherings."

So, a lot of good ideas out there. And I think we're going to transition now to our second poll, or third poll if we count the Browns and the Seahawks. And that is this, and I wasn't super clear on the last question I asked. But the question is this, so we asked about your goals kind of broadly for 2024, but think about more specifically what area of your business do you need to work on the most and why? And maybe to rephrase that as, what's a challenge you're trying to tackle in your business and give us some of the detail behind that.

So, [put] that into the comment box again. I think we're going to transition now to the next step along the process here, and that is essentially monitoring progress toward results. I do want to talk here, and maybe, I don't know if this is part of that section, Michael, or where, what we were just covering around process. But I know accountability is so important in your practice. And can you talk about that a little bit more and maybe take us inside some of the meetings you're having with the staff and what does that look and feel like? And how are they responding to that, call it, challenge, and what does that look like in your business, and what role does that play for the team?

Michael Novak:

Yeah. A good question. I mean, I think part of the accountability factor has to be being vulnerable, right? I talked earlier about we're in the people business. Not just with the families or clients that we work with, but the staff, right? So, I think like most people, you know, 60%-plus to 80% of the [profit and loss] P&L, the expense side, is probably their people. And so on the people side of the business, with accountability, I mean, ultimately unless you have vulnerability and accountability — I think a lot of people can hide behind things. And how do you define accountability?

And so, what are the, I don't want to say ramifications, but what are the things that could happen if someone's not accountable? And so, how do you create incentive plans around being accountable? I think, well, we use this as an example in one of our pre-calls about, just on the issue of accountability with incentive, where we create a bonus structure internally where we take a percentage of our profits every year and allocate them towards staff. Not anyone on the management team or ownership, but it's just staff. And we allocate that 30% just based on everybody's, you know, respective salaries of that total, and the other 70% is direct impact on where they're doing it and the work that they're doing that given year.

So, you know, I think a lot of people in their bonus structures with accountability, they get back to hey, you got X last year and this year you're going to get X plus CPI, right? And it's just, it becomes, I don't want to say a Christmas turkey, but it just becomes something you expect. Whereas that really doesn't provide any incentive to someone to do something differently or to be more accountable on an issue, or take on something.

And so, you know, through that incentive program that we created, kind of centered around accountability for staff at least, we acknowledged, OK, this is what it means to do your job and show up. This is what it means, and this is what it looks like, and again, how do you get as objective as you can in measuring that? But this is what it looks like in order to do more. And after a few years, we've been doing this now for seven years, it's interesting. One year, if you get a big bonus, the next year you don't, there's a big difference between why. And then you have that conversation around performance and accountability.

I mean, clearly just the traction pieces that we talked about, the L10s, the off-sites, the quarterlies, we're always talking about goals versus where are we on that goal. And, so, just like losing weight, unless you measure something, you can't manage it, so a lot of people just don't do it after a while, and they get back into recidivism, and they just go back to the things they used to do. So, creating something with transparency around it, measurement around that accountability, and then performance, and then incentivizing people around it.

Will McKenna:

That's great, and they're responding pretty well to that? Does that excite the team and get them engaged? How are they reacting to that kind of model?

Michael Novak:

Yeah. I mean, I would say when we started with our operating system, when we did “Traction,” it was really hard. We had some big difficulties. We had some arguments. You know, people wanted to do their thing versus the thing. And so, you're going to have to get through that. I mean, you're going to have to go through that. I think, you know, frankly, everyone always talks about what they did well. I learned more from screwing up than doing things well in life. And so, you've got to learn from your mistakes. Not live with those, but learn from them. And figure out how to change that. And not just change for the sake of change, but change for getting better.

And so, the staff in the beginning, like one of the things we do, this might be shocking, we track time. So, how do we understand our cost of goods sold? We literally track our time. So everybody here, including myself, tracks their time every day. Not everybody wants to do that, and so, you talk about accountability based on P&Ls by client, by family, by whatever, it's pretty clear. We don't track time to be the Big Brother on what you're doing, and did you spend eight hours today? But it goes back to true accountability to the firm. One of the things we say is, “Do what's in the best interest of the clients and the firm, and nothing is ever personal.” And if you can do that, then you're doing the right things.

Will McKenna:

Right. That's awesome detail. Thank you. And thanks everybody for writing in a bunch of good ideas. Let's see, Alex, I had two that are quite similar. Alex said, "I've recently inherited a fairly successful firm that has been doing things the same way since the '90s. My challenge and goal is to modernize that in 2024." And then Chris said, "I'm inheriting a book from an advisor who's retiring. I'm receiving about 40% of their accounts, mostly clients we've never spoken to. It's essentially extremely warm leads, but getting them to come over to us and open up.”

Others. Daryl mentioned asset retention after a client's death. Carol said, "Specifically, building relationships with the children and grandchildren of a number of clients." Others said, "Documenting processes and refining them." Again, back to the operational stuff.

Nathan, "Digital leads on social media." Nathan, go to PracticeLab and look at the last webinar we did and some of the articles on how to leverage digital media and talk to your Capital Group team about helping you with that. Andrea, "Speaking to the right prospects and qualifying them early." So, a lot of great ideas there that are specific as we get into it.

You know, let's do this. I think our last step in this food chain is really monitoring your progress toward results and tracking that over time. Ryan, I guess I don't know if I skipped over you on the last one or if you have anything you want to share on this and/or the last idea around team engagement or accountability. But, how are you thinking about this in terms of monitoring progress and measuring your results?

Ryan Radtke:

The only thing I'd add is the, I love what Michael said, incentives predict behavior, right? We believe in it deeply at Capital Group. It's the reason we compensate our portfolio managers over one-, three-, five- and eight-year periods, because we want their incentives to be on longer term success for clients. And so, nothing to add there. It was a great summary.

The idea of monitoring towards progress, it's important. You know, I hear it coming up in the idea of career pathing. And the idea of, like, hey, there's a lot of handshake agreements out there. I'm eventually going to take over the firm, but just like goals, that's really hard to measure and feel comfortable and connected with. So, are there specific thresholds for moving from client service associate to associate advisor to lead advisor to partner? If you don't have goals planned out, it's really hard to do that. If they're not clearly defined, if they're not written down. And really importantly, whether or not they tie into your goals and your planning, your firm values and strategies. That is critical for getting that buy-in for the next generation.

And I was recently at a conference, some of the largest RIAs in the country were there. Career pathing came up over and over and over again as a way to get a buy-in for the rest of the firm and to be able to zoom out and get that total firm picture: How is everybody within the firm doing?

Will McKenna:

That's such an important point, Ryan, and this whole idea that there's a big difference, and in some ways there's, reading between the lines of your comments, psychologically for our teams in terms of the difference between some of those sort of vague agreements around, like, hey, I think if you do well, you'll proceed to that next step in your career, too. Here's some very specific role definitions, what goes with them, how we measure the success against those and where. So you can have a sense of where you stand and where you're going.

Very powerful. I know that's something our firm does here at Capital, very pleased with that. Is that also a big part of the approach for you, Michael? How do you think about that career pathing and having really clear and crisp role definitions and things of that nature?

Michael Novak:

Yeah. I mean, we, so we've grown a lot over the years. We started with four, and now we're close to 30. And I think as we have added on staff, everybody wants to understand the career path at some point. What's it look like? What do I need to do to get to that next step? So how do you define that from ... And, so, what, I mean, again ... And, by the way, you keep hearing the same things about process, but we took a very process approach to this and looked at, OK, what are the skillsets of an associate? What are the skillsets of a senior associate? What are the skillsets of a manager? What are the deliverables? What is the workflow and work needed for each one of those positions? And literally put it on a chart to say, OK, you do this to this to this.

And, so, if you want to know how to get to the next position, here's the plan, here's the path. And it's not for everybody, and that's okay. You could be a career associate. That's awesome. But if not, if you're looking for more, and we love to promote from within. We've got two owners that are in their 30s that started as interns, and that's a really cool success story for us. But we'd love to continue to do that, but if you're growing, sometimes it's hard to do that. And human capital is the hardest part in our business. So, if you can create something, again, thinking of process, that shows them how they can get there and is objective enough, it's pretty clear. And then the accountability is there. And then obviously the transparency is there.

Will McKenna:

That's great, and your point that human capital is the most important part of this business is really well taken. Michael, as you step back, you talked about at the beginning of this event the transformation that you went through, and I love the story. The kind of real talk that I guess one of your clients had with you around, hey, what kind of practice are you running? You're thinking, "What do you mean?" (chuckles) You know, and he said, "A lifestyle practice or a real business?" And you're like, "Well, it's a real business." Well, nah, probably not. And that was a real, sounded like a real turning point for you. And then sort of the aha moment, in your case, of finding, you know, the Traction -

Will McKenna:

process and EOS, or whatever that approach is for those on the call today. But as you step back and think about that period of time in your transformation, what role, how has business planning impacted your ability to lead this successful business, to expand your capacity to pursue bigger and more ambitious goals for the firm?

Michael Novak:

I think every one of us on this call, and every successful entrepreneur at some point, there's a piece of being in the right place at the right time, and luck. And so I think everyone should just be thankful of kind of where we are. I think, to your question, Will, without spending the time, which, again, was difficult, it's not hard to do this. It's difficult because it takes time. So, as you look at the toolkit that's part of this presentation today, you read through that toolkit and you're probably like, "Oh, this is common sense." But you're not doing it. Why? Because it just takes time out of something else. But looking at where we've come from, from 2007 to where we are, and by the way, 2007 was probably not the time to start a financial services business, but without the process that we had, without the accountability that we had, without the buy-in that came through that process to get to the culture that we now have, we would not have the scale to build the firm that we are today, to be where we are, frankly.

And that's really the answer. And it's not a good answer, and I wish we had, like, you know, things that you would say, "Aha!" But it's just that. Right? It's just those little things that you do every day that add up over time. So having those difficult conversations at the beginning, going through the process, ripping apart your business, and starting again. Saying, "OK, well, gosh, blank slate." Every January when you do an off-site meeting, take a blank slate approach, whether it's to your portfolios, or whether it's to your business. What would we do differently? What did we learn from last year? And I guess just to be vulnerable on this so, earlier this year, I gave everybody in the firm, the management team, these Pac-Man stress balls. We were really stressed-out last year as a firm, with a lot of things that were going on internally. And I gave these out to the management team at our off-site meeting in January, and I talked about four things, and the acronym of PACC came out of that. P was process, A was accountability, C was communication, and then another C was consistency. And that's where we weren't doing as well as I thought we should.

And so even when you do this, and you think you're really good at it, you're not. And so you have to maintain it, you have to continue to do this. And so, as I kept talking about process, accountability, communication, consistency, and everyone take your stress ball and squeeze it, because that's really what you need. It’s just something that you have to continue to do. So even if you start, and everyone might do this toolkit, which I think is a great place to start, you have to consistently do it. You can't just set it down, or you're going to look like that dusty book. Maybe it'll be dusty six pages, but you'll look like that dusty book on the first slide that you saw.

Will McKenna:

That's great, I love that, first of all, the stress ball, and also your acronym there, process, accountability, communication and consistency. And Leah was asking, “What's the toolkit that Michael keeps referring to?” It's really this, it's in your additional resources there. It's this, guys on the production team, I need a higher tech way to show stuff on screen, man. I need one of those cameras that's up here and looks down. Right? All right, let's make a note to add that to the list. Give me a thumbs-up in the audience if you think I need more high-tech on this thing. We've created this blueprint, it's called the Business Plan Blueprint for Financial Advisors. And it's really, our team went through and synthesized a bunch of the great sources that are out there, the one that Michael uses, that others use, and we tried to put it in an easy, short format for you that can be helpful. Download it, use it if you want, use other approaches, connect with your Capital Group team to help you go through it and map out the next year.

One cool thing I think that, (laughs). Here's Robert. Robert says, "Give Will what he wants." Thank you, Robert. I wish that were the case more than it is. Especially here at home. But let's see. Business Plan, on the back of this, a very cool element that Melissa Phipps and the team put together, which is, "How to build your plan in 21 days," and it's sort of a three-week playbook for you that I think can act as a very helpful checklist. I don't know how scientifically true this is, but there's a belief that it takes 21 days to establish new habits, and that's at least probably a good step in that direction.

Let me do this also, before we end this event, I want, in addition to this workbook, I want to offer up a couple of calls to action. And if we could put on the screen the benchmark study ... If you go to PracticeLab, we've got, first of all, a report called, "Pathways to Growth," which is based on a proprietary study of thousands of advisors across the country. Helps you find out, what are top advisors doing in their practice? And, as we've answered today, not just their investment portfolios, but within their broader financial planning, wealth planning, taxes, 401(k), estate planning, et cetera, within their operating procedures, within their marketing, their client acquisition activities. Really comprehensive, and I don't think you're going to find this anywhere else.

The second part of this ... so, first of all, read that, and you can sort of hold that up to the mirror of your practice, and get a sense of how you're doing. But if you really want to know, is to take that assessment. And that's this, Your Growth Plan. You go through, you complete a 20-minute survey, and you get a custom report for your practice that shows you exactly how you compare to this national sample of top advisors, where some of your gaps are, and more importantly, some of the things you can be doing to help plan 2024, and how to get after those areas in your business. And I would encourage you to lean on your Capital Group team to really be your partner in this. To help you with it, to partner up with you, be your accountability coach, so to speak, through the year. To really help you get this done.

So, the other thing I would say is on PracticeLab, you'll find all kinds of other goodies. And that includes ideas around digital marketing, I know that came up a lot, about establishing standard processes in your business, about client acquisition more broadly, about some of the planning challenges you may have, whether that's multigenerational planning, there's a great article on there about how to have a family wealth briefing, to bring in those other generations. Former estate planning attorney, now on our staff, Leslie Geller, wrote a few articles on that topic as well. So, and I know we're coming toward the end here. Ryan, any final thoughts you'd like to share with our audience today?

Ryan Radtke:

You said it well. Lean on us in your relationship management team. We're happy to put these resources in front of you. We also have a team of practice management consultants that we can bring in and talk through this in more detail. You can do it on your own, you can do it with our help, you can use the books and all the resources we talked about today, but if you want some help, please, we are more than happy on our team, because we get to meet with thousands of advisors every year, to give you some trends and what we're seeing out there.

Will McKenna:

And, as I tee you up here, Michael, for some final comments, I would say to the audience, we see part of our goal here, with practice management at Capital Group, we have the great luxury of working with literally tens of thousands, if not hundreds of, a hundred thousand advisors around the country, not only RIAs, like Michael, but also financial professionals, advisors across different channels in our business. And we view it as our goal to bring you some of the best and brightest onto these programs, so that you can hear from them and not necessarily from us, but hear it from guys like Michael, who are just out there really making it happen.

But Michael started modestly. Right? I mean, Michael, you might have buried the headline on this program, which was 2007 was probably not a great time to start an advisory business. That's a funny comment. But he's from modest beginnings, really doing well. We wanted to share him with all of you on the line today. So, with all that wind up, Michael, any final thoughts for our audience?

Michael Novak:

Yeah. Um, I mean, I was kind of thinking, I wrote down … . So, internal and external, I think first, look at your people, both internally, the people in your firm and what you're doing, as well as your clients. Two, obviously, today was a lot about process. You know, whether it's a client process, but don't forget about the internal process. And not just the internal to serve the client, but the internal to survive as a business. And so that's, you know, obviously what this was all about.

Three would be partnerships. And frankly, I think, you know, I've been very fortunate. I've been on the RIA board of Capital Group now since 2019, and it's been a great relationship for me to see kind of behind the scenes what the Capital Group is doing, and to help kind of maybe think about things like this, but also from thought content. So, lean into your partnerships. You're not going to be able to do it all yourself. So, you've got to figure out how you could partner with others to help you get things done, because there's not enough time in the day. And I guess the fourth one is: prioritize. So, how do you fit all this into your day? Deal with the big rocks first. Deal with the biggest issues, because your bucket can get full with sand, but ultimately, that's the small stuff, so deal with the biggest stuff first.

Will McKenna:

Fantastic. Well, let me do this. I want to say big thank you to our audience for joining us, great to be with you. Thank you for all your great engagement and letting us know what you're up to, and the great questions. Of course, thank you, Michael and Ryan, for coming on the program and sharing your expertise with us. It's been great. So with that, thank you everybody, and enjoy the rest of your day.

Michael Novak:

Thank you.