Shaun Tucker

Hello, and welcome to the PracticeLab podcast, where we talk with top advisors about what makes them successful so that you can apply those lessons in your own business. I’m Shaun Tucker, the Director of Practice Management here at Capital Group.

Many practices struggle with key person risk. They become overly dependent on one individual’s knowledge, reputation and client relationships. And those practices have a hard time growing, because they lean on one person trying to do everything themselves.

My colleague Melissa Phipps recently spoke to Pat Hinton, co-founder and senior partner at Boston Wealth Strategies. And what stands out to me about Boston Wealth is how they’ve found some unique and powerful solutions to that problem, and how that’s helped them grow to over a billion dollars in managed assets in just 11 years. The key, as you’ll hear, is making the practice bigger than themselves.

So, let’s go ahead and dive in with Melissa and Pat.

Melissa Phipps

Pat Hinton, welcome to the PracticeLab podcast. So, let’s start with an introduction, tell us a little bit about your firm.

Pat Hinton

Sure, sure. So starting with my name is Pat Hinton with Boston Wealth Strategies. We're in independent financial planning, money management, and we also do corporate retirement programs for our clients. We have a little over a billion dollars of money that we're helping oversee for our clients.

Our firm is 15 folks. We've kind of segmented our practice into two areas. Area one, we call it private wealth. And we focus on primarily financial planning and we utilize a tool called E money, which is now owned, or a part of the Fidelity umbrella. Then on the retirement plan side, one of the things that we really focused on that side is not only just simply like 401(k)s, but cash balance plans, profit sharing programs, etc., and then also a lot of employee education.

Melissa Phipps

And can you tell us a little about your background and maybe how you ended up in financial services?

Pat Hinton

I've been doing this professionally for 26 years now. My background is such that I was kind of a weird background in the sense that I worked in the political arena, I worked down in Washington, D.C. My last job there was a press secretary for a member of Congress. And I did that for two years when they were in the minority, and then I did two years of the majority. It's always better to be in the majority. [Laughs]

Melissa Phipps

Interesting.

Pat Hinton

In Washington, I met my wife. She worked on the Senate side, I worked on the House side, and we got married and then expecting our first child, which became our first two children, because we had twins to start off.

I'm from the Midwest; my wife is from the Boston area. As all good husbands, we just listen to our wives and do what we're told. [Laughs] So that's why I'm in the Boston area. So, we moved up here. And I was going to make a career change, and a number of friends that said, Pat, that are in the financial services industry. Like, “Pat, if you put the time and effort energy you did into the political world, and translated it to this world, you know, you'll have a nice career.” So I'm like, “Well, I'll give this a shot.” So I worked for a firm in the Boston area and was there for about 20 years.

Melissa Phipps

Talk a little bit about that. What was your experience like at that firm?

Pat Hinton

It was … The firm, it’s an insurance broker-dealer platform.

Melissa Phipps

Right.

Pat Hinton

And one of the things that I really loved about going into this industry is that you have the ability to focus on what you're passionate about, because it's such a broad field. And I found myself really liking the investment side of things, really liking the financial planning side of things. So I invested my own time and money to get my certified financial planner designation.

And so, at my old firm, I had met Greg Pinto. Greg was our investment specialist. And Greg and I came together and formed a team where we were still individual producing advisors, but we started sharing resources. So we started sharing staff. Like I had an assistant, he had two, then we brought on somebody that really focused on our financial planning side, and we shared the costs in that and started to build that in the old world.

Melissa Phipps

OK, so how did you and Greg decide to strike out on your own? Or what made you want to take that leap of faith together?

Pat Hinton

It just … We were feeling like we were a square peg in a round hole.

Melissa Phipps

Right.

Pat Hinton

And especially being a CFP, where we have our fiduciary responsibility, we'd like, and we need to, this just doesn't feel right. It's really hard to do what we want to do with the focus on investments and financial planning in the old world.

Melissa Phipps

Yeah.

Pat Hinton

And so we spent some time looking at different broker-dealers, and ultimately we chose Commonwealth Financial Network. So we made the decision in 2020. You know, in the old world we had the advantages are that they provided office space, the copiers, all that infrastructure was put in place for us. When you do any sort of transition like that, it's kind of like you have all your clients on a boat, and you got to transfer everybody from boat one to boat two, so you got to get …

Melissa Phipps

Right.

Pat Hinton

… the luggage and everything. So that first year, it's just a matter of transitioning clients and moving them over.

Melissa Phipps

So you were able to transition clients from one business to the other. That was part of the move.

Pat Hinton

Yep, yep. And so we did that.

MUSIC

Pat Hinton

We were talking one day, and it's like, my gosh, we have over 50 retirement plans between the two of us. Is this where we want to really focus? You know, my passion is on the financial planning side of things, on the investment, helping clients, you know, plan for retirement, plan for kids, their kids’ education, etc.

And so Greg and I quickly realized that we need a dedicated person. So Dan Wagner was an advisor who had a lot of experience in the industry, so we talked to him about joining us and managing the retirement plans for us.

Melissa Phipps

Is that a business that you want to grow? The retirement plan business. Not just support, but grow it in some way?

Pat Hinton

Yeah. The reason we got to 54, 55 plans, it wasn't a real focus of either Greg or myself.

Melissa Phipps

Right.

Pat Hinton

It was more a lot of our clients had businesses and as a courtesy, like, “Hey, can you set this up for us? Oh, sure. We'll set this up for you.” And since then, part of Dan's mandate is to grow that business. Because one of the things that we're finding is there are a lot of advisors similar, that might have four or five plans. But it's such an area that requires specialization.

Melissa Phipps

Right.

Pat Hinton

And it's not a hobby anymore, you need somebody that really knows the rules. The DOL rules are always changing, etc. So you need a dedicated team.

So, I like the process that we've come up with in our retirement plans in that we have a dedicated team, to not only help take a lot of the fiduciary burden away from our clients, but also making sure that we're benchmarking so that the clients are getting good value for what we're providing, you know, just when you're doing some fee benchmarking, we've had a couple of really good wins, new clients that have joined us, because what these clients were paying versus where the industry is, were two or three times the industry standard.

Melissa Phipps

Right.

Pat Hinton

And they didn't know that. And so to bring it to their attention, now they're in a line, but they're also getting, kind of our service model is such that they're getting better hands on day-to-day help with regards to employee questions, but also the employee education piece that we're doing, I would put it up against anybody.

Melissa Phipps

I think you probably have some competency in that area, given your background ...

Pat Hinton

Yes.

Melissa Phipps

… being able to communicate and simplify things for people. So I can imagine that you probably do a good job of employee education.

Pat Hinton

Yeah, and that's a whole focus. We created our own program where we do employee education, helping them to educate the employees and just basic, I'm 20 years old, what should I be doing financially? Like, I'm out of college now, like, what should I be thinking about? How much should I save? Just the basic questions that people don't, you know, our education system in some areas does a really good job and others they kind of lack, but financial education is one area that we I think we could do a better job on it. But that's kind of where we try to add value…

Melissa Phipps

Definitely.

Pat Hinton

… to our clients in that regards.

Melissa Phipps

That's great. Do … and I know this is probably new for you, but do you find that this is just of interest to us, because we’ve heard from some advisors that supporting the retirement business more robustly can actually lead to more wealth management business? Has that been the case for you? Or are you going to try that out? Or?

Pat Hinton

Yeah, that's the intention is, so that it's not only on the retirement plan side, it does require a certain level of expertise. You need to focus on that for sure. But we've had a number of clients that, on the 401(k) side have said, you know, “Hey, I've got some employees that they're key employees, and I want to make sure they're doing the right things.” In some cases, the employer will pay for the financial planning fee as an added benefit. In other cases, by being part of the group if you will, we’ll reduce our fees for that engagement. But, yes, absolutely it does lead to potential for private wealth clients, for sure.

Melissa Phipps

Can you talk to me about new client acquisition?

Pat Hinton

Sure.

Melissa Phipps

What efforts you're making there?

Pat Hinton

Great question. So we're located in the Boston area. And there's a lot of great innovative companies that are doing a lot of great work in technology and biopharma biotechnology. And so one of our efforts to outreach is  we've joined two associations, one is the Mass Biotech Council. And then the other is the Mass Technology Leadership Council. And a couple of members of our teams have been very active within those organizations going to different events. We're offering content helping on, you know, you're 20 years old? What are the basics of financial planning you should be doing at this point in time? So I get a lot of education-type seminars we've been offering as well.

Melissa Phipps

That’s great.

Pat Hinton

And so we've done that. And it's an investment of time and money. But we're starting to see some payoff on that in regards to new clients coming to us.

So people that work in those industries, there's their salary plus the options, and they're paid in different types of option programs. And so we've developed an expertise in that regards as well, which can help them to kind of understand, “OK, I know this is my salary, but what is this other compensation? What does that mean? What does it mean to me and my family?” So we can kind of help to clarify that, and that's some expertise that we have on our team.

Melissa Phipps

That’s great. I love that. We're talking a lot about niches lately, so that's great to hear that that's been working out.

Pat Hinton

Yeah, it's a change, like when you started the industry it was: “fog the mirror.”

Melissa Phipps

Yes, anyone who could fog the mirror.

Pat Hinton

Yeah, they're a good candidate. One of the things that I actually learned from one of the American Funds podcasts was, another advisor was talking about when you're doing your marketing, you really need to be laser-focused on what you're doing, like niche marketing.

Melissa Phipps

Right.

Pat Hinton

So that was one of the things that we've taken away from one of your broadcasts is that you can't just be all things to all people. You really need to be focused, especially on your call it outgoing marketing dollars. What kind of clients are you looking to attract? And why?

Melissa Phipps

So this sort of enterprise operation that you have going now is fairly new.

Pat Hinton

Mmhmm.

Melissa Phipps

But can you tell me some of the impacts that it's had, specifically the way that you're working with a team where you've kind of …

Pat Hinton

Sure.

Melissa Phipps

… divided up some of the roles and responsibilities?

Pat Hinton

Yes.

Melissa Phipps

Talk a little about that.

Pat Hinton

So one of the things that we did in 2022 is that within the entity structure, Boston Wealth Strategies was an S corp owned 100% by Greg Pinto. We came together and we said, “All right, I'm going to put my book of business into the entity. He's going to put his in, Dan's going to put his in.” And we basically receive shares for the value of the enterprise.

For 20-plus years, I was, you know, kind of in eat what you kill mode, meaning that clients that you bring on board, those are your client relationships, and you'll pay a little bit for the overhead, but that's how most people get trained in this industry.

So now what we do, which is different, is that we're all W-2 employees. All the support staff, all the advisors are W-2 employees, including the three partners. And what we do is, on a monthly basis, we do a calculation on revenue that each of those advisors have generated, and then we pay out a service fee on a percentage of that revenue that gets paid out to all the advisors.

And this is a hard mindset change, because you've always been taught you look in the mirror every day, and like, OK, if I'm not happy about the amount of revenue I have, you know, the person in the mirror is the person that can change that, right? So you can call more clients, you know, do more prospecting, those are things that you can do to try to change that. Whereas, and then if a colleague would have a good success of like, oh, so-and-so brought in a new client that's a $10 million relationship to the firm, like, that's fantastic. But it really didn't have a lot of impact on me personally if my partner did that.

By adopting the firm model, it changes that in the sense that, you know, there's certain level of expectations of production by each of us. But if the 401(k) team, for example, has a big win and brings in a new client and it adds to the bottom line, that's a win for everybody.

I'll be 60 years old this year. And one of the studies that was done by FP Transition, it looked at the life expectancy of an advisor and their client base. And typically they're like within five years, up or down …

Melissa Phipps

Right.

Pat Hinton

… of where you are. And the ironic thing is that most financial advisors want to retire at age 65 or 70, right? Well, and if your client base is aligned with that same timeline, when do people need the help the most?

Melissa Phipps

Right.

Pat Hinton

65-70 if you’re going to retirement, and those advisors aren't there to help. That's a problem. So one of the things that we've done internally at our firm is we've looked at hiring and bringing onboard. So again, using FP Transition terminology is there's like the G one, G two and G three. Generation one …

Melissa Phipps

Right.

Pat Hinton

… is the founders. So that's the three partners. We're all about the same age. Generation two is that next-level advisor that will eventually be taking on more leadership role in the firm. And then that generation three is that advisor, that's the younger advisor that's working to move up that chain. So the bottom line is that we want to make sure that we've created an entity that will outlive us and that can help provide for our clients when they need us most.

I have a daughter that's getting her master's degree in London. So, I took my dad over as a Christmas gift, and we spent a week with her, but I brought my phone and I didn't check emails once and I just said, “Look, if it's really something dire, you know, call me. But otherwise, I'm unplugged. I'm focused on my dad and my daughter and, you know, doing the things we want to do.” And I was able to do that.

Melissa Phipps

That ability to have the team backing you up is really priceless.

Pat Hinton

100%, 100%.

Melissa Phipps

And do you think of it also as a sort of a succession plan, I mean a built-in succession plan?

Pat Hinton

Thank you for bringing that up. So yeah, like one of the exercises I did most of this morning with another, our advisors, was looking at the number of households that are right now technically under my purview. And my partner Greg has done the same thing. And what we're looking to do is to bring that list down. So we're focused on, from a revenue perspective, you're focused on your most profitable relationships.

I'm, you know, again, be 60, this year, 60 years of age. And your clients are always like, “Well, if you're not around, who can I talk to?” And it's like, well …

Melissa Phipps

Right.

Pat Hinton

… you know, here's my team. And that gives them assurance. And frankly, one of the other things that we spent a lot of time on in the last year or two is that a lot of our clients, you know, similar age, they have children that are in their 20s and 30s, just starting out, so they need help. And so, not to be my parents’ advisor, my parents’ old advisor, person, you know, we have a team of 20- and 30-somethings that they can talk to. And they feel more comfortable doing so. So that's the other nice thing about having the team, is that we have individuals on our team that we can, whatever their situation is, we can match them up with.

Melissa Phipps

And I assume that eMoney sort of levels the playing field, so that anyone can access the same amount of information on the client that they need to.

Pat Hinton

Yeah.

Melissa Phipps

Or there's that familiarity with the clients’ background, if they need to handle something.

Pat Hinton

Yeah, and the nice thing about having eMoney too is that a client that goes through the process has worked with either Caroline Knights or Grace Son on our team. So there's familiarity there as well. So there's not only the eMoney where they can pull it up and see their situation and see what we've done and the planning notes, but also on the client relationship management tool that we use, which is the Commonwealth Advisor 360, which allows us to kind of see notes of, OK, so this is what they're doing, this is why they're doing it. So there's that information as well. So that's been really helpful.

Melissa Phipps

Are clients a part of that, too? Did you have to do a lot of… in some of these changes that you've made… Did you have to do a lot of communication to clients and outreach to explain the new format? Was there any resistance?

Pat Hinton

As we've moved to this team approach, I think it's been eye-opening, a little bit humbling, both for Greg and myself. What I mean by that is there's a feeling I think that nobody can do this but you. But people can do this.

I thought we were going to get a lot of pushback when we were starting to introduce other advisors to work with some of these clients. But I'd say to a person most of the clients have said, “No, this is great.” They just want to make sure they're being taken care of, and they want to make sure that you're still around to have some level of oversight over what's going on. But at the end of the day, what they're looking for is when they get to a key point in their life where they have a question on something, they want to know that they can pick up the phone and call somebody and get an answer, or if their family needs something, that there’s a person for them to call and get the answer to help them.

Melissa Phipps

Yeah.

Pat Hinton

And that's really, at the end of the day, what it boils down to. So again, as an advisor, collectively, I think we're a competent group. And that's something you need to be able to kind of put your ego, set it aside. And I was pleasantly surprised at how clients took that and were very open to it. And like, yeah, I'm fine with this, just so you know what's going on. You're not abandoning me? Nope, I'm not abandoning you. But Jack is here, or Kohli is here. You know, whomever on our team is here, Caroline, to help with these questions that you may have. They're good.

The last thing I would just say, you know, you asked about succession planning is that …

Melissa Phipps

Yeah.

Pat Hinton

… again, I think, when you think about the structure of the financial services industry or the financial advisor, by putting together the team in place, you've got a natural, like, if I wanted to sell shares in my business, there's other people here that I can sell to. And the incentive for me and everybody on the team is to create value, right? As opposed to going out to an outside seller, then you've got the complications, are they this broker-dealer or that broker-dealer? It just adds a little complexity to it. And by putting the team structure together, who I'm eventually going to sell my shares to. I know who they are, right? I can walk out my door and see them.

Melissa Phipps

Well, and you're giving those people an opportunity also to thrive in the business and continue the business and continue to help your clients and …

Pat Hinton

Sure, absolutely, yeah, but that's, I think that's important. Because, for me, that's always the question is like, you work. And I've seen this where there's a lot of advisors that never retire. They maybe have a family member that joins them. And that's how they keep it going.

Melissa Phipps

Right.

Pat Hinton

If you don't have that, how's it going to keep going? How do you take all the blood, sweat and tears that you've done to build this business? How do you transfer it to somebody? And that's always been a challenge. How do you do that? And in this endeavor?

Melissa Phipps

Well, yeah, and I mean, are you feeling from, because I think a lot of advisors, this will resonate, that they need to go through this process, if they're going to change the way they operate and do this successfully. But they're afraid of the process because of the time and effort and money involved.

Pat Hinton

Yeah.

Melissa Phipps

What advice would you give? Do you think there's a time period where you're, you know, I'll know in three years, or I know right now, I think this strategy is a successful one. What are your thoughts?

Pat Hinton

That's a great question. I'd say that, number one, don't try to do it yourself. I keep going back to FP Transitions. I don't work with them. I don't have stock in the company. The FP Transition, there's another one that was started by former FP Transition folks that do this. But I would say, number one, enlist them to help you.

Number two is I think you've got to have your own internal advocates. So what I mean by that is, so one of the things that we did is FP Transition presented one business structure to us. But I brought my personal accountant to that meeting, Greg brought his personal accountant to that meeting, and Dan brought his personal accountant for the meeting, so we had three different accountants at that table.

Pat Hinton

One of the things that we've done is we engaged a coach through EOS, which is the entrepreneur operating system. So that's been helpful, because it's been, again, it just kind of creates a structure for you to have kind of productive conversations and get to a decision, as opposed to, “No, this is my idea.” No, no, let's work through it. And that's been really helpful to us as well.

Melissa Phipps

Do you do regular business planning and ongoing throughout the year? Like regular check-ins?

Pat Hinton

Yeah, we do. We do a two-day off-site. We do that in December of this year. And then we do quarterly meetings with our coach.

Melissa Phipps

OK.

Pat Hinton

And in between those meetings, we basically have the leadership team come together and say, “OK, what are the three or four or five critical things that we need to get done in the next 90 days for the success of our firm?” And who's going to own them? Who's going to, we call it rocks — who's going to own that rock to see it to its fruition? And then we come together. And that's where you’re held accountable. Like, did you get it done? Or did you not get it done?

Melissa Phipps

That's great. And you really have that structure to support that with the way your team is part of the wins. Yeah, that's great.

Pat Hinton

One of the things that's been a real help is, on the EOS side, is that we brought in other members of the team, because at the first it was just Dan, Greg and myself doing the, you know, the three of us, and just the perspective and insights that they bring has been really, really helpful. Because it's, sometimes there's this, like, “Oh, this is mine.” But there are things and perspectives that they're bringing to the table that you never thought of, and they're like great points. And it actually helps to, again, when they have a voice, I think they feel more tied to the organization and more connected to it and more focused on its success as well.

Melissa Phipps

And do you find that it can help also with – I know, you've already said this a little bit that you have clients who appreciate these points of view, the younger staff members, or want to connect with those folks. So does it help with having different points of view?

Pat Hinton

Yes, yep, definitely. And it's interesting because it's been very helpful and it's kind of enlightening in the sense that there are some things that again, just especially the, now I'm sounding like an old man, but the 20- and 30-year-olds, they approach things a little differently than people my age. Mine was like hard work and we're going to work 80 hours a week and blah, blah, you know, that's what we're going to do.

That's not the mentality. They can still be successful, but you have to understand that, and that helps to make sure that we're aligned with them, because without them, we would have a real problem, because then we’d lose our generation two and three, right? We'd lose them, and then what are we doing?

Shaun Tucker

Well, that’s it for this episode. We really hope you enjoyed this conversation between Pat and Melissa. If you liked what you heard today, hit the subscribe button and consider leaving a rating and review, because that helps other advisors discover this show.

During this episode, Pat and Melissa mentioned a few terms that we need to define. DOL stands for Department of Labor. An S corp, or S corporation, is defined by the Internal Revenue Service as one that passes corporate income, losses, deductions and credits through to their stakeholders for federal tax purposes. FP Transitions is a consulting firm that services wealth managers and financial advisors. And eMoney is a financial planning software provider owned by Fidelity.

PracticeLab is brought to you by Capital Group. You can find all these episodes and more at practicelab.com.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Capital Client Group, Inc.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and should not be considered advice, an endorsement or a recommendation.

Any reference to a company, product or service does not constitute endorsement or recommendation for purchase and should not be considered investment advice.

This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.

This podcast is intended for U.S.-based financial advisor audiences.