Podcast: Boost Post-Acquisition Business Value with Financial Planning Services

Mike:

Hey there, it's Mike Langford. Welcome to The Advisor Financing Forum, a podcast presented by SkyView Partners. This week on the show, Aaron Hasler and I are joined by Tony Stich, the chief operating officer of NaviPlan by InvestCloud. Like the conversation Aaron and I had with Roger Pine of Holistiplan, this episode is part of a series on improving the value of financial advisory businesses post acquisition. With Tony, we dive into the opportunity available for RIAs and independent financial advisory businesses when they provide comprehensive financial planning services to their clients. As Tony says, financial planning is a bastion of revenue security that many RIAs and advisors aren't yet utilizing to the fullest.

Mike:

And as I mentioned in the previous episode of this series, you don't buy a business for what it has been or what it is today, you buy it for what it can be in the future and adding or enhancing the financial planning services offered by the new firm is a fantastic way to grow the value of the business. Before we get started, as always, if you have a question about your specific M&A plans, feel free to swing by skyview.com or call 866-567-6282 and the SkyView team will be happy to walk you through the options that are best for you and your business. Okay, let's get to our conversation with Tony Stich. Well, Tony Stich, Aaron Hasler, so great to have you guys finally after our calendar gymnastics. Wonderful to have you on The Advisor Financing Forum. Welcome to the show, gents.

Aaron:

Glad to be here, Mike. Thanks.

Tony:

Super excited to be here, Mike. Thanks for having me.

Mike:

Tony, I'm so thrilled to have you on the show because we were talking in prep, about how important financial planning is for today's financial advisory firms. And NaviPlan is, lack of a better phrase, the 800-pound gorilla in the space when it comes to financial planning. And I assume most of the folks in our audience are familiar with NaviPlan. But I wonder if you wouldn't mind sharing a little bit about the company to set the stage for the audience about what NaviPlan does, and how the technology is helping RIAs and independent financial advisors.

Tony:

Sure, I think it's good to lay a foundation just a framework as to why I'm here. So NaviPlan is the preeminent cash flow, financial planning technology available in North America. We serve about 140,000 advisors across all these different segmentations, from wirehouses, independent broker dealers through RIAs. And really, that technology powers how someone gives financial advice, and how important financial planning is to someone's practice. And so I think it's really interesting, the convergence of technology as relates to M&A activity in our space, because those two things are very much aligned and how you value a practice, but also how you drive future value through financial planning.

Mike:

It's really is truly amazing, 140,000 financial advisors on the platform. And I guess that comes with, I think you told me at one point before you consider yourself a 40-year startup?

Tony:

It's actually a 50-year startup. We celebrated our Jubilee of our original technology, but with NaviPlan it's over two decades old as well. But we function and we think about ourselves as a startup. And I think that rich history has allowed us to understand the trends, especially in the M&A space, but also how it pertains to financial advice, how that pertains to the monetization of financial advice, and really where financial planning plays a key role in going forward with RIAs and how that's how they're going to really expand their book of business, grow that book of business, and how they can leverage technology to do that efficiently.

Mike:

Yeah, that's amazing. I wanted to hit on a couple of things here, because with that scale, with that history, you obviously have some visibility into things, some trends that maybe other firms don't. It's just too hard for them to have. I mean, you guys you made 140,000 advisors, 50 years of history. And plus you yourself are very, very active in the community. One of the trends that I'm interested in is in SkyView, and Aaron, you jump in here, obviously on this is, the M&A trends, right? With being able to see 140,000 financial advisory firms, you're likely seeing movement in the community. What are you seeing in terms of RIAs and individual advisors when it comes to buying, selling, or merging their businesses? Are you seeing some of that activity and how does that interact with the technology usage?

Tony:

Yeah, I mean, wow, yeah, we could talk about this for hours. I think this discussion-

Mike:

We have an hour we can go as [crosstalk 00:05:07].

Tony:

Challenge accepted. I think, really, when you think about it, we're seeing a real lift, right, in that M&A activity. And I think all the data, all the research, Aaron in SkyView, what they're seeing is the same as what we're seeing is there's an aging population advisors, that have built up an impressive book of business that are looking at that next chapter, and how that will unfold for them. And so we've seen that rise in that activity, but now I think it's going to really accelerate and go much faster. And we're going to see that in the next couple of years. In our space, especially we're seeing that because there has to be... There's this interesting transition of, I'm going to sell my book of business, how can I transfer this over? When you're the acquiring firm looking at their technology stack, they're auditing that and it's actually interesting, too.

Tony:

And I think it's very much important to point out, when these firms are auditing or reviewing a book of business to acquire, I think, looking at the technology stack, looking at those contracts, all those costs, and seeing where you can add value post acquisition, that's happening a lot, as well. So NaviPlan is seeing that, we're tracking that, we're watching those advisors move those books of business. And again, I think that's only an accelerant. I think Aaron will agree that's going to continue to accelerate and so technology is going to play an important role in value add post transaction, especially the financial planning space.

Aaron:

Yeah, I mean, I 100% agree. In fact, what we're seeing is that, as we've... There was the original pressure, what, five, six years ago that pricing was going to decrease, right? And that the 1% fee that advisors normally captured was going to be compressed. And what we're seeing is, instead, advisors are using technology and efficiency to their advantage and keeping their fees at the same and offering more services, which lends itself perfectly to the acquisition game, because what's a better option, or idea than integrating in these new clients and creating more services, and being better at using those new services like the software? That's something that older advisors just aren't doing very well these days.

Tony:

It's funny I didn't want to bring it up. I'm glad you did. And I knew you would, right? The concept of fee compression. Now, we're not seeing that everywhere, right? But there is the debate around where fees are going. And I was actually on, I forget where it was. But I had mentioned financial planning being one of the last bastions of monetization, right? So it's one of those places that it really cannot be commoditized the way portfolio management can be. Right? So we're seeing that growth in fee based planning, but also just charging for advice, because that is more subjective, it's e throw, it's not.

Tony:

You can't commoditize as such, so we're seeing that as a focus on these RIA firms, because they see that as a way as a revenue driver, but still adding significant value and distinct differentiated value to these clients. Right? So anyone can manage as... Not anyone, but you see that fee compression there, but financial advice is different. You have to be there, you have to be that human providing that advice which is unique to your RIA practice, right? The niche based advice concept and how you can charge a premium for that.

Mike:

It's interesting, I liked the way that you articulated that, right? Because most investment products or investment accounts are somewhat of... They're a packaged investment product or a package investment experience, right? This is your IRA, this is a mutual fund, here's the packaged product, and we're going to mix and mingle them in your portfolio, and we're going to charge you a fee for managing that. And people can question how much that fee should be. But when you're doing a financial plan, it's almost like you're a custom builder, right? This is a bespoke experience. I'm going to get to know you, your spouse, your children, your hopes, your dreams, your goals, and all the complexities that make you unique. And I'm going to dive in and give you a plan that's just for you. This doesn't look like Tony's plan. It doesn't look like Aaron's plan. This one is for you. Right? And so to your point is, it's really difficult to crunch that price down. Right? It seems like it's a very safe pricing structure.

Tony:

Yeah, quite frankly. And I'm sure Aaron's team sees this, if I were seeking out acquisition targets, if I were looking at firms that are looking to sell their books of business, I would look at that revenue line, that part of the balance sheet that says this is how much we're charging for financial planning because if that's given away or next to nil, that for me is a value driver that's saying, okay, we can take that book of business on and slowly shift. You don't want to overnight, just say hey, we're going to charge you 4,000 bucks for this financial plan or whatever that is, but over time demonstrate that value of planning and be able to charge for that, because that quickly grows not only revenue, but the value of your practice.

Aaron:

Yeah, Tony, are you seeing that a lot, which is that, those clients that you guys have, are adding a fee for plants service or adding what would you call it, maybe an annual consulting fee for it, because this conversation came up for me in managing a buyer and a seller. I've got a seller who charges 1%, was not a big financial planner. And so one of the great retention mechanisms that we can have with an acquirer is that they're going in and doing financial plans and consultations with each of those clients and actually inputting it into a software. But this client charged a retainer fee. And they've charged a retainer fee it was, I don't know, between 500 to $1,000. So it wasn't significant. But at the end of the day, when you're managing the firm, it really starts to add up. And it creates an additional margin there if you're talking about 200 and something households to be able to charge 500 or 1,000.

Aaron:

And so the conversation we concluded with was, if you're adding value, maybe for the first year you do that plan for free, maybe you do a second year for free, and you incorporate it in, but then you do start to add that retainer fee or blanking on the word they call it, but they call it something like an engagement fee annually, right? And it seems like a smart strategy. But it immediately signals to the sellers clients, in this case, hey, we are getting something more for a dollar, we're getting this engagement fee, we're getting a financial plan. And it just sets a new expectation of okay, this firm has a professionalism, and I am expected to participate in this relationship that they wouldn't otherwise have if they were getting that for free value.

Tony:

Yeah, so it's a complex but very... And we're seeing that, but I'd like to go even a step further. So I love the kinds of engagement fee, right? Especially if you give them something tangible in return. So for instance, access to a client portal, a living and breathing plan that they can manipulate or play with, right? So what are my options exploring things interact with an advisor? But what we found in all of our studies, well, two things. We've seen a variety of studies, one, advisors are just hesitant to charge for plans they never have before, right? And it's just something that they need to get over that hump, right? They just need to accept the fact that they're adding significant value. A financial plan is of significant importance, right? This is not something you just quickly drag and drop, and you build something out and send it over, it takes hours of understanding the client, developing an action plan for that unique household and then delivering that on a quarterly basis or on a living basis.

Tony:

So once they get over that, they'll achieve like you said that higher gross margin, right? Because they're providing that plan, they're creating a new revenue channel. But also, a vast amount of studies say that most investing population is willing to pay for a plan, okay? And those that don't want to pay for a plan, don't know what a plan really is, because once they start to really see what that plan is, they're more confident in purchasing that and I'll end with this. And Aaron, I know, you know this, everyone knows this, if you get something for free, the value of that is immediately lessened, right? If someone gives you something for free, you say okay whatever you're not engaged. But if you say I'm going to charge you, for instance in our independent RIA space, our average, RIA charge is $4,000 for a financial plan, that's about an average, right?

Tony:

We see some as high as 40,000 for those ultra high net worth, or high net worth, we'd see them down to 2000, even 500, depending on the scope of the plan, but on average about 4,000 for independent population of advisors. But if you start to charge them for that, say 2,000, 3,000 4,000, or that engagement fee of 500 a year, whatever that is, people are buying into that, right? Which means they're become more committed, which means they're going to be watching it and monitoring it and being engaged with the advisor more frequently. And as a result, you create a higher share of wallet, you grow that space. And to your second point, Aaron, it's important to point out that you can... Yeah, fee-based advice, yeah. People charge for the plan which is say $4,000. But there are levels to say, we won't charge you the plan if this happens, or this happens, right?

Tony:

Maybe it's $4,000 but if shared wallet increases, or you move over that old 403 b which is now an IRA, whatever that is. As those assets grow, maybe you credit back money over the course of the quarterly billing wherever that is to where that planning cost is $0. But you've increased wallet share, you've increased your other management account fees, and you're making more money in the long term. And then you're growing that value of that practice.

Aaron:

[crosstalk 00:14:55] Yeah, Tony, I think is that, as you're going through that financial plan for the clients, you're really uncovering all of the things that the previous administration, if you will has missed. And what we're seeing is it's a tremendous opportunity to go out there and really get to know the clients in a way that they maybe haven't experienced in the past. And provide them something with, ultimately, I think, what they would perceive as value in that new relationship as they're getting to know them. And they see that advisor in action, right? They see that greater interaction, greater engagement, and more questions, and providing a deliverable following through on something as opposed to just, hey, we've met you, now, okay, we're going to wait six months before the next meeting.

Tony:

Yeah, I mean, there's something special that happens when you provide a financial plan, either in PDF form, or in a client portal, where you know the name of the spouse or the children, or the grandparents, or your goals and your aspirations and your dreams. When you start to personify that advice, it changes the relationship from asset management to holistic customer experience. And people buy into that, people welcome that. I mean, I have way too many kids to admit, I have five children. And when I get my financial plan, and it lists all their names out and you see those goals of college savings, or weddings, or whatever that is, it changes that from being a simple document to this is about Tony and his spouse, this is about their children, and that next generation.

Tony:

And quite frankly, when you speak about next generations, this allows you an avenue into that generational wealth transfer as an RIA to now know the children, their goals, when they graduate, when you should start providing them advice, if it's self directed, or from a robo advisor channel like invest called offers commercial, or other ways it starts to get you deeper into that family, which creates a better experience and stickier client.

Aaron:

I use it as an opportunity to just review that name list and just scrub one or two off, as I'm going through that financial plan, too.

Mike:

Who's not getting their [crosstalk 00:17:09].

Aaron:

If I have all those, I will eliminate. We'll reduce the [inaudible 00:17:14].

Tony:

Yeah, I like Sally, and Sammy. I like Tommy.

Aaron:

It's all right. It's all right.

Mike:

I got to tell you, because if you start thinking about the future generations, I recently did the ancestry.com thing where going through a history, looking at the family, you realize like how big the family tree can be, you might want to put a limit on how far down you go into generations of people get and stuff, I'm just saying.

Aaron:

Two way for our house that's probably have.

Tony:

Yeah. Two way.

Mike:

I love the fact that you brought up, both of you hit on the client and asset retention component as a key component of why you want to make sure you're doing comprehensive financial planning for the new business, right? Not only for your existing business, but if you are acquiring another business or merging two, making sure that comprehensive financial planning is in there, because it'll help you retain those clients you just acquired through acquiring the business and retain the assets most likely. But I also, one of the... I'm so happy that Tony, you went deep on this, the notion of this is very much like buying a piece of rental real estate, right? And you wouldn't just buy it for the rent set it is produced, historically, you're buying it because of what the rents that it can produce in the future.

Mike:

And so you look at it, like how can I improve this piece of property? Right? Can I add some paint, add some new appliances or whatever, and then I can charge a higher rent and make more money from this thing I just acquired. You don't just buy it for what it is. And I think a lot of times when an advisor or a firm is looking to acquire another business, they are looking at like what it is, what it has been and the reality is, there's a lot of growth in there. And some of that growth can come through adding financial planning services.

Tony:

Yeah, I mean, it's even more than that. I know. I mean, SkyView does some great things, right? And there's pre-acquisition kind of an audit and review, but there's post acquisition as well. So not only to use your analogy growing rents to where they ought to be, it's also looking at the cost structure, right? So as you acquire RIAs and as you're trying to grow through M&A, it's a great time to review contracts and understanding the investment of your total technology spend of the firm you're acquiring. So for instance, I mean, not to pick on anyone but your average RIA has like nine to... It's practically 10 technology contracts, if not more. And they're kind of antiquated. They've sat there, they're paying them, they might be using that technology, might not be. It's disparate, right? Integrations are broken, you have a portfolio management tool, a financial planning tool, a CRM tool.

Tony:

And again, not a commercial, but this is a chance for you to review that whole tech stack and rationalize it and look at, for instance, a unified platform like InvestCloud where you can get all in one. Reduce the contract value significantly, reduce it down to one vendor which allows you to be more empowered with that vendor. So I think there's something that's even more nuanced that might not be brought up. When you think about retaining your clients, you might also be trying to retain the advisors of that acquired RIA, right? It might not be if it just found your lead, maybe that individuals leaving or moving on, but if there's junior advisors, pair planners, you always want to make sure that the technology that you're going to offer them in the future is amenable to how they provide advice because there is gold based planning, cash flow planning, self directed planning.

Tony:

If you can rationalize those contracts, you can find out all in one solution to provide the technology for each one of those individuals, while still saving significant money, you're immediately adding value, apex goes down, margins go up, and again, immediately getting return on the investment. So that's another thing I think an angle you can play is really that reviewing the contracts, reviewing of all those different sources of where they use technology and whether or not they're using it to the best of their abilities, and how you can operate on it better. SkyView, I'm sure they do a great job of saying this is how I look at it. This is the contract length, this is how I look at negotiating those or rationalizing down to a single vendor like InvestCloud.

Aaron:

Yeah. And to add to that, Tony, I really look at it as if you're looking at just existing clients and retention for that acquisition, you're really looking at the wrong picture. At the end of the day, what you're doing is to use that rental property analogy is you're investing in that property, you're expanding into this practice for future referrals in growth of it, not the way the clients look today. And we do see a lot of buyers get hung up in, what's been the historical growth rate? What are the average ages of the clients? Yes, those are important. There's no doubt about it. But I always look at it of, what is the buyer bringing to the table in terms of additional services, intellectual capital, staff? And how can they go and impress upon those sellers clients a favorable impression, bring new services to the table.

Aaron:

Financial planning are inevitably going to come up with new assets, new opportunities, or, hey, my previous advisor didn't have this, my buddy down the street was looking for or asked a question about this, you should talk to him, right? And so it's just an absolute no brainer, I think, when buyers are assessing this is to even assess what software are we currently using? Is there anything of value that the buyer has? If not, should we be assessing the entire landscape and adding services that can really help us grow this practice? So I think it's a good opportunity for advisors just to self assess what they have on the table. And then how can we make this integrated into our practice on a go forward basis. But let's use this as an opportunity to go out and explore new tools and ensure we're offering the best service for those clients.

Tony:

Yeah, you're absolutely correct. And we see this all the time with NaviPlan where an acquired RIA, the acquirer, right, will come to us and say we want to expand by 10 seats, right? This is the existing costs of this existing technology that they've purchased, how can you help us out here? And we'll help them out, we'll say, okay, we can help you save money, right? Reduce or zero out that contract, but also save money, because we're going to charge you less than historical contract not only because you have more users, but also just as a way to help you add more value immediately. So we see that all the time.

Mike:

For many of the advisors who are listening here, and you see M&A activity in the business news that you follow, that is actually what's happening in any traditional M&A process in the business world, right? If company A is going to buy company B, as they're looking at it, they're looking for synergies and opportunities for improvement. So when it can be, look at the tech stack, and where do we have redundancy here? Where do we have a lower performing tech? Is the company that we're acquiring using a better technology solution than we are? Do they have a better contracted price than we have? Should we be doing that? Right? To your point, Tony, the talent, are they comfortable using this tech? Or are we going to have to like retrain the whole workforce, all this type of stuff. Or are they using something just like, man, it's been around for 40 years and hasn't been updated. Maybe they should update to the newer version of NaviPlan and not be rocking NaviPlan 1.0 from 1980.

Tony:

Well, that's the reality, though, right? So they have to do that audit, right? And you have to understand the users of the technology but also how the technology being used. I wouldn't always suggest you just go to the lowest cost denominator, you have to look to what technology is going to help you accelerate value, accelerate growth in the future. And again, that's why SkyView or other consultants can come in and say okay, now that you've acquired this practice, let's audit all these contracts, review them and say can we find best-in-breed or should we go out to the market, like Aaron suggests, look at maybe a full stack solution such as InvestCloud where we can offer you all those services.

Tony:

And we can be amenable to all the different advice ways, reduce contract value, again, rationalize down to one vendor and immediately add value. Yeah. Are there some pains there? Some transition pains or training pains? Yes, but those are temporary. Right? Those are temporary. Growth value that's for the long term. So, sometimes it's tough at first, but look towards the future and see how that's going to unfold over time.

Aaron:

Well, and it's a talent management opportunity, right? I mean, one of the things we're always saying to buyers prospective buyers is, let's have a discussion around the staff, the individual staff in the practice because most sellers want that staff just to ground, right? They want to provide some continuity plan for their staff. But staff often when you sit down and ask them, they might feel sometimes that their skill set is underutilized. So it's a nice opportunity for a buyer to come in and say, okay, let's assess that financial planning tool or that software we're using, what input can we can take from the sellers practice and incorporate it in? Or what can we do to just engage the staff and get more out of them?

Aaron:

And by training them in on a new software, we're able to develop deeper relationships with them, build that trust, which is going to make them critical employees going forward. Because you often see a culture war, right? Hey, we're sellers practice, we're buyers staff, we're getting to know each other, and you really have to integrate those two parties in and training over software is a great way to focus your efforts on. Let's create this third party objective that we can all identify with, how do we get better at utilizing this tool, and then you're going to find out if that staff is trainable and coachable. And somebody worth investing in for the long haul.

Tony:

Now, that's a fantastic exercise. We actually call it brand championship where we identify someone in the practice that becomes the brand champion of the technology. They become the subject matter expert, they go to the conferences, they learn, they're on the training programs. But like you said, if you want to merge two cultures, what a great way to say, two people from this firm, two people from this firm, you're going to get together, you're going to audit the technology, we're going to look at the landscape, you're going to come to a proposal or solution, because then they all feel bought in. And then they all feel like they've owned that process.

Tony:

So throughout implementation, and then the constant uses of that technology, they are there as champions to help to promote it to advocate it and they feel like they're part of the solution. Again, their long term solution, what a great way to do that. And, like you suggest, it allows you the chance to see whether those people that you've acquired, are willing to kind of embrace change, run toward the fire, and they're trainable and they're ready for a new culture with a new technology. What an awesome way to do that.

Mike:

One other thing I wanted to... I think in [inaudible 00:27:59] we're just talking about here a little bit in a maybe a different angle, is we're talking about the age of the demographics happening in this M&A equation here. It stands to reason that many of the advisors who are selling are likely older towards it. They're 65, or so forth towards the tail end of their careers and looking for somebody to take over the business. And it equally stands to reason that many of the acquirers are probably younger, right, on the ascent and the growth portion of their career. And many of those older advisors, you've got their start when they're called stockbrokers back in the 1980s, and 1990s.

Mike:

And over time, evolved into calling themselves financial advisors and having more of a fee only practice, but I think that most of them still rely on... We talked about earlier exclusively on investment management, for their revenue models. How much of a challenge is it during the process get the sellers to appreciate financial planning as something that should be done and technology as something that really needs to be embraced and invested in if you're a buyer. Are you seeing that, Aaron? What are you seeing?

Aaron:

It's interesting. Yes, I mean, one of the challenges, one of the opportunities in working with sellers, is you're taking them through this career wind down, right? And they're going and they're assessing the buyers businesses, what would my clients like to see? How is this perspective going to be perceived? How do I compare it to what I've done with my practice, and you get envy, you get... Sellers just say, gosh, I wish I had done that, oh, I wish I had a little bit more runway in my career. And I could have incorporated that software, or I could have incorporated that fee billing strategy. And so we really try and create a positive light on that, which is to have conversations for the seller with what are the things that you would want to accomplish if you had the energy of a 45 year old, as a 65 year old? What would you want to incorporate into your practice?

Aaron:

What things would you want to see out of that buyer, and keep these positive experiences of what can we expand upon. But I would say the bulk of these advisors, 65 or older, unless they really were groundbreaking do not incorporate financial planning in the same way. And it's just a different conversation. And so there's a tremendous opportunity to expand the services, and really engage the seller in that conversation about what would you want to see out of this financial planning software feature, right? That's a great way to take them less on the focus of what's happening to them, which is that my livelihood and my career be taken away. But what's the positive spin that you can have for that client? And how can you engage them in a new opportunity or a new service to offer to their clients?

Tony:

That's a great angle. I think too, what's interesting is, Mike, you're right, right? Most books of business that are being sold today are individuals that are near retirement, right? So they're older sometimes. But I would argue, I'm sure Aaron sees this, that there is a bit of technological pressure on these advisors that are advancing an age or their practice where if they have not embraced technology, especially financial planning technology, they're seeing the writing on the wall, where their books will degrade over time, unless they invest in technology or exit the practice. And so this is that, there probably is a great deal of catalysts of saying we need to embrace the next generation of technology. And so I think, I don't know if you've seen this Aaron, but I would think that it's attractive, it would make an acquire...

Tony:

So someone that's seeking out to buy to grow through inorganic M&A activity, it might behoove them to position themselves with an attractive technology stack up front, not saying that this is by Dick Todd, but by saying, hey, we are technology forward so when these sellers are reviewing the buying parties, they might say, oh, I really would love to enhance my current practice, and provide my investors or my clients with a next generation of technology, this could be a very attractive and probably sometimes influential part of the decision of who they sell their practice to. Because financial planning technology can play such a key role in them.

Aaron:

One of the things that I think is interesting is these older advisors, the sellers can be a little bit intimidated by all this new technology coming in, in that, hey, I didn't offer this. And now all of a sudden, these guys are going to come in with just this amazing service. What am I going to look like? Am I going to look like chump change? And so, one of the things that we've talked with buyers about is, what's your vision for that inheriting generation? Because that's also an aspect that I think that the majority of people in M&A have to evaluate is, okay, here are the clients that I have today. But what's behind the scenes? What's the 30-year run rate on these clients and can I incorporate these clients offspring into it? And that's where we go and say, hey, seller, demonstrate what you guys do for those next generation clients.

Aaron:

How do you incorporate them into the financial planning fold, and get conversations with them early on, so that as you're incorporating new services for the senior clients, and for that senior advisor or that outgoing advisor, you can have a softer conversation, and you can lead with, hey, we maybe aren't going to touch your client so much but what we are going to do is provide these services for that inheriting generation, which adds significant value to your enterprise. And sometimes that's a softer approach to get them to understand what they can do with their practice and lead them into, well, maybe we should do that for all of my clients, and what could we do, and then you have things going on a positive light, there's renewed energy for that seller. And it really becomes an interesting and engaging experience for them as they start to transition their clients.

Tony:

Yeah, I love that. I mean, NaviPlan we have estate planning features, this is a great avenue to doing that and saying we understand we're not going to disrupt your current investor or client base, but through estate planning services or technology, we're going to be able to help that next generation which will be appealing to those investors, even if they are near retirement themselves. I think that's an attractive way of not upsetting the applecart, right, with the current investors and concerning perhaps the seller, but really showing that you have a plan for the future. And I love that 30 year runway, I love that concept because we should be thinking that way of those next generations, because the wealth transfer is happening. It's going to accelerate sooner than later, and estate planning, leaving a legacy. Those are the things that these investors, especially that baby boomer generation and those on the verge of retirement, they want to talk about, leaving a legacy. Making sure that their wealth is transferred or passed down appropriately. So that's a great avenue doing that with technology.

Mike:

Yeah. I love the fact that you talk about leaving a legacy from the perspective of the client. But there's also leaving a legacy in a perspective of the selling advisor, right? As you hit upon, Aaron, they're really concerned, right? So over the course of a 20, 30, potentially 40-year career, your clients become people in your lives. They're not just somebody who walks through the door once a quarter or once a year to talk about their financial plan, like you actually care. You've seen their children grow up, you've seen their kids go to colleges, you've seen them get married, you've seen divorces, deaths, all the stuff that are a part of the human condition, and these people are part of you. Right? It's a relationship based business and knowing that you're handing the keys to that legacy off to somebody who's going to be able to steward it well, is really important and technology in today's world plays a big role in that. It allows the advisor to deliver a higher quality more comprehensive solution than they would have before.

Aaron:

Yeah, I'd agree. I mean, you can look at Tony's Packers as an example of... Here in Minnesota, we have a little bit of a quarterback envy. [crosstalk 00:36:08] And probably a little bit of that too. And so I used to always tease my father who grew up in Wisconsin because he would call Brett Favre, Bart Starr. But who is, for those that don't know, he was the predecessor of the predecessor to the predecessor of Brett Favre. But it's the idea being that at the end of the day, you are creating a firm that's going to adapt to each generation and have this legacy plan. And so I think technology is one of those ways that you just are able to offer those new services integrated in a practical way, that takes some of the stress out of the sellers, emotional relationship that they have with that. And it's, hey, I can apply this technology to this next generation.

Aaron:

And I can have that develop a new relationship here, while I slowly transition myself out of my existing clients. And for us, at SkyView, it's really about softening that impact instead of ripping the band aid of retirement off for that seller, because most of these sellers, they put their blood sweat and tears into these practices. They don't know what they're going to do in retirement. That's a scary proposition for not just the clients, but for the advisors themselves, right? And so, focusing on technology is a great way to soften and transition that relationship.

Tony:

I like that gentle approach. But also, I mean, you can definitely angle that as, hey, we're going to continue your legacy. We're going to continue the brand you've built and developed. Now powered by state of the art technology, we're going to not only service your current client base, your current book of business with that same care that you did, but now we're going to offer them the best generation of technology and planning services, to continue again, your legacy. So what a great angle, but doing it in a very gentle, soft way so as not to disrupt or disturb, but to make that nice transition over the new ownership. That's a great angle. And who could say no to that? What seller would say no to, no, my investors don't need this, because they see that writing on the wall, it's just how you deliver that but still promising to create that same customer experience.

Tony:

It's funny, RIAs need to look at customer experience, not just your own technology, but how they interact with their clients at every step of the journey. And so that's a great way of leaving that legacy, that customer experience legacy, but enhancing it through technology, through financial planning and other ways to not only grow that book of business but nurture it for the next 30 years.

Mike:

I love the fact that you talk about softening the landing. And this being a big part of the pitch, because as we've talked about a lot on this show, sellers have a lot of buyers to choose from, right? You're not the only person considering buying this business, right? There's a lot of demand from not only from other RIAs and independent advisors, but there's also a lot of demand from PE, right? We see that coming into the marketplace looking to pick up practices. So in order to stand out, people need to know that you're going to be taking care of this business or clients going to be taken care of, and that their legacy is going to be well taken care of. So I like that approach. We're kind of kick it from home here or we're on the 10 yard line, I guess we're going to keep with that football metaphor.

Mike:

I suspect many of the listeners or viewers of this show are like, you know what, I do need to get serious about adding financial planning to my practice, as a buyer, or hey, we just acquired another business, this is something we probably should add. You're right, Mike, we can add extra value to the business. What's the process for getting started if you haven't been doing this already, if you haven't been offering comprehensive financial planning, what are some of the steps that an advisory firm or an individual advisor should take to get the ball rolling there?

Tony:

Well, there's multiple answers to that question, right? Financial planning, implementing that into your book of business is obviously the first step in a procedural laid out process. You have to understand a few different things to make sure it's successful in your business. Financial planning technology being I think, of the utmost importance. So you need to look at the technology landscape, and you need to see the shifting tides of what an investor expects. I would always suggest that when you're looking at financial planning software, you consider all the alternatives, but then understand where the industry is moving. And what I mean by that is this, investors are so much different than they were 10, 20, 30 years ago. Looking back to the '80s, you look back at the basic family, two children, a husband and a wife, a home, planning was wash, rinse, repeat, right?

Tony:

It was very unique. And so goals based planning came from that, because goals of planning became the concept of well, just do what applies to my goals, it's all the same. There's really not a lot of detail you need to understand, but today is so much different. You have these unique households of your parents living with you, your kids still with you in college, you're paying off your own college debt while you're paying for your child's college. I mean, it's so much more complex. It's so much more divinatory than ever before. And investors expect more unique advice. And that really should be underpinned by cash flow, financial planning, such as NaviPlan. But you need to understand that technology landscape. You need to understand what type of advice you want to give and then you begin the process of sourcing, implementing, both the technology but also the process or the best practices to provide advice.

Tony:

Understanding when you should introduce advice in relationship, either a prospect or existing client, and how the advisors, the paraplanners, other admin are helping through that process. Once you lay that all out and understand that, it will become a well oiled machine and providing that advice to technology, and then growing that book of business. So I would encourage you not only to do that technology audit landscape, but also to lay out and understand the best practices of how you provide advice. And there's a lot of great consultants out there that can do that for you. I'm sure SkyView provides that as well. But that's really that first step, once you have that all laid out in a nice framework, go to town, you'll see the rewards and benefits, immediately, you'll start seeing growth, you'll start seeing share wallet increase, you start seeing better margins, but then you'll see happier clients, stickier clients and the technology, I mean, the ROI is endless, because the technology costs remain the same. But the book of business continues to grow.

Mike:

Aaron, and I would imagine one of the things you also when you talk about implementing if they haven't looked at financial planning as well in terms of like you not only just looking at process and the technology, you probably ask the buyer to examine their team, right? If you're not a CFP and you're like, hey, listen, I've been doing investment management, right? As a financial advisor for years and years and years. I'm not going to run on get my CFP, because I'm 50 years old. Those people are available, you can hire them either full time bring them in, or you can use there are CFPs, who will do the work for hire, right? There are outsource CFPs that can do some of this stuff there too. Right? Do you talk to advisors about that type of concept of what is their talent tree look like?

Aaron:

Oh, my gosh, all the time, right? Part of why we got interested in commercial financing and in practice succession was really that my prior career was in working with that generational transfer, how do we get more advisors into the industry? How do we get them to not go to law school, but to get into wealth management, and build up and grow a firm and put themselves into a position of ownership. And so the more we have these multifaceted service firms, the better it is. I recognize that some buyers don't want to do that. They want to hang their hat on investment management. We see trends up and down. We see certain personalities that say I'm only going to offer financial planning, I'm only going to offer investment advice. But I think the firm's that went out, the ones that we see really grow are the ones that are offering a really blend of services and advice for clients.

Aaron:

And I feel like, the best operators in this firm, or in this industry, have a great grasp of technology. And they understand how that technology can make their lives easier, create more touches, and stickier client relationships, which is at the end and create more referrals, which is the ultimate end game. So to your point, I know and I recognize there are a lot of advisors who just say I don't really like financial planning, I don't like going in and providing these in depth questions and analysis. It isn't my bailiwick hire. They're great, talented people coming out. You can hire advisors, obviously with experience, certainly you're not going to get the same talent level if you hire one of these CFP grads out of one of the universities. But certainly you guys can learn together on a certain aspect of the client base, and you're offering more services than you have prior. So we still see big firms that do financial planning. But I think that for the well rounded firm that wants to continue to acquire, it's imperative and it's a great retention tool and a great growth opportunity.

Mike:

Love it. Love it.

Tony:

It's interesting. I mean, you nailed it, Aaron, right? And I think it's funny with NaviPlan now a part of InvestCloud, we both saw that need and how important planning is to the larger technology mix, right from portfolio management, rebalancing, onboarding, you name it, that whole spectrum of technology. And you're absolutely correct. The RIAs that are very successful, they're growing rapidly, that are doing all these things, right, understand the value of that unified wealth platform and how much that can add value to the business. And quite frankly, for those who are saying, it's not my bailiwick, or I don't know, I'm not normally providing advice. There's a lot of automated processes in a unified technology solution that allow you to do more things more efficiently, and get you over that learning curve quicker to not only embrace technology, but to provide multi dimensional advice from onboarding, prospecting, self selecting, and self directed planning, through that advisor lead, and then all the way through execution, and then rebalancing.

Tony:

So really those technology tools are out there. And the ones that embracing those unified solutions, such as InvestCloud, are the ones that are finding so much more success. Because, again, it's efficient, it's automated. It's what these clients and investors are desiring out of the next generation of technology. So the sky's the limit for RIAs that are embracing that technology, and then those that aren't, you're going to get left behind. So now's the time to look and audit that because it's so important, especially that financial planning aspect of RIAs.

Mike:

Well, I think that's a great way to leave us up. I really appreciate you coming on the show, Tony, people are going to want to follow up with you I'm almost 100% certain, what's the best way for them to follow up with you after the show?

Tony:

Well, you can find me on Twitter. That's probably the easiest way. But you can hit us up naviplan.com or investcloud.com at this point. But yeah, hit me on Twitter, LinkedIn, there's a contact page on our website, feel free to ask us more questions. This was a lot of fun. What SkyView is doing is pretty amazing. I'm glad to be a guest on the show. This is the future of our industry. What we're seeing today in technology like NaviPlan is excited to be a part of it, because we understand that this is driving our whole industry forward. And quite frankly, it's noble, providing financial advice to everyone across a wide spectrum.

Mike:

Fantastic. Well, thank you very much, Tony. Really appreciate it. Thank you, Aaron, for coming on today. And both of you for the calendar gymnastic stuff. I really appreciate it. All right, thank you.

Aaron:

Thanks, gentlemen.

Tony:

Thank you.

Mike:

Thank you very much for joining us today. It was fantastic having you with us as always. Even if your team is already offering financial planning to your clients, I have a feeling you got some great stuff out of this conversation. I mean, how could you not? Tony, Aaron, me? We were rolling today. Huge thanks to Tony Stich for joining Aaron and me today. Mr. Purple, as he's affectionately called on Twitter and at industry events, always brings the thunder so it was great to catch up with him here on The Advisor Financing Forum podcast. And speaking of the podcast, if you have a moment, make sure you subscribe to the show on Apple podcasts, Spotify, SoundCloud or wherever you get your podcast jam on and don't forget YouTube, right? Get over there and click the subscribe button on the YouTube channel as well.

Mike:

We're going to be putting out a lot more great content just like this show and you're not going to want to miss any of it. So subscribe. Just do it now before you finish listening, just swing on over there and do it, okay. All right. Lastly, make sure you swing by skyview.com to learn more about your options for financing to facilitate your plans to buy or sell an RIA or independent financial advisory firm. The SkyView team is there to help and it doesn't cost you anything to reach out and just learn about your options and get the ball rolling, okay? So do that today as well. All right, that's it for us today. We will see you next time on The Advisor Financing Forum. See you. Bye.