Join Jason and Dasarte for insightful reflections, highlights, and learnings from top episodes of 2023. They offer advisors a bold forecast for new trends in the year to come and dive into the success that comes from a "think big, operate small" mentality. For lovers of sports metaphors, this episode will not disappoint. ABOUT ALTRUIST: We’re on a mission to make financial advice better, more affordable, and more accessible to everyone. Altruist is an all-in-one platform built exclusively to help RIAs start, run, and grow their practices. Our platform saves you time and reduces your costs: You can manage your entire book of business, get performance reporting, and bill your clients with ease and efficiency. Want to find out how Altruist can help you grow? See more at www.altruist.com/podcasts STAY CONNECTED: Instagram ► https://www.instpagram.com/altruistcorp/ Twitter ► https://twitter.com/altruist Linkedin ► https://www.linkedin.com/company/altruistcorp/
Join Jason and Dasarte for insightful reflections, highlights, and learnings from top episodes of 2023. They offer advisors a bold forecast for new trends in the year to come and dive into the success that comes from a "think big, operate small" mentality. For lovers of sports metaphors, this episode will not disappoint.
ABOUT ALTRUIST:
We’re on a mission to make financial advice better, more affordable, and more accessible to everyone. Altruist is an all-in-one platform built exclusively to help RIAs start, run, and grow their practices. Our platform saves you time and reduces your costs: You can manage your entire book of business, get performance reporting, and bill your clients with ease and efficiency.
Want to find out how Altruist can help you grow? See more at www.altruist.com/podcasts
STAY CONNECTED:
Instagram ► https://www.instpagram.com/altruistcorp/
Twitter ► https://twitter.com/altruist
Linkedin ► https://www.linkedin.com/company/altruistcorp/
RESOURCES IN EPISODE:
For more tips on how to grow and scale your RIA, subscribe to The Advisor Journey at www. altruist.com/podcasts, on Apple Podcast, Spotify, or wherever you listen to podcasts.
DASARTE: What a year it has been. This has been an amazing journey in 2023 with The Advisor Journey podcast with my co-host Jason Wenk. I can't tell you how many people I've met, how many businesses I've seen change, and just being a very tiny part of your process has been a gift to me. I've learned so much from the advisors that I've been able to talk to, as well as meet at conferences on the road, and I just want to thank you first and foremost for tuning into this show. This episode is about 2023 takeaways as well as a few projections for 2024. I get the privilege to get inside Jason's mind and kind of riff my notes out and ask him all the questions that I'm thinking about, about business, about alignment and beyond. And I think that you're going to enjoy the conversation. I do have one favor for you. If you could please go to wherever you listen to the podcast and review, like, share. That helps our podcast reach more advisors and that helps the advisors reach more clients and hopefully impact the communities that they serve. I'll stop talking now. Press play. Hope you enjoy.
JASON: Welcome to The Advisor Journey, a podcast by Altruist dedicated to giving advisors the edge they need with proven RIA growth strategies. Each week, Dasarte Yarnway and I will have hard hitting conversations about the topics that matter most to the modern RIA. How to scale, how to maximize efficiency, and how to effectively reach your goals. It's real advice from people who've really done it and we're so glad you're here.
DASARTE: Welcome back to another episode of The Advisor Journey. I'm your co-host, Dasarte Yarnway, and today I get to see my main man, partner in wealth, Jason Wenk. Jason, how you doing?
JASON: I'm good. I was just telling, you know, I'm tired because I'm old. I'm not that old, I guess, but nonetheless, it's been, 2023 has been a really good year. Busy year. A lot of stuff going on. I know we're going to talk a lot about it, so I'm all right. But I'm tired because it's I've been a long, hard year. Been a good year but long, hard year. So how about you, man? How are you doing?
DASARTE: I feel good, I feel great.
JASON: Well, you look good.
DASARTE: Thank you. I'm trying my best to keep up with you. I always say that, but I feel good. I feel, in some ways, that I left some out on the playing field in 2023. Just because I had moments of like fatigue during the year. And have you ever had that? And I'm sure advisors that are listening, you're working so hard at so many things, you just get to that point where it's like, I need like a week to just do nothing, right? And I think next year I want to be better at balancing. Taking a weekend or, like, a couple hours on the weekend to do nothing. So it doesn't all hit me at one time. I feel good now, but I definitely am in that process of the year where I'm being introspective. And I'm looking at the year like, hey, I left, you know, I'm an athlete. So it's like, oh man, instead of that one yard run, that could have been a first down.
JASON: Yards after contact weren't as good as they maybe were in the past.
DASARTE: Exactly.
JASON: Something like that.
DASARTE: So that's how I'm feeling. But overall, blessed. Family is good. I have no complaints. Now, this episode was supposed to be about takeaways for the year and projection for next year. As you said, it's been a crazy year, not only for the growth of Altruist, not only for advisors that are on the platform, just in general. It feels like the year was a blink, but so many things have happened within that time span. On the flight last night, coming from Sacramento, California, you know, the farm, I wrote some notes about some things that I felt like were takeaways from 2023. We can even talk about Altruist's growth. But for advisors and the people that have come on the show, first and foremost, if you were on the show, listen to the show, shared the show, commented on the show, we appreciate you.
JASON: Yeah. Thank you.
DASARTE: This show is not done without you listening and without you spreading the word. Every week I get a few notes on LinkedIn just talking about how people are listening to the show, how they're inspired to go independent with confidence because they listen to The Advisor Journey. So if you're listening, again, we appreciate you. And thanks for listening all year long. Now let's get into the takeaways that I've had from some of the best advisors that have come to the studio in Culver City or virtually, and have been able to talk with us. The first thing that I want to mention is just alignment. I feel like the advisors that are doing it well, I can name a few. Taylor Schulte. James Conole. They've come to the show and they're super in tune with what exactly they want to get out of their business. The type of business they want to run, how they're going to do it and why they're doing it makes such a big difference. And this is something that I've actually challenged myself with in, you know, we talked about the Onyx HTC merger, with this like new kind of free time that I have, I'm asking myself all these hard questions. Am I making decisions because I just want to make as much money as possible really quickly, or is there a deeper connection and meaning to the business that I'm running? The advisors that I find that are doing it well are aligned, and they're almost reverse engineering, based on this big idea that they have, like, I have this big idea that I want my firm to be this, and then they're able to make decisions that align with that along the way. What are your thoughts about that? Because I think that's where it starts for growing an RIA, is just saying this is what I want out of this.
JASON: I mean, sometimes it's obvious. I think, actually, having done this for so long and talked to so many advisors for so many years, most people, when they have a big breakthrough, it's something they already knew. So it's not like we don't know being focused is a good thing. But then we meet with these advisors that are performing at this really high level and we go, wow, they have some pretty extreme clarity and focus. And oftentimes it's because they start with a goal in mind and work backwards. Like, what should the actions be? And I've yet to meet any advisor in all of my years doing this that was both really successful and also really effective, and they do really great work for clients, that's really disorganized. Like they're trying to do ten, fifteen things at once. They're trying to be like, I'm going to try five different client acquisition strategies. I'm going to work with every client persona out there. I'm going to use all sorts of different technology tools, strategies, portfolios, right? Those who seem to be delivering the best outcomes for their clients, have the happiest clients, the highest retention and the most growth, they have a ton of focus. That's just a consistent theme, and we all know that. And yet it's very easy to get distracted.
DASARTE: For sure. We call that locking in. Before the game time, you just got to lock in. And those advisors are so locked in, it seems like they're here to meticulously just march down the field if we're using that football analogy. So alignment I feel like it's table stakes for being a successful advisor, growing a successful firm. And I, as I am introspective in this season, I think about all the times where I wasn't aligned. Like, okay, I can see how this didn't turn out the way that I wanted to because I didn't make an aligned decision at this point. And I find that now looking at it with new eyes, advisors that contact me wanting advice or like, hey, I heard you and Jason say this on the podcast. I'm more so saying, get aligned. I can't tell you what's right or what's wrong, but you can find that answer if you are in tune and aligned with yourself.
JASON: To give you some credit though, I mean, I watched you this year go through a rebrand. Extreme focus on your ideal client profile, real commitment to the community that you live in and you do business in, and the ideal client that's in that same community, they have aligned interests, other entrepreneurs in Sacramento. I think there's another saying that's also helpful when you're kind of looking back and being your own biggest critic is that it's progress, not perfection. You've made a ton of progress. I watched. I got to witness it, but you're probably looking at it and going, well, I could find the ten things I did wrong. But don't forget about the twenty things you did right. And I think hopefully all advisors, even if they're looking at this and they're going, yeah, I could have done better. Left something on the field. They also don't forget to kind of celebrate. There's probably been a bunch of wins, a bunch of smart moves too. Key is, do more of that and do less of the other stuff. I mean, this is kind of each year you do that, you get better.
DASARTE: Absolutely. That's good advice. And I feel like ambitious folks don't often do that because you're watching the game tape. You're like, oh, man, I gotta do, oh man.
JASON: I mean, I never played football. I know you were at the highest level, but I had a son who played, and I remember there was this one game that he he'd caught like a game winning, like a Hail Mary. And he was a linebacker, by the way, that occasionally would play running back. But they just happened to like, hey, we're gonna do a Hail Mary. We need somebody that's athletic to go get it. So there's like a 50 yard Hail Mary. He goes up, gets catches the ball, brings it down. They win the game. As he's coming off the field, he's so pissed off he won't even talk to me. He's pushing people away. And I'm like, dude you literally just caught a Hail Mary game winner. What's going on? He's like, we would have never even had to do that play if I didn't miss that tackle. Like, whatever, on the, like, six possession of the previous drive where they scored and I'm like, dude, you're so fixated on that one mistake, you forgot about the fact that you won the game. I think that's oftentimes what happens. I mean, whether it be sport, life, business, relationships. We sometimes forget about, you know, we fixate on the one mistake versus all the good things that we end up doing right.
DASARTE: That's great. Let's just stay on the topic of sports real quick. I'll go to point number two. We had a saying when I was playing called Pick and Stick. It sounds kind of funny, but essentially, and I'm going to give a football lesson here for those that are listening, if you don't listen to football, I'll state it in a different way. Or watch football, I'll state in a different way. So we ran something called a zone offense, and the idea was just you get the ball, you run in one straight line until a hole opens up for you, right? And once that hole opened up, you pick that hole, you stick it and you just hit it. Advisors that are successful in scaling their firm, they're picking and sticking. They find the thing that works for them, and they're going at that thing full head of steam. And I think that's something that I admire, especially in this age where there's so many distractions, as you mentioned. There's so many things that you can do, so many pieces of technology that you could implement in your business, but the thing you should do is pick and stick. Like, this works for me. I'm going to hit it hard and I'm going to go.
JASON: This is a good lesson. We talk about the people we've met with and talked with. I was thinking of an advisor that I've known for, I mean, shoot, probably almost fifteen years, but we had on Matt Gulbransen from Minnesota. And what's wild is that, talk about picking and sticking. He picked a thing. He was teaching classes in the greater Twin Cities area and used that to go from zero to his first couple hundred million. Then he hired some advisors, taught them how. So then they could replicate the process. Was very, very much a teachable, replicable kind of efficient process. And I hadn't caught up with him in a while. And I remember thinking, oh, yeah, he's probably a few hundred million or something in assets. And he's like, oh, no, man, we're like a billion. I'm like, dude, a billion. And he's literally done that with largely a mono approach. Meaning he's just doing one thing, doing it really well, and then he's just, not hired a huge army, just a couple other advisors, that they're also doing that well. And they've got this predictable growth machine. So talk about picking and sticking it. That guy found a thing, worked for him and kept going and replicated it, kept going. And probably one of those things where it's like, what's the fastest way to one billion dollars? And it's, like, probably sticking with something for ten years or more. There's no real shortcuts. But I see so many other people, they switch their strategy every year. It's like, oh, we're running the zone offense this year, but next year we're going to do.
DASARTE: The option.
JASON: Yeah, yeah, we're going to read option. We're going to do pro style. We're going to do this. I think in this industry you shouldn't be flat-footed. Sometimes trends change and you want to make sure you evolve with them. But if something is working really, really well, one of the best lessons you could ever have is if it's working really, really well, keep doing it.
DASARTE: Keep doing it. Yeah, keep doing it. If it ain't broke, don't fix it. Another way that I want to say that is, or some advice, as I kind of think about the year, think about the advisors that we've been able to talk to. Respond, don't react. I'm getting a lot of advisors like, hey, I heard James Knowles episode and I'm going to start a YouTube channel and I'm going to do that. Or I heard Thomas is signed up for Twitter. Like, that's a reaction, right? And I think advisors might hear good information. And instead of taking that information and processing it, adding their own personality or thinking about the things they like to do or not, they try to run with that. I think you should respond. So if I hear, for example, somebody like Thomas saying, hey, I do Twitter, it works for me. If I digest that information and process that, I'm like, I don't want to spend that much time on Twitter, you know. This is not the.
JASON: You don't want to spend any time on Twitter, actually.
DASARTE: This is not the right strategy for me. So if you are looking for a thing, maybe you already have your thing. Keep doing that thing if it's working for you. But if you're looking for a thing, I suggest that you respond to sort of the suggestions and the ideas that come to your head versus just reacting based on the first idea that you hear. And I'm seeing that a lot now on the one thing that I'm on, LinkedIn. And I'm seeing advisors pop up new marketing strategies and they're putting on videos. I'm seeing half-baked products out there. And I think you do have to start somewhere. But I also think that this person may not have put a lot of time and effort and energy into this.
JASON: I think about the early part of my career. Sometimes when you're so hungry to be successful, you're kind of, you're like, I just want to be successful. And you kind of forget about, like, I also want to be happy. You think that success equals happiness? Like, if I had more money in my business or more clients or whatever. And so you have a lot of people that see what someone else is doing and they go, I'd like to have that much money. Like, as a business owner and entrepreneur. And so I'm going to do what they're doing. But you may end up, one, not being good at it. Let's be real, some people are just really exceptional at certain things. Others aren't. If you're not passionate about it, you'll do that half-baked version of the product. Maybe you're so good at faking it that you will be successful. You will acquire clients, but you might acquire the totally wrong clients for you because it's not who you're passionate about helping. Inevitably you end up kind of painting yourself in this weird corner where you're like, gosh, now I've created all this opportunity cost to go pursue actual happiness because I've built something that wasn't really true to me, and now I've got to go live that because I don't want to lose the financial freedom or whatever that it might have caused. I've seen a lot of that over the years where it's like, yeah, you copy someone else. And I do think that there's a, there's value in modeling. Sort of like, I see how this is working. I'm going to kind of build my own model based on what I've seen working elsewhere. But it's very dangerous. I think, just trying to copy lots of folks who are successful and doing it half assed without really having your heart in it's probably not going to work more often than not.
DASARTE: Yeah. I'm looking at some stuff like this stinks, why did you do this?
JASON: No, totally.
DASARTE: Why did you decide to do that? And I think that's why number one for me is the biggest takeaway. You have to get aligned. If you're able to get aligned, then I think you are leading from a place of intention and then you can actually make decisions that will hopefully give you a better likelihood of being satisfied with your business. That's the takeaway for me. And feel free to add on. The third thing, which is going to sound weird to a lot of advisors, is give up control. There's certain things that advisors should be doing, should be spending their time resource. And that thing is being in front of clients or thinking about strategies that can get you in front of clients. Maintain, preserve, scale your business. But when you are trying to do everything, that limits your resource, which is limited, to go out and do the most important things. And this is a tough lesson for me to learn. And finally, I just hired somebody. Best decision I've made. Giving up that control. Like, it's your baby, but somebody can do this part of the job better than you can. And those advisors, I see rocket ships, like, they're just going crazy because they built the systems. They're able to focus on those one or two things that make a big difference and only they can do and their business changed for the better. So giving up control I think is a huge thing. I even see it here in Altruist. As we scale, we're getting people that just are better. They're just better at the job.
JASON: Well, the simple recipe, it doesn't matter if you have one employee or you have 400 employees, I learned this from a friend of mine, a really great entrepreneur. He says, you look at any really high performing company or team or group, you're going to have to have a high density of talent. That works in sport, right? Works in business, works in life. So, high density of talent pursuing a compelling mission with strong leadership. It's a very simple recipe in a lot of respects. And so, if you're an advisor and you're hiring that first person or you're building out the team of ten or whatever, make sure you've got a really, really high density of talent. But then you need to, just that alone doesn't solve everything. They need to be pursuing something that's compelling. So give them a compelling mission that feels like, gosh, my work is important. It's really valuable what we're doing. And then make sure that you lead well. Lead by example. Actually be a great leader. If you're not a great leader, then hire somebody else who can be a great leader, I suppose. But yeah, there's lots there. There's a lesson that I was just thinking of. I don't know why it came up. Maybe it's not on your list. So sorry if I'm breaking protocol here, but I was just thinking too, another great commonality, was, advisors just providing great value to their clients. I was thinking about a couple of guests, one of the sort of enigmatic Matthew Jarvis. But I tell you what, man, I started following him more closely on LinkedIn. And as much as some people might kind of have an oil water relationship because he's very strongly opinionated, a lot of what he says is really hard to argue with. One of the things he talks a lot about, I forget what he calls it, but it's this extraordinary high amount of value. And he's like, you just do that for your clients. Like, it's like one of the super power secrets of being successful. I think similarly, we had the kind of the whole team from Windle Wealth in here. Again, another kind of, can sometimes be a polarizing figure in social media, but at the end of the day, that team is laser focused on their customer. They know who their customer is. They deeply value. They give so much. And so I think, rarely do you find that there's such thing as too much value. I think that's a Matthew Jarvis thing. There's no such thing as providing too much value to your customers. That seems to be a common trait, along those firms that are doing well, they have lasting power. Ironically, most of those firms, what I think if I was really kind of breaking it down is they're the ones who actually market the least. They don't really have to market because the value they provide is sort of the marketing and ends up kind of creating this organic growth engine and super high retention. It's overlooked, obvious in hindsight. Of course you should be doing great work for your clients, but it's very easy to be like, well, I've got to go to fifteen advisor conferences. I've got to make sure I post thirty-seven social media posts. Put up seventy-five videos or something. And it's like, well, what about the clients? What about those people who've already chosen to work with you? What are you doing for them? And I think that's something that, again, as obvious as it might seem like, man, you better do that well.
DASARTE: No, I got a lot of thoughts about that. And first of all, since we've interviewed DJ, I text DJ, we talk, like, once a week. We're talking, he just had his holiday party. He had 167 clients there.
JASON: It's awesome, but he dropped some serious coin taking care of those clients.
DASARTE: He definitely did. That's the one marketing, like, the one marketing event he probably has to do for the entire year. Maybe. Did that. Crazy. Did his whole house for the Oklahoma Sooners game. He's a big OU fan. But I took away that the value of the advice is it. That is it. If you do that well that's all you have to do. And I hope to get to a point where I don't have to market. I can take the YouTube channel down. Because I'm giving so much value and people see it. So shout out to DJ. Another thought about that is, Matthew Jarvis. I walked away really liking Matthew Jarvis.
JASON: Me too. Yeah. He's great.
DASARTE: Contrary to what people think. No matter what your opinion is, if you're passionate about it and you're open to any sort of resistance, which he was, I asked him some hard questions. I'm your friend. I mean, he's a good dude, in my opinion. I just wanted to say that as well. Matthew, thank you for doing what you do. Tons of value for advisors. That was awesome. I think this is somewhere I would like to get your take on. Number four. Advisors that get the numbers. I find that at the end of the day, we are running businesses. And advisors that are priced well and giving value, I think that that makes a difference as well. I know a lot of advisors that are like trying do $100 subscription per month packages. Nothing wrong with that if that works for you. But I think that a lot of great advisors get the numbers right. Like this is what I have to do to continue to take a step in growth and scale. And that's something that, maybe I've been pretty good at it for like the last two years, but before that I was just trying to make a name for myself. Anything that breathed, I wanted to try to figure out if they could be my client. And it wasn't until 24 months ago I was like, this has to make sense. And if it doesn't make sense, I need to ensure that there's still ways that I can give value to these people who may be interested, but it's just not a good fit for the capacity that I have right now. So great advisors get the numbers right. That leads them to execute in a certain way to figure out who their ideal client is. And ultimately it helps their firm and it helps the client because they will get that type of service that they deserve. So what are your thoughts about getting the numbers right?
JASON: What comes to mind, which maybe isn't the intent of the question, but, I find it kind of comical how many people in our industry debate fee structure and I'm pretty sure fee structure, like in and of itself, is not an incredibly important factor to our clients. I think the clients, they look at it like, of course, I have to pay you for the work. And so I think what they're primarily interested in is what's in it for them? Not so much, what's it going to cost them, but what do I get? Am I going to feel highly confident and cared for? If I call you, will you call me back the same day? If something happens to my spouse or my partner, will you take care of them? Will I know that they're going to be all right? If I have a dependent child, are you going to be there to make sure that, again, if something happens to me my money goes to the right places to make sure that that person's cared for. None of that has anything to do with the, are you paying a subscription fee, an AUM fee, a retainer fee, a flat fee. Now, are some things more obvious ROI? I think if you look at probably the most well played out example, Vanguard, that's the number one spoke on their flywheel. Just keep costs low because they believe low cost drives better returns, which creates happier clients that then give them more of their share of wallet. And that allows them to have more scale, which allows them to reduce costs further. And the flywheel spins. So I don't think that they should have unfair fee schedules, but the fee schedule itself is not the value. I think you're totally right in that. You have to kind of work backwards from, how much time do you have? Is probably the better way to kind of calculate how you think about fees and who your clients are. Those who are doing well, I mean, there’s some interesting metrics when you run a company like an Altruist. Oftentimes we have to talk to investors, we have to talk to our board. And so we're constantly being compared against other portfolio companies, other companies out there that are similar stage. And they'll have their sets of metrics. How are you doing from a revenue expansion perspective? What's your CAC to LTV ratio? What's your payback period when you're bringing, in other words, how fast can you scale and grow? What's your retention rate? Your NPS? All these metrics. They want to know the metrics because there is actually a pretty high correlation between those that have, again, depending on the stage of your business, are performing in the top quartile to those that become eventually very, very successful. Large public companies, things like that. I think sometimes when we're a small business owner, we think, oh, we don't have to do that. I just operate from feel. But I think you're right. If you don't understand your numbers you can, again, paint yourself into a corner where one day you go, Holy cow, I've said yes to 200 clients at a price that is not sustainable. I'm no longer happy. I'm burnt out, I'm tired, and I can't actually provide the value that I promised these people I could. I think there's a fair bit of that that happens. And I think there's also a little bit of ego that sometimes happens. I'll see some people be like, I charge $15,000 for the work I do, and I'm like, okay, well, that's cool, but I'd be willing to bet that's a hard number to defend if you're not providing 50 or 100 or 200 some huge multiple on what you're charging in value to that customer down the road. So again, you have to know not just I'm charging a high fee, but I'm also providing lots of value that those are two different sets of numbers that you have to know as an advisor, as an entrepreneur.
DASARTE: Yeah, I want to run my small business now like it's a big business.
JASON: We have a saying, we get told all the time, you should actually be operating today almost like where you believe you'll be in five years. And that's just, you know, maybe it's three years, but oftentimes it's like, think about your business five years from now. Do you have the right people, the right processes, building the right tools? Do you have the right infrastructure? If you're not, start working on it in advance because you'll never get to that point if you're not thinking that way. I think the same way in your business or any other business.
DASARTE: It took me so long to get that, though, you know what I mean? Because, you know, you're at a stage where like, I'm making money. I like this. But then you find that you have to reinvest that money to get to the next level. The sublime. Where you see, but you don't really know what's on that other side. But you have to invest that cash to get there. So it's been interesting for me to kind of walk this line and figure out that, I have to think of my future self and what I want.
JASON: Hey, listen, a little cheat code I did early days of my business was I just paid myself a salary. I didn't worry about the business profits. I let them accrue so I could reinvest them and grow the business. But, you know, I think it's always easy sometimes, you see people, now I'm in my in my 40s, I've been doing this for a long time, 20 some years. And I think there's maybe some perception that, oh, gosh, you probably always had some level of success. But I remember in the early days, I paid myself 25,000 and I gave myself a big raise to 50,000 at one point. And then for the bulk of my career, over half of my adult life, I paid myself $80,000 and lived off $80,000. Business made a lot more money than that, but because of that, I was able to reinvest and reinvest in that. I used that capital then to start new businesses, buy new businesses. And so I just think if people want to do, again, be able to know their numbers, reinvest in their business, one of the things that's important is once you start seeing some success, is you don't adjust your lifestyle to that success, because now you can never back out of it. You've kind of, really again, put yourself in a tough spot. You haven't given yourself much flexibility. And also it puts a lot of pressure on maintaining that revenue. So you feel actually pressure. What if I lose a client? Or what if this what if this? All that fear is generally not very good for motivating. Very few people perform well in duress. Some people will say they do, but very few actually do.
DASARTE: Yeah, I agree. I've definitely become super critical of the numbers. Last thing before we kind of move on to 2024 projections, which I'm really excited about, just an overall theme that I have. And I've kind of seen it in advisors that I talk to, and I've seen it in Altruist, and I've seen it in you. Think big, but operate small. You're thinking really big about your future self, how you want your firm to look, but then you're breaking it down, maybe even quarter to quarter. Like, to get here, we need to execute in this 12 week span, this first quarter, second quarter, third quarter. And those compounding efforts move the needle. So for anybody listening, sometimes I get overwhelmed. And I was kind of reflecting on this a couple of weeks ago. I look at a year like, hey, this year I want to do this, this many clients, this much revenue. And then it's just one big year to get it done. And obviously things don't happen. Linear ups and downs ebbs and flows throughout the course of the year. But when I think big and operate very small within a certain three month time frame, I can really just lock in, as I mentioned before, and just focus on this time period, that after assessing, I can see how far the needle has come. So for the advisors that I admire, the businesses that I admire, that's what they're doing. They're like, we need to get this done. If we get this done right now, that will give us the platform to go ahead and do this. So what are your thoughts on that? I know you talk about, I remember one time we were talking kind of BTS and you were talking about listening to a startup founder, I think he may have been interviewing you. I listen to what you say, Jason.
JASON: I forget what I say. So I'm glad someone's listening.
DASARTE: And you were, like, he asked you for two pieces of advice on running a business or scaling a business. And you told that founder, treat everybody with kindness. And pick a really massive TAM. Something that you can serve. Think big. That's what I got from that. So what are your thoughts on that? Thinking big, operating small.
JASON: Yeah. So I think it's easier for me to obviously draw that parallel to what I do every day today, running Altruist. Choose large markets is kind of like that TAM, you know, the total addressable market. Choose large markets. You don't always have to do that. I guess in some respects it just depends on what you're doing. I think about like if someone's a plumber, for example, they're probably saying, look, I'm going to, if the community I live in has 100,000 homes, that's your TAM. And so then they kind of break that down. There's something they call SAM, which is your service addressable market. And that might depend on, well, what service do I have a, whatever, a camera system to diagnose whatever. Plug drains or something. Depending on what your equipment, your specialty is, that might reduce that SAM down a bit. I like to solve big problems. So for me that's really important. I think if someone's trying to build a fintech company or they're trying to build a large business, you better go into a place where there's a large addressable market. But as a financial planner, you don't always have to. I think about the number of advisors who just be like, hey, listen, all I do is I work with dentists that are over age 50. It's like, okay, well, you know, that's a pretty big market, but that's not the whole country. Like, that's not going to be, you know, it's called millions of people versus hundreds of millions of people that they could serve. And there's people otherwise who'll be like, again, I think your case is a good one, where you're saying, listen, I'm going to work with entrepreneurs in Sacramento. I don't know how many entrepreneurs are in Sacramento, but let's just say that there's 100,000 of them. That's still a big market, right? And you don't need all 100,000. You only need probably a few hundred. If that couple hundred, shoot 50 of the right ones and you're set. So I think, kind of working backwards, but I think a good way for people to think about that in terms of a practical way to get focused on near term things that still compound to big goals is another sports metaphor.
DASARTE: Let's go.
JASON: So this one actually has come from, I think the first company that really popularized this way of thinking was Google. And they used this process called OKRs, which is objectives and key results. And one of the early ways it was described was actually using football. And they'd say, listen, the owner of a team might say I want to increase the value of my franchise by $1 billion or something like that. Well, they then say to their GM, that's their big, audacious, hairy goal. We're going to create a value like the owner might have. And then the GM will be like, hey, the best way to do that is to win a Super Bowl. And so then they go to the coaching staff and say coaching staff the goal this year is win a Super Bowl. The coaching staff then looks at the different coaches and they might say, okay, you're a defensive coordinator. The goal as a team is to win the Super Bowl. Even though the owner is kind of saying the Super Bowl equals some commercial success, that defensive coordinator is going to look at it and go, okay, well, I can't determine exactly if we win the Super Bowl. What I can control is, how many missed tackles do we have? How many yards do we give up? Are we going to be a top ten defense against the rush? How much pressure do we put on the quarterback? What are all the metrics? What are our takeaways going to be? The key here, in that kind of metaphor or that analogy, all those things that that defensive coordinator, he might literally even have another set of coaches, my defensive back coaches, they're going to have their key results. And they might say, listen, as a DB coaches like our goal is to, you know, limit passes over 20 yards. We don't want to have any. We want to have blah blah blah, small percentage of pass interference. Whatever those metrics might be, those are the key results that they're looking at driving and they're looking at measuring it really, again, on a play by play game by game kind of basis. You apply that to all the different teams and coaches and specialty coaches and you start to see how all that rolls up into, okay, we'll have a strong defense. If the offensive coaches do the same thing with a strong offense, we'll have a strong special teams. All of a sudden it's, like, that should win us a lot of games and that should give us a chance to win the Super Bowl. And if we win the Super Bowl, that should give us a chance to have a sold out stadium, tons of merch sales, increasing value. So I think it's a similar process here. You think about how we do things at Altruist, it's very much along those lines. We know that there's $8.25 trillion of assets in RIA custody, growing at 13.2% CAGR for the last ten years, accelerating 16% the last five years. It's a big market. Ten years, it's going to be even bigger market, right? It's going to be like 25, who knows, $1 trillion. That's a huge market. But it'd be crazy to build a top down model against those metrics. Instead you have to go, well, what can we do today to be meaningfully providing a ton of value to advisors and their customers? And let's just break that down even further. How can we help them open accounts in a more efficient way? How can we help them fund accounts? What can we do to minimize taxes? What can we do to minimize cash drag? What can we do to minimize number of clicks or work streams or required integrations? Interestingly, like obviously you do all those micro actions in short time periods. Well, they roll up into having good quarters, good halves of years, good years. Those things compound into decades. And then all of a sudden you might look back ten years from now and go, wow, they sure got a few things right there. And it's like, well, actually it was thousands of little things right, measured either daily, weekly, quarterly, etc., but all in pursuit of a big ambitious goal and a huge market. So I think advisors, you know, it's like it's okay. I say this, I don't know how many times I've said this in the podcast, if we get some AI tools, maybe they can look at dumb things, Jason says. But one of my favorite blog posts ever is a one sentence blog post that just says it's okay to stop when you're happy. And so I think like that goal, whatever that big objective is, it should be an objective to say, well, I'd feel real happy if we achieved that. That's so variable. It's so personal. Everybody's different. And I actually love the businesses where you see an advisor that just, they just acknowledge, like, listen, I don't need to make a ton of money. I want to be happy, make an impact in people's lives. There's an advisor that, we should have him on, I don't think we've had him on yet, but, Jeremy Walter. I just love what he's doing. He just planted his flag about, like, a year or two ago. Maybe it was this past year. And he said, I'm done taking new clients. I want to take extremely good care of the small number of clients I have, and be the best dad and father possible. That's an awesome objective, right? And then you can work backwards. What does that look like on a micro basis? I just think that's kind of an important disclaimer to like have big goals if big goals are important to you. But again, that's very, very personal. And people should definitely be in pursuit of what makes them happy.
DASARTE: Absolutely. Get a line. That was just a masterclass on thinking big and operating small. And I think it's important to give grace and be okay with those little moves. I think, you know, advisors want these big bangs. Oh, man, $10 million in a month. But there's a lot of little things in between that you can be equally as happy for. Let's roll over real quick into 2024 projections. I'll start. One of the things that I think that is going to happen in 2024 is human advice is back, baby. I don't know if you just saw another robo advisor just, like, shut down.
JASON: JPMorgan, I think?
DASARTE: JPMorgan. And you had like the Ritholtz guys' boss. The spinoff of the robo business from another firm. I forget which one. I think it might have been Blackrock, but all these robo advisors are, like, shutting down slowly or they're not profitable.
JASON: Yeah, the ones that are still existing, I mean, are only profitable because of their cash businesses. They launch a companion cash product and it'll be like, oh, we've got this cash product we're paying you five percent on. And people kind of, all of a sudden they double their AUM. That's easy money. Easy come easy go money. So, you take that away and at the core, robo advice is tough. It's a tough business to be in. It's like a quarter point. Takes a lot of assets to make it work. And a lot of them are kind of having a hard time growing at the rate that you need to really, really succeed. At any tech company, it's hard if you're not growing it better than 40% a year. And you create if you don't grow at a high rate, you end up getting this weird purgatory where it's you're kind of too big to get bought, but you're definitely too small to go public and your preference stack, they've raised so much money that the preference stack is so high that your employees are no longer highly incented to be there because.
DASARTE: When you say preference stack, what does that mean?
JASON: Preference stack means, like, so when you're part of a company that's taking in private equity or venture money, they have preferred share ownership and employees and founders have common. And so it means if a company was to sell, those people get paid 100% of their money before anyone else makes any money. So I mean, yeah, you've done a bunch of work with people who have equity comp, you know, and so it's just one of these things. So imagine you work at a company that's raised, you know, $500 million, but they're only doing like 100 million a year of revenue. In today's market, that business is only worth 5 or $600 million max, probably worth less than that. And so all of a sudden, you're in a world where it's like, how do you incent your employees to stay and keep grinding when, actually, if the company liquidated, the only people getting their money back are the investors? You can't raise more money because again, the preference stack's too high. All of a sudden you're like, really, really paying yourself in a corner here. So it's a tough world. I think that's the reality with a lot of those robo businesses is that the economics were very, very hard to get them to work. They required a ton of capital, and they were actually pretty easy businesses to compete with. Like, Schwab and Vanguard launched competing businesses and just brought those things to their knees. It's tough, but I agree. I think human advice never went away. It just, people forgot about it. And it's like, I kind of shared some of the stats, you know, I live and breathe this stuff pretty actively. The RIA space was under $1 trillion in assets 20 years ago. Now, it's $8 trillion. This space is growing. The first robo advisors they are 12 years old now. And the independent robo advisors not owned by, again, a big firm that already had distribution, they just kind of seeded it with, don't even have $100 billion in assets. It's just infancy compared to like look, the RIA space alone is just way, way, way bigger. Growing way, way, way faster with way better economics. So I'm 100% in agreement. Human advice, it never went away, but it is really back. And people get it. It's like, you can augment humans, make them better, make them more efficient, but you can't replace them entirely.
DASARTE: Absolutely. It's funny, I was having a dinner with an NFL player that I work with through my firm in LA last night, and he was like, tech is not always good. I don't know why he said that. It was just random. He was like, you know, back in the day, we used to stand in line for shoes. Our kids will never be able to stand in line for their favorite pair of shoes. Because everything's done online. And I think when it comes to advice, some things tech has accelerated for the better, but other things not so much. And I think human advice is one of those. When people were really wondering if advisors were going to be around because of robo advisors. That was actually a conversation on Twitter three years ago, I'm like.
JASON: And you had firms that were like, we're going to spin up our own robo advisor in-house to serve ours. And it's like, those didn't work either. They're like, well, we're a robo advisor for advisors. That was a fail. So yeah, I totally agree there. I think also, just as far as things that will happen next year, and I think it happened a lot this year, I think another, rumor, I don't know if it's a rumor, a thought that was had, and I just don't think it's playing out to be true at all, there was a number of the really big firms, they'd get together at firms at conferences for other big firms. So you get a whole bunch of people that have a super clear bias. And they would all say, what we think is that in the next decade or two, there's just going to be a handful of big RIAs and small RIAs will go out of business. I'm going, well, I get to live this every day, and I can tell you that small firms are alive and well. They're growing very fast. They have great businesses. And we actually were breaking down here, someone asked the question, well, where do we get breakaway advisors from? What's the biggest segment of breakaway advisors? Well, the biggest segment of breakaway advisors that come to Altruist are advisors who are employees at big RIAs. And they go, I don't want to work at this big RIA anymore. Where like, I'm never going to become a meaningful stakeholder. It's owned by some private equity firm or something. And they're like, I want to go do my own thing. I want to serve my own clients and build it my own way. So you have all these people who have five, ten years’ experience in the RIA channel, and then they're spinning off and saying, I'm going to go do my own thing. I mean, you kind of sort of did that too, right? It's a pretty common thing. So I think the industry, I think what we're going to find is that it's a beautiful thing. Entrepreneurship, small business is a beautiful thing. It's good for America. It's good for every industry to have that. It's good for consumers because now you can have people who are truly passionate specialists in their kind of business, serving hundreds of thousands of different people who are also highly unique. So I think that human advice is back, and I think that, it never went away, but I think it's back, back. And then I think the entrepreneurial advisor is the advisor of the future. It's not just, oh, we're all going to become employees at some giant wheel and feel like a cog. No, there'll be a lot of really cool special businesses and that's exciting to me.
DASARTE: Yeah, I'd like to add tech's true colors. I think the winners are going to show next year. I think there's a lot of technology that's basically doing the same thing. Like Kitces, that map. In every section I can see two companies that, at least two companies, that are doing the same thing. And I don't know how long that can last.
JASON: It lasts as long as the cash on the balance sheet lasts.
DASARTE: I'm like, how long can this last? They're doing the same thing. I think you're going to find some winners. Tech is going to show its true colors and there will be some companies that are around. And there will be some companies that are not around. But next year is going to be the time that I feel like you'll start to see more emerging leaders in those different categories. Like, this is the one that most people, or the two or three.
JASON: Look, it's tough. I think one thing that happened the last five to seven years is it kind of became easy to throw together a syndicate, put together a safe round and raise a few hundred grand to a couple million dollars and kind of get things, get something off the ground and up and running. And so you had a lot of people that they wanted to scratch that itch. I mean, I'm living, breathing example of someone who's like, hey, I had an idea. I wanted to go pursue it, you know? So, it's totally okay to have that. But as a result, we have a lot, probably hundreds of companies that have probably relatively low amount of funding. They likely have a million or two maximum of annual revenue, probably less. A lot of them are under a million. And if they can't raise more money to keep pursuing their dream, eventually the money runs out, the business folds up. So I do think we'll probably see a fair number of closures. And then I think some that'll get tucked in, you'll see some sales. And a lot of times those sales are not because someone's getting a huge payout, it's because they're like, hey, listen, what I'm doing isn't working. Therefore I need to go kind of tuck this into somebody else's business. And you hope one of the big players, an Orion or somebody comes along and buys it and snatches you up. I don't think that's a bad thing. I think we've talked a lot about focus. And I think it's good to have optionality for sure, but if you have hundreds of different options and many of them do the same things, some don't do them that well the companies aren't resourced to be able to continue to evolve and improve and spend more money on R&D. That's not good. That just creates a lot of complexity and friction and waste. And so the industry would be better off with maybe instead of its 500 logos on that fintech map, maybe it's 200 names. That's still plenty of options. But it might be 200 good options that are complementary versus lots of overlap.
DASARTE: I agree. I think I'm going to have more projections as the year goes on. Maybe in January we could really do a full walkthrough of what this year holds. But I'm excited. I'm excited for this year. I think the aligned advisor, the entrepreneurial advisor, I love that. I love that point of view, Jason. It's your world right now. It's your world for the taking. And I'm really bullish on those folks who are going to pursue their destiny.
JASON: Absolutely. Yeah. So just, my final comment, but I'll say, listen, I think 2023, I started off by saying it was a hard year. It's a hard year in the sense that there's just a lot of crazy shit that went on this year, just a really bonkers year. I know we didn't acknowledge a lot of it. I just want to say if anyone struggled this year because it was a tough year, there's just been a lot of unrest all over the world. A lot of negativity and pessimism and I think that stuff, you know, it's really, really hard to kind of keep your head up and stay emotionally strong and spiritually strong when you have years like this. I really do hope and pray that next year, I think it's gonna be a phenomenal year. From a business perspective for a lot of people in our industry. But I just hope it also brings a lot more peace to people, because it's been a tough year and that makes it harder to grind. And I don't want people to have to go through that year after year after year. So, I'm hopeful that we'll kind of get better as a society, and that'll make it a little bit easier to build really great businesses that provide a ton of value in clients lives. And I am very bullish on that. I think our industry for all of its faults, there's some really good people trying to do some really good things. And if you can get more of those stories out, inspire more people who want to build those types of businesses and be those types of people. I mean, that's a good thing. And I'm really glad that we get to do some of that here. So thanks for all your work, man. It's been a fun year. 2023 working with you.
DASARTE: Awesome. Awesome. And thank you again for listening to the podcast. We really appreciate you. This cannot be done without the people that are listening week in and week out. To continue to listen, altruist.com/podcast. We would love for you to listen on whatever platform that you feel like you like the best. We're going to keep this thing rolling all 2024. You're going to hear from us week after week. And hopefully we can deliver value that you can take out to your business and impact your clients. We appreciate you. Again, thank you for listening. Until next time.
Thank you for listening to The Advisor Journey by Altruist. Don't forget to like, review and subscribe for future episodes. Each advisor's journey is different and your results may vary. While we hope you find this information helpful, success cannot be guaranteed. Also, Altruist and its affiliates do not provide tax or legal advice.