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Episode 36: 
Getting Laser Focused With Brandon Kawal
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In this episode of The Ultimate Advisor Podcast, we discuss the benefits of being laser focused on your business growth and mission with Brandon Kawal from Advisor Growth Strategies. We talk about the ways to differentiate your business, keep the needle moving, and execute your mandate. Brandon shares a lot of his own experiences and advice on the important aspects of the Financial Advisor business. So, push PLAY and join us as we delve into getting laser focused on your business development in 2020!

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Speaker 1: This is the Ultimate Advisor podcast, the podcast for financial advisors who want to create a thriving, successful, and scalable practice. Each week we'll uncover the ways that you can improve your referrals, your team, your marketing, and your business operations, helping you to level up your advising practice, bring in more assets, and create the advising practice that you've dreamed of. You'll be joined by your hosts, Bryan Sweet, who has more than half a billion dollars in assets under management, Brittany Anderson, the driving force for advisors looking to hire, improve their operations and company culture, and Draye Redfern who can help you systematize and automate your practice's marketing to effortlessly attract new clients. So what do you say? Let's jump into another amazing episode of the Ultimate Adviser podcast.

Bryan Sweet: Welcome to the Ultimate Advisor podcast. I'm Brian Sweet and with us today is Brandon Kawal, who's a partner with Advisor Growth Strategies in Arizona. And for those of you that don't know Brandon, let me turn it over to him to give a quick introduction, a little background.

Brandon Kawal: Thank you, Bryan. Really appreciate you having me today. So my name is Brandon Kawal and a principal partner here at Advisor Growth Strategies. And we are a management consulting firm, but we only work within the wealth management industry. And specifically most of our work is with independent financial advisors, whether in the independent broker dealer space, RIAs, hybrids. That's where our expertise lies and we work with advisors in a variety of topics, most of that involving issues or opportunities on the business. So whether it's starting a new firm or working on growth that are really around the structural items of the business. Some of our popular engagements are compensation and equity planning, succession. We also do mergers and acquisitions. And you know, our story is, we're a small firm in Phoenix, we go nationwide, but we have deep backgrounds in the financial advisory business, although not being financial advisors ourselves, we have an outside perspective. So we just are really passionate about what all of you do and how you're growing your businesses and trying to be more successful, whatever that successful means for you. And really excited to share some of the things we're learning in the industry today.

Bryan Sweet: Yeah, thanks Brandon. And we've actually used your firm for some succession issues in our firm and have had great success. So thanks for being on today. So maybe start out the podcast by asking this question, you get to work with a lot of successful advisors around the country. What would you say are some of the characteristics that you see in some of the top advisors that make them so successful?

Brandon Kawal: That's a great question. For us, we see all different types of advisors and all different types of business models within this space. And I think one thing that sometimes gets overlooked that we see that is really, really important is execution. And some of the best advisory firms that we see in the industry are pretty laser focused on executing on their mandate, whatever that is. So the types of clients they want to work with, the types of services they want to offer, and then they're very disciplined around everything from how they run their client experience to how they manage their teams, to really how they manage their business overall. It all is really based around executing for the clients. And I think why I bring that up is something that is really happening overall at the macro level in the industry is that organic growth over the past several years has been so-so, and what I mean by that is, based on the estimates you use, whether it's in the RIA channel, IBD, you name it or smash it together, we're looking at probably four to 5% organic growth over the last almost 10 years.
 So when we look at, well, what are firms doing that are maybe handling that in a better way? It's really about the execution. They're just laser focused. They're not getting distracted on what we call shiny objects, things that are maybe distracting them from their core business proposition. So it really feeds into the successful advisors really have a vision for what they want to do, how they want to serve their clients, and then they stay anchored to that and build everything around it. So I'd love to start with, "Hey, you have a strategic plan or you have this great something in the business." But I think for us, it really boils down to the execution element and that feeds everything else that we would actually help with. Right? So how do you compensate people? How do you build your strategic plan? All of those things really feed around that, around the execution side of it. That's one I would say is really important and it's the less sexy, if you will. And it's not as glamorous as some things that you might say, but I think it's really, really important.

Bryan Sweet: No, it very much is important. So I just loved your perspective. So one of the things that you had mentioned that was the merger and acquisition component, and I see you came out with a, I don't know, it was a white paper or something on that today. So maybe talk a little bit about some trends or comments or reference that paper that you came out with today.

Brandon Kawal: Yeah, no, I appreciate that. We did, we came out with a, what we call the RIA deal room and it really is a look at M and A trends in over an analysis period. So we did an actual study of real transaction data over deals that happened from 2015 to 2018 and really tried to look, take it a level deeper and look at, well what are the competitive differentiators in this space that are allowing firms to win in the M and A market. And it really folded into two themes for us, which is, new demands if you want to be a buyer, and new realities if you're a prospective seller. The caveat is we feel any practice, any firm could be a buyer, a seller at any given moment. You just have to, until you evaluate M and A in a meaningful way, you kind of don't know or it could switch at any time.
 So we wanted to keep both sides of the table in our narrative. And I think where it feeds into what makes these firms so successful is what we found. The data really told us that there's a lot of focus on valuation. Throughout 90% of the market, the median valuations really didn't move all that much over, less than 10% variability in any given year. What was really moving the needle were the terms and structure of the deal, which we're reflecting in our opinion, some of the platform growth capabilities, human capital, all of those things that some of these really successful acquirers in the space have. So when we think about what makes successful advisors, to your first question, our report really is based on the thesis that you have to have something more in the M and A market to win in today's competitive environment, right?
 Beyond just having some money to spend, access to capital or maybe a modest size differential from your counterparty, if you're on the buyer's side, it's not quite enough anymore. You have to really have a great point of view on your platform, the support structure you have, the service offering, how are you going to grow, all of those things and how people come through an M and A transaction are more successful together. And I think, to my first point on the execution side, it really feeds off of that. You kind of can't have one without the other in the M and A market. You really have to be able to go into an acquisition and explain to your counterparty, here's how we do things, here's why it works and it's really great and here's how we can be better off together.
 And then if you're on the seller side, you really should have the right expectations of the M and A market, not only just from a valuation perspective, but what are you trying to get out of the M and A transaction itself? And it comes down to that, for us that core business thesis of why enter the M and A market in the first place. Is it succession related? Is it a scale play? Is that a talent issue? Whatever it might be, really be intentional about that before ever approaching the market because there's a lot of options out there now that weren't there 10 years ago in our minds and not all of them are going to be appropriate.

Bryan Sweet: Yeah, that's a such a big topic. And I was just at a conference a couple of days ago and a big, big part of that was talking about mergers and acquisitions. So before the podcast ends, we'll make sure we get your contact information and how you can access the really interesting report that you just created. So one of the things we get a lot of questions and we talk a lot about with our ultimate advisor coaching program is the importance of protecting your business and in the planning that you do, what's maybe the one thing our audience could do to protect their business that they built and/or maybe one thing that you see overlooked that people should consider.

Brandon Kawal: Yeah, I think that's a great question and something we hear a lot as well. And I think where I'd start with that is as you're thinking about your business and you're evaluating the ... We like to talk about things like growth and success and those things are great and that's where a lot of the focus should be, but when you think about protecting what you've built now and in the future, we look at it two different ways. I think this notion of succession sort of gets bundled together with this other terminology, continuity. And for us they're very two, they're two very separate things. So I would encourage anybody who wants to protect what they've built to think about them differently.
 One, continuity is really more of a disaster plan, so I think every advisor and any business owner really, it's not even exclusive to our vertical, should have a continuity plan. And that is really what happens if something unfortunate happens to you or you and your partners depending on how you're running it and what's going to happen for your clients, what's going to happen for the business you've built. And it doesn't have to be crazy elaborate. It just can be as simple as maybe it's insurance with a really great plan for how the business will transition and how your family is protected. Or it could be an agreement you strike with another advisor that allows you to know your clients and your team will have somewhere to go and at least be able to, although it will be disruptive and we all know that, have somewhere to go to be able to continue and continue to be successful.
 And then I think succession is more strategic and that, to me, is really an intentional planning for working yourself out of your business over time and so you kind of have to have both. And then I think one of the misconceptions we tend to see is, well if we just do the continuity plan that is succession and I would argue and really encourage everybody listening that it's not. You have continuity in the event of a disaster and succession as the strategic time-driven purpose-driven approach to working out of your business. So that, and it involves a lot more than maybe just protecting your family through insurance or through a buy sell agreement. I think the succession is a long range plan where you can really transition ownership and management of your firm, of your practice over time. A couple of things I think get looked over is that the distinction between the two and then I think, within the succession plan, what gets overlooked is that transitioning ownership or the rights to economics is not quite the full spectrum of what needs to happen for a successful succession strategy.
 You really have to make sure that everything from your client experience to the operations of your business to the management of the business. And by that I mean the oversight of all of it. It really has to be factored into your planning process. And it's a protectionist strategy right around the succession plan, but it's also a growth strategy in our minds because you're really activating others that you've brought into your practice or your firm to be more successful and take the reins, so to speak. And it's not easy, so I don't want to oversell it like, "Hey, it's simple." But it's something that I think, if I boil it down to its base components, every advisor should be asking, "What happens if something really unfortunate happens?" Although it's not ... nobody loves talking about it, you should ask the question.
 And then from a succession standpoint, really challenge yourself to say, "Okay, to protect what I've built and have it go on, do I want this to go on beyond me?" And if that's the case, then it's worth taking a crack at an intentional plan around succession with your team, with others that you feel could be really important to your business going forward and start to go down that path. Now could it lead to, could it work or not work? Yeah, it could not work. I mean, there are scenarios where internal succession is not successful and you see the M and A market at least partially is being driven by owners that need to get liquidity and start working their way out of the business. But I would encourage everybody who's thinking internal succession or is at least evaluating it, think at least 10 years in advance of when you might want to start winding down and really challenge yourself to see if you can see it through because the M and A market's always going to be there in my opinion.

Bryan Sweet: Yeah, excellent point. And it's one of those things that's really easy to put off or forget or I'll get to it someday, but really for the benefit of your family, your clients and your team, it's really something that you need to prioritize. So for anybody that hasn't done that yet, I would highly, highly recommend that get put on your 2020 plans to give that some consideration.
 So another topic that comes up frequently in our coaching is advisor compensation and/or team compensation when you have multiple financial advisors working for you. So is there any compensation models that you've seen that are working well or do you have any insight into any compensation issues that might be helpful for the audience?

Brandon Kawal: Yeah, this is a big one as well. And so I'm not surprised it's coming up pretty regularly. I think a couple of things with compensation in our industry, I think it starts at sort of a big question that everybody that's listening can ask, which is, could you go to somebody on your team and can they tell you how they win in your compensation system? And what I mean by that is, sometimes what we hear from advisors or from non-advisors that are working in the business and supporting advisory efforts is that, "Hey, I have a compensation plan. I'm not complaining, but I'm not really sure how I get to my number each and every year." So, I would encourage everybody, as you're looking at 2020, you're looking at the future of your businesses, ask yourself that question, "Could my team really articulate to me or to somebody else, yes, here's how I'm paid and here's how I do better or win in the system."
 Because I think the challenge is look, most advisory firms, pretty much all of them, if you were really oppressed are smaller medium-sized businesses, but everybody's pretty important to what you're doing in their own way. And so, sometimes I think that gets lost in the wash a little bit, is can somebody explain to you, "Yes, here's how I progress in the firm and then here's how I do better if I'm really performing the way I'm supposed to be." So that's one that I would say that's a broad reaching sort of a question that I would encourage everybody to ask.
 And then from the advisor side particularly and, I'll start there, I think what we're seeing the industry move to just broadly is a sort of, I'll stick on this, for those of you who don't know, I'm a former baseball player, so you're likely to hear a few analogies from there. But on the advisor's side, we're seeing really a lot of firms move to this, multiple ways to impact the game sort of compensation approach. So whether you are able to, and that means, "Hey look, as an advisor, you should be rewarded individually for what you do, right? That is a staple merit-based compensation plan that Hey, if you do X, you get Y. There's nothing wrong with that. And then I think where the industry is moving is we want you to be rewarded for not only what you do as an individual, but for team success in some way somehow.
 And I think that the firms that we've seen really do well in this have given advisors and non-advisers and in this case, a way to win individually and a way to win on a team level or a firm level. So I think I would encourage everyone to put some thought to what are you doing through your compensation plan to incentivize people to work closer together on behalf of the broader mission, which is generally the practice or the firm and overall success. And I think if you start there, you may be able to pick out some proportions of your compensation strategy that maybe need to be tweaked or maybe need to be overhauled a bit. But I think there is a push towards more of this notion of teaming in the advisory space.
 And where that really shakes out for the firm is when you have teams and when you have pretty robust support in the advisory and just the general compensation model, you're really just trying to improve your capacity and productivity. And so the company does benefit from that if you do it right and you really want to get big. That's where we see the industry kind of going overall. So I think, there's a lot of ways you can do that, but I really would just encourage those sort of high level questions. You know, how do people win in your system? And then on the advisory side, are you incentivizing advisors to just do what moves the needle for them or moves the needle for them and moves the needle for the overall entity? And it can be a very, the overall practice, it can be a very, let's call it squishy topic and a difficult one to parse through. But I promise, if you ask the question and really take a step back and look at it, you'll find a few things that you want to change.

Bryan Sweet: I would think this could and should be one of the things that we all as advisors spend more time on. And I think a lot of times we just assume every one of your team members is happy. And I think, from your comments, the more you can get your team involved and understand how does everybody benefit in the system, I think that's great, so I would encourage the audience to, if you haven't spent any time on compensation planning, give it a little more thought and how can you create something where your team is motivated to make the firm better. Because once motivated, I've just found team members can do an amazing amount to make your firm more successful. So I appreciate your comments and you have some great ideas on that. So anybody that's had concerns with that would be good to check with you.

Brandon Kawal: Yeah. And I think I'd add one thing to that, Bryan, as you sort of recapped it. I think one way to think about it in today's environment, you're right, if you haven't looked at compensation planning and what you're incentivizing, it's at least worth a look and if nothing else, for everybody listening that's an owner, founder, sort of lead person in their practice or business, we have to acknowledge that, and today, right now, and this may not be true for ever, but right now where we are in the labor cycle, it's a very hot market out there for talent. So when you kind of look around at your teams and you've got valuable people that you want to keep motivated, just know that I always encourage advisors, never make decisions solely based on your competition.
 But this is one where I'd say at least acknowledge yourselves that the market right now is hot for talent. And if you view your team as potential free agents, there would be an active market to hire them. Because you know, look, this is just where we are in the labor cycle and then we're in a pretty specialized, we operate in a decently specialized industry that people can go and see, wow, there's a lot of firms that need help out there and a lot of practices looking for great people. And so if nothing else, look at your compensation plan from that perspective of "Hey, do I feel really good about, not only what I'm doing and what I'm culturally and how I'm treating my people, which is critically important, but am I risking my team potentially being poached from another advisory firm that's willing to do a little bit more, or at least have a better alignment around the compensation plan." So I would just say it's worth looking at it. If nothing else, look at it for that.

Bryan Sweet: Yeah, I'm really glad you brought that up because at least in our area, the labor market is really tight. We're trying to find a couple of new people and for sure you don't want to lose anybody that's an exceptional person on your team because of compensation issues. Plus if you have creative compensation and people know how they can improve, you're more likely to attract that new talent. So thanks for those comments. One of the other things I'd maybe wanted to have you comment on is we did use your firm for our succession planning and maybe just give some input as to is there something with succession planning where people miss some component or is there any other part of succession planning that you didn't mention that people should be aware of? I just think that's so valuable to, as I mentioned to your teams, your family, your clients. So is there a common mistake that you see when you're looking at these agreements?

Brandon Kawal: Yeah, I do. I think it's a great point when we look at succession planning and in looking at that specifically as you're evaluating succession and sort of how you might want to go about it, that the couple of the big things that everyone should be aware of is, there's a lot of focus that tends to get placed on the economics or the financial impact of succession, which is very important. I mean, everybody wants to get fair consideration for what they build, right? So when succession you are, and in effect, over time, making, selling, economic value of your business to somebody else. So you know that that is a real impact. But there's a huge component of succession planning that for me gets overlooked when it comes to issues around control and influence in the direction of the business.
 And so when you really think about a really key founding partner or advisor or a couple of advisors that are really powerful in starting and leading the business, one thing that if you're in that position and you're evaluating succession, you have to really be comfortable with the notion that at some point you will get others involved through succession that will have a meaningful say in how the business is run and how the business is growing, in decision making that may have historically just been your call. And that is to me probably the hardest thing for most entrepreneurs to come to terms with, because for a long time it's kind of been, "Hey, this is the way I want to build this business and I've had success and there's really not a ton of reason to change", which is absolutely valid.
 But when it comes to succession and really trying to perpetuate your business beyond you, that is usually the biggest trade off that I see people grapple with is the change of control, the change of influence and management of the business itself. And so I'd say that's something that gets overlooked and the sooner you can really address that and have it in your mind that it doesn't have to be now, it can be later, but at some point, if you really want succession to work, somebody else or multiple other people have to be able to come in and put their stamp on the business and run it without you or with very little involvement from you, I would encourage you to really, really think through that and to come to terms with it. And then I think when you're looking at just agreements, strategy, things like that, I'd say, one of the things that we feel and we've observed as it gets overlooked is, when you're thinking about succession, it's usually tied to governance and buy/sell agreements in an entity or in your practice. Don't skim on that.
 I mean I think that the more definition and the more confidence you can give everybody in this type of conversation, the better because, it may seem inconsequential now. So an example would be what rights does somebody have if they're buying you out? What rights do they have and when to both, not only buy ownership from you or move ownership from you, but also what does that mean for their say in the business? Do they have a seat at the table so to speak? What happens if something happens to them as a new and incoming partner and things like that where you really have to design the rules that govern not only just you, but everyone else that would come alongside of you and make succession a reality.
 And the more certainty you can give people with that or competence at least, and they're nothing certain, but confidence is the better it's going to be. So we really encourage firms that are looking at succession to say, "Hey, let's do the internal succession plan. Let's put a roadmap in place. Let's make sure your agreements are right and everything is well supported." And then we've got to go through it and hope for the best and know that you put yourself in the best position to succeed. But I'd say, sort of recapping that is owners really needing to understand the control and influence in the business will change at some point. And then in the interim, really defining, well when is that, what does somebody get by becoming an owner and taking some ownership and economics away from you and giving you fair consideration for what does that mean for them and what protections do they have going through the process.

Bryan Sweet: Yeah, as you can hear, it's a very complicated thought process, but very important. So before we wrap up the podcast today, is there any other piece of advice you'd give to financial advisors?

Brandon Kawal: Yeah, I would say a couple of things, I'd say take the opportunity to, going into 2020, take the opportunity to pick sort of your top three on the business items and by on the business, I mean it could be succession, it can be compensation, it could be just your strategic plan, or all of the above, but something on your business that you maybe have put to the on the side burner and our back burner for a bit or you just want to really be intentional about. No more than three, but pick those three items and see if you can make some significant progress on them in 2020 and don't be shy about getting other people involved. I mean your teams, feet to the fire, your teams will relish in the opportunity to help you with that, to try to have their own, try to help you and feel like they put a stamp on the business or the practice.
 But I would say just pick three items that are on the business that are not related to the advice you deliver to clients that are not necessarily the new marketing or business development campaign you're going to deploy. And more about running the business itself and trying to move the needle on either capacity or with your talent, whatever it might be, and really commit to it. Because I think as you're looking at 2020 and beyond, you can't predict what the markets are going to do. You can't predict a lot of things, but what you can control and what you can do is the intentional approach on how you're running the business or the practice. So I would say that to me comes first and decide what you want to build and then really get others to help you define how you want to build it. And I think by doing that you'll see a pretty significant outcome in a short period of time.

Bryan Sweet: Yeah, great point. So if somebody wanted to reach out and learn more about what you could do or how you could be helpful to them, give me a little information on your contact and maybe how could they get this merger and acquisition paper?

Brandon Kawal: Yeah, a couple of ways to reach us. So our website is www.advisorgrowthllc.com. That serves two purposes, a little bit about our firm and the areas that we help financial advisors in their growth and on their business. We also have a link at the top called RIA deal room where you can get access to our report on mergers and acquisitions and kind of see what's happening out there in the industry beyond maybe some of the things you've seen before us is very, very different, but some great insights in there that I think will help a lot of the listeners. And certainly I'm happy to have folks reach out directly to me. So you know my phone number (480) 245-5094 or I can always be reached by email and my email address is on the website. You'll see my grinning photo and an email address right below it. So happy to connect and go through chat with anybody that's wants to reach out. Remember the first call is always free. We're just getting to know each other and so don't hesitate to reach out. Happy to have the conversation.

Brian Sweet: Thanks Brandon. And you are very so take advantage of that free call. So with that, I'm going to wrap up this episode of the ultimate advisor podcast. And want to thank Brandon Kawal for being part of it and look forward to having everybody on the next episode of the ultimate advisor podcast.

Brittany: Hey, Brittany here. We hope you got a lot of value out of today's episode. To access the key takeaways, the show notes, and any deliverables go to ultimateadvisorpodcast.com and while you're there, check out the ultimate advisor mastermind if you want to learn ways to maximize your income, your impact, and your legacy through an automated practice, a self managing team, and a killer culture the clients can't stay away from. We look forward to seeing you back here in next week's episode.

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The Ultimate Advisor podcast is a business podcast for financial advisors who are looking to grow their advising practices with greater ease and effectiveness. Ultimate Advisor was developed to help financial advisors master their marketing, sell their services with greater authority, generate repeat clients, and additional revenue in their business.
Each week, your hosts Draye Redfern, Bryan Sweet, and Brittany Anderson will share some of the closest guarded secrets from successful financial advising practices across the U.S.  

Draye Redfern

Draye is also the founder of UltimateAttorney.com which helps Attorneys go from “Surviving” to “Thriving” in their business.  In addition, Draye helps to provide insurance solutions to more than 8,600 law firms across the United States annually.

Bryan Sweet

Founder of Sweet Financial, CEO, Wealth Advisor, RJFS
Creator of The Dream Architect™
Co-founder of Dare to Dream Enterprises
Creator of Elite Wealth Advisor Symposium
Author of 3 books – Dare to Dream: Design the Retirement You Can’t Wait to Wake Up To, Imagine. Act. Inspire. A Daily Journal and Give & Grow: Proven Strategies for Starting an Running and Effective Study Group

Brittany Anderson

Director of Operations at Sweet Financial, Office Manager, RJFS
Co-founder of Dare to Dream Enterprises
Author of 2 books – Imagine. Act. Inspire. A Daily Journal & Dare to Dream: Design the Retirement You Can’t Wait to Wake Up To
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