Chapter 2
Create a Compelling Vision
“Whatever you do, or dream you can, begin it. Boldness has genius, magic and power in it.”
—Goethe
Inspired leaders lead with long‐term visions for their teams and organizations. A shared vision is how a leader creates a committed and invested team. We all know that advisors in general are mostly focused on their practice only. They mainly care about their clients, themselves, and their family. So why are we talking about having a vision? Because almost everyone would like to be part of a winning team and be part of a community of people with shared principles and values. People want to know that others around them are also committed to excellence and that the team, division, or firm has a vision. Where are we going? How will we get there and why are we doing this?
Before you can create a vision for your team or firm, you need to become very clear about your personal vision, your values, and your principles. You need to answer the question, “How will everyone benefit if we achieve this vision?”
Vision needs to be shared. As an advisor you need to start with your vision. It could be the vision of a small wealth management team of three, a partnership, or the executive office. But whoever the stakeholders are—everyone must be committed to that vision for it to stand a chance of becoming fulfilled.
Until you truly believe and envision what your business, team, office, region, or firm should be, you're sailing without a rudder. You will likely create confusion and the lack of motivation will be pervasive. Based on my personal research and experience, most firms or teams operate without a clear vision. And, if there is only one person in the organization who can describe the vision, chances are it is the person who created it. The firms that have a clear vision operate with a sense of purpose. These types of firms or teams occur quite infrequently. The following is an example of what commonly happens across firms without a vision. A firm I worked with a few years ago had gone through major organizational changes over several years and the new CEO felt the firm had gone through so much upheaval that it was best to default to doing nothing. In other words, his mindset was that people couldn't handle more disruption, and therefore it was best not to do anything to cause more upheaval. Even though he was the new CEO of the firm, he never created a new vision nor did he ever talk about how the firm would not only compete but win under his leadership. As a result, everyone became confused about the future, who they were as an organization, what the new organizational culture would be, and how they would achieve their objectives and serve their clients. As I mentioned earlier, this tends to be the norm in many companies that have undergone a lot of leadership change.
By the way, you don't need to have a large firm to have a vision. It doesn't matter if you are one advisor or a three‐person team, having a vision is important. It will serve as the lighthouse, the North Star.
Consider this:
- Create a clear and vivid picture of where you want to go, why you want to go there, what “there” looks like, and why anyone should care about it.
- Set out how you are going to get there.
The future is unknown, the markets are unknown, and change is constant. Your vision should focus on the people inside the organization, as well as the value you're committed to creating for clients. Be enthusiastic and energetic about the future. A vision is an act of creation.
Ask yourself:
- How does our vision benefit the client and the people on our team? A business vision is not about you; it's about the people you serve. Every decision you make about the future should have the client front and center. Every decision should be guided by these questions:
- How does our vision benefit the client?
- How does our vision benefit the back office?
- How does our vision benefit the front office?
- How does our vision benefit the community?
- How does our vision benefit the shareholders?
Growth Is a Choice
Let me stress again that before you create a team vision or a corporate vision, you have to cultivate self‐awareness and create your own personal vision. You may be asking why I am making such a big deal about having a personal vision. Vision is all about authenticity and the quest for authenticity starts with self‐awareness.
Since 2008, I have called my advisor and manager training and consulting programs, which are designed to grow assets under management and evolve overall wealth management practices, “Growth Is a Choice.” The reason for that title is simple: everyone has the power to create his or her own vision. Everyone has the power to choose growth over fear or over complacency. We can either design a life starting with an intentional vision or we can react aimlessly to everything that comes our way. We can be the creator of our destiny or a victim of circumstances.
The choice is ours.
Consider this:
- The only thing you must do to live is maintain a body temperature of 98.6 degrees. Everything else in your life is your choice and part of your vision. You have the power to make decisions that will help you and others live a more purposeful life. Let me say it again: everyone has the power to choose growth over fear or over complacency. We will talk more about Be + Do = Have in Chapter 23. Your personal vision is the “Be” part of the equation. You dramatically increase your odds of achieving success once you know who you like to “Be” and only then you will start doing the activities necessary to achieve your objectives.
All it takes is courage and discipline.
“The best way to predict the future is to create it.”
—Abraham Lincoln
I have known Mark Casady for a number of years and knew he would have great insights on successful leadership practices. Mark is smart and driven and has incredible communication skills. He has a wonderful combination of emotional intelligence and practical business acumen. Unlike some CEOs with inflated egos, Mark is humble and has a good handle on what's important in life, especially as he retires from LPL Financial and is spending more time traveling and engaging in entrepreneurial ventures, which he calls life 2.0—the next version of his life.
Rick: Mark, how did you get started in the business?
Mark: I loved the markets and always thought I would be a portfolio manager. I went to work for Northern Trust in 1982 and they had this wonderful training program. I realized quickly you can buy a company as a portfolio manager but you couldn't change the company itself. I like IBM, or I don't like IBM, but you couldn't fix it, and that was incredibly frustrating to me.
Rick: When did you join LPL?
Mark: I joined in 2002 as the COO with about 4,000 advisors. I became president in 2003 and in 2004 I became CEO. Over 12 years LPL grew from about 5,000 advisors to 14,000, with another 4,000 affiliated with AXA for a total of 18,000. About 20 percent was acquisitions and the rest was organic. We went from $90 billion in assets to about $500 billion in that same time frame.
Rick: How did all the stars line up to achieve this kind of success?
Mark: We started with smaller advisors and went up the market over the years. It was a time of a lot of accumulation of assets by the investment community. The second wave we rode was consolidation and I believe we will see more consolidation over the next two to three years. The third was the march to independence and it continues today. We built out new capabilities, financial planning, and rebalancing tools. We tried to respond to the advisor needs.
Rick: How do you see the future of independent broker dealers in terms of margin compression?
Mark: Advisors will have more options—everyone will feel compression. Self‐clearing makes a big difference. If we didn't self‐clear, we would have a third of the margin we have. We control custody and control cost. Multi‐custodians are almost free today, and it will not always be that way. These custodians are saying if you give me $300 million it will be one price, but if you give me $1 billion it will be this price. You need to have someone that's your major partner.
Rick: What advice would you give an advisor who's interested in growing the business?
Mark: They need to do three things differently: First, they need to change the dialogue from “I manage your money” and “This is the expected return” to “I help you figure out what money means to you.” Most of the problems for consumers are due to behavior and not a problem with the portfolio. We all came into the business because we love markets. “Hey, Rick, I'm smarter than everyone else, come and work with me.” And that's a nice pitch. The problem is I'm selling you a commodity, which is a return. Compare that to “Hey, Rick, let's talk about what you want to do with your money, and what your money is going to mean to you.” The advisors need to get into the client's head. Why do you spend so much? What's your relationship with money? You have to have the mind of a capitalist in terms of how markets work and the heart of a social worker. The problem I see is that we spend too much time on the capital market side and not enough on the soft side, the relationship‐building side. The best advisors I talk to tell me they spend a lot more time on the soft skills.
The second thing is they need to automate the process by outsourcing as much as they can, including rebalancing, social media, portfolio modeling. The practices that are growing faster are those that use a standardized approach. Because, guess what? This frees up the advisors to spend time on building relationships. So they need to get efficient.
The third thing that needs to change is to outsource investment management. You will not be able to afford the talent it takes to run a portfolio. Now you need to be able to talk about markets and you need to understand who you outsourced to and know if they are doing a good job. So you need to be able to evaluate performance, but that's a different skill.
Rick: What does it take to be an effective leader in the wealth management business?
Mark: I would ask advisors: What's the brand experience you are trying to create? What's the look and feel for the client? How do we interact with the client? You need to define what it means to have a great experience for the client.
The second is how do we make money? It doesn't matter if you're at the wirehouse, bank trust, or independent. This question gets to the heart of your strategic vision and value proposition. For me it's a clear way to get to the point of why we are in business.
Rick: How do you think the advice business will be disrupted by technology?
Mark: I don't think technology will displace the advisor if they evolve to the new world. The issue is cost. Robots will not take over the world. The next generation will still want face‐to‐face. When I have a little bit of money, I have a gambling pool and I can open an account online and trade. When they accumulate more assets, they will seek advice from a human being. The big issue is cost. What's the right price to pay? When we look at fintech, which is my new life, we look for technology that lowers costs and produces better outcomes. The mass affluent market will expand because of robos because in the past this group didn't get any advice. The advisor can use robo solutions for a certain segment of their book. The trend that's real is this cost trend, so this cost is also driven down because of lower investment returns over time and market volatility. Therefore, it's going to impact the cost you pay. That's why ETFs are so popular, and robos that do asset allocation at a reduced cost from 100 basis points to 35.
Rick: What advice would you give an active asset manager?
Mark: Great question. I was just asked this question by a big firm in town [Boston]. This model has not changed in 30 years and it's wrong. It's really very simple to me; you have to lower costs. The only question is, how do you do that so it doesn't destroy your existing business? Close the old fund and open a new fund with new pricing and you may need less wholesale force. A wholesaler just going around selling a product doesn't get much attention. They have to show how they add value to the practice. Some asset managers do this better than others. To me this is the best example of how wholesalers add value by helping the advisors grow their business. They walk in and they can help you with robo advice, risk management tools, and practice management. They can help you with a whole range of things that go well beyond the product conversation. The value‐add wholesaling will be key going forward. I think we will see more consolidation over time.
Rick: What advice would you give to a client who's thinking about retirement?
Mark: First, you need to decide what infrastructure you need going into retirement. Do you need an office setup? Do you have a personal assistant to help you with logistics? Have you thought about being on a board? Are you exploring a business that's a passion project? Most of us are type A personalities and it's difficult to slow down. I'm taking golf lessons with my wife. We thought about the time we spend together and the time we spend apart. The fun things we do together and the nonprofits we support we can do together. We are also working to make rums and whiskey. This was first a vanity project and it may turn into a business, but we are having fun. I joined two boards but didn't go on a third because I want to spend more time with my wife. Retirement to me is not playing golf all the time or stopping and doing nothing. That's why it's life 2.0. There are still things I want to do, including more travel. And I may decide to get into running a business like asset management, for example. Leaving yourself open to the possibilities, that's the key.