#FASuccess Ep 223: Finding Success In Succession By Building Towards The Successor’s Vision, With Marianela Collado

Author: Michael Kitces

Team Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Wealth Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2010, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

What You’ll Learn In This Podcast Episode

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Full Transcript:

Michael: Welcome, Marianela Collado to the “Financial Advisors Success” podcast.

Marianela: Thank you, Michael. Thank you for having me.

Michael: I really appreciate you joining us today. And I’m looking forward to the discussion around, I think it’s going to be a theme of succession planning, and succession planning from the successors’ end. I know you’ve been through a succession plan over the past couple of years. I guess you are the successor. You are now the majority shareholder and leader of the firm. And I was fascinated by your story when I had heard about it because I find, for a lot of advisors, when they go through succession plans, particularly the kind of firm that you took over, which was a one-man practice. There were a few people. Or a one-lead advisor, founder practice with support advisor and support staff. And have now, over the span of just a couple of years, turned it into a much larger firm with 17 people, and growing rapidly.

And to me, it’s such an interesting transition because so many advisors I see, when they are founders and owners, and they’re looking at succession, they tend to try to find successors who are kind of mini-mes. Like “mini-me”. Mini them. Just like them. They find themselves from 30 years ago, when they were getting started so that they can give someone else the same kind of path. And more importantly, at least from their perspective, someone who will continue the firm in their footsteps, in their style. Basically, in their own vision. And one of the biggest places where I see succession plans fall apart, just in practice in our industry, is when successors come in and say, “love what you’ve built, taking it in a totally different direction.” And that can create a lot of challenge. A lot of friction. It ends out making a lot of succession plans fall apart.

And so, you seem to have navigated that path as well, I’m sure with a couple of speed bumps and travails along the way, which I suspect we’ll get into. But I’m excited to talk about this idea of what does it look like to come in as a successor of a succession plan and coming in with a different kind of vision than what the firm and the founder was, to begin with, and say, like, “Love what you’ve built, totally respect what you built. But I am taking it in a different direction because I own it now and this is where we’re going.”

The Foundations Of Marianela And Ben’s Succession Plan [05:58]

Marianela: Yes. And as you mentioned, definitely there are challenges, but I will give the founder credit in that when he met me, he said the exact same words you just said. “You were me 30 years ago. We basically grew up just a few miles apart, but generations apart.” And what he meant by that, it was just the background. The education, the upbringing. So even though we’re different in so many ways, he saw the vision of bringing in a female advisor. And what I give him credit for as well is recognizing that, I don’t want to say an upgrade, but just looking at the opportunity to bring more sophisticated planning. Because of my background, I was almost 12 years with Bessemer Trust, working on ultra-high net worth individuals. So that was the technical skills I had.

So I give him credit, because even though… I did. And I said the exact same thing to him. “I love what you’ve built, and I’m seeing a vision that we could now raise the bar and take it to the next level.” So philosophically, from a client service and a client advisory perspective, he knew that we were philosophically aligned, but what I brought in that was different was this idea of just elevating what he had already built on.

Michael: Well, I love the way that you frame that. That you were philosophically aligned. Like, different vision, the same values. And to me, that really becomes probably like the only foundational point that you can really build around if you want to see a successor come in with a substantively different vision is, if you’re philosophically aligned, if the values are the same, then your successor might build it differently, but they’re still going to build it in your mold. Because they’re still building around the same core values in the first place.

Marianela: Exactly. And I think it’s funny, because when I made the decision to join Tobias Financial Advisors back in 2015, and it wasn’t an easy decision, but it was the right time because of where I was, personally, my family. I’m a mother of three kids. And at that point, I don’t know how I was juggling what I was juggling, but, just thinking about what was I going to be doing at this smaller RIA. I’m used to working with families whose net worth exceeded $100 million. And so I wasn’t sure how I was going to fit in and add value. I just wasn’t sure where I was going to fit in.

And so I made a decision coming here that my role was just to sit in every client meeting with Ben, and just absorb. And I said, I’m just going to sit in and just see what it is, what conversations are we having? And even though I tried, Michael, just really tried hard, I wasn’t going to say a word, I couldn’t help myself, because then I started getting excited. I’m like, well, the light bulb is going off. “Have we thought about this? Have we looked at this?” And I think what made our succession plan so successful was that it was happening naturally in the clients’ eyes. They were seeing that maybe I did have the skills to fill in those shoes, and maybe make the shoes even nicer.

And so, they started turning to me, they started respecting what I was bringing to the table, so that by the time this actually did happen, it wasn’t such a shocker to them. It was like, “Oh, that hadn’t happened already? Because I could have sworn it had already happened,” just because they were seeing the level of service, the way the meetings, the look and feel, the flow, everything was starting to feel and look different.

Michael: Interesting. And so, I guess in practice, the fact that you were on board for some period of time before the formal, “the official” succession planning transition began meant clients were already seeing a firm that had always been Ben as the original founder and lead advisor, become not just Ben. And I knew Ben when he was active in the practice. Ben had some gray hair. I’m sure everybody got, at some point like, Ben is not going to be doing this indefinitely, there probably needs to be some other advisors who are younger, if they’re going to be around. So I’m sure clients were picking up on what’s going on, that just clients seeing, “oh, there’s this other person in the meeting, and they’re much younger, but they are mature and experienced. And look, she clearly knows her stuff. Look at these ideas that she’s bringing to the table.”

Clients were already doing the mental transition of my future isn’t really just going to be Ben, at this point. It’s going to be Marianela and this next generation of advisors coming in, and “I’m working with them, and I’m interacting with them, and I’m having a positive experience with them. And this is going well.” And then they get the official news. It’s like, “Oh, well, yeah, we made that mental shift like a year ago.”

Marianela: Exactly. But you know what? And that’s similar to, I tell my advisors, you don’t behave a certain way because you’re given a title. In this situation, you do put the cart before the horse. You do start behaving in that role that it is you’re looking to have. So if it’s that senior advisor role, you start behaving in that way before that promotion comes. And I follow my own advice. I don’t just tell people that. So if I wanted to be the owner and be the person taking over at the helm, I needed to start behaving that way. And it was through action and through building that trust and that rapport with the clients.

So that was my priority coming here. It wasn’t, “I’m here, I’m taking over. A new sheriff is in town.” That wasn’t my thinking coming here. It was more about what can I learn from this? And what are things, like, “where am I going to add value? And what has Ben been doing? And how do I piggyback off of…?” Because you also don’t want to do a full 180. Clients are used to certain things. So it was just slow introductions of an enhancement here and there as sort of say.

Michael: So, we’re going to talk a little bit later about what the firm looks like now and where you’ve taken it since the succession plan completed and you took over the role. But take me back first to when you came to the firm.

As you were saying, you came out of the environment of Bessemer Trust, you came into the firm. So, paint the picture for us. I mean, what was the advisory firm? What did it look like when you showed up, whenever it was, five or six years ago, to say like, “Okay, I’m going to join Ben, we’re going to do this thing?” What was that firm in terms of size or team or clients or assets, however you size it up and paint the picture? What did that firm look like?

What Tobias Financial Looked Like When Marianela Joined The Firm [13:59]

Marianela: So, when I met Matt, which actually was the one I met first, at an estate planning council, and just would sit next to him and tell him all the things I did, and I got invited out to lunch, I think it was July, 2015. And they were telling me they had this idea that I would just come in and be a part of their succession plan, which was at that time, was supposed to be more of a five- or seven-year plan.

At that time, and I remember my clients, when I was telling them I was leaving Bessemer, they were so worried. They’re like, “You have to be careful. These firms, sometimes out of Florida, the Bernie-made-offs of the world.” So they were really worried. Where was I going? So, of course, I started doing my due diligence because I’m like, yeah, where am I going? Who is this guy?

And doing all my due diligence, Ben had been in business since 1980. He turned his CPA practice into an RIA back in, I guess, late -80s, around 1989, 1990. And had been doing this for a good 25, 30 years, as far as the advisory side of the business. And at that time, in 2015, he had about $250 million in assets under management. Revenues at about maybe $1.5m, $1.6m. And so, looking at the size of the clients, they were about the million-dollar range. At that time, our minimum was $750,000. And we were providing, I’m going to put in quotes, just kind of “holistic wealth management service.”

And so, I wasn’t sure where I was going to take the firm. I just saw that he had a nice foundation. It was a profitable practice. Ben was pretty much for all intents and purposes, the lead advisor, pretty much at every meeting. Matt had some clients that he was the lead on. But the clients would ask for Ben to be there. So he was looked at as the person to meet with. So we had…

Michael: And how many clients were there?

Marianela: So there were about 130, 140 clients at that time.

Michael: Okay. So, to me, like classic ‘firm at capacity’. Most advisors start topping out at 75 to 100 clients, if you got a support advisor along with you, you can sometimes get to 125, 250. That’s right where they were. It sounds like Ben and Matt had 130 to 140 clients. So you’re not necessarily growing and adding a lot so you can service a few more. And that was the deal, averaging just over $10,000 of revenue per client, given the one and a half million dollar revenue base. So a good, solid, profitable practice sitting at capacity and doing its thing. And was there a lot of support team structure in place as well?

Marianela: So, when I came, we had two client administrators. Amazing. And I would say, Michael, they do so much. From opening accounts to, they did it all. And we still have Peggy who’s with us. She’s been with the firm for over 12 years now. So basically, two support administrative staff. And then we had an associate. But when I came, I saw this associate and felt like he had no direction on where he was going and what he was doing. So there wasn’t much of a development system in place at that time.

So, with that structure, at that time, I saw that one of the challenges we were going to have was attracting and keeping talent. So I knew that I needed to bring in that experience that I had had, more in a corporate setting. I mean, I started my career with Arthur Andersen. You joined Arthur Andersen because they had a state-of-the-art training program. And unfortunately, they collapsed. But anyway, the point is that…

Michael: For other reasons not related to the wonderful training program they had.

Marianela: Exactly. The training had nothing to do with their collapse. But the point is that I knew that coming in, one of the challenges we have in our industry when you do planning, is the talent. The scalability of the work we do. And it gets harder because you need people. It requires brainpower. And you need talent, and you need to be able to attract it and maintain it.

So it was a very small team. I came on board, and I may have scared that associate because I said, “I’m going to train you and do this, we’re going to do that.” He left us. So then we were just, I remember that that year-end, we were working on year and tax planning, and Matt and I looked at each other and were like, “well, I guess it’s the two of us to run all our client projections.”

But yeah, so I think the vision was that there were a few things we needed to start streamlining and cleaning up in order to really turn this into something. And I needed to go slowly. So the first, I’m going to say six months, it was me more of getting the lay of the land and where were my blind spots, and what were things I needed to start implementing.

Michael: So you come into this practice, I’m just trying to make sure we got a clear understanding of what it looked like. So Ben is a CPA financial planner, he’s been doing this for 25-odd years. Has a great client base of 130, 140 clients. More than one and a half million of revenue, almost 250 million of AUM. He’s servicing these clients with Matt, kind of his right-hand advisor, slowly taking the lead on clients, although some clients aren’t used to letting go of Ben yet. Two client service administrators and an associate. So a team of five supporting and managing this client base. And that’s the business. That’s where it’s at.

And I’m going to assume, and correct me if I’m wrong, not necessarily growing a lot at this point because it was was already at a pretty good level.

Marianela: Yeah. The idea of business development back then was just waiting for the phone to ring for the most part. And that was it. And it’s funny, because some clients said, “Well, are you taking on new clients? Because I understood that it was at capacity.” I guess they had heard that at some point. And I said, “No, we’re looking to grow.”

So it was more of, not really hunting for new business, but if it came, it came. And it was just you got a call here and there from a NAPFA, a referral, or fee-only network. And that was it. You just waited for the phone to ring. There was no really, proactive approach to business development.

Michael: Okay. Which makes sense. Ben has been doing it for a long time. He’s got some good connections. You’ve got a happy client base who can certainly let their treasured friends and family know if they feel like sending a name along and referring someone in but not necessarily looking to do a lot to grow because the practice was at a good place.

How The Succession Plan (And Its Structure) Changed Unexpectedly [21:41]

So you’re in that environment, and we’re in 2015. And so, Ben and Matt start this process of like, “Hey, we should talk to Marianela”. So I’m presuming it was acknowledged at this point, okay, the practice is at a point where Ben is, I’m going to guess was probably into his 60s by that point. And is just looking at this and saying, “Okay, I got to figure out this succession thing, because it’s time. And I want to retire out by 70-ish or so.”

Marianela: And his vision was really not to retire. But he would always say, I help my clients plan, and I wouldn’t be doing right by them if I didn’t plan for who was taking over should something happen. And maybe it was some writing on the wall, but also, his wife was ill. And so he just saw that there were things that could, potentially, take him away from the day-to-day. So he just wanted to have something more formal and knowing that he had the right people in place so that if he did need to step back, he knew it was going to be smooth and his clients would be serviced. Which, I don’t know, it was perfect foresight at that time for him, because that was 2015. So, 2016 was a pretty rough year for him because exactly what he was anticipating did happen. His wife, that was a roller coaster of a year in terms of her health. And so 2016, Matt and I pretty much ran the business, from meeting with clients and bringing on new business. We did it by ourselves because he was in and out, just taking care of his personal affairs.

And this is why you do that. This is why you have a plan in place, because you may say, I plan to retire in five or seven years. But anything can happen where, all of a sudden, it has to be accelerated for one reason or another.

Michael: So you come on board to say, okay, we’re going to do this over the next five to seven years. And a year later, Ben’s wife is sick. He’s hardly in the office. And it’s already basically the Marianela and Matt show.

Marianela: Pretty much. And so, by the end of 2016, he comes in, and it must have been October, November. And he says, “I realize I haven’t even been able to come into the office. And I’m glad that the two of you have pretty much been running with things. And so because of where I am right now, I think we should accelerate the plan.” Because we had already hired FP Transitions to help us develop what this succession plan was going to look like. We had laid it all out that it was going to be five to seven years. We had done that in early 2016. But never did we anticipate that maybe six or seven months later, we would just full-throttle on it.

Michael: Interesting. Interesting. I understood that it changed. And we’ll talk about that in a moment. But I’m curious, what was the original plan? What was the original five- to seven-year plan? How was it expected to work before everything changed?

Marianela: It was expected that over the course of five to seven years, he would be transitioning incremental ownership interest so that by the end of year five, six, and seven, he’d end up as a minority owner, maybe with 25% ownership of the business. So that was his vision, and he would stay engaged. But as I mentioned, we ended up making the decision at the end of 2016 to just accelerate the whole thing and just go to year seven and end up right where he was looking to end up in year seven and just do it all at the beginning of 2017.

Michael: So in the original version, were these going to be transitions as compensation for the role that you’re doing? Were these actually going to be purchases? Like you were going to buy the shares at whatever FP Transitions valued them at. Because I know they also do valuations.

Marianela: They did. They did. It was a buy-out using soft notes so you’d buy in based on the valuation at the end of the prior year. We had a whole system in place, and it would be designed with the soft notes where your distributions would pretty much cover the note back to Ben. That was the original plan. And increments to get to the 75% ownership to next-gen.

Michael: You make an interesting point there of structuring it so that the distributions cover the note back to Ben. It’s one of the things I find is often not well understood in succession plans. I hear a lot of successors say things like “the practice is too big for me to buy.” And the reality is if the advisory firm is running profitably, which most do, we see a lot that have 20% to 30% profit margins. Sometimes high-income solos have even more profitability than that. Like, as long as the advisory firm is profitable, it’s never too big to buy, as long as you finance it over enough years, as long as you amortize it over enough years. If you over-generalize a little. Like if I buy the firm and I pay it down over seven years, I’m paying essentially one-seventh of the principal per year or about 14% of the value.

And so, it’s not uncommon to see advisory firms end out with what essentially are anywhere from 10% to 20%, dividend rates, the profit margin is higher, but as a function of the valuation, it can still end up being a 10-20% dividend rate. And if you’re paying payments that run about 15% and you’re taking dividends out that run about 15%, these things offset each other. And if the math doesn’t work there, you make it an 8- or a 9- or a 10-year payment. And then the math works better, particularly when interest rates are so low. So the interest doesn’t actually add much to that equation. The deals do tend to get pretty close to sell-financing at worst. Maybe the first year or two cash is tight until the firm grows a little bit more, and then the distribution cash flows outweigh it.

So I think it’s interesting that you were structuring it that way upfront to say we’re going to finance this over enough years. And it sounds like this would essentially have just been Ben seller-financing the note in and of itself, and that would be the deal.

Marianela: Correct. Yeah. That was the original plan.

Michael: Okay. Okay. And the only other thing I’m curious about in the original plan, you had talked about selling incremental ownership interests over five to seven years. So that by like years, five, six, and seven, Ben’s ownership is whittling down to a target of 25%. I’m just wondering, what was leading the plan of saying we’re going to do it incrementally, as opposed to, we can just do the sale today, finance it over seven years, and seven years from now, we’re done paying off a note and Ben has had his new ownership level? Was there a driver as to why incremental versus a big chunk just financed over a long period of time?

Marianela: It was Ben’s vision. So I wanted him to design it the way he thought it appropriate. Again, I thought I needed that time to continue building that rapport and learning the ropes around an RIA, and running a practice. So I was comfortable with that timeline. I thought it was a good enough runway.

So we just let him design it the way he thought he wanted to see it. I didn’t want to push him to do it quicker or this way or that way. And then he was also, in his mind, participating in that growth that was happening in between year one and year five, six, and seven.

Michael: Okay. Right. I find the tension points for a lot of successors, it’s those most say like, “I don’t want to be successoring in and buying the growth that I’m creating. I’m helping to grow the firm. And I’m still buying shares as I go, which means I’m making my own shares more expensive by growing the firm as I’m buying in.” And yes, mathematically, that’s true. But as I think your story is illustrating, well, you have to consider this from the seller’s end as well. Like, if they know there’s some growth coming, they don’t necessarily want to sell the shares. And if that’s the case, you want to buy them all now, and they don’t want to sell any of them right now because it’s still growing. So what’s the midpoint? Often, you sell incrementally. So you buy a little bit of your growth, and they participate in a little bit of the growth before they sell. But you both have growing skin in the game through a transition. And it’s the advisory firm equivalent of dollar-cost averaging in for the successor and dollar-cost averaging out as the seller.

And we do it for the same reason. You’re trying to minimize regret and manage the concern that there’s a big change in value shortly after you sell that if it was a good change in value you don’t want to miss all that as the seller. If there’s a bad change in value, you want to be buffered a little as the buyer and incremental plans meet the midpoint on that for a lot of people.

Marianela: And I think that was that epiphany for Ben at the end of 2016, because he had realized that he was pretty much MIA for that year, and we had sustained it and maintained it and even added new clients, so I think in his mind is, I don’t feel right about this because you guys are at work. And I respect that he came to that realization. And maybe not all founders would have been as forthcoming and fair. So I think I appreciate the fact that he came to that realization and said, “You guys have pretty much, you’re running with it. Let’s just move it forward.”

Michael: It’s an interesting point. So, it sounds like part of the reason that he wanted to continue to own shares and transition gradually was, he really envisioned himself continuing to be an active participant and actively engaged in the advisory firm. And when he realized he was going to be an absentee owner, because of what was happening in his personal life was the point that he decided he just wasn’t going to be the owner anymore.

So had you done the first tranche, the first sale, the first transition yet? Or was it still you were planning this five to seven-year deal, in 2016, it was going to start in the year that followed, and then all of a sudden it was like, “no, no, no, we’re going to do the whole thing at once?”

Marianela: We did. We did round one in early 2016. And then by end of ’16, decided to accelerate. And by spring of 2017, the full plan was complete, but where the twist of events is that with that acceleration, it was no longer really seller-finance with soft notes. At that point, we had to really put skin in the game. And that meant looking at SBA loans and doing that type of financing. So that was a game-changer.

And really, where the story took a big twist was final moments, and Ben was not happy with these, final moments. We’re about to get ready to schedule a closing and everything. And SBA comes back and says, You know, your plan calls for Ben staying on board to the tune of, I think it was 20%, 25%. And SBA doesn’t allow that. So we said, “what?” And so, at that point, Matt and I looked at each other and said, “Well, I don’t think this is going to go through,” because that was important to him. And they said they wouldn’t allow it because the business had to, from an SBA perspective, they didn’t want it to seem like the founder was cashing out but still being part of the business. Not really selling. So they didn’t allow him to stay on board. And Ben decided to still move forward, which was a big surprise. He wasn’t happy with that.

Michael: So I just wanted to understand the context here. So Ben decides, we’re going to do this thing more accelerated. He still wants to do the I’m going down to 25%. Which is I’m not going to go down to 25% over 7 years, I guess 6 more at that point. I’m going down to 25% immediately. If I’m going to move that much at once, I’m not comfortable doing this as a seller-finance note. Like, you all got to go get a bank loan and write a check. And I want my check now. You can settle up with the bank over whatever the payment periods going to be. So you go to the bank, you end up with an SBA loan because they have lots of loan provisions that are favorable for supporting small businesses. That’s why it’s the Small Business Administration.

You’ve got an SBA loan, it’s lining up, you’ve got terms, you’ve got all the rest. And then you find out, Oh, wait, but there’s a requirement in this particular SBA loan. Because I know a lot of SBA loans have very specific program requirements that you have to meet. You’re using this SBA loan for people to buy out business owners. If you’re going to use this loan, they have to be completely bought out. Ben can’t stay. Or Ben can’t keep ownership.

Marianela: And it was so shocking because, in our mind, one would think that maintaining him tied in and invested in our success would actually be better for the business long-term. But that’s not the way they viewed it. Just from an SBA requirement.

Michael: Interesting. So now, all of a sudden, Ben finds out if you want to close on the deal this way, the whole thing, you have to go to zero. And he said, “Yes.”

Marianela: And he said, “Yes.”

Michael: And what was the structure of the deal itself? Like, just how did this work when you were going out for bank financing? Because classically, a lot of time, you go out for bank financing because it’s either the down payment or just literally the whole payment. Like the seller gets a giant old check all at once, and then the buyer finances it over years under the terms of the SBA loan.

So I guess I’m wondering, what was the structure of the deal itself? Like, was this all-cash upfront to Ben and that’s that? Was it part upfront, part over time? Just how to be actual deal get structured?

Marianela: It was partial. So whatever maximum SBA loan we qualified for we obtained it. And FP transition helped us get everything lined up. The banks that were experts in our field, this is what they did, because not every SBA bank understands that there are no real assets. There are no buildings. You’re not going to have any collateral. You’re basically making a loan based on the revenue stream. So we went for the max SBA loan. And so that redeemed Ben’s interest. And then whatever didn’t get covered by SBA, there were some side note from Ben. So he did a little bit of it as far as the full transition as a seller finance, but he did get what I hope he thinks is a nice big old check.

Michael: And was there any adjustments for what if clients don’t retain us or stick around? Or was it just like, we’ve run the valuation, the number is this. You’re getting all your money mostly upfront and a little bit that he had to seller-finance? Like, the deal is the deal, the price is the price and now we’re just paying it out.

Marianela: Pretty much. Yeah, that was it. So, one can say we took on the risk. If we weren’t able to retain all the clients, the risk was on our side.

Michael: I was going to ask, were you concerned about that? Paying what essentially is an all-upfront price for an advisory firm transition. You get not only the clients or retain you also just get what happens if right after we buy there’s a bear market and revenues are down 20%? Were you just not concerned or felt like you could grow through it or just willing to take the risk because that was the deal?

Marianela: I felt comfortable just because having, and again, it wasn’t that much time, but it felt like years, having those, call it, maybe a year and a half building that rapport, I was feeling good about the success I was going to have with the existing client base. For the ones that I was most concerned with, the bigger clients that had been with Ben since the beginning, those were my babies. I needed to make sure I owned them. I needed to make sure that there was no risk of at least that group of clients leaving.

So I felt good about it. I didn’t feel like we had too much of a downside risk.

Michael: Interesting. So the deal gets struck, terms are set, Ben, suddenly, surprisingly, is out for the whole thing. So, from your end, that’s like, oh, surprise, you’re buying another 25% that you didn’t think you were buying. It’s like you already knew you were going to be in for millions. So like, what’s a couple of a hundred thousand more in shares?

Marianela: Exactly. Exactly. And at that point, in a way, it was a little bit liberating because now we knew, not that I was going to do a full 180. “Oh, yeah, I was going to take the firm in this direction, and now that you really don’t have much of a say, we’re going to go in this direction.” But it was a little bit liberating because is, all right now… Because out of respect, I would say, “Hey what do you think? I’m planning to do this.” But now I was, “All right, Matt, we’ve got this, we’re going to do this.” So in a sense, in the way we were going to grow, what we were going to do, we just had full autonomy to just do it the way we wanted to.

The Dynamic Between Marianela And Matt As Partners As They Assumed Ownership [38:19]

Michael: So, help me understand now the dynamic with you and Matt. And who bought what and how much? Just because it sounds like Matt had already been there and been there for a while. He was the one who met you at the estate planning council meeting to bring you into this discussion two years prior with Ben to say, “Here’s someone that might be able to help be a successor and support this.” For many firms and deals of the structure, like if Matt’s the one that’s been there the longest, he might be the one that ends out taking the biggest chunk of the shares. It doesn’t sound like that’s the case. You were newer in the door, but came into a different role and came in to buy more of the shares.

So, how does this work amongst the successors, particularly when you were the new kid on the block in the firm to a firm that already had someone there who was at least participating in the succession plan as well?

Marianela: Right. And I have a lot of respect for Matt. We get along. I joke, picking a partner is, is just as important as picking a spouse. Because if you don’t have a good relationship with your partner that’s going to be pretty miserable. And I got along with Matt extremely well from the beginning. I think we had a lot of mutual respect for each other. He had basically grown up at Tobias Financial Advisors. He learned the business from the ground up. He started filling out client applications to doing the trades to… He just did it all.

So I knew that he was going to be a key part of, sort of the yin and the yang. He has all the operational background, the trading, he’s our chartered financial analyst. He’s the lead of all portfolios. But we have different personalities. He jokes because, “You’re just the people person. You talk to someone and they just want to keep talking to you.” So we saw the skill sets that we brought in, and my ability to connect with people. And so that was the arrangement is I can be the rainmaker, be the strategist. What planning ideas are we talking to clients about? So I’m directing the whole advisory team. Like, “this is what we need to be talking to our clients about now. Interest rates are low, let’s talk about this.” So, sort of directing.

And he saw that in me. So I was a little bit uncomfortable. I just didn’t know. Ben insisted you need to make sure you’re the majority owner. You’re going to help the firm grow. And I said, but I respect all of the skills and the talent that he brings to the table. So we just reached the… It’s almost 50/50 for all, but it’s 51 and 49.

Michael: Okay. Okay. And that was essentially your mutual agreement that you were going to have the majority stake if only by a slim margin. Like, you are going to have the majority stake and the division of roles was going to be, you’re the rainmaker, you’re the strategist. Matt drives the investment side and the trading and some of the operations.

Marianela: Correct. Right.

Michael: Okay. Okay.

What It Was Like For Marianela To Take The Keys [41:45]

So talk to us about what it’s like when the deal gets struck and you suddenly sign the paperwork. Like, “congratulations, you own it, Ben doesn’t. You’re now the proud owner of a multimillion-dollar debt.”

Marianela: Oh, my God, yeah. Unlike a pair of shoes, you can’t go and return them.

So I think the next day I was like, “holy, what? I am now responsible for all these people and all these clients.” So it just hit me. And the next day, Ben comes in and says, “Well, this is now yours.” So he dropped all the financials. He actually had a checkbook. He goes, “Here you go. I’ve had it. Here’s the QuickBooks. You can run with it.” And I said, “Oh, my God. Oh, my God, what did I just do?”

Michael: It gets really real when they hand you the checkbook, isn’t it?

Marianela: I know. I’m like, “What do you mean? I have to actually run this thing?” And I had a moment of this is insane. So I found myself doing my advisory job from 9 to 5. And then at 5, I would start, “Okay, now I put on my CFO hat, maybe a little HR hat.” So, it was pure insanity. I literally wanted to pull all my hair out because I had to worry that the bills were paid, that I was transferring cash between here and there, and I didn’t miss paying for health insurance or paying the employees. And one of my associates would laugh. She was, “Every time Nella was inside the QuickBooks you’d hear her just screaming.”

So I quickly learned, Michael, that I enjoy what I do, but I do not enjoy running a business. So that didn’t take much time for me to learn that.

Michael: Is that awkward when you’ve bought said business and have seven figures of debt associated with it?

Marianela: And I realized like, I’m not enjoying this. This does not bring me joy. Like balancing our books is not bringing me joy. This is not what I want to do. And I would find myself, if I had to go and pick up the kids, they had sports, I would go do all that. And then I’d put them in bed, log back in because I needed to make sure I ran payroll. I could not, like, not pay people.

So I did that for about, so there’s May, June, July, for about five months. And then I thought, “Self, this is not sustainable.” And at that point, my husband was CFO of Ingersoll Rand’s air conditioning business for Latin America. And so, just to add a little fuel to the fire, what was happening at that time is he was pretty much traveling 75% of the time. So he’s all over South America. He would leave on Sunday, come on Saturday, leave again on Sunday. So I was by myself, three kids. And at that time, they were two, three and six. Around that age.

So I just said this is not sustainable. Husband is all over South America. I’m by myself. He’s a CFO. And I said to Matt, I said, “Matt, what if we entertain the idea of hiring Edgar? This way, we have dedicated management.” And it was way before a firm like ours is ready for dedicated management. I mean, it doesn’t really happen until you have revenues around, maybe closer to $5 million. But it just wasn’t sustainable. It wasn’t working for me personally, and just me trying to juggle the advisory side and the business side. And I knew that with someone like an Edgar, who had that sort of strategic mindset, that it would only help us grow even more.

So Matt entertained the idea. We met at his house. It was Matt, his wife, Edgar, and I, and we just talked. We were like, “Listen, who cares more about our own success than we do? Who?” And they were like, “Oh, this is it. The four of us, we’ve got everything to lose.” So then we decided that he would quit Ingersoll Rand and he would come and basically run Tobias Financial Advisors.

And this poor guy, his background is with a firm like Trane and Ingersoll Rand. It’s just a different beast. It wasn’t like just, sure I’m just going to now run an RIA. So I said, just come in, and just take a good six months and just observe, just learn.

And that’s exactly what he did. But he was incredible. And so a lot of the success that we have had I attribute to the fact that he brought that corporate mindset and that strategic outlook on what we were doing. So, I think, really, he was the catalyst to us taking off after he came on board in October of 2017.

How Marianela Set Up The New Org Chart [47:08]

Michael: So help me understand just, like titles and division of duties now between you, and Matt, and your husband coming in. Like, who’s responsible for what? Like, how does this org chart work?

Marianela: Yes, we have a beautiful org chart. Okay, so, basically, everything I didn’t want to do, Edgar took. So Edgar, CFO…

Michael: Perfect way to write a job description.

Marianela: Yeah. Whatever we don’t want to do he does. So, he is our CFO. He handles everything to do with financing and creating budgets, having a plan. So he started treating us the same thing he did at Ingersoll Rand, just having a plan and what are we working towards, he was doing for us.

Michael: And just a quick note, it is worth noting, when a deal happens, and there’s been a purchase, and there’s a big old bank loan and debt payments, there is a level of managing your books and financing and business projections and budgets that take on a different level of pressure and obligation and concern for the firm. And I think most of us that are running firms want to have some reasonable accounting of how we’re doing and keep track of the books. But there is another level of business projections that often can and do need to happen and a certain stringency around how budgeting occurs because the bank expects to be paid, and you don’t want to screw that up. So you do have to get a little bit deeper into projecting and managing the finances when you’ve done a succession plan and there’s a loan on the books.

Marianela: Right. At that point, it wasn’t just, “I’ll get to the books and I’ll clean it up.” No. They were asking for financials and I had to provide them. And so it really did take on a life of its own. So we put a whole list together and we said, “Edgar, these are all the things we think that you’d be able to help us with, from managing the finances, creating a strategic plan, budgeting, anything to do with HR.” He took the whole HR function, which at that time, it may not seem like much, but it was becoming almost a full-time job in itself. Because one of the things I knew from the beginning is, like I told you, hiring and retaining talent is a challenge for us because we need smart people. So we bring them in. And how do we bring them in the door? What’s going to attract them to Tobias Financial Advisors versus a brand name out there? And then what’s going to keep them here?

So immediately, we thought we need to start looking like an organized firm that has a vision and a mission. So creating that culture. So Edgar jumped on that. We have to create a culture. We have to all buy into who we are, how we want to do it, and who we’re going to do it for. So creating that vision and mission, streamlining all that. So the HR became a big part of what he was doing. Even aligning compensation. Like, pre-takeover, bonuses, and raises were a number out of a hat. Well, I said “that doesn’t make sense. How are we then making sure that we have all these people behind us rowing in the same direction? What’s going to make them want us to be successful?”

So developing a compensation structure that really did align their goals to ours. So the HR function; marketing. I don’t have to tell you compliance is all a burden for us. If we’re going to put any blog post, everything has to be compliance-approved. So he took over all of the compliance and marketing functions. So today, he is our CFO, COO, he is our head of marketing, HR. So those are the four main functions. And he’s also a certified exit planning advisor. So talking to our business owners about exit strategy, just because his expertise is in running a business.

Michael: Interesting. And so then, what is your role and Matt’s role now as those carved up?

Marianela: Good. So what we also did, just thinking about how can we develop people and grow is we started implementing the Diamond Team Structures.

Michael: From Angie Herbers’ work.

Marianela: Exactly. So basically, Matt and I are the heads of two diamonds. With Matt also head of portfolio strategy as our CFA. He is our chief investment officer. So he is head of a diamond and heads up portfolio strategy. I am the head of another diamond, and basically, talking about strategic planning for our clients. What’s that going to look like? What are the strategies we should be implementing? And more of the business development side. So doing more of the CEO-type functions, making sure the team is brought up to speed. Are we all delivering the same level of service, and how, and what does that look like?

What The Firm Looks Like Today [52:44]

Michael: Okay, so standards for the practice itself. Like state standards for the advice of the firm. So then tell us about how this is going over the past three-plus years now. You’re a couple of years in, having written the check for buying out the firm at roughly $250 million of AUM. So, what’s the state of the practice today? What’s the size of the firm? What’s the size of the team? What does it look like now?

Marianela: So we reached a major milestone in the middle of a pandemic year, which makes it that much more of a reason to celebrate. Our AUM, as of end of last year, was $513 million. And we now have a staff of 16. It’s no longer just Matt and I on the advisory side. We now have seven on the advisory side. We have a dedicated portfolio analyst. It’s no longer Matt pushing trades through. Matt oversees the portfolio strategy, but we have someone who’s doing all the research and doing all the trades. We also have a dedicated tax specialist, because our biggest strengths, is tax. I’m the CPA. Twelve years at Bessemer Trust coming up with strategies on tax minimization, wealth transfer, that’s sort of the…

Michael: And Ben was the CPA as well, right? The firm has always had some tax roots.

Marianela: Yes, yeah. That’s one of the things that really sets us apart is that we don’t just say we do tax planning, we really do tax planning. So that’s one of the reasons we attract a lot of clients. And I think when we survey our clients, which also was one of Edgar’s ideas, that’s one of the key things they say, I’m just surprised with the level of tax planning that’s delivered. It really is above and beyond what they were expecting. But that’s one of our biggest strengths followed by the estate planning. We catch so many things that people, they don’t know what they don’t know.

So dedicated tax specialist. We started our financial planning team. We’ve promoted that client administrator that was here since the Ben days. She’s beginning our financial planning team.

So we’re creating more of a structure around how we’re doing what we’re doing so that we can continue this engine. We can continue developing our people. And it’s a tall order to try to hire an advisor who has tax knowledge. So I knew that that’s just not sustainable. And not everyone loves, and can you believe it? Not everyone is passionate about tax. So…

Michael: I know, it’s such a tragedy to me that this is just one of these things I’ve had to accept in the world that not everyone shares our passion for taxes, but I don’t hold any grudges to anyone, we’re all born to ourselves.

Marianela: Exactly. We all have our deficiencies. So not having a tax passion is one.

So needing a dedicated tax specialist was going to be key because we were finding it difficult to hire client advisors who were going to be able to provide the tax advice. And that could be dangerous. We want to make sure that if we’re giving tax advice we’ve done the research and we know what they can or can’t do.

So my goal is that having spent 12 years at a firm like Bessemer Trust, and seeing “what are the things that work really well?” On the planning side and on the holistic wealth management side, it was done very well. I was one of those pillars. So my goal is to be able to build this structure to be able to serve that client base that they’re not the billionaires that are getting this service. And to me, being able to build a structure to be able to serve those clients that are not Bessemer caliber as of yet, but really need it. Because unfortunately, this is like a whole. They have the wealth and the planning is that much more meaningful for this client base. It actually moves the needle.

So I have to tell you, I loved it. The fact that I now realize how much more impactful my planning was for my clients here. Not that it wasn’t impactful there. But it took on a new meaning in terms of really helping families. Providing that peace of mind that we were helping them achieve their goals, but with a cherry on top.

Michael: And how many clients are with the firm now?

Marianela: So, right now, we have 257 clients, if we’re going to go by client count. However, however, the reason why we have 257 clients is because one of my big initiatives is looking at the age of our clients. When we took over the firm, I knew it was essential that we start developing relationships with our clients’ children. So, as soon as we are working with a client, the next step is we’d like to start engaging your children. We will help them review their employee benefits and help them start a Roth IRA. So since I’ve joined, we’ve really done a good job working with next-gen, which means we have more clients from a client count. But I would say we’re probably more in the 170 to 180 families because these folks wouldn’t be our clients if their parents weren’t.

Michael: Can you just talk a little bit more about that from, what are you doing to make these connections to clients’ children? What are you doing? what services are you offering? How are you reaching out to them? Who does the work internally at the firm? How does that next-generation client initiative actually work at the firm?

Marianela: So, what we find is that these children over clients are actually the ideal client for our associates to start developing and start practicing a lead role. And they connect better. I mean, a 25-year-old talking to another 25-year-old, they can just connect better. So what we do is we call them, we say, “Hey,” and the parents usually give them a sort of a heads up, “the folks at Tobias are going to call you, they just want to talk to you about some potential planning opportunities.” So usually we start with, “Hey, we’re here to help you. Whatever questions you have. Are you starting a career?” Sometimes they have us review their offer letter and the benefits and helping them walk them through whatever selections. Then we engage them even more. We should start a Roth, we should start this.

So really, it’s just a matter of keeping them engaged, and we treat them, I’m not going to say they get the full wealth management, but essentially, whatever they need. They may not necessarily get a tax projection just because they’re just a W2. And we know, for the most part, they’re covered by withholding. But we’ll check their W2, and “hey, can we do more for the 401(K)s? Can we bump that up? Can we maximize? Are you doing at least the piece that you’re going to get the matching on?”

So, simple things that we could be doing that just helps us develop that relationship. But I think more importantly, it’s helping my associate advisors feel like they’re taking the lead on a relationship. And I tell them, “You treat them the way we treat the parents because they’re giving their parents feedback.” And what you don’t want is a 30-year-old going back to the parents and saying, “Hey, so and so was really not helpful.” So, to me, they are just as important as the parents are because we all know if you haven’t developed a relationship, it’s too late once the parents die or something happens and the wealth is transferring to next-gen. If you haven’t done that throughout, it’s too late at that moment.

Michael: And so, are you charging them separately for these advice services? Are you creating a pricing package? Is it just like part of the bundle with the parents? Do you just, if there happens to be a little bit of dollars to manage, you manage that, and otherwise it’s pro bono for the client household? How does this work from the business model end?

Marianela: Pretty much, we don’t charge extra. There’s no financial planning fee for them. If we open up a Roth or start a brokerage, they pay the standard rate without a minimum. So if we have just investment management, that would have a $3,000 minimum. There’s no minimum for that for them. It’s waived. And we’ll just have them sign a standard financial planning agreement that says, We won’t charge you. The scope of our engagement is that if you ask me questions we’ll provide advice, but there’s no fee.

Michael: Okay. Because you just want the relationship there and established so that if and when a client passes away, you’ve already got a relationship with the kids. And then hopefully, that means the business relationship continues.

Marianela: Right. And I tell the younger associates, this is not for me, this is for you guys. They’re your age, not my age.

How Marianela Leveraged Client And COI Referrals To 2x The Firm In Three Years [1:02:43]

Michael: So then, help me understand. Where did all this growth come from? I mean, three years ago, I guess three and a half years ago, you’re signing on a deal of a firm that’s about $250 million under management. Fast-forward, three years later, it’s essentially doubled, the staff has more than doubled. Where did all the growth come from?

Marianela: It’s a miracle. No.

The client service, as I mentioned, raising the bar, so there were a lot of client referrals on, “Wow you guys are really bringing it.” So a lot of client referrals. My biggest strength I would say is building relationships with estate planning attorneys and CPAs. I can speak their language and I can work really well with them. So just building that rapport and just saying, “Hey, here’s what we’re doing for our clients. Here’s the planning that we’re talking to our clients about. What do you think about it?” And so just being able to have that professional relationship, that has helped with attorneys referring clients to us, CPAs referring clients.

Michael: I am curious there for a moment. I know a lot of advisors out there who, essentially, have relationships with attorneys and CPAs, have joint clients with them, send referrals to them, don’t get any referrals back. What are you doing differently that it’s actually making business and referrals show up from these attorneys’ accountants?

Marianela: I would say that I really try to engage them. So, now, for example, everyone’s talking about a proposed Biden tax reform and a reduction on the estate tax exemption. So what I did is I put together a whole deck of slides on different strategies that can help our client base. Remember, not working with the billionaire. So I need to think a little bit more creatively. I can’t have these clients creating SLATs and just giving it all away, because they might need it. So just coming up with creative ideas on certain things that we could be doing for this client base.

And then I’ll just schedule a call and say, “Hey, these are some of the things that I’m thinking about. I’d love to just do a soundcheck and make sure that I’m not completely off the mark. What are your thoughts?” And just keeping them engaged so that when the situation comes up, hopefully, for one of their clients, they think of me. And when we do, for instance, the estate planning, we’re very involved. So we’re at that meeting with the attorney and the clients and we’re brainstorming together. “Hey, you have special needs? Well, how do we want to structure the trust? What are restrictions you want if you pass for your husband?” So be through those conversations I think these attorneys they feel really comfortable that if they have another client, and it falls under that scenario that, “Hey, maybe Tobias Financial Advisors can handle it because we just did this case.” So I think it’s a function of engagement.

Michael: Okay. When you talk about scheduling a call with the accountant and saying, “We’ve got these strategies we’re thinking about, we want to do a soundcheck,” as you put it. Does that mean these are generally accountants or attorneys you already have joint clients with? Like, “Hey, I’m calling about Bob, he’s a client of both of ours, we’ve got some ideas, and we just wanted to bounce this off of you.” And start it off that way? Or are you also reaching out and trying to do this with those you don’t have any joint clients with and just like, “Hey, I want to share some of the ideas of what we’re doing with our clients and see if that sparks a relationship with your clients?”

Marianela: A little bit of both. I think when I reach out to CPAs it might be about a mutual client. But I want to add value. I think you have to give. It’s not just about, well, I gave you a referral, where’s my payback? It’s about, call me a nerd, but maybe even just talking strategy. And if it’s, “Hey, we heard this at the Heckerling Conference, and here’s how I think I want to implement it. What are your thoughts?” So I think it’s a different professional conversation, not just about, Hey, this is an issue that so and so is having. Like for all of those CPAs that I work with, I said, “Why don’t we schedule a video call, Zoom, and I want to walk you through how to help your team, identify planning opportunities for your clients because you’re going to look like the hero if you’re able to, as you’re preparing,” and you and I both know, tax season, as tough as it is. But that’s your moment to shine because you’re touching every client. So there’s your moment to see the red flag that the client should be doing something differently.

So having had a whole session with a couple of CPAs, just to walk them through, “here, when you’re seeing this, this should be your next question.” And even the managers were like, “Well, yeah, I didn’t think about that, or yeah, that is a good time to bring that up.”

Michael: And so, are there any other drivers for growth? Client referrals that picked up as you hire more and reinvest in the service, building relationships with attorneys and CPAs. Or you’re doing these outreaches like, “Hey, I’ve been working on planning ideas, can we talk about them together,” as a way to build rapport?

Marianela: Yeah. And I think our marketing, I have really good relationships with journalists. They like to call and just pick my brain on different articles they’re working on. And that has certainly helped. There was a recent Barron’s feature. So that really has had my emails blowing up here. So I think the marketing…

Michael: Where did that come from? How did that come about?

Marianela: This is a journalist that calls me.. He has been calling me for the past couple of years, just on different articles he’s working on, just to get my take. “What are the tax implications? How would this affect the family? What are things you’re doing?” Just building that rapport. And so, he was working on a feature for Barron’s? And it’s so funny, he calls me, he goes, “I’m working on these features. And I just did one on the creator of the 4% rule. And I’d like to do one on you next.” I’m like, I’m following the guy that created the 4% rule? Really? But yeah, that has helped. We do invest in marketing. And so, all of our growth has essentially been just organic. People google us and so they do come from just a…

Michael: What have you invested in the marketing end if you say you’re spending dollars there?

Marianela: Yeah. We hired a team. They’re based out of California. Their expertise is RIAs. So it’s Out And About Communications out in California. And so, they helped us not only with the website, but just the blog post, that search engine optimization. Just putting ourselves out there. And I like to respond to a lot of the media quotes. And my rule of thumb is if I can just answer in five minutes, I’m responding, just because it’s a topic that I know well. So they tend to get picked up. So I guess just putting ourselves out there that has essentially paid off.

Michael: And so, like spending more dollars with a firm that focuses in more custom IRA websites, you’re finding like that is giving an ROI for you that is producing favorable results? Because I think there’s a lot of advisors that are still of the mindset, like, well ironically, “Business is made the way you’re doing it, Marianela, which is client referrals and referrals from attorneys and accountants. Why are you hiring a fancy firm to make a pretty website?”

Marianela: Well, I think we’re in an era where if someone gives a client your name, you’d be surprised how much they’re researching. And they’re doing their homework, and they’re going online, they’re checking the website, they’ve checked you out. So I think it’s not just enough to wait for a COI to refer you. I think you need to look good once that name is given to someone. So to us it’s important. I know some advisors say, “If someone just calls me from Google, I don’t want that client.” Like, why? This is the era that we’re in. We onboarded clients start to finish during a pandemic completely, virtually. People are out there and they’re doing their homework. We have more of an educated consumer. So I think it’s important that the website and whatever people are finding on you reflects the reputation that you want to have out there. So, to us, it’s important to invest in that.

Michael: Okay. Okay. And I am curious as well. If you’re to ask, the firm continues to be called Tobias Financial. I know a lot of advisors out there actually make the case, you damage the value of your firm when you put your name in it the way that Ben Tobias did by calling it Tobias Financial Advisors. So as someone that not only bought the firm as a successor, but like, bought it and grew it and it still got Ben’s name on it, at least Ben’s last name on it. How do you look at and think about the name of the firm?

Marianela: It’s so funny, you bring that up. I thought, you know what? Ben has built a firm. He has a reputation. Why would I want to not use that? Why wouldn’t I want to showcase that? And I joked, and I said, I want to put your name in lights, Ben. I’m going to make it front and center. I think we’re going to build on this. You are a pioneer of fiduciary service, fee-only. You were a pioneer in this. And so we want to make sure that people see that those fundamentals, why you started the business. You saw that there was a disconnect between a client’s needs and what was being provided by brokers or insurance agents. And so you bridged that gap. And we’re going to continue that.

So we just thought that there was really no value in changing the name. Why would I want to erase the history? I want people to ask, who is Tobias? Why keep the name? Well, he’s 40 years of history, and why we started still remains. Nothing has changed in terms of what we believe at the core of what we do.

Michael: And so, the fact that it’s got his name attached to it sounds like for you is not only not a detriment or a reduction in the value of the firm. This is an asset to you because it’s a name that’s been around for 40 years of practice and means something.

Marianela: Right. I have a better story. We say stories are important and and they resonate with people. I have a better story to say Tobias Financial Advisors has been doing this 40 years. What am I going to say if I just say, well, ABC Advisors, we were Tobias, but we changed our name, but we’ve been doing this for 40 years. It just changes the script. And I don’t think it’s for the better. I came from Bessemer Trust. Who’s Bessemer? That’s the process used during Steel Carnegie. So I think the name, having the history, and being able to tell that story are more valuable than my ego. I don’t need Collado. I wouldn’t want that. I don’t think it adds anything.

What Surprised Marianela Most About Building An Advisory Firm And The Low Point Of Her Journey [1:14:56]

Michael: So, as you look back over the past couple of years, having made a transition into being independent channel out of a firm like Bessemer, and now acquiring the firm and serving as the successor. What surprised you the most about trying to build an independent advisory business?

Marianela: I think, initially, what surprised me is, and it was sad, actually, just to see… I guess I was sheltered from this in a way. When you’re a CPA, you started at a firm like Arthur Andersen, you’re ingrained, you’re taught to do right by your client. And then joining a major trust company, you were there to do right by the client, just kind of the upbringing. I was surprised to see that there’s this whole world of clients that are not given the right advice. And so it became more of a passion to me just being able to be in this world and maybe save people from that. That was a surprise.

Another surprise was my ability to run a wealth management firm. I never thought that that was going to be my path. My trajectory at Bessemer Trust is maybe one day I’d be the director of tax. Just because I’m really passionate about the tax planning. So that surprise that I’m able to do it and maybe even, dare I say, inspire a team of people to follow in my footsteps. So yeah, I think pleasantly surprised on that front, and hopefully, make a difference for the part that was not so pleasantly surprising.

Michael: So, out of curiosity then, what led you to make the shift? If you were at Bessemer and was going well, and you had your eyes on a director of tax position someday after being there more than a decade. What made you take the meeting with Matt and take the plunge with Tobias?

Marianela: Yeah, yeah. So, when we moved to Florida, I ended up moving to an area west of Fort Lauderdale. And I was commuting to Brickell in Miami. I’m not sure if you’re familiar with that distance, but I don’t wish that commute on anyone. And so I’m here with three kids, three boys to boot, just juggling. And I’m by myself. I don’t have family here. So just juggling the home life, the sports, this, that, by myself, and just this commute, it just wasn’t sustainable. So something was going to have to give.

Again, not thinking that I wasn’t going to ever do something like this, but when this came up I thought, well what do I have to lose? It’s something different. It’s exciting. Worst case, talking to myself. I said, “Self, you can always go back.” I never burned bridges. I love my former Bessemer colleagues. I just think the world of them. So I thought I can always go back. I can either go back to Bessemer Trust, go to public accounting. So there was opportunity for me to do something somewhere.

Michael: It is a good point that after 15-plus years of experience at big accounting firms and big Bank and Trust companies, your resume has plenty of strength and credibility. Like, if this independent advisory thing doesn’t work out, there will be jobs. There’s a giant talent shortage for experienced advisors right now that gets worse every year. There will be jobs if you decide you need to go back and find one.

Marianela: Right. And I thought this was a unique opportunity to try something different. It seemed exciting. So, as Steve Harvey would say, you just have to jump and hope the parachute opens. And that’s what I did.

Michael: So what was the low point for you on the journey?

Marianela: Yeah, it’s a big responsibility. And I think I realized this really is not a 9 to 5. And I think I’m still trying to come up with a system that works so that I don’t find myself. Even when I’m not working, my mind is preoccupied that I should be doing this, I should be doing that. So I think we’re still in the middle of the growing pains. We haven’t been able to get the team. It feels like most people are here less than a year just because we’ve grown so quickly. So we haven’t reached that sweet spot where, okay, now these people are up to speed. It doesn’t need me 24 hours a day, 7 days a week.

So my struggle, and I would say now is that I feel like constantly, need to be doing something. Even on weekends just trying to disconnect. So I think I’m still in the thick of it. I haven’t reached that point where I can step back a little bit and have more of a balance. But, what is balance? I joke. I’m like, I love what I do. So even I’ll come in on Saturday, because what else should I be doing but reviewing a tax return, right? So I think I’m still in the thick of it. I hope to be able to continue developing the team so that it doesn’t, mentally, feel like I’m constantly working.

Michael: So, anything you wish you’d done differently then? Like, anything you wish you could go back and tell you from like five years ago when you’re taking the meeting with Matt and starting down this journey with Tobias?

Marianela: I think I’m pretty happy with how everything… Remember, we were pleasantly surprised. We would have been now at the point where Ben would have started stepping away more. And he really is retired. If he comes in once every six months, these days, that’s a lot just because he’s got a lot on his plate. But I think I’m happy with all the decisions that we made.

I think now it’s about developing that succession plan for next-gen. Even though I’m 43, I don’t want to wait to do this when I’m 65. My vision is that we need to develop some sort of a system where we’re engaging and having our talent have some skin in it as well. Maybe earlier. How that’s going to look like and what that’s going to look like I don’t know yet. We’re working through that. But I’m happy with all of the choices we’ve made. And I think that we continue to grow. That’s my focus.

Marianela’s Advice To People Of Color Looking To Become Financial Advisors [1:22:12]

Michael: So, what advice would you give younger or newer advisors looking to become a planner today? And I’m particularly curious of any thoughts or words of advice you have to advisors of color, because I know we do not have a very diverse industry. You do have a very diverse firm. The team at Tobias now is very racially diverse, very gender diverse. So you seem to be figuring something out there that a lot of other firms are struggling with. So what advice would you give around next-generation advisors, and particularly advisors of color coming into the business?

Marianela: Yeah, I think they need to find a firm that is committed to nurturing and developing them and really appreciating who they are. I’m going to say I owe my success throughout all these years, from the minute I stepped into the doors at Arthur Andersen to some of the best mentors. Who you work for is really going to dictate your path.

And I think, when people are interviewing for a job, they think the firm is interviewing them. I challenge them that they need to interview. They’re the ones that really need to interview the firm and the manager because you want to work for someone who’s genuine and who’s really going to be vested in your success. And that could make or break you. I’ve seen many advisors who’ve had these managers where they take all the credit, they’re not looking to elevate you. And I tell my associates, I need to make you uncomfortable. You’re going to grow from being uncomfortable.

So what I tell them is, “Don’t settle.” I think you need to find the firm that believes that all of us being different contributes to the value that we add to client service. So really just be really selective and picky about who you’re going to work for. And especially early on, that’s going to make the difference. And I’ve heard so many advisors say, “I got my CFP and I started working and I was so disappointed. It didn’t feel like I had the opportunity to grow. No one was really developing me. And it was survival of the fittest.” So it’s not the right environment.

And I think if you choose an environment that’s rooted in education, which is our focus. Our vision is to be able to inspire, educate, and prepare our clients to live the lives they want. And that applies also to our staff. We have to educate. So if you find a firm that’s rooted in education and really vested in the development of next-gen, that’s what you need to go for.

Michael: And then, I have to ask, what is it that your firm is doing to be able to do that for and with advisors of color, in particular, that other firms just don’t seem to be moving the needle on this? For, I feel like, not a lack of talking about it in the industry. But most firms’ team pages still don’t look very diverse. Yours is. What’s different for what you’re doing there?

Marianela: I don’t know what comes first. Is it the chicken or the egg? But I the tone of the interview, I think has a lot to do with it is making people feel like this is going to be the environment where their authenticity is going to be valued and appreciated. I don’t know what those conversations look like for other folks. But it really is hard to say that you believe in diversity and inclusion if the firm doesn’t look like they do.

I struggle because everyone asks me that question, what’s the secret. And I think it’s just those conversations. Being genuine and making sure that whoever it is you’re interviewing, whatever their background, whatever their color is that they’re going to feel like they’re coming into an environment where their difference is going to be valued.

Michael: So, I see what you mean on the chicken and egg problem. Like, if you’re a firm that’s trying to hire diversity, and you’re talking in your interviews about trying to be supportive of diversity, and then someone goes and looks at your website and your team page, and it’s not diverse, it sounds and rings hollow. It’s hard to attract diverse candidates if the firm isn’t diverse. And of course, if the firm isn’t diverse, and that blocks you from attracting diverse candidates, then you never get diverse. Because you’re stuck at zero. That becomes the chicken and egg problem.

Like, if you want your firm to be more diverse, you have to figure out how to break the initial barrier of diversity in your firm. And it may compound from there, but if you can’t figure out how to cross that line to start, you’re going to be stuck with the chicken and egg problem.

Marianela: That’s perfect. You said it better than I could have ever said it.

What Success Means To Marianela [1:27:29]

Michael: So, as we wrap up, this is a podcast about success. And one of the themes that always comes up is even just the word success means different things to different people. And so you’re on this incredible track of successfully building the firm and buying in and taking over and doubling it in three years. So the business is going well. And I know you’ve still got a long time horizon on the business. But I’m wondering, how do you define success for yourself at this point?

Marianela: I guess it’s living the life you were envisioning. And I think I’m in it. This is exciting. I feel like I make a difference in my clients’ lives. And so that would be a key thing for success for me. But I guess if I had to take it further, is just having a little bit more freedom. Just mentally being able to disconnect. I think that’ll sort of feel more like success.

From a numbers perspective, we had a target, we want to get to a billion. Okay, the target is there. That’s success. I think success is going to look like a full team of developed advisors where I don’t necessarily have to be so much in the weeds. But as I as I mentioned, I’m enjoying the journey. So, to me, I’m living the success right now, just because we’re enjoying the ride.

Michael: Okay. Very cool. Very cool.

Well, I appreciate you Marianela joining us and sharing the journey on the “Financial Advisor Success” podcast.

Marianela: Thank you so much for having me. This has been so much fun.

Michael: Absolutely. Thank you.