State of the Industry Podcast: “Making decisions for the people I care most about.” – Audio Transcript

Scott: Hey, everyone. Welcome to Allworth Financial’s “State of the Industry” podcast as we talk about things that are going on in the industry and periodically have some guests join us that are part of the organization. And today, we have Kelly Richards. Kelly joined Allworth Financial…when did you join us, Kelly?

Kelly: November 1st, 2021.

Scott: Okay. And so wanna just hear a bit about your journey, like, how you built your practice, why did you go through this process? Why are you here? What’s worked out? What is frustrating? Those sort of things. So, maybe just give us a little background about your business and how you started and that sort of thing.

Kelly: Sure. So, back in October of 2010, I joined the company back then as it was known was RG Capital. And it was owned by a gentleman by the name of Robert Graham, that was the RG part of RG Capital. And I essentially was an assistant to him. I’ve been in the financial industry since 2005, but basically starting over with moving over to Robert Graham and worked there for several years as an assistant. And then started working with the clients, started doing review calls, started getting more involved in the business.

And then in 2014, and I worked closely with Patty Gale who’s with us at Allworth now, but in 2014, Robert sold the business to another gentleman, first name is Kevin. And Kevin bought the business from Robert and I continued on and became basically…the title was president of RG Capital. And I ran the book of business completely with Patty with no involvement from the new company that bought it. They let us just manage it and work with it. And so we’ve been working with these clients since, you know, at least 2012, Patty and I, and we continue to…

Scott: You have a specialty with mostly dentists, right?

Kelly: Yeah. Yeah.

Scott: Dental practice.

Kelly: So yeah, we deal with business owners primarily, and out of the business owners that we deal with, over 95% of them are dentists. And so that’s our niche. It’s done very well for us and it’s been great for the dentist. We’ve been able to help them with their retirement planning and the retirement plans in their office. But yeah, it’s been a great ride. And then Kevin, I made Kevin aware, the new owner, that if he ever wanted to sell that I would be interested in buying the business. And so Kevin came to me, oh, probably October of 2017 and said, “Hey, I wanna sell the business. You still interested?” And so I moved forward with it and, you know, got the financing put together.

Scott: How did you finance it at that time?

Kelly: We financed through Oakstreet Financial. And the thing is nobody else would touch me. Nobody would finance it. Oakstreet came in, it was a very expensive rate. Still very worth it. I think I was at 10% at that time, especially when rates were low, and then refinanced it later on with the credit union and brought it way down. But yeah, I purchased it from Kevin.

Scott: And did you have much cash at the time to purchase it?

Kelly: That’s the funny thing is, you know, I basically bought it blind. I had no idea. I had no idea. I didn’t know what it took to run a business. And if I did know, I probably wouldn’t have bought it, so I’m glad I didn’t know.

Scott: That’s funny.

Kelly: Yeah. And so I had to jump in and I had to learn how to, you know, save money and got in and immediately found about $50 grand a year of wasted money, and that really helped us to progress. But yeah, I was very stressed. It was very scary, you know, doing this alone. You know, it’s hard as far as the load of carrying a business. And I know you understand that. But yeah, I had no real training of running a business and I despised QuickBooks. That was and still is my least favorite thing to do is get into QuickBooks. But, you know, it all worked out. I don’t believe in coincidences. I think that I was incredibly guided to do this, everything unfolded.

Scott: And so what brought you to the point? So 2017, October ’17, you buy this business, you go through a massive transformation. Obviously, you know, a year later, you know what’s going on at this point, right? Things are running pretty smoothly. So, what made you seek out a partner?

Kelly: You meaning like Allworth as a partner?

Scott: Yeah.

Kelly: So, it’s just…

Scott: Because I think you were represented by a banker of sorts too, if I remember, right? Were you not?

Kelly: Yeah. Skyview Financial. And I had been thinking about it for a while. So, I sit here and I tell my clients to diversify, diversify, diversify, diversify. And as I’m telling them to diversify, I’m completely undiversified in every asset that I have is tied up in the business. And so that was a massive concern for me that… I also had cancer in, let’s see, it would’ve been January of ’13. I had colon cancer. And what it did is it forever changed my thinking.

Scott: And you were really young then. I mean, you’re young now.

Kelly: Yeah.

Scott: How old are you now?

Kelly: I’m 46 now. So, I think I was like 37 or so.

Scott: Yeah, that’s young.

Kelly: And really young to have it, but what it did is it forever and still does always brings up into my brain mortality. You know, what’s gonna happen? What happened if I died? What happened if I had all my money tied up in this and I died? What would happen to my wife? What would happen to all my clients? You know, I had a continuity plan in place, very rough continuity plan. It was a friend of mine here and, you know, I’d asked if he would take over the book if something happened to me and he said, yes.

But what I started thinking about is this is kind of a complex setup we’ve got and I’m fearful that he would step in and say, “No, I don’t wanna deal with this,” and then all my clients were left high and dry, and Patty was left in a bad spot too. And so the two things that really drove me to partner with Allworth was, one, diversification and two, a continuity plan for my clients. And that is something that was very important to me. And it’s not necessarily in that order either, but that’s what drove me to it.

And so I’m sitting there thinking about this in 2021, and I get an email that pops into my computer and it shows me a firm that’s for sale in Scottsdale, and it’s Skyview Financial. And I’d talked to Skyview Financial before, they looked at refinancing me, so I thought, oh, that’s interesting. And again, I don’t believe in coincidences, there’s a purpose to this. And so I reached out to Skyview Financial and I chatted with them for a little bit about it. And it it just really made sense, everything fit.

You know, Skyview Financial was amazing. They set me up in front of, I don’t know, 10 different companies. I interviewed, you know, multiple people and just kept coming back to Allworth, just kept coming back. The setup was better. The buy-in I liked, I liked the fact that I’d be a partner. It was just an all-around better setup. And my wife, she ultimately is the one that picked Allworth and she said that’s where you need to go. And so we did [crosstalk 00:09:00].

Scott: And how did she get to know much of…was she involved in some of the meetings or she just…?

Kelly: She was involved, not in the meetings, but we would go to lunch or we’d go to breakfast and we would sit down and she actually was having a hard time with me wanting to sell. And the reason is, you know, we had an income that was amazing. It was great. And we knew that going to Allworth that my income could drop, but the benefits would outweigh that drop in income by far. And so that was hard for her because it does take more planning on living and it takes being a little more frugal and smart with the purchases. And I know that was hard for her. I was fine with it, but it was hard for her. So, it took a lot of talks, a lot of convincing. And what’s funny is it took me a long time to get her to buy in to buy the company, now she wanted me not to sell.

Scott: I have a wife who’s really helpful in that way as well. I’ve always said the only bad decision is indecision. Like, just make a decision, like… And my wife’s very slow on decisions and methodical, and I find it’s been really helpful for me, particularly on the big decisions in life.

Kelly: Well, totally. And she is, and she’s like your wife. And so I always tell her she’s like turning a train around. You can do it if you’ve got a roundhouse, but it still takes a while. And this is what we faced, but ultimately, you know, with prayer, a lot of prayer, a lot of personal guidance, personal revelation, this is the path that we took. And, you know, I get asked by my clients, actually quite frequently, they ask me about Allworth, and do I regret it? And it’s nice because I can say I absolutely do not regret my decision to sell and partner with Allworth Financial.

Scott: And how is your life…what is different for you today?

Kelly: The difference is instead of me carrying…so we look at the markets, right? Right now, it’s pretty difficult. It’s a lot of chaos, a lot of craziness in the world. And so this is the best thing for me is the fact that I used to have to carry that all on my own shoulders. And that was very hard and I couldn’t actually imagine owning my business right now dealing with the environment we’re in, you know, financially or as a country or globally. I just couldn’t imagine having to do that on my own. And so with the sale of and the partnering of the business with Allworth, what it’s done is basically added others to carry that weight with me. And so I’m not doing it alone anymore. And so that’s nice.

You know, and I liked the structure of Allworth. I liked that the marketing was there. I don’t know how to market. I am horrible at it and that was nice. And that’s also helpful is that, hey, finding clients, that’s not on my own shoulders now. This is also going to be helped out with the marketing team. You know, there’s great training. It’s just great. It’s just nice. And the work-life balance, you know, I had it before, but my stresses were greater. And so even if I took time off, the stresses, you know, were stronger than they are now. So, it’s nice to take time off now. Like, when I go to Newport Beach a handful times a year, I actually enjoy my vacation with my wife and family. Yes, I’m still working. Yes, I’ll do trades. Yes, I do that kind of stuff. Probably should let go, but…

Scott: Probably. Yeah.

Kelly: But it’s noticeably different. My mood is noticeably different. It’s just been a better way of life for me. And like I’ve said, I don’t regret this transaction or transition at all. Not even for a moment. It doesn’t mean things are easy, but it’s a lot less stress.

Scott: And when you look at your futures, you’re 46, I think your oldest just went off to college now, right, this fall. So you’ve got a lot of life ahead of you, Lord willing.

Kelly: Yeah. Hopefully. Right.

Scott: What do you see for the next few years for your life? Because you’ve had some interesting chapters if you look back last 12 years when you joined RG Capital. Like, what’s this next Chapter 2 look like for you?

Kelly: Well, you know, I talked to my wife a little bit about this and I said, well, what if I focused on trying to retire at age 55? And she immediately said, drop that focus. You’re not retiring at 55.

Scott: I’m 55. My wife would kill me if I’d retired.

Kelly: I know. And she said, “This is my place of business. The home is my business.” She goes, “Do I go to your office? And do I run around your office?”

Scott: That’s hilarious.

Kelly: And I’m like, “Well, no.” And she goes, “So, you’re not retiring at age 55.” So, you know, the way that I look at it now is, you know, I like being a partner with Allworth. I have no reason to quit for several years. And so I hope to be part of Allworth and continue forward with Allworth for greater than a decade at least.

Scott: And is it working with clients that gives you the most joy you think, or is it…? Like, if you’re designing your perfect day or your perfect week, like…

Kelly: I think the work-life balance is probably my favorite. I like that if I need to go to my son’s school and I don’t have client meetings, I can do it. But I do enjoy my clients. Like when I call them, you know, I look at my schedule and I’ll go to call them, I get excited because I see a couple of them are on there that I really like to talk to and they’ve all…most of my clients all feel like friends. Like, when we talk and we do our review calls, we can be very direct with each other. And I do enjoy that. We have great a set of clients. They don’t freak out when the market dips. I don’t get any phone calls which almost makes me worry, so I’m always calling them. But they’re good. They’re a good, solid book of business and I love them. I can say I honestly love my clients.

Scott: That’s what makes you a good advisor.

Kelly: Yeah. Well, thanks.

Scott: And do you find your kind of mindset around risk tolerance has changed? I mean, like, Pat McClain and I started this business almost 30 years ago and 5 years ago, roughly, we sold a majority stake to private equity to get capital to help us grow. And I just know personally, like, when I had some chips off the table, it was a different mindset. There’s things that I stressed out before I no longer stressed about.

Kelly: Yeah, totally. You know, it totally does help. And I love the partner aspect for me looking down the road four to five years, that’s nice and that’s a comfort. You know, it’s a nice little insurance plan and it helps me also because I understand that, hey, my retirement will look a lot different now than it would have had I just kept the business.

Scott: Yeah. Because you’re an equity owner in Allworth, which is how we structure our [inaudible 00:16:45].

Kelly: Yeah. And I have the contingency payment November 1. I think that’s what it’s called. Yeah. And then four to five years down the road, equity payment, or whenever that is, that’s great. That’s a nice piece that will go towards my retirement.

Scott: Yeah. Well, that’s one of the structures that… It’s interesting, I was talking with a business development guy at a firm similar to ours. You’ve probably talked to them actually in your journey. And I asked about the equity role and he says, well, that’s usually 10% or less. He says, oftentimes it gets…they think they won at the start, by the time it get down, it turns out to be nothing. And I said, wow, that’s really interesting. I said, most of our partners sit somewhere around the 25% level. And frankly, I said, I want that. I want partners. I want our interests aligned. Just like we try to align our client’s interest, I want our interest aligned with folks who join the firm. And I mean, we’ve done 20-some transactions, I couldn’t imagine if the majority of them did not have stock in Allworth, that’s like all’s they’d be doing is fighting for resources.

Kelly: That’s right. Well, yeah, and it’s nice because whenever I’m meeting with other Allworth employees, that’s what I always tell them is, Hey, you know, I’ve got skin in the game too. I wanna help out. We need to get this going. It’s right. We have kind of a meeting of the minds and I think that’s what partnership is, you know, or partnering with Allworth is important.

Scott: Yeah. So, what advice would you give to other advisors that maybe are kind of in the similar place just looking at their future?

Kelly: Well, I guess the biggest piece for me is I was a hypocrite. As far as diversification goes, I had nothing. I wasn’t diversified. And for me, that’s very important. So, if I were another advisor, that’s what I would have to do is pull back and look at my life and say, am I diversified or not? Then do I have a plan in place if I were to die or, you know, something happened? For me, those were the two biggest items but, you know, it’s security. I have diversification, you know, is great and it’s added a lot of security. So, if you’re feeling a little insecure about where you sit, I’d say this is a good route to go because it’s definitely gonna help change that.

Scott: And you said you used SkyBridge and you looked at roughly 10 firms. Did you have a lot of clarity on what you wanted at the start of that, or was it you learned more as you went through the process of talking to different firms?

Kelly: I had no idea. I had no idea. And then we would interview and I would be like, “Oh, that sounds good. I like that.” And then Skyview would say, well, you know, let’s talk about this a little more, so they kind of open it up. And, you know, and I had to pay them, I think it was like what you pay your realtor. I think we paid them 6% of the sale proceeds. And I knew that was a big chunk, but I also knew I couldn’t do this on my own and I needed them. But as we went through the process, even they were recommending Allworth Financial.

Scott: Well, I think what happens, they get to know you, you have a lot of interviews, then they help you, they help guide the discussion. So, the only reason [inaudible 00:19:57] I’m sure Skyview, they don’t always refer clients to us. They might refer somebody else if a different firm would be a better fit for somebody else. Yeah.

Kelly: Right. Yeah. But they did. And, you know, we kept talking about it. There’s, you know, another firm out of California, I can’t remember the name, but we met up with and I just felt uneasy about them. And that’s when, you know, Skyview partners they just stepped in and were like Allworth is gonna be your best bet. Look what they’ve got. You know, so they helped with me to understand. And I learned a lot through the process. I learned how time-consuming selling a business was and overwhelming and it would shut me down. But bottom line is I made the right choice. And all of those other firms, not that they were horrible, but they didn’t align with me.

Scott: And I think that’s what you discovered going through that process for yourself, right?

Kelly: Yeah.

Scott: Well, Kelly, hey, thanks so much for taking a little time today to have this conversation. Greatly appreciate it.

Kelly: You bet.

Scott: And thanking you everyone for listening to this podcast. If you wanna learn more about Allworth, go to our Allworth partners page, allworthpartners.com. You can learn more about what it means if you wanna explore what Kelly went through. So, thanks so much.

Announcer: This podcast has been brought to you by Allworth Financial, a registered investment advisory firm with the Securities and Exchange Commission.